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Latest Revised June 2007 Budget The city staff presented to the city council the revised 2006-2007 budget at the council meeting on Aug. 21. Just because the budget is straightforward, it does not mean it is acceptable as written. The following observations may be applicable: 1) The budget as submitted still provides for a Director of Technology at $153,000 plus benefits. Benefits usually add up to 25 percent or 30 percent of salary or more. This is simply a meal ticket for someone, since technology changes so fast that a person will have to be at a conference 24/7 weekly just to keep up. The city could hire people or specialists of the best type, and this would still apply. This position should be contracted out for the best results on a semi- annual or tri-annual basis. Mission Viejo is a contract city, and we should remain consistent. 2) Under Exhibit A of the budget, the $2 million park development fee from Steadfast, presumably, is still reflected in the budget. If funds have not been paid in, they are uncollected funds. The Exhibit shows $35 million in reserves currently, and $67 million or $68 million in revenues. (A question has been raised regarding how much of the $35 million has been received.) Budget expenses are $51 million with $12 million or $13 million in capital expenditures. The net effect is to have a reserve fund on June 30, 2007, of $37 million, or simply $2 million above current reserves. When park fees are taken out, the city is operating at zero or a deficit 3) Since the budget is designed to spend 100 percent of what the city takes in or close to it, there is no margin for error. The budget is, therefore, bordering on a deficit because expenses may exceed income. 4) The city is spending roughly two times its reserve fund balances. To put it another way, the city is spending close to 100 percent of its income or revenues. 5) Failure to bring the budget in line by providing for reserve increases will result in pain downstream in subsequent years. James Edward Woodin |
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