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Oceanside facing $2M budget gap
By: MARGA KELLOGG - Staff Writer
City tightening operations, changing hiring practices | ∞
Wastewater operator Don Dynes checks the blanket level in one of the primary clairifiers at the San Luis Rey Water Reclamation Facility in Oceanside on Thursday.
HAYNE PALMOUR IV Staff Photographer
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OCEANSIDE ---- City officials said last week that they are planning for the pinch of a slowing economy that could mean a $2 million budget shortfall in the coming fiscal year.
The city is seeing smaller gains in sales tax, property tax and other revenues, said Finance Director Teri Ferro, while at the same time, expenses are going up.
Ferro said preliminary figures suggests Oceanside will see "very conservative" revenue growth of about 2 percent in the 2008-09 fiscal year.
Expenditures will increase by around 5 percent, she said, leaving a gap of about $2 million in the general fund that will have to be bridged.
A draft of the budget for fiscal year 2008-09, which begins July 1, will be available toward the end of April, she said. Breakdowns of projected numbers are not yet available, she said.
"We've told all the departments to tighten their belts," said Ferro. "We won't see a significant reduction in services. We want to make sure we protect our residents as much as we can."
In addition to the shortfall, Ferro said it is unknown how Oceanside will be affected by the state budget. The city could lose an additional $2 million, based on proposed state figures released in January, Ferro said.
And she said that depending on the final state budget, which is revised in May and usually approved in June, the city could lose an additional $5 million.
"I'm not forecasting those numbers," Ferro said, "I'm letting people be aware of them. I'm asking the departments to make a Plan A and a Plan B."
Tightening the process
City Manager Peter Weiss said Thursday that department heads have been told they must collectively make up the projected shortfall by cutting spending.
He said he has notified the City Council that vacant city positions "probably won't be filled" unless they are for core services. And if they are filled, he said, the city will be looking in-house first.
"That's not a hiring freeze," he said. "If it's critical, we'll fill it."
Weiss said that between vacancies and more efficient operation, he expects to bridge the $2 million gap projected by Ferro.
"I think we need to be cautious," Weiss said. "What I'm seeing is cause for concern, but not cause for alarm yet."
Property taxes down
Ferro blamed a decline in property and sales taxes for most of the expected shortfall.
She said that unlike previous years, when the city experienced increases of 8 percent to 10 percent in property tax revenues, the coming year will likely see a 2 percent to 3 percent increase in those revenues.
Ferro said that the number of foreclosures in the city in the last year is not expected to affect property tax revenue much, because banks are taking over the properties and continue to pay the taxes based on the original assessed value.
One out of 17 homes in Oceanside's 92057 ZIP code entered foreclosure between January and November last year, according to data from RealtyTrac, a foreclosure tracking service, and the San Diego Association of Governments.
On what she called a positive note, Ferro pointed to development in the next several years that will boost both property and sales taxes, even though it won't help with next year's budget.
Plans include downtown hotels, shops and residences, and the Pavilion, a 950,000-square-foot, high-end shopping center planned for 92 acres at Mission Avenue and Foussat Road on the site of the old Valley Drive-In.
Sales tax drop
Sales taxes are expected to be down about 1 percent in the coming year, she said.
Ferro said the city expects to take in about $715,000 less in sales tax than it did in the current fiscal year, which ends June 30. Projected sales tax for the current fiscal year was estimated at about $18.5 million, she said.
While that means a slight drop in sales tax revenue, it won't be the deep decreases that could hit some cities where high-end products such as cars and furniture drive most of the sales tax revenue, she said.
The current struggle follows several years of budget growth.
In the two-year budget approved in June 2006, the city projected an overall revenue increase of $14.3 million ---- $8.3 million for fiscal year 2006-07 and another $6 million in 2007-08.
Officials said at the time that most of the increase would come from property taxes.
The budget showed Oceanside's general fund at $109 million during fiscal year 2006-07. In the following year, the general fund would increase to $114.8 million. And the city budget included a surplus of nearly $300,000 over the two-year budget cycle.
