ENCINITAS - One year go, as the city headed into election season, Encinitas officials warned voters that without subsidies from property owners, a state-mandated clean-water program could cost them services.

The prediction, however, has not materialized.

Last week, the city's Finance Department unveiled a $53.4 million spending plan for the coming fiscal year that absorbs increased costs that Encinitas must pay to test and treat the water that flushes from its storm drains.

The budget would provide money for new programs and employees and build cash reserves to an all-time high.

General fund revenues in 2007-08 are estimated to grow by $2.4 million, or 4.7 percent. And at the end of the coming fiscal year, which begins July 1, a $4.1 million surplus is projected.

Looking ahead, a six-year financial forecast shows continued surpluses in the operating budget despite increased costs of the clean-water program.

New programs and people

Finance Manager Jay Lembach said that during the build-up to Proposition C last year, the city underestimated its income projections.

The proposition asked property owners whether they would pay $5 a month to offset the costs of the clean-water program mandated, but not funded, by state and federal authorities.

Voters answered with a resounding no. Sixty-one percent of them in March 2006 rejected Prop. C.

After the tally, former Mayor Christy Guerin said the program would be stripped to its leanest components to assure compliance with the federal Clean Water Act.

"Needless to say," former City Manager Kerry Miller said at the time, "we'll be tightening our belts."

Instead, Lembach said last week, "property tax revenue has been growing at historically high rates. Higher than we expected."

As a result, the 2007-08 spending plan shows that the city can afford increased law enforcement services and a satellite-based mapping of the city. Also proposed is $100,000 to contract a coordinator for three existing Highway 101 merchant groups and a one-time payment of $91,000 for the Encinitas Chamber of Commerce to furnish a new visitors center.

The projected revenue increase follows a recent pattern: from fiscal years 2004-05 to 2005-06, the budget increased by $1.4 million, or 3 percent, from $46.5 million to $47.9 million; from 2005-06 to 2006-07, it increased by $3.1 million, or 3.1 percent, from $47.9 million to $51 million.

The operating budget, or general fund, pays for employee salaries and benefits, materials and supplies, contract services and debt payments.

It also pays for increasing costs of the clean-water program. Next year, the city expects to pay $1.6 million to meet the state and federal mandates. That's a $326,000, or 26 percent, increase from the present year's costs.

Much of the growing cost would be tied to salaries for two new city employees, as well as one full-time and one part-time contract employee, assigned to the clean-water program.

The budget also earmarks $29,000 to pay for a new, off-road vehicle so that the proposed "stormwater environmental specialist" can complete his or her job requirements.

"We want to keep our oceans clean," said taxpayer advocate Bob Bonde, one of Prop. C's most vocal opponents. "But I wonder if we need all of the positions or if this is just leading us down the pike so they can justify asking us for more taxes in the future."

A leading supporter of the measure, Steve Aceti of the California Coastal Coalition advocacy group, said he and other backers anchored their campaign to income projections that showed the city would need the fee to meet clean-water requirements.

"If the city hadn't been so fortunate (with its property tax receipts) there would have been a need for the clean-water fee," Aceti said.

Flowing costs

With or without the fee, ever-increasing clean-water requirements are driving the need for more employees and equipment, said Kathy Weldon, the city's stormwater manager.

"We have to do it," Weldon said of expanding the program. "There's no debate about it."

The mandates Encinitas faces are spelled out in a permit issued by the San Diego Regional Water Quality Control Board.

To comply, the city must ensure that runoff washing from streets and storm drains meets purity standards before entering lagoons, creeks or the ocean.

A city report outlines the new clean-water requirements:

• New commercial or residential buildings would be subject to continued inspections to ensure polluted stormwater does not leave the property.

• All commercial, industrial and municipal facilities would be subject to routine inspections.

• Plans to prevent stream erosion must be developed.

• Bacteria levels at Moonlight Beach must not exceed certain thresholds. Monitoring and reporting requirements are heightened.

• Bacteria, sediment and nutrient levels within San Elijo Lagoon must not exceed set levels. Eight cities within the Escondido Creek watershed would share increased monitoring and reporting responsibilities.

The mandates come on top of existing pollution-monitoring, reporting and cleanup requirements.

Every workday, city workers fan out to maintain and inspect the city's 22 miles of channels and 180 miles of storm drains. A specialized truck equipped with high-pressure hoses power-washes storm drains and sucks the wastewater into its holding tank for disposal at a treatment plant.

The city also owns a truck equipped with wheeled cameras that search the insides of drain and sewer pipes for debris and damage.

Street sweepers collect waste and silt before it washes into storm drains, and technicians collect samples of creek, lagoon and ocean waters and send them to laboratories for testing.

"All we're trying to do is get into the city budget what the permit is telling us to do," Weldon said.

- Contact staff writer Adam Kaye at (760) 943-2312 or akaye@nctimes.com.