City to Make Budget Cuts Instead of Tapping Reserves

The Beverly Hills City Council opted June 3 to make cuts across all city departments to avoid dipping into its emergency reserve fund and still balance its budget for the upcoming fiscal year.

"It was equitable," said Eliot Finkel, the city treasurer. "Everybody hurts a little bit."

The city's revenue from retail stores, hotels and other businesses has fallen  drastically, according to Budget and Revenue Officer Don Harrison. That drop  prompted the need to make nearly $23 million in budget cuts over the last two years and an additional $9 million in cuts for the upcoming fiscal year. The budget for 2010-2011 contains approximately $402 million in expenditures.

"It wasn't that we had a deficit in spending," Harrison said. "We had a gap in the budget."

With an approximately $9-million gap in the general fund, the city began evaluating its 2010-2011 budget more than seven months ago with community outreach and public hearings at City Council meetings.

The Citizen's Budget Review Committee was established last year, giving city stakeholders with business experience the opportunity to evaluate the budget and offer recommendations to the council.

"The council and committee agreed that reserve funds should not be touched," Finkel said. "To dip into those in a situation like this felt unwarranted."

To maintain core city services and public safety, the council opted to reduce city grants for community service projects; add at least five furlough days for city employees; consider outsourcing maintenance work; and permanently eliminate 25 staff positions, of which more than half are currently vacant.

If the city determines that it will save significantly by outsourcing its maintenance work, then it will lay off about 20 more employees, Harrison said.

The council refused to cut weekend library hours and instead plans to close the libraries only during holiday weekends, which tend to have little patronage, to lessen the effect on the community.

The proposed city furlough days will not interfere with safety and emergency-response operations, though $1.1 million was cut from nonessential police and fire services.

By making cuts to bridge its budget gap instead of using reserve funds, the city will continue to hold the highest credit bond rating, Harrison said.

To generate additional revenue, the city plans to operate a car impound lot and increase fees  for planning, building and construction permits and for late utility payments.

With sales improving and property values at fixed rates, Harrison said the city is projecting $32 million in revenue for the current fiscal year.

"We're expecting revenues to be slightly higher in the upcoming fiscal year," he said. "The hospitality industry is coming back."