After months of pencil-sharpening and number-crunching, city officials throughout the South Bay soon will gather for a yearly ritual: approving a budget.
Most budget proposals for next year contain few major surprises, with services and programs, for the most part, remaining at this year's levels. And in several cities, revenue losses in one area are expected to be offset by gains in another.
For example, in Redondo Beach, where city officials predict that the decline in oil and natural gas prices will take a heavy toll in royalties and franchise fees, much of the loss will be made up in tax money generated by the South Bay Galleria and the Sheraton hotel, which is scheduled to open in January.
The bleakest prediction for the forthcoming year came from Hermosa Beach, where City Manager Gregory T. Meyer, in his budget message, termed the city's financial position as "precarious."
And in Torrance, the South Bay's largest city, officials say that unexpected expenditures and lower-than-expected revenue mean the city will have to increase some taxes and fees in the coming year to maintain the level of services.
Perhaps the cheeriest note was sounded by Manhattan Beach City Manager David J. Thompson, who said that community's budget calls for a 35% increase in spending over this year. Most of the increase is the result of an ambitious list of capital improvements funded largely by bonds.
A common thread running through the cities' budget deliberations is the expected loss in general revenue-sharing funds from the federal government. Cities have received the funds since the early 1970s, but the program is scheduled to expire next year. Unlike other federal grants, cities are able to spend revenue-sharing funds as they please and typically have used them for a variety of purposes.
"We anticipated the loss and have been able to plan for it," Gardena City Manager Ken Landau said. "But more important, the economy has been very good. With the increase in property and sales taxes in particular, we have been able to make up for the loss."
Most cities adopt new budgets by July 1, the beginning of the fiscal year. Before approving a budget, cities hold public hearings to receive comment from residents.
Here, briefly, are outlines of the proposed budgets for each South Bay city except El Segundo, which does not plan to adopt a budget until August, and Lomita, whose proposed budget was not available.
After several years of adding new programs and personnel, Torrance will have to do some belt-tightening and increase taxes next year just to maintain this year's level of service.
In his budget report to the City Council, City Manager LeRoy Jackson said unexpected expenditures in the current year coupled with lower-than-expected revenue and new debt accumulated this year will result in one of the city's tightest financial years ever.
Under Jackson's proposed budget, the city will spend $72.5 million in fiscal 1986-87, a 3.5% increase over this year, on expected general fund revenue of $73.9 million.
(The city also maintains separate enterprise budgets for its water, airport and transit departments, for a total of $15.7 million in expenditures on revenue of $16.8 million.)
A surplus of $3.2 million from this year's general fund will be carried over for a total of $4.6 million in reserves. However, $2 million of that surplus will be used for self-insurance, and the remaining $2.6 million will be used for salary adjustments still to be negotiated. Depending on contract negotiations with the employee groups, the city could use up its entire reserve.
For example, if all employees were given a 1% raise, it would cost the city an additional $500,000, said Albert Ng, assistant to the city manager.
City officials last summer got the idea that 1986-87 would be a tough year when a change in federal labor laws forced the city to pay its firefighters an additional $300,000 in overtime. The city also paid the Torrance Unified School District $700,000, the first of three payments, for its purchase of the Greenwood School site.
The city came up about $560,000 short in expected revenue this year, primarily because it took in less revenue than expected from the sales tax and the utility users tax, which together provide half of the city's general fund.
Jackson said the opening of the South Bay Galleria in Redondo Beach affected sales at the Del Amo Fashion Center, and lower natural gas rates and less consumer consumption because of milder-than-usual weather contributed to the drop in utility user revenue.
While revenue is dropping, expenditures will increase next fiscal year. The city will make the second payment ($700,000) on the Greenwood School, make the first payment ($1.7 million) for the new city yard and fire station and pay a full year of overtime for the firefighters ($600,000).