COSTA MESA — When the City Council discusses next year's preliminary budget at its May 17 meeting, the city is expected to reveal that sales tax revenues are increasing, but pension costs also are increasing faster than previously reported.
Through March of this year, Costa Mesa has $6.6 million more in sales tax revenue than originally projected. Still, city officials said, when they reveal their preliminary budget next month, they expect a $5-million budget shortfall.
The revenue was already budgeted into the amended budget for the second half of this fiscal year, said Councilman Steve Mensinger.
Costa Mesa also has more cash on hand than it did last summer, when the city only had $5 million. The city now has about $16 million in usable cash, but that changes monthly as revenue flows in.
The city has $27 million in designated funds. Of that $27 million, about $14 million is emergency money and the rest is designated for other purposes.
The totals are still significantly lower than previous years. In just 2006, Costa Mesa had more than $56 million in designated funds — labeled in city books as "unreserved" — which were actually assigned for certain city expenses and projects.
On the pension side, Rick Santos of the California Public Employees' Retirement System (CalPERS) revealed that if the city's workforce remains the same over the next three years, Costa Mesa will owe more than $25 million to the fund. That total, higher than previously projected, does not include city employees' contributions, which would lower the total the city owes.
The state's pension investments would also have to perform better than expected in the next several years for the city's costs to level off.
Tuesday's meeting was the first of many the city is planning with the public. There are the regularly scheduled City Council meetings May 3 and May 17, and in between those dates are study sessions, discussions on Chief Executive Tom Hatch's recommended cuts, and five-year financial forecasts.