Murrieta's budget good through June

By: NELSY RODRIGUEZ - Staff Writer
Mid-year review shows revenues down, but bank of reserves strong | Monday, March 3, 2008 11:01 PM PST ∞

MURRIETA -- Nearly three-quarters of the way through the budget year, the city is holding strong against a tightening economy and a hobbled real estate market, financial officials say.

Despite receiving about $2 million less in revenues, Murrieta will still end the year with a healthy revenue picture for the fiscal year ending June 30, according to staff reports.

After projected general fund expenditures of nearly $43 million, $6.9 million in revenue will remain in reserve for "a rainy day -- and they happen all the time," said Finance Director Suzanne Wellcome.

Specifics on the revised projections for the end of the year will be discussed today by the City Council at 7 p.m. at City Hall, 26442 Beckman Court.

"Murrieta has very solid, fiscally prudent reserves," Wellcome said in an interview Monday. "Compared to many, many other cities, I think Murrieta is in decent shape."

Wellcome estimates Murrieta will feel its most painful pinch in sales tax revenue. She expects sales tax revenues, which were originally projected to reach $14 million this year, to drop to $12.8 million. Some of the loss is expected to come from reduced sales in home furnishings, home improvement supplies and appliances, the staff reports state. Also, vehicle sales have been hit by the economy and now are expected to produce $100,000 less than anticipated.

Those figures coincide with the declining housing market. City analysts are predicting the median home price in Murrieta to drop from $460,000 at the beginning of the fiscal year to about $440,000, staff reports state. The median price hasn't fallen more probably because homeowners are holding out on selling until they aren't going to take a loss, officials said.

"They've probably got a target price in mind and I think they prefer to hang on," to the asking price, Mayor Rick Gibbs said.

Revenue from property taxes is expected to increase slightly, but receipts from supplemental property tax and property transfer taxes are expected to come down by 4 percent. The city expects to receive about $300,000 more in property tax revenues than estimated, in part because the city was overly cautious in its expectations, Wellcome said.

"The only pleasant surprise was that the property tax that we're getting was a little bit more than anticipated," Gibbs said. "I had expected that we were going to take a little harder hit and that hasn't manifested yet."

However, the city is reducing its estimate for incoming property transfer tax revenue by $337,500 -- an indication that the real estate market has slowed locally, Wellcome said in the report she prepared for the council.

The city predicts $2.1 million less revenue through the end of June.

With the move to a new City Hall this month, city spending will increase slightly from what was originally expected. Wellcome expressed the need for an additional $71,566 for janitorial services at the new building, $67,200 to replace computers and other office equipment, and $130,000 to contract an accounting manager and specialist to bring the city up to date with required infrastructure and capital assets.

The employee payroll also will increase, Wellcome said, including the addition of $260,000 for city attorney services, totaling $600,000 for the fiscal year, and another $100,000 to correct the salary budget for an interim city manager position, since that role was filled longer than anticipated last summer, Wellcome said.

The redevelopment department needs an additional $393,800 to buy land, develop housing programs, analyze foreclosures and track affordable housing projects, she noted.

Some departments were able to cut their expenses this year, which helped offset the cost of increased spending in other departments. While development fees for the city are expected to fall $856,718, the building department and the public works department were able to shave $400,000 off their expenses.

Wellcome also included in the mid-year adjustment three new full-time positions -- a senior housing analyst, a full-time police dispatch position that would replace two part-time dispatch positions, and a senior recreation leader position, which would also be two part-time positions rolled into one.

"We're still down a couple of million, so that just means we're going to have to tighten our belts a little bit," Gibbs said.

-- Contact staff writer Nelsy Rodriguez at (951) 676-4315, Ext. 2626, or nrodriguez@californian.com.