SEAL BEACH : Budget Crisis Looms, City Officials Say

Seal Beach may be sliding toward a financial crisis as it begins to feel the impact of state budget cuts, according to city officials.

“The city is heading for bankruptcy,” Councilman Joe Hunt said.

Hunt said he believes that in three years Seal Beach will find itself in the red with no reserve funds to absorb the deficit. That would force layoffs and painful cuts in services, he said.

City Manager Robert Nelson estimates that Seal Beach will cross into the red in four years if costs continue to grow faster than revenues. The effects of recent state budget cuts and other unforeseen expenses could push the city into deficit much sooner, he said.

State cutbacks have left Orange County with an estimated shortfall of $46 million. To make up for the loss, the county is considering levying a number of new fees on cities for services it now provides for free.

Among the proposed new fees is a $75.50 booking charge for each prisoner that city police departments bring to Orange County Jail. County supervisors have indicated that they will approve the fee, which would cost Seal Beach more than $22,000 per year, Capt. Gary Maiten said.

The county also may start charging cities for collecting property taxes, which would cost Seal Beach about $37,000 per year, said finance director Denis Thomas.

Thomas said he expects that the city’s legal bills will also grow as it prepares to fight a possible lawsuit by the Mola Development Corp.

If Seal Beach rejects a claim filed recently by the company, Mola attorneys say, the company will sue for more than $11 million to recover costs it spent in an unsuccessful bid to build a $200-million housing project that the city first approved, then rejected.

Seal Beach’s 1990-91 budget is only $16.4 million.

The Persian Gulf crisis could pinch finances even further as higher gasoline prices increase the costs of keeping police and other city vehicles on the road, Nelson said.