Los Alamitos : Official Says Budget Crisis Possible by ’92

The city will face a fiscal crisis within three years if spending and revenue continue at their current rates, the City Council was told at its midyear budget review session Wednesday.

Also at the meeting, the council postponed taking final action on a plan to install a traffic signal in front of Los Alamitos High School until its regular meeting on Jan. 22.

“The city is at a crucial point in its history,” City Manager Robert C. Dunek said. “We have been deficit spending for the last two years . . . dipping into our reserves to cover our costs.”

A solid base of reserves built up during the mid-1980s has dwindled from nearly $2 million to $1.2 million, said Gerard Goedhart, director of administrative services for the city. The city’s financial situation would be dire if reserves were to dip under $700,000, he added.

“If the status quo were to continue, by the end of 1992 we will be in a crisis situation,” Goedhart said. “I regard this present situation as a problem that needs to be addressed.”

A dramatic dip in sales tax revenue, a major source of money for the city, was cited by Dunek as the main reason for the current budget crunch.

Sales tax revenue slipped 13% in 1989 alone, according to Dunek, who attributed the decline in part to the withdrawal from the city of three industrial businesses on Winners Circle. He added that about 64% of sales tax revenue comes from the light industrial businesses in the city.

Councilman Anthony R. Selvaggi said he does not believe the closure of three businesses alone could have such an effect on the city’s budget.

“It’s like saying when people down in the PM (industrial zone) area sneeze, our budget catches the flu,” Selvaggi said.

Two specific programs were approved by the council to help boost revenue. One was a business retention program, in which city officials will become more involved in the business community in hopes of staving off any more defections, Dunek said.

The other is a neighborhood preservation program, which would help to increase property values--and therefore property tax revenue--in the city, according to community development director Mike Brotemarkle.

In other action at Wednesday’s meeting, the council postponed making a final decision on whether a signal should be installed on Cerritos Avenue in front of Los Alamitos High School.

The Los Alamitos Unified School District would have to make some improvements at the high school for the project to be completed, and the council felt the district had not given its assurance that it will do so.

“I don’t know for a fact that the school district will hold up its end of the bargain,” Councilman Ronald Bates said. “I would be concerned about spending $12,000 of our taxpayers’ dollars until we get a commitment from the district.”

For the signal to be installed this summer, the council needs to add $12,000 to this fiscal year’s budget to fund the signal’s design. The additional $80,000 needed to complete the project would then be added to the 1990-91 budget, according to Brotemarkle.