The financial picture at the three city halls was colored by the recession that hammered the latter part of the decade. Hermosa Beach watched 15 percent of its workforce disappear in attrition, Redondo Beach laid off workers and persuaded the rest to take pay cuts, and Manhattan Beach lost workers to attrition, but continued to be buoyed by property tax revenues that refused to erode.
Silver linings
Near the end of the decade, with the recession well under way, Manhattan Beach eliminated eight vacant employee positions, including an associate planner and a plan checker, scaled back the Community Police Academy, and turned to the private sector to fund popular community events such as the Pumpkin Race, Halloween Carnival, Holiday Crafts Night, Family Kite Festival and Metlox Art Series.
Also axed were the city’s allocation to the Chamber of Commerce, and free parking at metered spots for the holidays.
But Manhattan saw large silver linings in its economic clouds.
The city emerges at the end of a decade that has sorely tried other municipalities with untouched reserves totaling about 28 percent of its $49.3 million general fund.
No layoffs have occurred, despite the attrition.
The Police Department workforce was 98 strong 10 years ago, and is 98 strong today. The Fire Department also has not lost a position.
Officials say the city’s budget has been prudently managed, and its property tax revenues have risen 110 percent since 2001, even while sales tax revenues stagnated.
“I’d have to say we’re holding our own, and if you look at our revenues, it has everything to do with property tax helping us survive,” said Finance Director Bruce Moe.
“For us, property tax is the single biggest revenue source, and even with [the last] bad couple of years, we’re seeing zero increase, but we’re not seeing a decrease,” Moe said.
Consultants tell the city that property tax revenues might even go up a couple percentage points as the new decade dawns.
The city gets about 15 cents of each of its property tax dollars – some municipalities get more and some less. Looking ahead, Moe said about a quarter of the properties in Manhattan have not sold since before Prop. 13, promising the city a revenue bump when they do sell, and are reassessed upward in value.
“Even though median prices are not what they used to be, we still expect to see some increase,” Moe said.
In the middle of the decade the city was able to pay about $28 million down when it built a sparkling $40 million police and fire facility, and over the past two years City Hall was able to give $1.8 million to the local school district.
Some revenues have declined; permits to construct or tear down buildings have dropped off sharply since 2006. There was a time, Moe said, when the city would process as many as 15 demolition permits in a single month, as people scraped properties bare to build anew, and that activity slowed to a near stop.
But City Hall has few complaints. Moe quoted longtime controller Henry Mitzner:
“When it’s bad out there it’s good here, and when it’s good out there it’s great here.”
Looking to the next decade, Moe said Manhattan will join other California cities in examining the costs of employee retirement packages.
“We do have some challenges ahead of us, and like most public agencies, some of those come in the area of pensions,” he said. “We’ll be looking closely at those.”
War of attrition
City officials in Hermosa still flinch when they recall the 1980s, the last time the municipal belt was tightened to the point of employee layoffs. And while this decade’s recession did not bring layoffs back to the city, it did bring the severest budget pain since those bad old days.
When the national and state economies began their dizzying plunge in 2007, the pain was soon felt at City Hall. Officials didn’t lay anyone off, but they watched as the workforce cut itself by 15 percent through attrition, declining to fill positions that had become vacant.
The city offered early-retirement packages to ease their payroll costs, and 11 members of the workforce took them up on it.
All city employees groups agreed to foreswear pay raises.
Although the private sector was hard hit by the economy as well, it provided a silver lining for the community when businesspeople and the Chamber of Commerce stepped in to save three iconic community events, after their funding was axed by the City Council.
The owners of respected local music venue St. Rocke took over a popular series of summer concerts at the pier, and pulled off the feat to general acclaim. The Hermosa Beach Chamber of Commerce & Visitors Bureau agreed to take over the annual St. Patrick’s Day Parade down Pier Avenue.
The owners of Spyder Surfboards took over the downtown holiday tree lighting ceremony, and expanded it with 50 tons of machine-made snow for snowboard demonstrations and community sledding.
In the last summer of the decade, City Council members pondered their thinly staffed police and fire departments as they struggled to put together a budget for another lean year.
They accepted a continued freeze of 14 vacant employee positions, including five positions in the Police Department, which council members describe as near sacrosanct in any but the toughest of times.
The Fire Department’s staffing level dropped from six firefighters per shift to five per shift.
In addition, officials continued to press for a two-tier pension system in which any new hires would receive fewer benefits than those whose pension packages are already set in stone.
The dawning of a new decade held little promise of improvement.
“Revenue growth in the general fund is flat for the second year in a row, with growth of less than 1 percent,” wrote Finance Director Viki Copeland in a June 2010 report.
“While there seems to be some sentiment that the economy will begin to pick up slightly in the beginning of 2011 and by the middle of 2011 will grow at more normal levels, there is little sign of improvement in the local economy,” she wrote, citing a March forecast by economists at UCLA.
Hard times
Redondo saw economic trouble even before the late-decade recession hit. In 2003, then-City Manager Lou Garcia quoted “philosopher” Woody Allen: “We stand at a crossroads. One path leads to despair, the other to destruction.”
But despite early-decade property tax revenue dips and state cutbacks, the private sector had generated decade-high sales tax revenues in 2007. But then the subprime loan and housing market crises struck the nation, and Redondo was not spared.
By 2009 city employees were taking 6 percent pay cuts, and in 2010 they were asked to extend the cuts for a second year, and forego a scheduled 4 percent cost of living increase.
Over the summer, the second round of wage concessions were accepted the Redondo Beach Police Officers Association, forestalling a “Plan B” by the city that would have laid off six officers. The police union was the last of the city’s bargaining groups to accept the terms.
The imminent retirement of four sworn officers would bring the city’s total to 88, down from 103 officers in 1986.
A total of $3.6 million in salary concessions saved the city $3.6 million, covering the lion’s share of a $7.4 million budget gap.
The lagging economy continued to drag down city tax revenues almost across the board. Sales tax revenues were down from a 2007 peak of nearly $11 million to $8.1 million in 2010. Hotel “bed taxes” were stagnant, and property tax revenues were projected to decline for the first time in decades, largely due to a drop in Proposition 13 property-value calculations.
A half-dozen employees were laid off in 2009, and in 2010 nine more fulltime positions were eliminated, although all but two of them were already vacant.
In the last days of the decade, City Manager Bill Workman lamented that state officials have failed “to have proactive economic development programs, and instead created massive deficits and unfunded liabilities for cities and counties and schools.”
But he praised city employees for achieving “high levels of productivity” even as a smaller workforce.
Workman cited as significant to the economy the recent passage of a ballot measure with harbor zoning parameters.
“Locally, the passage of Measure G is one of most major actions that has taken place in the last 10 years. It means revitalization of the harbor,” he said. ER
