City feeling crunch from development dip
By Kyle Jorrey kjorrey@theacorn.com

Rising operational costs and declining developmentbased revenue have combined to make 2007-08 a difficult budget year for Simi Valley, forcing departments citywide to tighten their belts to help the city pass a balanced budget.

Unanimously approved at the City Council's June 11 meeting, the adopted general fund budget for fiscal year 2007-08 is $65.1 million, with revenue expected to exceed expenditures by $27,200, leaving the city's general fund balance at $33.4 million.

The total city budget, including funds from outside the general fund, is just over $146.3 million, up about $9 million- nearly 15 percent- from 2006-'07.

City budget officer Dan Jordan attributed that jump primarily to two factors: one, a significant increase in the amount of money the city has budgeted for street and road repair, which has gone from $4.3 to $7.9 million over the last year, and two, a $7million major sanitation project.

According to Jordan, the next fiscal year's budget reflects the fact that nearly all major construction in Simi has been completed, and thus the high fees developers pay the city to mitigate the impacts of their projects are disappearing.

"We've had in Simi Valley for the past five years or so really a great deal of commercial and residential development," Jordan said.

"With that level of development slowing down somewhat, the other items that will eventually fill in as a result- sales tax from the mall, property taxes from different developments- haven't kicked in yet. Meanwhile, some of the related expenses have slowly but steadily gone up," he continued.

The result has been what Jordan described as a "hard landing," more severe than even Simi's fiscally conservative staff could plan for.

"It was perhaps a little of a harder landing than we had anticipated, but it's all still happening in real time," Jordan said. "On the other side of that, we don't know when the revenue side of things starts kicking in, how high that's going to get."

Still, the budget officer said, the two sides would at some point reach equilibrium.

"We just don't know exactly when those two lines will meet," Jordan said.

After receiving preliminary budget requests from all city departments city manager Mike Sedell and his staff were left to bridge an imposing gap of $18 million to arrive at a balanced budget.

After months of heated meetings with various department heads, who had to justify every increase in their individual budgets and defer costs wherever possible, city staff returned to the City Council on June 11 with a gap of just over $2 million for council members to close.

"There's always a greater level of request (from city departments) than there is money to fund them- that's just the nature of budgeting," Jordan said. "This year that particularly was the case because that initial difference was so large."

Despite all his staff was up against in this transitional year, Sedell said, no existing city jobs and no services had to be eliminated from the budget.

"We've been able to hold the line and continue to provide the same level of services as we have in the past," Sedell said.

In addition to approving only the most essential capital asset requests and budget increases, the city continued its hiring freeze, the city manager said, in addition to eliminating 14 positions that were waiting to be filled.

The "soft" freeze, as Sedell described it, works quite simply: When a request to recruit for a recently vacated position lands in the city manager's inbox, he simply makes it wait there longer than usual.

Some applications have been on his desk since before the first of the year, he said.

"Staff members have been willing to work together to take up the slack, even here in this office," Sedell said, noting that one of the requests on his desk was from the city manager's department.

Commending the entire city staff for the work they put into balancing one of the tightest city budgets in recent memory, Jordan also noted that the city cannot continue to have budget years like it will in '07-'08 if it hopes to pass balanced budgets in the future.

"We can't keep on doing this indefinitely, seeing budget gaps like this every year," Jordan said.

Stay tuned in upcoming weeks for more indepth coverage in the Simi Valley Acorn of this year's budget and what it means to local residents, employees and city services.