This came in from Irvine Mayor Sukhee Kang this morning.Â It’s a responsible budget that draws on the city’s rainy day fund while holding costs down and not cutting city services – an enviable position compared to many other cities in California.
From the Mayor:
“I’m pleased to announce that the City Council has adopted the fiscal year 2010-11 City budget of $135.8 million during the June 15 regular meeting. As you may remember, at the beginning of the recession, the City Council outlined a “Four Pillars” approach for responding to decreasing City revenue as a result of the faltering economy: no material reduction in core services; no tax increases; no staff layoffs; and no pay raises. In accordance with these priorities, the adopted budget reflects our firm commitment to fiscal responsibility, effective management of the City’s planned development, as well as high quality services to the community in the face of the recession.
The budget bases its projections on lower-than-expected FY 2010-11 operating revenues.
- Sales Tax revenue is budgeted at $40.6 million, 27 % below its peak in FY 2007-08.
- Property Tax revenue is projected to remain flat for the third consecutive year at approximately $43 million.
- Transient Occupancy Tax revenue, budgeted at $7.2 million, has experienced a significant decline of 23% from its FY 2006-07 peak.
Amid these drops in City revenue, General Fund operating revenues are budgeted at $119.6 million, compared with expenditures of $135.5 million. The gap is bridged by $14 million from the City’s contingency reserve; a variety of smaller transfers into the General Fund to reimburse it for services provided to other funds and fund/project close outs; and one-time expenditure reductions/deferrals.
Revenue estimates are conservative and reflective of the expectation that City revenues will lag any larger economic recovery. While reserves and transfers ultimately balance the FY 2010-11 budget, the City also reduced General Fund expenditures by $12.8 million, or 8.6%, from FY 2009-10, using vigorous cost containment strategies. All City departments worked together to come up with this budget cut by efficiently consolidating manpower and re-evaluating key projects.
Budget highlights include:
- Eliminating 30 vacant full-time equivalent positions ($3.2 million savings)
- Reducing conference, training and professional development budgetsÂ
- Transferring expenditures of $1.5 million from the General Fund to the Lighting, Landscape, and Park Maintenance (LLPM) Fund
- Suspending the annual $1.1 million transfer from the General Fund to the Compensated Absences Fund
- Utilizing $1 million from the Systems Development Charge Fund to pay a portion of the final Civic Center debt service payment
- Funding $1 million of the Northwood Community Park modernization and expansion with Bowerman Landfill funds
In addition, the City Council voted to include theÂ following allocations from the unallocated General Fund balance: $100,000 to Legal Aid Society; $100,000 to the Barclay Theatre as a grant and an additional $75,000 as a challenge match grant; and $15,000 forÂ a concert in the park.
The City’s budget balancing choices have been made according to the Bridge Plan adopted at the onset of the recession. It uses reserves and directs strategic expenditure reductions over a three-year period to balance the budget while preserving core services. Although the recession has been deeper than anticipated, the City remains on-track with its Bridge Plan contingency reserve projections despite lower-than-expected revenues.Â
Looking ahead, weÂ see positive signs of economic recovery. According to the latest data,Â sales tax revenueÂ improved 5% compared to that of 2009 in the first quarter of this year. According to the Irvine Chamber of Commerce, hotel revenues for April and May this year also rose about 20% from the same period last year. All this, combined with successful launching of new housing developments by the Irvine Company, signals a brighter financial future for our community in the coming months.
I would like to acknowledge City staff who work so hard to continue to provide high quality services to the community in this difficult time, and particularly thank the Budget Office and the Departmental Budget Coordinators along with the City Manager for their extraordinary work coming up with this budget plan.Â