City Revises Ojai Revenue Expectations

Forecast goes up 1 percent, but sales and property tax collections fall short of expections

By Nao Braverman
Despite the nationwide economic woes, the city’s mid-year budget report shows that Ojai is still on target for this year’s projections.
With new projections showing a slight increase, just over 1 percent more than previously projected in revenues coming in this fiscal year and higher fund balance than expected last year, the city expects to close this fiscal year with just over $3 million in reserves. Still short of the $3.9 million policy target, the general fund balance will nonetheless surpass the initial projection of $2.7 million, said city manager Jere Kersnar.
Though two of the city’s three largest money generators — sales tax and property tax — came in lower than projected, the largest income generator of them all, transient occupancy tax, came in higher than expected, making up for shortfalls in the latter.
“There are storm clouds surrounding us which lead to property tax weakness,” Kersnar told the council.
Property tax had only come in at $662,447.27 from July to December, under 1 percent less than projected, he said, a shortfall so small that it would still be considered within the scope of projections. However, with the declining housing market, it could be seen as a foreshadow to increasing loss in property tax revenue in the coming years.
“We are not feeling it yet, but the lag time between the declining property value and its effect on the city is generally two to three years, he said. “We are OK for this year but we may feel it later.”
Sales tax, which has been historically volatile experienced a more substantial shortfall, coming in $473,103.72, from July to December, is at this point 5.5 percent short of expectations.
“That concerns me,” said Kersnar. “Because it may be an indicator of general economic problems. People are feeling the hardships so they aren’t spending as much in stores and on dinners out on the town,” he said.
But fortunately bed tax came in at $1,259,195.38, from July to December, just under 4 percent more than projected, and more than the combined shortage in property and sales tax.
With other revenues coming in more than projected, the total revenues from July to December came in at $3,464,990, with newly projected numbers just under 1 percent over previous projections, said Kersnar.
There have been no unexpected expenses, total spending came out to $3,607,941.85. Though $142,951 more than revenues, that is to be expected said finance manager Susie Mears. The beginning of the year has a number of one-time payments such as liability insurance and major repair projects such as the skate park renovations, that won’t be incurred during the last two quarters. So, overall, the revenues are expected to come out over expenses by the end of the year.
Kersnar added, however, that with many “storm clouds” surrounding the city, from declining housing prices to regional economic issues, the city would have to get prepared to face some shortfalls.
“Income tax reductions, for instance, don’t directly affect us but it is a big one for the state,” he said. “As the state’s financial issues mount they are going to start cutting elsewhere. But unlike the state we can see it coming and prepare for it.”
In other council news, the new Public Works director, Mike Culver, proposed a reorganization of the Public Works staffing that would reduce upper level management, and contract workers, enhance the administrative staff, and add a much-needed full-time maintenance person. This saves the city a little money while organizing the staff to better suit the needs of the department, improving overall efficiency, said Culver.
The reorganization would eliminate a transportation manager, as Culver could wear both hats, serving as the director while managing transportation.
“I could take care of transportation issues as I am pretty well versed in that area,” said Culver, who served as the city’s former transportation manager for years. That elimination would free up $120,670. Those funds would help pay for upgrading the administrative assistant, upgrading the office specialist II to an administrative analyst, upgrading the trolley coordinator to transit operations supervisor, and adding a full-time maintenance person, all with $7,836 overall reduction in personnel costs for the department.
Mayor Sue Horgan said she would like to see a future update on the reorganization to see how well it was working for the department.
The reorganization was approved unanimously.
Earlier, during the public comment period, Dawn Clifton, a newcomer to Ojai, wanted to know if the city could do something about the lady riding her bike through Ojai “basically nude.”
“I have a 14-year-old son raging with hormones and a daughter to whom I don’t want to explain that that is not appropriate behavior. I don’t want to be embarrassed that I moved to Ojai to raise my kids,” she said.
Kersnar explained that doing anything would raise a number of legal issues.
“As I understand there has been no behavior that contradicts existing laws,” he said. “Restricting anything else would be a restriction of freedom of expression.” Nonetheless he promised to look into it.