HUNTINGTON BEACH : Recession Threatens to Increase Deficit

A host of budget-tightening measures has saved the city $2.7 million this year, but the prolonged national recession has increased the city’s projected 1992-93 deficit to $6.5 million, officials said this week.

The spending reductions, including a continuing hiring freeze and postponement of most capital improvement projects, have cut the city’s shortfall for the current fiscal year to $1.43 million, Asst. City Administrator Ray Silver said. That shortfall must be bridged before the City Council approves next year’s budget in June.

The city has also saved money by nearly eliminating overtime for city employees, while city departments have been working to cut routine spending wherever possible.

The city, meanwhile, has been focusing on its 1992-93 deficit, which until recently had been projected to be about $5 million.

But as financial indicators suggest that the recession will linger--and perhaps worsen--in the coming months, the city’s projected shortfall for next year has ballooned by $1.5 million, Silver said. Declining sales-tax revenue caused by the recession has hit cities hardest, he said.

Despite the burgeoning deficit, city officials said this week that the budget picture is not dismal.

“It’s not business as usual for us,” Silver said. “We’re not crossing our fingers and waiting for the recession to be over.” In addition to cuts being made for the current fiscal year, officials have been studying ways to raise more money and cut costs for the following year, Silver said.

A citizens’ Budget Review Task Force has been established to propose ways to cover the spending gap. It is scheduled to make its recommendations to the council in January.

At the request of City Administrator Michael T. Uberuaga, directors of each city department have identified potential spending cuts, which would total $5 million.

A consultant is preparing a study of the city’s fee schedule, which will probably result in the city increasing charges for some of its services, or reducing some of the services provided, Silver said.

“We’re making a number of long-term efforts to make sure we can transition very smoothly into these (spending) reductions,” Silver said.

“Very few cities are spending this much time this early on next year’s budget. Because of that, I think we can transfer through the cuts without significant reductions in service or a dramatic increase in fees to the public.”