Council Discusses Budget Philosophies and Priorities

The Coronado City Council held a pre-budget workshop during a special meeting Wednesday at City Hall.

“I’m new and I haven’t worked though this cycle of the budget process,” City Manger Blair King explained. 

He wanted to get the council’s direction on a number of issues that will help him and his staff prepare the city’s FY 2011-2012 budget by setting forth 18 “approaches, principles and applied techniques” for the city’s official budget meeting in May.

For example, he proposed adopting a yearly budget plan instead of the traditional two-year plan because of the fiscal uncertainty brought on by the economic downturn and the state’s financial crisis.

“It’s like choking up on a bat. It gives you greater control and a quicker response,” he said.

He also recommended that the council review budget assumptions at the close of the fiscal year on June 30 and again in six months to make any necessary adjustments.

The basic model would continue to be a line-item budget, with the same distribution of services from the general fund, with the bulk of the funds directed to public safety and construction and maintenance. It will also continue the council’s historic conservative stewardship of the taxpayers’ money by “matching services levels to available funds.”

In that spirit, King said he would continue to work with the council to control pension costs and look for contracting and entrepreneurial opportunities. For example, at the animal shelter, the city could contract with PAWS to provide volunteers at the animal shelter or it could generate extra money by offering boarding services, or it could rent out other facilities, King suggested.

Councilwoman Barbara Denny was quick to point out that the shelter was “too small to serve as a doggie or kitty hotel.”

The council was also asked if it wanted to take advantage of current low construction rates to begin work on some capital-improvement projects. While many members expressed interest in a particular project, such as a new senior center or a revitalization of the 100 block of Orange Avenue, few really wanted to get the ball rolling until the fate of the redevelopment agencies is known.

As Councilman Al Ovrom pointed out, if construction costs rise, it will mean that the economy has turned around and revenues will rise.

“Let me be a Scrooge,” he said. “I don’t want to support a project that doesn’t have a funding source.”

In addition to the general discussion about priorities and philosophies, the board took direct action on how much of the reserve fund the city needs and whether to prepay its debt to CalPers, the state’s employee pension fund. 

On the reserve fund the council voted 4 to 1 to support a plan that would set aside $20 million to allow that city to continue operating for three months in the event of a severe economic downturn or a natural disaster. The money would be used to maintain public services until state and federal help arrives. 

Denny objected because she said the $1 million directly allocated for emergency response was “not nearly adequate.” She also warned that the city might not be able to rely on the federal or state government for support, given their respective budget shortfalls.

The council also voted 4 to 1 pay off the balance it owes to the CalPers Safety Pension Fund, which covers public safety officers, such as police and firefighters. By doing so the city would save more than $3 million in pension costs over the next 13 years

Councilwoman Carrie Downey compared it to taking money out a savings account that was paying half a percent interest to pay off a credit card debt that costs 8 percent.

“It makes sense to pay off my credit card debt,” she said. 

Denny disagreed.

“I don’t think it will do as much good as we think it will,” she said. “I’d rather see the $6.2 million go to an emergency fund.”