Setting priorities
Councilman Jerry Kern said Thursday that he believes the $2 million budget gap is "optimistic," and that the economy is at the beginning of "a real downturn."
Contrary to Ferro, he said he sees some services being cut back, but that when it comes to setting priorities, his will always come down to public safety, police and fire protection.
"They want to do the best job they can," Kern said of city employees, "but if you're the pot hole guy, we may not have the money to fill every pot hole."
Kern said he doesn't see the economy picking up until March or April 2009.
"It's going to be a tough couple of years and we're going to have to keep a really close eye on our finances and prioritize what we spend our money on," he said.
Deputy Mayor Rocky Chavez said that because vacant positions will likely remain unfilled, customer service may suffer.
"As people retire, we're probably going to throttle down on personnel," he said, adding that he's going to focus on keeping the city's basic services intact when it comes to approving the budget.
He said empty positions in the city's code enforcement division will likely stay vacant and the city may have to cut back on the number of police officers it hires.
"Crime is down, which is a good thing," said Chavez. "So we may be looking at that. It's tough out there, and we need to be good stewards."
Contact staff writer Marga Kellogg at (760) 901-4067 or mkellogg@nctimes.com.
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What a surprise; wrote on Feb 9, 2008 10:36 PM:Just the tip of the iceberg Mayor Wood. Time to re-evaluate the enhanced retirement benefits you gifted to the general employees. This is just poor fiscal management and it is just the beginning. This is the first glimps of a budget status we have seen for Oceanside in over a year. It takes more than glad handing to be an effective Mayor. By the way, given the Council's poor fiscal management track record, don't even think about a public safety tax this year or next.
Welcome to Oceanside Ms. Ferro, wrote on Feb 9, 2008 10:42 PM:Maybe now someone can show the community how we are going to pay the downtown hotel developer $27 million. Yes we know it is Redevelopment Funds, we just want to see the smoke and mirrors.
Long Range Planning Needed wrote on Feb 10, 2008 5:56 AM:What happen to long range financial planning in Oceanside? We need to know our revenues and expenditure for the long term to make informed decisions about employee raises and/or our ability to support more police and fire services. We have Council Members who insist on sustainability in community development but do not have the knowledge or foresight to expect the same of the City’s own finances. We deserve a better explanation of our budget dilemma. Is this a temporary problem or is it a structural deficit like the State of California? If it is the latter, as I suspect, we will have to do a whole lot more than is being suggested in this article.
Hang on residents here goes your wrote on Feb 10, 2008 7:16 AM:assets--be prepared to watch your council sell every square inch of city land to cover their budget! First will be the Marina Towers, next Goat Hill, then the Pala property, and so on, and so on until it's all gone. There is another way to make up the deficit and it isn't through selling public property.
John wrote on Feb 10, 2008 7:29 AM:Cutting Law enforcement might not be a bad idea considering it takes at LEAST 3 patrol units to make a traffic stop on Coast Highway! When LE is tripping over themselves on Coast Highway, there needs to be LESS, not more of them!
Randy wrote on Feb 10, 2008 8:06 AM:Having the new concrete plant come on line will help. The $200,000 that they will contribute to the general fund will cover about 10% of the shortfall. That may mean keeping two more patrol officers on the streets.
To Surprise: wrote on Feb 10, 2008 8:06 AM:In addition to the enhanced retirement, all who are now preparing to retire have had their salaries illegally bumped up so they can get a HUGE retirement. Do a little digging and see. For instance, why does Oceanside now have 3 Deputy City Managers? Michelle Skaggs Lawrence (used to be secretary to the City Manager), Don Hadley (used to be Director of Harbor), and Mike Blessing (the only real Deputy City Manager). Because of these artifical promotions that came with a significant and unbudgeted payraise, the City is hurting!
voting resident wrote on Feb 10, 2008 8:14 AM:I have a great idea. Let’s give the fighter fighters another 5% raise. Who cares about a deficit? Every government has them today. Oceanside residents don't know anything about budgets. Don't worry about overspending.
