Proposed Budget Plan for South Gate Forecasts Deficit

The will be holding a public hearing tonight during their regular meeting at 6:00 pm to consider approving the city’s budget for the 2012 and 2013 fiscal year. The city is still facing a tough economy and , South Gate’s Finance Director, has forecasted a budget with a deficit.

“The city’s general fund, like everything else, is affected by the overall economy,” said Cook, who added that revenues from city fees and taxes have yet to reach pre-recession levels. “We have not seen sales tax collection at the 2007-2008 levels.”

The city estimates that for next fiscal year it will receive $35.2 million in total revenue, while expecting to spend $37.9 million. 

According to Cook, the deficit is estimated to be anywhere from 1.6 to 2 million dollars, rather then the difference between the intake and output, because of loans that are expected to be paid back to the city’s general fund.

The absence of $1.2 million as a result of the statewide elimination of the redevelopment agencies was considered the biggest contributor to the predicted deficit of the general fund.

“The tool that we allowed us to grow economically has been taken away by the state,” said Cook. “It is a lot more difficult to entice developers to come tot o the city.”

Residents are not expected to see a decrease in city services since all have been carried over to this upcoming fiscal year. However, Cook admits that city is dipping into its savings, and warns that the city could face having negative fund for 2013-2014 if the economy does not pick up.

 “The problem is that we are dipping so heavily into our reserves this year, that if there is no robust recovery, we will run a negative fund balance going into 2013-2014,” said Cook, who says the making use of some savings is common. “This means we will run out savings.”

Councilmember expressed concern over the deficit and urged everyone to be cautious.

“We have to be very careful from what we do from here on end,” affirmed Gonzalez.   

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