Glendale officials say they expect the city to end the fiscal year next month $3.9 million in the black — money that could be used to shore up worker compensation and other funds that are in severe need of replenishment.
In addition to the surplus for this year, officials this week said they are forecasting a $1 million to $2 million budget gap for fiscal year 2013-14, a far cry from the huge gaps in years past.
While the bulk of the surplus could go to bolster so-called internal service funds —workers compensation alone had a $17.7-million deficit as of last June — the council could also use the money to close the smaller projected budget gap, officials said.
"It is an intimately solvable problem, as opposed to last year," said City Manager Scott Ochoa at a City Council meeting Tuesday.
Last summer, the council was forced to close a $15.4-million budget gap mostly by reducing staff. The year before, several programs were cut to close an $18-million gap.
The city's thin financial margins, prompted by the protracted recession, were exacerbated by the loss of local redevelopment powers last year. In February 2012, state lawmakers ended the decades-old program that allowed cities to use increased property taxes from development in blighted areas. They did so to close the multibillion dollar budget gap facing California.
The projected surplus in Glendale this fiscal year comes after steep cutbacks at City Hall, including reducing the city workforce by 14% to about 1,600 employees through early retirements, eliminating vacant positions, and layoffs.
Increased property and sales taxes, a $1.9-million legal settlement and $1.1 million in gas-tax funding that can be used to pay for street maintenance projects have also had positive impacts.
While Glendale's budget may be balanced in the way that pays the bills and keeps the lights on, it will continue to be a challenge to fund other obligations, such as the internal service funds and future capital improvement projects, Ochoa said.
Rising pension costs also continue to be a problem. Last month, the California Public Employees' Retirement System, or CalPERS, increased the amount Glendale must pay for retirement benefits starting in 2015. That could boost the city's tab by $10 million to $15 million over five years, according to a city report.
Glendale's annual pension cost was $30.6 million last year.
The rising pension costs prompted Councilman Ara Najarian to request city officials let CalPERS know about Glendale's displeasure.
"Let them know we're not happy and maybe some other cities will follow us," Najarian said.
But Mayor Dave Weaver said the effort would be futile.
"I just can't believe Sacramento is going to listen to little ol' Glendale," he said.
The council is set to continue budget discussions throughout the month with the goal of approving the final spending plan on June 25.
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