SB County cities feeling effect of slowed economy
The nationwide economic slump seems to be affecting almost everyone, but the budgets of many cities in San Bernardino County are being hit especially hard.
Sales-tax revenue is not meeting expectations, which officials from various cities describe as "very conservative."
Redlands-based economist John Husing, who focuses on the Inland Empire, says cities will probably have to deal with unusually low revenues through 2010 or longer.
"It depends on when new homes can be built in the Inland Empire," Husing said.
Sales-tax revenue is not meeting expectations, which officials from various cities describe as "very conservative."
Redlands-based economist John Husing, who focuses on the Inland Empire, says cities will probably have to deal with unusually low revenues through 2010 or longer.
"It depends on when new homes can be built in the Inland Empire," Husing said.
The meltdown of the local housing market has severely crippled the
local economy and resulted in a 9.1 percent unemployment rate in the
combined area of Riverside and San Bernardino and
Riverside counties, the highest in the nation for an urban area its
size, Husing said.
"Our biggest industry, which is residential construction, is not coming back for a long period of time," Husing said.
This will likely affect cities' discretionary funds, which usually go toward increasing public safety or community programs, Husing said.
When the local housing market is fixed, the economy will likely rebound, Husing said.
San Bernardino is no stranger to fiscal hardships. The city was forced to fill a $17.3 million budget shortfall for the fiscal year that ended June 30.
According to the most recent sales-tax figures released, the city will likely face another shortfall this fiscal year, which spans July 1 to June 30.
A report from the Finance Department shows sales-tax revenues are down about $500,000 from July through September, the first quarter of this fiscal year, as compared with last year.
Overall revenues are down over $2.2 million, the report said.
So far, the city has collected $1.2 million in sales tax through the first quarter, said Assistant City Manager Lori Sassoon.
Sales tax is the city's No. 2 revenue source behind property tax, Sassoon said.
The city has projected it will take in $30.5<TH>million in sales tax this fiscal year, Sassoon said.
That seems like a lot to make up with only $1.2 million in the bank, but Sassoon said it's not uncommon to have low sales-tax figures through the first quarter of the fiscal year.
The bulk of sales-tax revenue usually comes in during the holiday season when retail sales are booming, Sassoon said.
But the outlook for retail sales is not promising this holiday season and San Bernardino officials are expecting another shortfall in the second quarter, from October through December.
Colton is facing a similar challenge.
This year, the city has been hit hard by the closure of several prominent businesses. The meltdown of the credit industry, coupled with economic uncertainty, has also caused RV sales to plummet.
Recreational vehicles are a major sales-tax contributor to the city's general fund.
"It's tough out there. I think everybody's feeling it," said City Manager Daryl Parrish.
The city's biggest revenue source is sales tax, and Parrish expects it will come in about $1 million less than expected this fiscal year, which ends June 30.
The city has already saved about $700,000 through spending cuts and holding open positions vacant. City staff is looking at ways to save an additional $250,000, Parrish said.
Sales-tax projections are made through a joint effort, Parrish said. The city examines numbers from previous years and gets input from its Economic Development Agency, the county Assessor's Office and tax consultants before calculating a number.
This year's projections were "very conservative" yet still came in less than expected, Parrish said.
"At this point, I'm telling staff, 'Don't bring me anything that costs us money. It's not the right time. Bring me something that will save us money,'" Parrish said.
Redlands, its large shopping plazas that which draws shoppers from other cities and has a median household income of about $80,000, according to the U.S. Census Bureau, hasn't been immune to the slump.
"People are buying less -- it's the economy," said city spokesman Carl Baker. "When they buy less, that means fewer sales taxes and it cuts into municipal revenues."
The city is looking to cut $1.6 million in spending this fiscal year to make up for expected shortfalls in sales-tax and other revenue source, Baker said.
When looking at the county's budget, sales-tax revenues aren't as vital as property-tax revenues but still make up a significant portion of the county's discretionary fund, said Dean Arabatzis, assistant county administrative officer.
County sales-tax revenues are expected to come in at least 10 percent less than expected, Arabatzis said, which could have some effect on the county's public safety and health and welfare agencies.
Property tax accounts for about 70 percent of the county's discretionary fund of approximately $610 million, Arabatzis said. Property taxes will come in as expected this fiscal year, but Arabatzis can't say the same for the next fiscal year, beginning July 1.
