San Clemente's Budget Will Have Razor-Thin Surplus; Redevelopment Is In Limbo

City finances are looking good despite the sluggish economic growth in California and across the nation, City Manager George Scarborough reported Thursday to the City Council.

Scarborough said, however, that the city redevelopment agency budget had dipped into the red, in part because of Pier Bowl improvements. Officials anticipated that redevelopment coffers would be restocked in coming years by tax revenue from taxes in the Pier Bowl redevelopment district; however, that expectation could prove unfounded if the state of California cuts funding to redevelopment agencies as Gov. Jerry Brown has threatened. Should that happen, the city's general fund will have to bear the extra expense, Scarborough said.

Finance officials are budgeting for $114.3 million in spending on operations, capital projects and other items in fiscal year 2011-12. The projected revenue is only $153,000 more than the budgeted expenditures, leaving a razor-thin margin for  error to maintain a balanced budget.

“This is the smallest surplus in a budget this size I’ve ever seen,” Scarborough said, who added that revisions will almost certainly be necessary once the city finds out how much in taxes it is actually collecting throughout the year.

“This is not an exact science,” Scarborough said.

Excluding fund balances and one-time expenditures on building projects, Assistant City Manager Paul Gudgeirsson said the city’s revenue is projected at 16 percent less for the 2011-12 fiscal year than 2010-11, but that’s because of the one-time sale of the land on which the new Target will be built.

That sale brought in about $13 million. Part of that money—more than $4 million—went to pay off debts associated with the city’s employee retirement plan, meaning the city is in better shape because it’s avoiding years of interest payments.

City Engineer David Rebensdorf said the city spent $95.1 million in 2010-11 on such capital projects as road rehabilitation, the La Pata-Vista Hermosa Sports Park, the new fire station and senior center, the T-Street overpass rehabilitation, Upper Chiquita Reservoir and dozens of other projects.

The fiscal 2011-12 budget sets aside only about $10 million for capital projects, consisting mostly of improvements to existing facilities and infrastructure, including  beach bathrooms, sewer mains and playground equipment, Rebensdorf said.  Most notably, the city plans to perform a historical renovation on the Ole Hanson Beach Club for $1.5 million.  According to Rebensdorf, the work is necessary because water has leaked through the roof and roof deck, damaging some of the wooden beams.

The City Council is slated to officially approve the budget at its meeting June 7.