Poway may dip into surplus funds to balance budget

By Steve Dreyer

Adjusting to a world without redevelopment program revenues, city officials last week laid off five City Hall employees and on Tuesday night talked openly of having to use a special reserve fund to balance next year’s budget.

Five workers who had direct ties to redevelopment work received word on Feb. 15 that their jobs would end March 1.

Three of the positions cut were full-time: an assistant engineer in development services, a senior management analyst in community services and the assistant director of community services. Two positions were part-time: a senior management analyst in public works and senior management analyst in community services.

In addition, City Manager Penny Riley said the city will not replace a senior planner who is retiring this summer.

This is the third time since 2006 that Poway city employees have been laid off, for a total of about 40 positions, or 20 percent of the 2006 workforce. Previous rounds of layoffs were sparked largely by recession-related declining sales tax and property tax revenues.

The Feb. 1 ending by the state of all local redevelopment programs means that Poway will loose $40 million in annual property tax revenues. The money will be transferred to the county, which must by May 1 establish local oversight boards to administer the redevelopment programs. Revenues will be redistributed to taxing agencies in the city, including schools and hospital districts. City officials say about $20 million will be returned to the city for payment of redevelopment bond obligations. Another $2 million or so is expected to come back as the city’s share of the property tax distribution, but the amount falls short of the estimated $4 million hit the general fund will take due to the redevelopment agency’s death.

The City Council will be asked during spring budget discussions to dip into a $3 million “economic uncertainly” reserve to balance the 2012-12 general fund budget, Riley said. The fund was started in the mid-1990s and has grown with money allocated from frequent year-end general fund surpluses.

Riley told the council that using the reserve funds will “buy time” until the full impact of the Feb. 1 elimination of local redevelopment agencies across the state are evaluated.

John French, the city’s director of administrative services, said that while sales tax revenues this year are up a surprising 6 percent, the still-unknown true impacts of the death of the redevelopment program may also affect the current budget. Based on what is known today, he said, the current budget remains “tenuously” balanced.

As to the use of reserve funds, French told the council “We will probably be bringing that into discussion.”

The city’s long-standing practice of setting aside reserves for a rainy day like the one being faced now was praised by Mayor Don Higginson and Councilmen John Mullin and Jim Cunningham.

“Our predecessors have positioned ourselves to weather the storm,” Mullin said.

“We’re in solid shape. We’re ready for this,” Cunningham added.

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Posted by Steve Dreyer on Feb 22 2012. Filed under Local News, Poway. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry