While the city predicts it will remain in a fiscal deficit for the next four years, Mayor Richard Montgomery kept a positive outlook Tuesday and said that while conservative planning has allowed the city to maintain most of its services, careful cost control is essential to forge ahead.
Montgomery addressed a packed room during his State of the City address, put on by the Manhattan Beach Chamber of Commerce and held at the Belamar Hotel.
He said that while the city had a $32,000 deficit last fiscal year, more than $14 million in reserves and the maintenance of the city’s AAA bond rating – one of only two cities in the state to maintain the rating from all three credit rating agencies – are a testament to its careful fiscal planning in years past.
“We’ve been very lucky,” Montgomery said. “Our ultra-conservative planning pays off.”
While general fund revenues have overall increased 36 percent during the last decade, they’ve gone down five percent, or $2.5 million, over the past two years. Expenditures increased by 58 percent over the last decade, with an 8.9 percent reduction, or $4.8 million, over the past two years, Montgomery said.
Revenue sources that have decreased over the past couple of years include licenses, permits, interest, rent fees, and sales, business and hotel taxes paid to the city. However, recent hotel bed taxes and retail sales activity were both up, according to Montgomery. The city also anticipates an extra $300,000 per year from a tax revenue-sharing plan it approved last year with Dewitt Petroleum.
Property taxes — the city’s largest revenue source — remain flat with very slow growth. The city’s largest expense – labor – makes up 70 percent of its general fund budget, with the cost of employee pensions and medical benefits on the rise.
“Cost control is the name of the game,” Montgomery said.
While the city eliminated eight staff positions over the past two years without resorting to layoffs, Montgomery said it will look for ways to cut expenses during labor negotiations with the teamsters, police and fire departments this summer. Recently, Montgomery said that a two-tiered retirement pension system would likely be considered.
“We can’t keep paying what we’ve been paying in the past,” Montgomery said Tuesday. “Everybody knows that. We need to find an agreement that works for everyone.”
“Our assumption is no pay or benefit increases after the [current labor contracts] expire,” said City Manager Dave Carmany. “One of the biggest things is pensions.”
Next week, the city will award its largest contract – a roughly $22 million, seven-year waste hauling contract – to one of three firms that submitted bids last year, including Athens, Crown and Waste Management. Montgomery said that the City Council will focus on the cost and scope of services provided by each company, as well as the rate at which each diverts trash to recycling, in its selection process.
The city also hopes to fill its police and fire chief positions by spring, Montgomery said. MBPD Chief Rod Uyeda announced his retirement last November, while the city has managed with an interim fire chief for almost a year. The city recently hired Bob Murray and Associates to recruit a new police chief, while the fire chief replacement will be handled in-house, according to Carmany.
Looking ahead, Montgomery discussed plans to move forward with the widening of the Sepulveda Boulevard Bridge from three lanes to four just south of Rosecrans Avenue. The project is expected to be completed by 2014 with a projected $17.3 million cost, which will be funded by monies earmarked for transportation, Montgomery said.
A new, state-of-the-art, 22,000 square foot county library in the city is expected to be completed by 2012. The project will be funded by the county through excess property taxes set aside in a library fund for the city. Montgomery said that technologies that will be available in the new library may reduce operating costs by minimizing staffing needs.
Montgomery said that the city will also look for ways to better accommodate seniors, but that services provided to them have “quadrupled” since 2005. At a meeting last week, the City Council approved $718,000 in work at the Joslyn Community Center., where senior activities are often held.
The mayor called last year’s reopening of the sand dune at Sand Dune Park and the implementation of an online reservation system a success, deeming it a fair compromise to all parties interested in whether the dune remained opened or closed. He said that the former traffic and noise problems that plagued the neighborhood surrounding the park had been mitigated and that 80 to 100 reservations are made for the dune per day.
The city will continue to consider implementing a trolley system that will connect the east and west sides of Sepulveda. It will also explore the possibility of leasing property from the Manhattan Beach Unified School District.
Preparations for the city’s 2012 Centennial Celebration and a remodel of the Manhattan Village Mall are also on the horizon.
Building activity in the city is stabilizing, Montgomery said, with new construction taking a back seat to remodels. The 2010 median home price in the city was $1.5 million, up 9.1 percent since 2009, but still eight percent below the 2007 median price of $1.63 million.
“We are having the exact same problems in L.A.,” said attendee Los Angeles City Councilwoman Janice Hahn, who this week announced she will run for U.S. Congresswoman Jane Harman’s soon-to-be-vacant seat (see story on p.14). “It’s very impressive. This is a very well-run city. You’re losing money like all cities. But you’ve kept a conservative grip on this city. Kudos.”
The City Council is scheduled to award its waste hauling contract and discuss its mid-year budget report at its regularly scheduled Tuesday, Feb. 15 council meeting. For more information, visit www.citymb.info. ER
