If the general fund budget were to include the personnel requests and only part of the capital outlay requests, the fiscal 2001-02 budget would have a surplus of $2.1 million while fiscal 2004-05 would have a deficit of $2.1 million. With personnel requests and all capital expenses included, fiscal 2001-02 would have a deficit of $363,352, while fiscal 2004-05 would have a deficit of $9.4 million.
The single, largest expenditure the city faces is in workers' compensation premiums. The city normally pays premiums worth $342,000 yearly, with another $400,000 in claims. Beginning July 1 the city faces $1.2 million in premiums, with no change in claims.
Mayor Cheryl Walker said the increase in workers' compensation stems from the Legislature, in that certain injuries are now presumed to be work-related.
"We're at the mercy of the Legislature when it comes to workers' compensation and the Legislature has made it an expensive proposition for local government," Walker said Friday. "We did not expect our workers' compensation to up as unexpectedly as it will be in 2001-02.
"It's an expense with no benefit," she said.
The city is facing a potential shortfall in sales tax revenues for fiscal 2001-02.
Walker said the shortfall follows a state economy that is slower overall.
Phil Carr, city director of administrative services, said Friday the shortfall will result in the city receiving about the same in sales tax revenues as the current year, about $6 million.
"It's about the same as last year," Carr said. "We consider that as flat."
Ideas on how the city might cut expenditures or increase revenues included self-insurance for workers' compensation, contracting for certain city services and offering certain services to other communities facing tough budget decisions.
"If we don't start looking outside of this box, we'll be locked in it forever," said City Councilman Larry Grogan.
Councilman Jack Terrazas suggested the city use "creative financing" and consider selling certain city assets.
"There's nothing wrong if we get in debt, as long as we pay it off," he said.
Meanwhile, Salem said the city's biggest sources of revenues are property taxes, sales taxes and motor vehicle taxes. He said the city only gets one-quarter of 1 percent of property tax increases, which are limited to 2 percent yearly under Proposition 13.
Salem said the sales tax is good source of revenue but it is not guaranteed.
"The sales tax has been our source of reserves but it's volatile," he said.
Walker asked that a second workshop be set and that department heads prioritize their requests.
"Let us know where you see the most-pressing needs," she said.
The council set a second workshop tentatively for June 26.
Staff Writer Rudy Yniguez can be reached at 337-3440.