Martin and other officials say the revenue losses are partly due to
the crippling effects of the Sept. 11 terrorist attacks on tourism, a
numbing state budget deficit of $24 billion and a sluggish economy.
"I do think this is a very serious matter and the council should put
this as a top priority on their agenda," Councilman Peter Green said.
"It's going to be worse next year."
Budget shortfalls are occurring in several areas, as the city faces
losses of revenue and some higher costs.
In addition to the $3 million less pouring in from sales tax -- a
number Martin is now projecting to be $27 million instead of $30 million
-- city leaders also expect to be given $1 million less from state grant
programs. Gov. Gray Davis has imposed across-the-board cuts, which are
expected to hit public schools hardest but cities as well.
"I'm concerned because it's one of a handful of things we're dealing
with on the downside," City Administrator Ray Silver said about the
The city's cable provider, Time Warner, has also said it will stop
paying the franchise fee and utility tax on Road Runner, a high-speed
Internet connection offered to residents. The company has said it will
stop paying the $400,000 a year because the broadband service can't be
regulated by the city as cable.
Also of note, the city has seen the bed tax it charges on hotel and
motel rooms drop almost 18% since Sept. 11. The city pulls in $1.8
million a year from those taxes, which amounts to 1.5% of the $138 million general fund budget, Martin said.
Revenue from the hotels was down as much as 30% in the wake of the
attacks, but has steadily climbed back, officials said.
Downtown's Hilton Waterfront Resort and the Extended Stay of America
at the Seal Beach border have been hit hardest by the Downturn in
"There's no question that 9/11, especially in the midst of a
recession, was damaging to all the business and social travel," said
Steve Bone, president of Robert Mayer Corp. and co-owner of the hotel.
"Every month since then has shown a recovery, so people realize that
life does go on," Bone added.