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Slow Housing Market Sinks City Revenue

Low property values and a continued rash of foreclosures in Murrieta will slow growth of City revenue next year, officials reported at a Tuesday budget forum and City Council meeting. A home improvement incentive program was also approved.

A sluggish housing market will drag Murrieta’s revenue next year down to nearly the lowest levels since the recession began, officials reported Tuesday.

The City will collect $39.6 million to pay staff, provide services like park maintenance and upkeep the community over the next twelve months, Murrieta’s finance director told the City Council at an evening budget forum and meeting. That represents an increase of just 1 percent over last year, the worst on record after the local economy collapsed in 2008.

Low property values and a high number of foreclosures on Murrieta homes will force down City revenue from property taxes by 2 percent in 2011 and 2012 compared to the previous year, Finance Director Joy Canfield told Council members.

Money gained from sales tax will rise by 7.5 percent in the same period, to $11.4 million, as local retailers ramp up sales and new businesses like the recently opened pump cash into the economy, Canfield said.

Two sales were already reported at the dealership since its opening this week, a harbinger of future economic development, she said.

“Sales tax is the major bright spot,” said Canfield, as she pointed to a slide showing sales tax revenues soaring upward over the next decade to post-recession highs.

Still, the poor property tax outlook was a major concern for city staff, who recommended the Council adopt a budget covering just one year, instead of the usual two, to leave wiggle room for cuts that may be necessary next year.

“If current trends continue, we could need to make $1.5 million in cuts in future years,” Canfield said.

To save money in the future, the City will repay $4.5 million borrowed from its sister agencies that was used to finance the building of the new Murrieta Police Department headquarters in 2001, among other projects, effectively closing out all the debts levied against the general fund, its main bank account.

Council members praised the budget, citing innovative cost cutting measures and hawkish accounting as examples of the City’s commitment to avoiding deficits and staying lean.

“It’s anybody’s best guess where the economy will be going down the stream,” said Councilman Rick Gibbs, who led budget discussions with staffers on behalf of his colleagues. “This is like balancing your checkbook: you can’t spend more money than you’re making.”

He said the delicately balanced budget, which included continued concessions from City staffers, accomplished the City’s ultimate goal: offer continued services and kept some money in the bank.

The proposed 2011-2012 budget will be revised and eventually voted on by the Council later this month.

New Building Incentive Offered to Stimulate Economy

In an attempt to breathe some life into the local home improvement business, the Council unanimously approved a new home improvement incentive program that will refund City permit fees for a number of residential building projects. The one-week incentive will run from July 5 through 13, said Director of Building and Safety Allen Brock.

Councilwoman Kelly Bennett was absent from the meeting and did not vote.

Local building supply companies like and will also provide a 10-percent discount to homeowners who undertake improvement projects themselves or hire local contractors, Brock said. Also signed on to give discounts are J.W. Lumber, , Hub Construction Supplies, , Roberston’s Concrete and .

To receive the incentive, homeowners must first apply for a building or improvement permit while the program is open. To see the City’s permit procedures and guidelines, click here and check the Forms column.

The program is available to residents who perform the work themselves and buy materials in the City, and for those who hire Murrieta-based contractors to do improvement work.

The incentives were proposed by Councilman Alan Long, who worked in Anaheim when a similar program was enacted with great success.

“That’s the incentive – to keep it local,” Long said.

Clarification: The first publication of this story stated the City would be waiving City permit fees during its one-week incentive program. The City will not be waiving, but refunding, building permit fees for homeowners who meet the program's criteria. Patch apologizes  for the error.

Rob June 08, 2011 at 06:53 PM
Murrieta over commited and over built as a govt edict during the boom. Many did and it is time to face the issues at-hand. The challenge is to make sensible cuts and sensible LONG-TERM decisions while not alienating, nor forcing undue burdens on, the residents. The Council MUST avoid the quick fixes and short-tem revenue gimmicks. Pitfalls Low-income housing. Let us not kid ourselves. Murrieta has changed. Our solid middle-income American life-style has collapsed because of the housing market. In its place some of our communities are now low-income. Cruise down Madison and you can buy a condo for a $80-100K. $150K will get you a house. That is, by most accounts, love income housing. WE also have low-income renters in nearly every community. What the Council MUST protect is the building of low-income housing. If the life-style changes, home values will not come back to a reasonable level and, worse yet, the people who built Murrieta's solid reputation will leave. Tax/Tickets - The community is hurting, red light cams, distracted driving, etc. etc. is NOT going to help the issue. In fact, these actions are hitting raw nerves and people are looking at the City Govt as their adversary.
Rob June 08, 2011 at 06:53 PM
Spending - The City should not cut spending last, it should cut spending first. The community owns/employs/ City Govt, not the other way around. Our salaries are being lowered, many are not working, benefits are being reduced and yet the City paid the Fire Dept. over 2.5 million above MAX PAY in 2009. Eliminating OT, ALL OF IT, in the MFD along would save 2.5-3.2 MILLION/year. Murrieta must END ALL OT. This is a very common private sector practice. If they are under-staffed, based on the last published date, the fire dept could hire 35 full-time firefighters and break even on the budget! If City Govt is not willing to curb the runaway salaries, the community will not support any other proposed fixes. To date, the people are being asked to "eat cake" while the public sector is making no sacrifices int he short, nor long, term.
Diana Serafin June 09, 2011 at 06:29 AM
I agree with you Rob. City council still will not implement D & E but wants to add more cameras for revenue and the cops are hiding on every corner issueing tickets to even kids. No warnings or talking just tickets $150 and more. The city is desperate for money and will tax us any way it can BUT WILL NOT listen to the voters and implment D & E. We would save about $75,000 a year on the city council's golden parachute inusrance policies. We would save hundreds of thousands if they implemented E. It is not just the city manager's pay & benefits but all the top officials in the city. Yes quit spending first! Stop RDA, quit the memberships for all the special leagues, groups etc. Stop the trips to Washington DC & Sacramento and quit borrowing money!
Diana Serafin June 09, 2011 at 06:32 AM
I hope everyone read about LA getting rid of the red light traffic cameras. Accidnets were 4% higher at camera intersections too.
dwaynefloyd39 June 09, 2011 at 09:46 AM
We're currently in the midst of the greatest mortgage refinancing frenzy of the past 5 or 6 years. Rates are now the lowest they've been since mid to late 2003, I worked with a company called "Mortgage Refinance 123" I refinanced my current mortgage to 3.12% search online for them if you are planning to do refinance.

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