San Bruno B.A.R.T.

  The economic downturn is creating slight havoc on the city of San Bruno's budget this year when combined with a new structural deficit of $1.54 million including a loss of state funds.

  That means the city may have to reorganize its departments to save $500,000, bank on one-time funds for another $500,000 and di into its reserves to cover the state revenue loss.

  Combining the library services and parks and recreation director position is one way to bridge the budget gap while eliminating a fire battalion chief and a public works secretary position that are both currently unfilled.

  The economic downturn is already beginning to show.

  A $200,000 to $300,000 shortfall in sales tax is anticipated for the current fiscal year, said Finance Director Jim O'Leary, who added next year should be similar. The closing of CompUSA earlier this year, one of the top 10 sales tax generators for the city, was a hit to those revenues, he said.

  The city managed a $500,000 annual deficit for the past few years. It made an unsuccessful attempt to create new revenue with Measure F - a half-cent sales tax increase in November. The measure, defeated by a mere 89 votes, was anticipated to raise $2.7 million for the city's annual general fund. The money was slated for capital improvements such as a new library, public safety facilities and sidewalk repairs. It was also a way to address the city's annual deficit.

  At last night's special City Council study session, O'Leary explained there were three main reasons for the loss.

  First, the structural deficit remains. Second, O'Leary anticipates the city to take a hit along with the general downturn in the economy. Finally, the city estimates a loss of over $660,000 in state revenue next year, he said. O'Leary budgeted for about a $500,000 loss.

  San Bruno faced a more difficult budget prior to the 2004-2005 fiscal year, which projected a $3 million shortfall. At that time, 25 positions were eliminated or not filled. Only five positions were filled since, O'Leary explained. As a result, the police department, for example, has the same number of officers now as it did in 1972, said Police Chief Neil Telford.

  Cutting further was not a warmly welcomed idea.

  "I think we're pretty much maximum of cutbacks," said Mayor Larry Franzella.

  The city will continue to look at ways to share services with neighboring cities - not a new concept for San Bruno. Millbrae Fire Chief Dennis Haag is currently working double-duty for both departments after San Bruno Fire Chief Dan Voreyer retired last year.

  In recent years, the council approved a $500,000 deficit utilizing one-time funds and unused money to fill the holes by the end of the year. The city will most likely continue utilizing this method for $500,000.

  Reserve funds could be utilized for the remainder of the shortfalls. O'Leary budgeted the state losses into the projection. The loss may not be as drastic, he said. Also, much of the money would be like a loan, which the state would eventually need to pay back to the city.

  Franzella said he'd be comfortable with using about $200,000 in reserves to fill the hole for this year with the intention of paying it back once the state refunds San Bruno.

  Councilwoman Irene O'Connell requested the implementation of a long-term budget process.

  "Not just how we're going to plug the hole this year," she said. "We should have a five-year budget strategy so we're not scrambling every year."

E-mail Heather Murtagh at heather@smdailyjournal.com