Beverly Hills will start the new fiscal year with a balanced budget and a projected increase in revenue, officials told the City Council on Tuesday. But in a troubling sign, overhead costs continue to rise and outpace the city's income.
"A majority of the city's operating costs are labor [so] any meaningful budget changes will involve employee salary and benefits through negotiation with employee associations," City Manager Jeff Kolin said at the first of several budget study sessions scheduled by the City Council.
Total general fund revenues for the next fiscal year—which begins July 1—are projected to be $164.5 million, up slightly from last year.
Before recent budgeting adjustments made by the city's financial staff, the city had projected a deficit for fiscal 2011-12. and was later adjusted to $4.5 million, according to the city manager's presentation.
Pension benefit increases totaling 20 percent will cause a "significant impact" to the General Fund over the next two to three years, he said. "Of that $4.5 million gap that we started with, nearly $3.4 million of it is retirement costs."
The city manager also noted the budgetary effect of the continued rise in health care costs. "In the headlines we've been reading about very large percentage adjustments that are being at least requested by many of the insurance companies," he said.
Despite a sluggish national economic recovery, the city's revenue is projected to increase by 1.3 percent, Kolin reported. Combined with the effects of budget cuts over the last two years, officials now project a general fund surplus of more than $250,000.
Budget cuts have been achieved mainly by streamlining the city’s workforce, Kolin said.
"We've eliminated 88 positions in the city, and with that we've successfully restructured the way we operate and I think have become much more efficient. … In some cases it’s being recognized by the citizens in terms of our ability to respond in the same manner and time that we have in the past," he said.
Chief Financial Officer Scott G. Miller said that the city is also saving money through an early retirement program “that resulted in a savings of approximately 50 percent of the salary and benefit costs for those positions that took the early retirement.” He didn’t say how many staff members took the retirement offer.
The entire 416 page 2011-12 budget can be found by clicking here on the city's website.
Additional budget study sessions will take place May 17 and May 19.