New Council, Old Foe: Huntington’s Deficit : Budget: Fee hikes appear remote, officials say. Job attrition should help make up the shortfall.

HUNTINGTON BEACH —  The City Council next week will pick and choose between cutting jobs and raising fees and taxes to cover a $900,000 deficit that was confronting them even before the Orange County bankruptcy hit.

The council members Friday received various financial scenarios from city administrators, who are assuming that the city also may lose as much as $800,000 in interest payments from the $43 million it has in the county’s frozen investment pool.

However, the special budget session Wednesday will deal just with the original deficit in the 1994-95 budget, said Richard Barnard, deputy city administrator.

“The city has a really tough task ahead of it,” Mayor Victor Leipzig said. “If you look at the worst-case scenario, things could be grim. But I think the county fiscal crisis is going to be resolved so the city does not face massive layoffs.”

Leipzig said he does not believe the council will consider the raises in taxes or fees being proposed by the city’s financial officers.

Some of the revenue-generating ideas on the list include an increase in annual business license fees from $75 to $85 and a raise in the utility tax from 5% to 6%. A $1-per-billing increase in garbage collection fees could generate about $500,000 in new revenue, the staff report suggests. The report also recommends, among other options, an annual $39 business license on single-family homes that are rented out.

Leipzig and some other council members said that any such fees or taxes are remote at this point.

“My own feeling is the city is not ready to raise any taxes to any extent,” he said. “I don’t think the mood of the community or the council would support that.”

Instead, the mayor pointed to the boon the city has in retirements this year; 40 to 60 employees are expected to leave.

“We’re going to have a significantly smaller staff in 1995,” Leipzig said. “If we simply do not fill those positions, we should be able to get by on existing revenues. . . . I’m suggesting that we freeze (staff) at our current levels.”

Councilman Ralph Bauer agreed that taxes would be the last resort for closing the deficit and that any cuts probably would not result in layoffs. “We are a very lean city already,” he said.

The current council (three new members were seated in November) inherited the deficit in December after four successive quarters of decreasing revenue from sales taxes without concomitant spending cuts, Councilman Dave Garofalo said. For example, the last council had voted to hire eight additional police officers “without a clear analysis of the funding available,” Leipzig said.

City administrators are recommending that the council drop the plan for eight additional police officers. They also suggest not replacing a captain and a lieutenant who are retiring from the department.

Garofalo said the council will spare “no sacred cows” during the budget session, but that he will fight to save small but meaningful expenses such as a $3,000 item for buying band uniforms. He will try to save other recreational and human services, he said.

“I think the logical solution is not to hurt everybody but to isolate major programs that are capital-intensive in nature,” he said. One such item might be the $54,000 the city has budgeted to replace signs, he said.

Garofalo also said he will suggest borrowing money because he believes interest rates will continue to rise. But he would not agree to any raise in fees or taxes. “That would be the final blow,” he said.

Barnard said the city’s administrators are not expecting any final decisions from Wednesday’s meeting, but they hope to get some direction by proposing every available scenario.

“This gives the new council an opportunity to see what the old council did and ask, ‘Do we want to maintain this?’ ” he said.