Property-tax revenues may not increase or could drop 3 percent to 4 percent, Arabatzis said. A worst-case scenario of a 5.5 percent drop has been released by the Assessor's Office, Arabatzis said. Such a drop would be approximately $23 million.
The county is already in the midst of a hiring freeze, Arabatzis said. If things get worse, reorganization is a possibility, he added.
michael.sorba@inlandnewspapers.com
"Our biggest industry, which is residential construction, is not coming back for a long period of time," Husing said.
This will likely affect cities' discretionary funds, which usually go toward increasing public safety or community programs, Husing said.
When the local housing market is fixed, the economy will likely rebound, Husing said.
San Bernardino is no stranger to fiscal hardships. The city was forced to fill a $17.3 million budget shortfall for the fiscal year that ended June 30.
According to the most recent sales-tax figures released, the city will likely face another shortfall this fiscal year, which spans July 1 to June 30.
A report from the Finance Department shows sales-tax revenues are down about $500,000 from July through September, the first quarter of this fiscal year, as compared with last year.
Overall revenues are down over $2.2 million, the report said.
So far, the city has collected $1.2 million in sales tax through the first quarter, said Assistant City Manager Lori Sassoon.
Sales tax is the city's No. 2 revenue source behind property tax, Sassoon said.
The city has projected it will take in $30.5<TH>million in sales tax this fiscal year, Sassoon said.
That seems like a lot to make up with only $1.2 million in the bank, but Sassoon said it's not uncommon to have low sales-tax figures through the first quarter of the fiscal year.
The bulk of sales-tax revenue usually comes in during the holiday season when retail sales are booming, Sassoon said.
But the outlook for retail sales is not promising this holiday season and San Bernardino officials are expecting another shortfall in the second quarter, from October through December.
Colton is facing a similar challenge.
This year, the city has been hit hard by the closure of several prominent businesses. The meltdown of the credit industry, coupled with economic uncertainty, has also caused RV sales to plummet.
Recreational vehicles are a major sales-tax contributor to the city's general fund.
"It's tough out there. I think everybody's feeling it," said City Manager Daryl Parrish.
The city's biggest revenue source is sales tax, and Parrish expects it will come in about $1 million less than expected this fiscal year, which ends June 30.
The city has already saved about $700,000 through spending cuts and holding open positions vacant. City staff is looking at ways to save an additional $250,000, Parrish said.
Sales-tax projections are made through a joint effort, Parrish said. The city examines numbers from previous years and gets input from its Economic Development Agency, the county Assessor's Office and tax consultants before calculating a number.
This year's projections were "very conservative" yet still came in less than expected, Parrish said.
"At this point, I'm telling staff, 'Don't bring me anything that costs us money. It's not the right time. Bring me something that will save us money,'" Parrish said.
Redlands, its large shopping plazas that which draws shoppers from other cities and has a median household income of about $80,000, according to the U.S. Census Bureau, hasn't been immune to the slump.
"People are buying less -- it's the economy," said city spokesman Carl Baker. "When they buy less, that means fewer sales taxes and it cuts into municipal revenues."
The city is looking to cut $1.6 million in spending this fiscal year to make up for expected shortfalls in sales-tax and other revenue source, Baker said.
When looking at the county's budget, sales-tax revenues aren't as vital as property-tax revenues but still make up a significant portion of the county's discretionary fund, said Dean Arabatzis, assistant county administrative officer.
County sales-tax revenues are expected to come in at least 10 percent less than expected, Arabatzis said, which could have some effect on the county's public safety and health and welfare agencies.
Property tax accounts for about 70 percent of the county's discretionary fund of approximately $610 million, Arabatzis said. Property taxes will come in as expected this fiscal year, but Arabatzis can't say the same for the next fiscal year, beginning July 1.
Property-tax revenues may not increase or could drop 3 percent to 4 percent, Arabatzis said. A worst-case scenario of a 5.5 percent drop has been released by the Assessor's Office, Arabatzis said. Such a drop would be approximately $23 million.
The county is already in the midst of a hiring freeze, Arabatzis said. If things get worse, reorganization is a possibility, he added.
michael.sorba@inlandnewspapers.com
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