Tuesday, September 20, 2005 | The money man. The city of San Diego received $46 million more in revenue than it had budgeted last year, but offset the windfall by spending $37 million more than the amount originally planned for 2005, the city auditor said Monday.
The City Council heard the first monthly presentation by City Auditor John Torell’s staff after voting last month to exercise a right in the City Charter that allows them to receive periodic updates about the city’s finances. In his report, Torell compared the city’s actual balance sheet for day-to-day expenses and general income during the 2005 fiscal year, what was budgeted for that year, and the financial plan for the current year.
Members of the council said they were satisfied with the update, but at least one was dismayed by how the revenue projections by the city’s financial staff strayed $46 million from the city’s actual take-in amount.
“To me, it’s incredible for us to low-ball our budget like that,” said Councilman Tony Young. He has supported tweaking the financial management staff’s projections for the size of the budget so that services that would otherwise be cut, such as the operating budgets for recreation centers and libraries, could be incorporated into the city’s spending plan.
The city charter directs the City Council to pass a balanced budget by June 30 every year.
Councilman Scott Peters said he would rather err on the side that was financially conservative.
“I think we’d be really annoyed if we were $46 million under the revenue we projected than $46 million over it,” he said. “I’d rather be on this side of the line.”
Of the $46 million boost in income for the city, about $7 million was raised in increased tobacco tax revenue, $6 million was from higher-than-expected property taxes, and $6 million resulted from the city collecting more in service charges like business licenses or sewer fees than was projected.
Torell told council members that the administrators that oversee departments that earn more money than expected can spend the increase as they see fit, but that the elected officials should consider making decisions on how to spend the unexpected revenue.
Public safety costs were underestimated last year, Torell said. Deputy Manager Lisa Irvine attributed that to overtime costs that have historically been over budget.
The report also stated that the city’s payment into the pension system increased by $32 million from last year and that its retiree health contribution was $6 million greater in 2006. Services, however, were cut by $27 million.
Assistant city auditor Larry Tomanek said the city’s retiree-related expenses will be “an ongoing concern for years to come.”
The city may also be short $9 million after the state Board of Equalization determined that Sacramento paid cities more than it owed them in sales tax, finance director Ron Villa said.
Officials also said that mounting legal and consulting bills, the state’s decision not to reimburse the city for housing prisoners, and the upcoming Nov. 8 election are unexpected costs administrators will try to clear up at the Oct. 10 council meeting.
In August, Deputy Mayor Toni Atkins and Councilwoman Donna Frye requested the reports to better monitor the city’s books.
Torell said that the presentation in October will detail how budgeted enterprise funds, such as hotel taxes or the operating fund for Qualcomm Stadium, stacked up to the actual amounts that were earned and spent. In November, the auditor will provide the city with an update on how receipts for the current year’s first three months compare to what was planned in June, he said.
The city of San Diego’s fiscal year runs from July 1 to the following June 30.
City may have had too much of its ‘fill. Building permit applicants in San Diego will be charged a refundable fee to ensure that waste from construction projects is handled properly in order to help the city avoid a costly penalty.
If the city does not sort out at least 50 percent of the waste it collects before depositing the remaining matter in the Miramar Landfill by Jan. 1, the state will fine the city of San Diego $10,000 a day. The city’s environmental services division said that about 45 percent of the city’s waste was diverted from the landfill to recycling facilities in 2003 – the last known count.
Builders, renovators and demolition crews will be required to deposit an amount related to the size of the construction project area’s square-footage and to submit methods for disposing of the debris involved. Money will be returned to the permit holder if authorities determine that the manner the waste was disposed helped the city reach its 50-percent goal.
The city’s diversion rate has declined since 2000, when it was at 48 percent, environmental services director Elmer Heap said. Because the rate has slipped on the eve of the city’s deadline, voluntary diversion of recyclable construction materials away from Miramar can no longer be trusted, some officials said.
“I think we need to move past that,” Councilman Scott Peters said.
State lawmakers passed a law in 1989 that gave local governments 10 years to bring their diversion rates up to 50 percent. The city of San Diego has since been granted two extensions on the deadline.
City Attorney Mike Aguirre said the city should have been complying with the 1989 law within the 10 years allotted. His office will be investigating the matter, he said.
More than 1.4 million tons of waste is deposited at the Miramar Landfill each year, the city estimates. The site is expected to be at capacity by 2014, but the project’s supporters said the requirement could extend the landfill’s lifetime.
Several lobbyists representing taxpayers, businesses and the building industry asked the council to oppose the measure, saying it didn’t make sense to force businesses to pay for recycling, especially when a facility where construction debris could be properly sorted has not been built.
“We would support a mandatory ordinance, but you have to give us a place to take the materials to sort,” said Craig Benedetto, who represents the San Diego Building Owners & Managers Association, Inc. “Are you going to shut down city streets to allow us to do that?”
Heap said that a construction and demolition materials facility will be operable by June or July. The council approved a 45-day window between the facility’s completion and the date the city will begin requiring the deposits.
San Diego County Taxpayers Association president Lisa Briggs said it wasn’t clear where the revenue generated from the lost deposit money would be spent. Furthermore, she said, if the money wasn’t spent on recovering the cost of a fee, it would be considered a tax, which can only be approved by the city’s voters.
Deputy Mayor Toni Atkins and Councilwoman Donna Frye said they supported the option of requiring the deposit as early as Jan. 1, but said it was more important to get the safeguards in place at any rate because harsher restrictions could have been denied by a shorthanded council. Five votes were needed to pass the legislation – a more difficult task given the council’s membership has shrunk from nine to six following the resignation of former Mayor Dick Murphy and two councilmen convicted on federal corruption charges.
Fee ride. The council finalized the approval of $111,000 in fees that they passed in June.
The fees include an increase to businesses’ alcohol licenses, a $30 team fee for city volleyball leagues and an increase to Mount Hope Cemetery burial fees.
Low-income households that bury deceased individuals at Mount Hope will receive a discounted rate.
– EVAN McLAUGHLIN, Voice Staff Writer
Please contact Evan McLaughlin directly at