_____________________________ ST. NORBERT CHURCH           RATES _______________________



By Rico Dizon

Terry Matz, La Palma  Interim City Manager presented a near-term financial fiscal plan to the City Council to address the looming loss of sales tax revenue brought about primarily by the recent decision of BP/Arco to pull its fuel sales group out of La Palma come September of this year.
Matz pointed out that the City is not in any immediate financial crisis but in good financial condition with General Fund Reserves at over 100% of expenditures. Hence, he continued, the City has time to respond in a well-thought out manner to the impending loss of sales tax earnings.
However, due to the expected sharp drop in revenue projection placed at $8,707.600 and with expenditures across six departments remaining as is at $9,644,200, the City is now facing a projected deficit of $936,600) for FY 2012-13 if not checked on time.
In order to address this deficit, the City Staff is recommending a four-pronged plan of action to begin dealing with the potential revenue loss, said Matz. Specifically staff is seeking direction from the City Council on the following:
Suspension of recruitments for vacant positions.
There are immediate savings that began on July 1. In the light of current situation, Staff felt it prudent to leave the two positions  of Management Analyst in the Police Department and the newly-authorized Management Aide in Recreation Services
vacant for the foreseeable future, saving approximately $157,300 a year.
Review of the FY 2012-13 Adopted Budget by each Department to determine what programs, activities and services can be reduced. Saving  an estimated $25,430 could be realized in the areas of part-time and overtime wages. Each Department Director has also identified Maintenance and Operations reductions which can be undertaken without eliminating any services or programs and will save approximately $82.685 a year.
Review of Revenue Projections
Determine if the General Fund revenue should not be limited to sales tax. Finance has determined there is approximately $100,000 in additional property tax the city can generate for FY 2012-13. This additional property tax revenue is projected due to the dissolution by the State Legislature of redevelopment agencies. Each taxing entity in the County now receives “residual property tax” twice each fiscal year.
Another projected source of revenue would be the city’s Utility Users Tax which was lowered to 4% from the voters’ approved 5% rate. Under current situation, the city can set back the UUT to its former rate  which will add some $95,000 in revenue for the current fiscal year. For the full 12-month period in the succeeding fiscal years it was approximately $190,000 in General Fund revenue.
Reduction of Genel Fund Transfer to Capital Outlay Reserve.
Currently the non-operating transfer is budgeted at $1,700,000. In an effort to further conserve General Fund reserves, the transfer could be reduced by $571,185 while not affecting projects currently planned to be completed in the fiscal year.
Mertz said the above-mentioned actions are just a few of the many possible responses the City can undertake to address the permanent loss of sales tax revenue in near-term while additional long-term solutions are developed and implemented.
The  long-term strategic response will require  establishing new policy directions for the provision of basic services which ideally should be discussed with La Palma residents—an action that is strongly suggested by Mayor Pro Tem Steve Hwangbo and seconded by Councilman Ralph Rodriguez.
With four “yes” votes, Councilman Steve Shanuhan was absent, the City Council agreed that discussion on the Recommended Financial Plan in dealing with expected loss in sales tax be continued on Sept. 4 when the new City Manager Ellen Volmert will have assumed office. Further, the City Council would like to see the comprehensive version of the same plan by Sept. 18.