City Seeks to Cut Spending After Near $1M Budget Gap

In an attempt to cut spending and save money amid a growing recession, Hermosa Beach City Council members held a special budget meeting on Feb. 25. During the meeting, they considered possible solutions to the 4 percent ($1.2 million) decline in revenue caused by drops in property tax, building development revenue and mounting legal fees from an ongoing lawsuit involving Macpherson Oil.
 
"Four percent doesn't sound horrendous, but for us, it's a lot of money," said Steve Burrell, Hermosa Beach city manager. "This will be the most difficult budget we've ever faced."
 
Proposed fixes suggested at the meeting included an additional business license tax, elimination of free city-wide wifi and a merger of the city fire department with other South Bay departments.
 
But resistance to the proposals was evident at the meeting.
 
"I've lived here all my life. Getting all the fire departments to merge, it's political football," Mayor Pro Tem Peter Tucker said. "We have to get all the unions on board. If we get this done, I think it'll be the greatest thing we ever did."
 
Regarding an additional business license tax, many local businesses were outraged when it was first proposed in 2008.
 
"The city had tried to move it along two years ago and it just created a lot of animosity between the business community and the city," Fishman said. "Part of the problem was that the city neglected [to include them in] the process and look at the present way the license was working. Any time you're going to change fees it makes sense that you bring that group into the mix."
 
As of March 3, the total amount of legal fees accrued due to the Macpherson lawsuit is $2,602,752. The total operational budget of the city is $34,341,146. The Macpherson suit started in the early 1990s and revolved around a breach of contract that was to initially let the oil company drill within city limits.
 
The city plans to replenish the lost funds with an estimated $1.5 million in savings generated by reducing office expenses, extending the life of city vehicles for one year and by not filling 14 vacant city positions, including five police officers, an assistant fire chief, a public works inspector and a senior building inspector.
 
Although the economic outlook for Hermosa Beach is grim, both Tucker and Fishman said they are optimistic.
 
"It's the whole idea that life runs in cycles," Fishman said. "We have the good and we have the bad and we've probably hit bottom, but we're determined to rebound."
 
The 2009-10 adopted budget can be found here.