South Lake Tahole walks tightrope in budget balancing act |

South Lake Tahole walks tightrope in budget balancing act

The city of South Lake Tahoe walks a tightrope as it juggles finances in an effort to balance next year’s budget.

Faced with lean times, the city got a jump on the situation by holding a preliminary budget workshop Tuesday at council chambers, where City Manager David Childs presented his suggestions to staff and council.

“This is an attempt at showing the real cost of running the city,” Childs said.

The plan he presented, which showed the city’s actual funds at $16 million, calculated that the current cost to operate the city is $20 million. While presenting an unbalanced budget to the council, Childs had a list of 12 suggestions to make the budget work. The plan included continuing to fund reserves for retirement and medical, looking at ways to cut cost, and figuring how to enhance revenues.

Childs suggested that over-projection of revenues in the past has put the city in a tough position, but one he feels can be remedied.

Suggested budget cuts totaled $1.8 million and the rest of the nearly $4 million difference came from transfers and enhanced revenue. The suggestions left the budget about $100,000 shy of being balanced, but Childs let the City Council know that he was open to suggestions.

“I’ve used all my best ideas,” he said.

Also, Childs proposed to the council that it work together to come up with a five-year plan by spring, prior to the next fiscal year.

The strongest source of revenue from the city would come by transferring funds from the California Public Employees Retirement System, the retirement fund used by city employees. CalPERS officials have told cities statewide that, at this time, they would not have to make contributions to the system. However, the situation is subject to change depending on the status of CalPERS investments. In response, the city has continued to budget for that fee and has since collected nearly $1 million.

The council could take $900,000 of that surplus and transfer it to the general fund. Many of these dollars could potentially be used for Capital Improvement Projects, although general fund monies could be used at the discretion of City Council. The council would also take $100,000 of those funds and put them towards a health care benefit reserve.

While councilwoman Brooke Laine demonstrated a concern about depleting the CalPERS reserves, it was determined that since the city was already budgeting for that cost, it was safe from a backlash should payments be required in the near future.

Health care costs posed a more immediate concern, because of their extremely high rising interest rates – 12 percent to 14 percent per year – while inflation is only increasing 3 percent a year, Mayor Tom Davis said.

The proposed plan called to fund organizations such as The Women’s Center, Tahoe Arts and Sierra Recovery at the same amount as last year and not a penny more. The plan would not include any new organizations.

The total funding for these private groups totals $64,900, but Councilman Bill Crawford suggested that these groups be eliminated from the budget entirely.

“I am obliged as someone from City Council to come up with a budget that is dedicated to city services first,” he said. This however caused a heated response from his fellow councilmembers.

“You act as if we should narrow ourselves down to police, fire, snow removal and these community services which are not a core part of the city should be excluded,” said Councilwoman Judy Brown.

It was also argued by Mayor Tom Davis that these organizations play a vital role in our community. But he also suggested that if these organizations needed to be phased out, the city fund the organizations this year under the proposed plan and the process begin in the following budget year. Each group could be phased out at a 25 percent reduction per year to give them time to adjust, he said.

Brown, however, balked at the idea and called for a public hearing on the subject, a hearing that would have to occur after this year’s budget is finalized in October.

Another major funding source comes from $437,419 that was left over from undesignated funds from the 1998-99 budget. These additional monies would most likely be used for Capital Improvement Projects.

Other transfers and cuts were included, but were not as prominent.

Other adjustments will have to be made to figures provided for the airport. Figures that councilmembers agreed were overestimated.

“I hate to be a doomsayer,” said Councilman Hal Cole. “But I don’t think we will get $20,000 from the (airport) restaurant and $6,000 from the gift shop.”

The restaurant space at the airport is vacant, though it will go out to bid next month, said Airport Manager Rick Jenkins.

Although not discussed in detail, the plan suggested possible increases in Transient Occupancy Tax, a 2 percent increase could net the city $1.8 million annually and the possibility of utility user fees. Both issues could generate a strong debate.

The plan also mentions the possibility of increasing taxes and fees that have been unchanged for years. This, however, would require voter approval.

No official decisions were made at this workshop. A budget hearing will be held Sept. 12.

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