03-07-1996 - Laserfiche WebLink

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Ream provided a backdrop to the City's financial situation by noting that the City's population has increased by 50°4 over the last decade while City staff has downsized to become the second smallest city workforce per capita among California's 11 largest cities. Ream also detailed how the City had lost approximately $36 million in revenue over the last six years to State budget cuts. Ream projected a budget shortfall of $10.4 million ($6.7 million reduction in decreased revenues and $3.7 million in additional expenditures) in the General Fund Budget and explained how the deficit could be corrected through: - personnel reductions; - revenue enhancements which include a 1% increase in the water rates and refuse fees, a $1 per month increase in the sanitation fee, a conservation-based rate structure for water service, and modifications to the City's recycling program; and - revenue transfers (on-going and one-time) from enterprise and reserve funds. Assistant City Manager Debra Kurita then briefed the Council regarding proposed changes in miscellaneous and other fees. Ream concluded his presentation by noting that the City lost approximately $30 million in the Orange County bankruptcy and covered the resulting budget shortfall by deferring capital improvement projects, such as the Garthe Reservoir expansion, and by borrowing money to pay the debt service for the new Police Administration and Holding Facility. RECESS - 7:15-7:$5 P.M. CONSERVATION-BASED WATER RATES Water Resources Manager Lee Harry outlined the accomplishments of the City's Water Enterprise which include constructing five new wells, eliminating 70% of main line breaks, and maintaining the City's low water rates (Santa/ina ranks 26 of 34 Orange County water providers listed in the order of highest to lowest water rates.) Harry showed slides demonstrating projected population growth coupled with a rising demand for water, then discussed the need to increase the water supply through various means such as conservation and recycling. Harry stated the FY 96-97 Water Enterprise fund is projected to incur a $2 million budget deficit and referenced the water capital improvement funding shortfalls. According to Harry, the deficit could be closed and the water capital improvement fund restored by implementing conservation-based or inclining block pricing for water rates (higher volume users pay higher water rates) in January 1997. Harry pointed out that tiered pricing has already been adopted by 11 of Orange County's 34 water providers. Harry explained that under this proposal, over 60% of Santa Ana's customers would experience no increase in their water bill, and that water to irrigate City parks would continue to be charged a flat rate. CITY COUNCIL MINUTES 79 MARCH 7, 1996