The Lakeport City Council approved a series of staff recommendations to deal with the budget shortfall during a budget workshop held before its regular meeting on March 24. Councilman Jim Irwin was absent for the discussion.
Before the council was a staff report submitted by interim City Manager Kevin Burke, outlining suggestions for spending reductions and alternative revenue to meet a budget gap of about $400,000.
The city's 2008-09 budget included a $400,000 line of credit as a potential source of revenue, but the council decided in previous meetings that they didn't want to draw on that line of credit, which was never set up.
Councilman Bob Rumfelt said he was surprised to see the budget issue raised again, because he had thought the council had settled on how to take care of it, including scaling back on spending.
Burke explained that his report included both the original budget recommendations and some new information, specifically additional funds available through the Regional Surface Transportation Fund.
His report laid out the latest on the city's financial situation, including a savings of $40,000 due to employee furloughs and a clerical error that unnecessarily allocated $17,000 in one budget area, which resulted in an approximate budget gap of $343,000.
That shortfall, said Burke, could be addressed in a variety of ways.
He said staff recommended that the city not draw down any of its funds through the sale of city property.
Instead, he proposed restructuring the Safe Routes to School grant – to be used for street improvements to Lakeport schools – and using $280,000 from the the Regional Surface Transportation Fund to advance for the project instead of using general fund money. Burke would then use general fund money previously allocated for the project to cover the rest of the budget gap.
Burke's report outlined other department head recommendations, including implementing the “golden handshake” early retirement option, which would realize only small savings this year but would see $161,000 in reduced personnel costs over the two fiscal years after it's implemented.
The staff also suggested suspending paving activities in the city for the remaining three months in the fiscal year, which would save $55,000, and freeze citywide travel and training, for another $15,000 in savings.
All told, Burke said all of those proposals would result in $350,000 to apply toward the $343,000 gap.
City department heads have been extremely conservative in their spending this fiscal year, said Burke, which will help create a buffer if revenues – such as sales tax – fall significantly short of what's expected.
Burke emphasized, “Staff never had any intention of using that line of credit.” He said staff never applied for it.
Mayor Ron Bertsch didn't want to see paving suspended. He said the money in the paving account hasn't been spent in the nine months of the current fiscal year, and he wanted to know why.
Public Works Director Doug Grider wasn't at the meeting, so Burke explained that last summer and fall there was a lot of paving going on, especially along Highway 20, and Caltrans ended up taking most of the area's available asphalt. “It was a great frustration on Doug's part.”
Grider had voiced that frustration to the council last year as part of regular reports to the council.
Councilman Roy Parmentier, who is a member of the Lake County City/Area Planning Council, said that council sent a letter to the state about the asphalt issue, adding that Caltrans didn't care.
Bertsch had suggested freezing some other city accounts, but Burke said if they did it could make city operations extremely cumbersome, with the council essentially becoming department heads and needing to approve everyday purchases from paper clips to bullets. “We have routine expenses from those categories.”
Rumfelt supported approving the staff recommendations. “We don't need to tie everybody's hands. Once we've got rid of that $400,000, let's move on.”
Bertsch said he didn't want to suspend the paving, and Burke admitted it was a hard choice.
Parmentier said he went through the budget and found more than $100,000 in potential cuts. “There's a lot of stuff that's in here that doesn't need to be in here,” he said.
Burke said that, overall, the budget is a good representation of the city's funds.
Rumfelt moved to accept recommendations, with Council member Suzanne Lyons seconding the motion.
Bertsch said the next three months may be the only time the city is able to do any paving. Burke suggested that the $55,000 in proposed savings by not paving is small enough that the city's continued conservative spending could absorb it if the council wanted to see paving continue.
Rumfelt amended his motion to remove the paving suspension from the list of recommendations, with Lyons again seconding. The motion was accepted 4-0.
Next up for city staff, said Burke, is beginning work on the 2009-10 fiscal year budget, which will go into effect this summer.
E-mail Elizabeth Larson at
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