Stop Spending Whims! wrote on Feb 10, 2008 9:33 AM:This Council MEN need to stop their whims of spending. The City Manager and Finance Director can do their jobs without the input of the Council. Ms. Ferro uncollected TOT discovered. We let Builder fees slip away and now we are at build out. What a shame! Take away all credit cards of Staff and Council and use an effective purchasing procedure in ALL departments! Find the Black Holes of lost and uncollected revenue! Ms. Ferro will discover them if she takes a hard look! She doesn't need campaign funds!
To John wrote on Feb 10, 2008 9:39 AM:Dude! You need to wear a gun and uniform of the Officer or a helmet and uniform of a Firefighter/Paramedic before you go off! Try riding along with them for a week!
To Randy! wrote on Feb 10, 2008 9:43 AM:Obviously you know nothing about Robertson's! They pay sales tax in Corona where their cash register is located. Mitsubishi owns 70% of their operation! We get NO revenue unless a cash register is in this City!
Redevelopment Revenue wrote on Feb 10, 2008 9:52 AM:Money from everything in Downtown, other than a very small %, stays in the Redevelopment Department! If they pay back the money borrowed from the General Fund, plus interest, we will be real flush! Why do they still owe the money? Over 2 million + interest.
What about this year? wrote on Feb 10, 2008 10:06 AM:Because Michelle Lund severely miscalculated revenues for this year, how does the 2007-2008 actuals look? Has anyone inquired about that? How will the unbridled spending of 2007 affect the bottom line?
Let's See! wrote on Feb 10, 2008 10:34 AM:Special Interest Giveaways! $500,000. Remodel and $1. Rent for Surf Museum, $1,000,000. to Art Museum construction. Funny, almost equates to projected shortfall! Of course there are more! Council decisions run amuck!
Just like the Schools wrote on Feb 10, 2008 10:36 AM:Why doesn't Oceanside have a wage freeze like the School District?
Gone! wrote on Feb 10, 2008 10:38 AM:Finance Director, City Managers, Engineer, Fire Chief. Hopefully, their replacements won't get bogged down while picking up the pieces. Who is Mr. Wasserman anyway? Trouble shooter?
To Surprise wrote on Feb 10, 2008 10:42 AM:Now! You know it takes all three of them to turn on the lights in the Finance Department! Just before they leave employment!
To Redevelopment wrote on Feb 10, 2008 10:55 AM:Oh really, redevelopment money stays downtown? What about the $10 million plus that redevelopment is paying for low-cost housing at La Mision?
Rocky Listen UP wrote on Feb 10, 2008 10:56 AM:You don't know what you're talking about regarding the police department. Why don't you go along on a ride-a-long and see what it's really like? Oh, I forgot. They won't allow you in their police cars!
Solution wrote on Feb 10, 2008 10:58 AM:Get rid of the redundant department heads and those who aren't qualified. There are several.
Next get rid of all the new assistant City managers who are only padding their retirement. These highly paid positions are political pay-back for never disagreeing with KFC troika. Sickening and a huge waste of precious taxpayer funds.
Hey Rocky & Jerry! wrote on Feb 10, 2008 11:05 AM:You need to go meet with the Police and Fire Chiefs to eleminate your twisted views regarding Public Safety in Oceanside! Surely Mayor Wood can clue you in! It isn't all in the paper! Get real with the Crime Stats!
Redevelopment Duh! wrote on Feb 10, 2008 11:17 AM:That money came from the developers as their share of low income housing in downtown. Redevelopment has extended its boundaries to outside the HIGH RENT DISTRICT! They don't want no stinking low income housing along the beach! They hide it in the areas East of I-5! Next door is their convenient Z Market!
Council Set Funding Priorities: wrote on Feb 10, 2008 11:45 AM:The prior Council spent us into this situation along with the downturn in the economy. However, it is not where we have been but where we are going that is important. What we lack to address an economic crisis is leadership at the top. This will be a test for Mayor Wood, we will all be watching with great interest to see the leadership emerge. If past history is an indicator we will have a long wait....
