"Property, sales and bed taxes have experienced some recovery this past year and we are expecting moderate growth over the next couple of years," Pietig said. "But we still need to be cautious in evaluating any new programs or services, although there will be some opportunities for funding one-time projects."
Those three taxes generate about 75% of the city's annual revenue, according to Pietig's memorandum to the council, which is included in the draft budget.
For the first time, the draft budget covers two years, as recommended by Pietig.
"I suggested the shift to reduce the staff time it takes to assemble a detailed budget every year," Pietig said. "The shift does not preclude the same policy discussions that occur midyear or at the start of the next fiscal year.
"Council still has the opportunity to modify the budget as necessary to respond to current events."
A three-year projection shows expenditures increasing faster than revenues, with "revenues and net transfers exceeding expenditures by" $623,000 in the coming fiscal year, $423,000 in 2014-15, and $293,000 in 2015-16.
General fund revenues and net transfers for fiscal 2013-14 is estimated at almost $49 million, $50 million in 2014-15 and $51 million in 2015-16.
The proposed operating and capital improvements budget is estimated at $68.5 million for fiscal year 2013-14 and $67.5 million the following year, which includes $5 million for the Village Entrance project — a cost spread over the two years.
Both budgets may be affected by factors not included in the draft.
The city is negotiating with its employee associations. Any changes will have to be incorporated into the general fund budget when they are approved.
The city manager hopes to have negotiations with city firefighters and municipal employee associations completed before the beginning of the next fiscal year.
Active negotiations with Laguna Beach Police Employees Assn. and part-time lifeguards will begin soon, Pietig said.
The budget also does not include the estimated $300,000-a year cost of funding for a view preservation program. A mayor's subcommittee is crafting a proposed ordinance to deal with the restoration and preservation of views obstructed by vegetation. The subcommittee will update the council at Tuesday's meeting.
A reduction in the transfer of about $700,000 a year from the Parking Fund to the General Fund will also have to be taken into consideration, if approved.
Lastly, the unfunded allocation of $2.1 million within the next five years is needed to fund the replacement of the countywide public safety communication system, Pietig said.
A report will be presented to the council at the budget workshop regarding requests for funding not included in the draft budget, Pietig said.
The public will also be able to make requests and recommendations.