ENCINITAS: City considers increasing its reserves

Move comes in reaction to national, local economic news

By BARBARA HENRY - Staff Writer | Wednesday, November 19, 2008 10:38 PM PST ∞

ENCINITAS ---- The city plans to set aside some extra cash in case it's needed later, but won't make any other immediate budgetary changes in response to the national economic crisis.

City Council members unanimously agreed Wednesday increase the amount in a special budget stabilization fund to $2.67 million. That fund can be tapped into if Encinitas needs money later to fill gaps caused by state budget cutbacks or declines in tax revenue, city staff members said as they discussed the proposal.

"Absolutely, let's do that," Councilwoman Maggie Houlihan said after their presentation.

The city won't need to cut its current fiscal year's budget in order to set aside the money. There's a surplus left from last fiscal year that can be used, the finance department reported.

Right now, Encinitas is one of the lucky cities, staff members said. Its property tax revenue ---- the single largest source of income for the city ---- is projected to grow by 5 percent this fiscal year.

City sales tax revenue, however, isn't looking good.

Sales tax revenue generated between April and June was down 5 percent compared to figure a year ago, the report notes. City staff members said that's simply the start of the bad sales tax news.

National figures indicate that October sales were far worse, and the Christmas shopping season is projected to be dismal, city employees said.

Mayor Jerome Stocks responded that this is a great year to encourage residents to shop locally so Encinitas can hang onto the sales tax dollars.

City Manager Phil Cotton told the council that Encinitas is in particularly good financial shape when compared to other government entities, especially the county of San Diego. County officials reported earlier this week that they face a revenue shortfall of about $78 million.

That's far more money than the city of Encinitas expects to raise or spend out of its general fund in the coming year. The city is forecasted to collect $54.5 million and spend $48 million.

In other action Wednesday, the City Council agreed to encourage people who live in mobile home parks to apply for rental housing assistance programs for low-income families. The council also agreed with a staff recommendation that the city should not give mobile home residents preference in the housing programs.

The city has 921 people on the waiting list for Section 8 housing vouchers. Average wait times for people who already rank high on the application process --- the elderly, working families and people with disabilities --- already is five to six years, a staff report indicates.

Contact staff writer Barbara Henry at (760) 901-4072 or bhenry@nctimes.com.