Meeting Minutes! wrote on Feb 10, 2008 11:51 AM:Hey Ferro!! Get an eyball on the last years Council approved spending habits and see how well those commitments fit into your projections? At least you will see where the money went in special interests! Start collecting ALL the beach and snowbird rental TOT!
Accountability 101: wrote on Feb 10, 2008 12:11 PM:This is what happens when you have a new City Manager and Personnel Director recommending improved retirement programs that benefit both them and the Council Members voting for these benefits. All of the bargaining unit Agreements are put on the Council’s Consent Agenda, and approved without discussion. This recently occurred for the General Employees retirement enhancements and the more recent Firefighters two year contract. No discussion, no presentation, and best yet, no messy North County Times interference. We can start the corrected course by adopting a policy of full public disclosure on future Bargaining Unit Contacts, including a presentation for general discussion.
Jeff wrote on Feb 10, 2008 12:14 PM:I see that the paper only quoted Rocky and Jerry, that's because they are the only two who understand economics. The other three are lost when it comes to city finances.
Hey Marga: wrote on Feb 10, 2008 12:19 PM:Hey Marga; an issue this importantant and no quote from our Mayor Wood or your good buddy Esther Sanchez?
Jeff? wrote on Feb 10, 2008 1:23 PM:ARe you serious? If these two were so in the "know" why aren't they business owners?
You Are Right! wrote on Feb 10, 2008 1:27 PM:The same MEN now seated and who are running for reelection do not listen to Staff or the City Manager! They don't even respect the wishes of those who elected them! They do not care what any of us think about their lack of brilliance. None of them know how to read a Financial Statement let alone Staffs Reports attached!But you should read their lists of campaign contributors!
Jimmy the III wrote on Feb 10, 2008 2:11 PM:Years ago I started warning the city to prepare for this economic downturn and I was laughed at, called all sorts of names, and labelled by some as a sort of a nut. I promoted openly a slowing of projects and duel budget program scenarios, that was called dumb by the same folks who are now planning to implement it. I pointed out technologies that could do better jobs than hiring pernonnel. I was ignored. I tried to warned about this decline in every way possible privately and publicly. and gave many avenues to address the problems. I was politely listened too but my advise was ignored and the council and lead staff spent like it was no tommorrow and they are still doing it satying "oh, it's budgeted" Having a paper budget and real sources of income are two different things folks. We need a temporary freeze on city spending and hiring even for public safety and reevaluate the real sources of anticipated. The state and feds will be being hit soon and cascade effects are inevitable. And if technology can do the job let it if it is cost effective, like public safety cameras and folks be prepared for state and fed take backs. And any Candidate who promises pie in the sky stuff or wants more public safety personnel ask them how will they pay for it without affecting the budget or your taxes? It is time our leaders listen and think. Folks follow the money.....
Hmm.. wrote on Feb 10, 2008 5:50 PM:To think they were going to court the Chargers and give them Goat Hill, too. ..and they can't even come up with a measly 2 million.
Sam wrote on Feb 10, 2008 7:22 PM:I hope Feller and Chavez stop paying all are tax dollars for ENVIROMENTAL STUDIES, ETC..
BRIGHT IDEA wrote on Feb 10, 2008 7:35 PM:Let's fire the OPD and farm it out to SD Sheriff. That will save us a bundle just with the ineptness they call accidents!
Whiners Whiners Whiners!! wrote on Feb 10, 2008 10:19 PM:I never knew so many Negative Nellies and Whiners!! You guys are all not fit to live here. Oceanside has a great Mayor who is not just a camera hog. He also just quietly does his job. You all just gripe gripe gripe!! We will get through this just like we got through the other recessions. Let us celebrate the positive things and stop the whining.
To Whiners...... wrote on Feb 11, 2008 5:44 AM:I don't want to be negative either, but the signs are clear. Anyone can be MAyor when the economy is rolling along. It will be a defining opportunity for Mayor Wood to step up to the task. Rather than blindly defend him, I like so many others will be watching to see if he is made of the right stuff. I hope police management are wrong in their assessment of Mayor Wood's abilities and characture.
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