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City Accomplishment No. 6: stabilizing the city's financial posture

October 14, 2010|By Ken Frank

Editor's note: Laguna Beach City Manager Ken Frank is retiring in December after 30 years with the city. In this column, he shares what he sees as the "top 10" most significant accomplishments of the city administration during the past three decades.

No. 6 on the list of City accomplishments over the last 30 years is: stabilizing the city's financial posture.

When I arrived in 1979, the city was beset by two notable financial difficulties.

First, the city was coping with reduced property taxes because of Proposition 13. Because Laguna Beach was (and is) a municipality that relies heavily on property taxes, the city was reeling from the draconian cutbacks that had been necessary to balance revenues with expenses when the property tax base was significantly depreciated.

Second, the city had recently incurred a debt of $6 million to purchase 520 acres of open space from Rancho Palos Verdes Corporation. Located between Laguna Canyon Road and El Toro Road, this property, which is known as Sycamore Hills, was the subject of litigation over its future development. The city tendered a substantial down payment but could not honor future installments and the city's ownership of the land was in jeopardy.

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Laguna Beach was able to overcome both of these detriments and state raids on city revenues in subsequent years. Today, compared to most other municipalities in California, Laguna Beach is financially healthy.

Laguna Beach is weathering the pernicious economic recession without appreciably reducing services. However, about 4% of the full-time jobs have been eliminated by attrition and additional positions will need to be excised from the budget over the next few years.

Fortunately, the City Council has established an array of reserves including a 10% General Fund cushion, a recession smoothing account, and a separate, sacrosanct reserve for future natural disasters.

Capital improvements are underway to ensure that the community's infrastructure is functional, safe and attractive. The City Council had the mettle to allocate all of the hotel tax revenues from the Montage Resort — averaging more than $3 million per year — to the capital improvement account. That unequivocal dedication of revenues has fostered a robust capital improvement program — which will be discussed in detail in next week's column — while allowing residents to enjoy an enviable level of public safety and other municipal services on a daily basis.

Ken Frank is Laguna Beach city manager.

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