MURRIETA -- Estimations of how much money Murrieta would pull in during the last fiscal year were left in the dust as the city finance director announced Murrieta received about $2 million more than it had expected.

All but $400,000 already has been earmarked to be spent in the upcoming months.

Finance Director Suzanne Wellcome told the City Council earlier this month that the city's revenues for the fiscal year that ended June 30 exceeded expectations.

In June, the council approved a roughly $40 million spending plan for the city for this fiscal year. The surprise influx of $2 million is the equivalent of a 5 percent increase in revenue.

Some of the unforeseen revenue came from a growing number of residents buying their Internet, cable and telephone plans as a fiber-optic bundle from Verizon, leading the telecommunications company to pay the city higher franchise fees to the tune of $665,000, according to city reports.

Other sources of the money were smaller but added up, said Teri Cordoza, a city budget analyst.

Although the surge in revenues is good news for the city, one councilman said he believes the money should be tucked away for a rainy day.

Despite that sentiment, the council agreed earlier this month to spend all but $400,000 of the unanticipated revenue.

Much of the $2 million will be used to update an archaic city accounting system and to hire a director of human resources.

Currently the city employs a manager of human resources, who works closely with City Manager Rick Dudley. City officials say a director is necessary for bargaining negotiations, risk management and insurance issues. The city set aside $125,000 to hire for that spot.

"I think the HR director position is absolutely crucial," Mayor Rick Gibbs said Tuesday. "So much of what you do in city government is based upon HR direction."

The city also will open a position for an economic development manager, who would work under Bruce Coleman, the director of that department,and whose salary will be funded by that department having shaved expenses by $415,000 this fiscal year, city staff reports state.

The manager will help Coleman attract businesses to Murrieta, retain the businesses that are already here and help redraft the overall map of land use in the city, said Councilman Gary Thomasian.

"Bruce is kind of spread pretty thin right now," Thomasian said. "He's one person and it's hard for him to be two or three places at once."

The city also will use up to $1 million to buy new accounting software to replace the city's outdated Disc Operating System, a program that saw its heyday in the 1980s and mid-1990s. The software is "maybe as old as the city is," Wellcome said.

Another $500,000 of the unanticipated money will be earmarked for a potential increase in rates the city pays to the California Public Employees Retirement System. That agency pays retirement benefits to former city employees, and city officials are expecting that a rate hike could kick in during the 2011-12 fiscal year, city reports state.

The city also plans to set aside $60,000 toward the establishment of an AM radio station for the Murrieta Fire Department to transmit emergency information.

Though the city will fill several holes in its operations and still retain about $400,000 in reserve, Gibbs expressed concern about approving expenses that had not previously been written into the budget, particularly because of the downturn in the national economy.

"Each department needs to do such a competent job on their budget that they are comfortable that when they turn it in, it's good for at least six months," Gibbs said.

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