EL MONTE — Faced with projected cost overruns of $3.5 million when the fiscal year ends on June 30, the City Council has established guidelines aimed at averting the same problem next year.
The council has advised city staff to continue a yearlong hiring freeze in the Police and Fire departments, increase fees for such things as building permits and freeze or reduce the level of city services. The action was based on recommendations from city Administrative Officer Gregory D. Korduner.
To balance this year's budget, officials have had to dip into the city's reserve fund to cover the $3.5 million deficit. That reduced the fund to about $6.5 million, they said.
If cost-cutting measures are not adopted, officials estimate that the city will have to draw another $3.5 million to $4 million from the reserve fund to balance the budget for the next fiscal year.
"We're trying to address that now before it gets to that level," said Korduner.
In a special meeting last week, the council also instructed staff to consider selling excess property that the city acquired for the $11.2-million Peck Road grade separation project, a vehicular underpass under construction. City officials said the unneeded property, about two acres, could bring El Monte as much as $1 million.
The council rejected a suggestion to establish a street lighting assessement district.
"There's not enough concern that I think we have to put a tax on the people," said Mayor Don McMillen. "People in El Monte can't afford it. We have a real high senior population in the city."
Officials blamed this year's deficit on several factors.
The primary reason is the loss of federal revenue sharing funds, which have dwindled from $2.3 million in 1983 to $575,575 this year. The funds have been used to pay for police and fire services. Korduner said the city was notified in November that it will receive no revenue sharing funds next year.
Officials also cited a $250,000 increase in employee overtime costs, mainly because of changes in the federal Fair Labor Standards Act last April that limited firefighters' regular work week to 53 hours. El Monte firefighters work 56 hours a week and must be paid a minimum of three hours' overtime, said Fire Chief Charles E. Masten.
Other unforeseen expenses included a $200,000 hike this year in liability insurance premiums and a projected $600,000 increase in workmen's compensation costs. In addition, the city's bond debt from capital improvement projects, including city hall expansion and the underpass project, has risen by $1.5 million.
Police Chief Wayne Clayton said that because of the hiring freeze, he has been unable to fill six positions in his department and has had to compensate by assigning officers more overtime hours.
The Police Department's $380,499 budget for overtime has already been exhausted, and the chief estimates that another $198,000 is needed.
"Everyone's pulling harder," Clayton said.
Fire Chief Masten said that his department, which is down three firefighters, has not felt the impact of the hiring freeze.
"I don't see any major problems with it as long as there isn't any major increase in the size of the community or the number of fires," he said.
Indeed, despite the deficit, officials are optimistic about the city's financial health.
"At this point, the city is in good financial shape," Korduner said, referring to the surplus in the reserve fund.
"It's not as bad a picture as the staff paints," said McMillen. "We've got a surplus now. We're a long way from being in the red."