Sunday, July 13, 2014

Hermosa Beach, CA City Budget Reflects a Focus on Priority Based Budgeting!

"This budgeting process reflects a focus on priority-based budgeting with high level of customer service that has engaged community and stakeholders.” - City Manager Tom Bakaly

The Center for Priority Based Budgeting is proud to welcome the City of Hermosa Beach, California as a recent priority based budgeting partner community in early 2014. The city has worked hard in their implementation of priority based budgeting and the results of their work is paying off.

Sandy Mazza with The Beach Reporter recently wrote an article Hermosa Beach's city budget buoyed by higher revenue. See the full article below and congratulations again to Hermosa Beach on their efforts in successfully implementing PBB!

Hermosa Beach's City Budget Buoyed by Higher Revenue

Working with a slight bump in revenues for the fiscal year that begins Tuesday, Hermosa Beach leaders have crafted a budget that plans for long-term needs but also provides short-term spending on several community projects.

The 2014-15 budget adopted last week by the City Council sets aside additional money for street and park improvements. The “8th Street Safe Walk to School” program will receive $67,000 in funding to be combined with $300,000 in grant funds for new crosswalks where the sidewalks end along Eighth Street. About $1 million will go to various street improvements, in addition to ongoing aesthetic and roadwork improvements along Pacific Coast Highway and Aviation Boulevard.

Altogether, $6.4 million is allocated for capital improvements that also include protective supports along The Strand, energy-efficient electrical upgrades at Clark Field, renovations at the fire station, Police Department and City Hall, and various improvements at the city’s two other parks.

One of the biggest budget debates Tuesday centered on how to fund needed sewer upgrades across the city. Staff members pegged the cost of improvements at $14 million, but council members voted to reduce that figure to $10 million by doing the work in-house rather than through a consultant.

Council members directed staff to return with various options to pay for the work and they voted to prioritize the project by assigning extra revenue expected from the city’s insurance fund into the sewer system.

“Utility-users’ tax pays for sewer maintenance but we have to replace parts of it because these structures wear out,” Councilman Pete Tucker said. “They crack and get realigned from earthquakes. They need to be replaced just like the tires on your car, but they’re underground so nobody thinks about it.”

Big-ticket items like the sewers have become the centerpiece of a campaign by E&B Natural Resources Management Corp., which is promising hundreds of millions of dollars in new revenue to the city if voters approve its proposal to drill for oil in an upcoming ballot measure.

The city has more than $100 million on its wish list for capital improvements for the next 20 years, but budget expenditures are expected to exceed revenues in the next few years because of increasing expenses and other costs.

In addition, if residents do not approve the oil-drilling measure, the city will have to pay $17.5 million as part of a 2012 lawsuit settlement tied to its previous revocation of oil-drilling rights that were approved in the 1980s and rescinded years later. A portion of next year’s budget will be set aside in anticipation of that payment.

Council members advocated for priority spending on needed infrastructure upgrades with an eye to the oil-drilling proposal and lawsuit settlement.

“A lot of our extra money that we have as a city is going to the oil issue,” Councilwoman Carolyn Petty said. “Once things get past November (when the ballot measure is expected to go before voters), we’re going to have a different financial outlook.”

In the immediate future, however, revenues are expected to increase.

“The positive trend in property tax revenue continues to go up,” Finance Director Viki Copeland said, highlighting one of the budget’s positive aspects. “We’re very fortunate we never had a dip there, while a lot of cities had big dips.”

Property taxes account for the largest chunk of revenue, making up 39.6 percent of the budget. Sales taxes, which will account for about 7.7 percent of city spending, are also expected to get a bump. Most other revenue sources are relatively flat since the last fiscal year, Copeland said.

“The increase in revenue is small, but some of those sources are up at a very high level so, if they maintain, that’s good,” she said.

By July 2015, the city’s savings account is expected to reach $8 million.

Most of the city’s $33.7 million general fund, 63 percent of it, will fund the salaries of city employees. That amount is roughly 7 percent less than it was before organizational cuts were made during the height of the recession.

Public safety accounts for about 60 percent of total operational spending from Tuesday through June 30, 2015. Public works spending will make up about 13 percent of the budget, management 9 percent, community development projects and programs 5.3 percent, and capital improvements 6 percent, Copeland said.

City Manager Tom Bakaly said this budgeting process reflects a focus on “priority-based budgeting with high level of customer service that has engaged community and stakeholders.”

For example, since May, the city has held a workshop, study session and two public hearings on the proposed budget. Spending priorities were also identified in earlier community meetings and working groups of residents paired with consultants. An emphasis was placed on things that are environmentally conscious and reflect Hermosa Beach’s status as a small beach town that values healthy, active lifestyles.

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