Ryan Hagen, Staff Writer
Posted: 05/25/2011 05:08:06 PM PDT

GRAND TERRACE – A presentation on how to rebuild the city’s budget to escape what a consultant called serious financial trouble was delayed about 10 minutes Tuesday evening – when the lights went out at City Hall.

“These are not part of the cutbacks,” joked Councilman Bernardo Sandoval.

But it might get to that point if changes aren’t made soon, according to consultant Jim Simon of Santa Ana-based Rosenow Spevacek Group Inc.

The city is facing a projected deficit of about $550,000, about 10 percent of the General Fund, for the fiscal year beginning July 1. That figure is expected to balloon to $1 million for 2015-16, if no changes are made.

“You’re not at a point where this is insurmountable,” Simon said, “but you are at a point that a lot of cities have been at a crossroads and made the wrong decision.”

If the city doesn’t enact some combination of service cuts and increased taxes, he said, the city will run out of money by 2015.

Simon recommended rethinking the budget by dividing it into three priority levels: legally required functions; services the city considers essential, such as business development; and optional services.

“It’s not about deciding what line items are we going to delete but what’s most important, next and next,” he said.

Projections of rising costs for services such as law enforcement – 70percent of the city’s budget – show the city will need to raise more money if it wants to keep service levels above what unincorporated communities receive from the county.

It’s something people have said about the bedroom community since it incorporated.

“It’s true what was said back in 1978: You really have no other sources of revenue,” Simon said. “The city’s gotten by for years doing things – pulling money from reserves, relying on redevelopment – that quite frankly are not sustainable.”

Grand Terrace, which has very few businesses, draws heavily from its Redevelopment Agency to fund many basic functions – including part of the salary of 13 of the city’s 20 full-time employees.

But the agency expires in 2034, and Gov. Jerry Brown has proposed eliminating all redevelopment agencies this year.

“Redevelopment loss would be catastrophic,” Simon said.

But the city does have bright spots, including a small employee roster that saves it from the ballooning pension costs crippling many other cities.

And it still has until July 1 to incorporate Simon’s suggestions into a working budget.

City Council members, who had warned about the city’s financial situation before hiring a consultant for $25,000, said they want residents to tell them which services they consider essential.

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