SAN JUAN CAPISTRANO : City Adopts Budget With Tax Increases

Hours before the Wednesday deadline, the City Council adopted a $10.9-million budget for the 1992-93 fiscal year that includes several tax increases and the layoff of one city employee.

Tuesday’s unanimous vote allowed the city to start the fiscal year with a budget intact, although council members expressed fears about having to take additional action if state revenue cuts are made later this summer.

“We met the requirements of the law by adopting a budget by the end of the fiscal year, but we really can’t do any planning right now,” said City Councilman Kenneth E. Friess. “This budget is only good until the state decides what it will do.”

To balance the budget, the council was forced to eliminate one staff position in code enforcement, a move that wiped out a potential $51,000 shortfall.

“Fortunately, this person left under good conditions, meaning he will have another job,” Mayor Gil Jones said. “Hopefully, we won’t have any more layoffs, but we know more cuts are coming.”

Under a worst-case scenario outlined by the city staff, the city could lose $1.2 million of its annual state revenue--mostly property taxes and motor vehicle fees--and be forced to lay off 12 of its approximately 70 employees.

“We think that’s far-fetched and extremely unlikely, but we have to be prepared,” Jones said. “This is a very difficult process. It’s kind of like trying to plan a household budget without knowing if you will have a job or a payroll check.”

Cuts in police services and City Hall hours are also possible, although “highly unlikely,” Jones said.

To balance the budget as it is, the council already approved some minor tax increases including a hike of the city bed tax from 8% to 10% of the price of a hotel or motel room. City officials hope the increase will bring another $20,000 in revenue in the coming year.

The council also raised fees paid by local businesses by removing a $125 cap on a tax based on the number of their employees, a move that is expected to generate $18,495 annually. Businesses will now pay an annual tax of $25 for their first employee and $5 for each additional employee. There will be no cap.

The $125 cap on the annual per-unit business license tax on all apartment houses, mobile-home parks and recreational vehicle parks was eliminated, a move that is expected to generate $8,000 annually. From now on, a $15 tax and a $5-per-unit tax on all units or spaces in excess of four will be assessed.

Such taxes will become more common, Jones said, because cities will be forced to generate more of their own revenue.

If the city cannot find ways to generate more revenue, however, City Councilman Jeff Vasquez said he would rather cut employees’ pay than lay them off.

“My philosophy is to redivide the pie instead of laying people off,” Vasquez said Wednesday. “Unfortunately, we are now forced to deal with the spending spree in this city of the 1980s.”