City Manager Rod Wood told The Courier yesterday that he has asked all city departments, including police, fire and paramedic departments, for contingency plans to reduce expenditures by 10 percent.  In addition, Wood has suspended hiring for new positions and has asked all city departments to reconsider priorities in new hires.  

The directives were issued as a result of anticipating large decreases in City revenues from sales, hotel and property taxes anticipated from the current problems in financial markets.

“I'll tell anyone who calls me what the economic reality is,”  Wood said.  “We're going to have to decide whether we close the Roxbury Senior Center, reduce hours at the public library or cut police and fire.”

 Wood made clear that no spending reduction decisions had been made yet.

“Frankly, we don't have answers yet,” said City Spokeswoman Cheryl Burnett.  “We are in the process of conducting internal analyses right now and much of the sales/revenue data is not yet in.  As such, we are not planning to specific numbers.”

Beverly Hills is still collecting data from the first quarter of the fiscal year that ended Sept. 30, said City Treasurer Eliot Finkel. “It may take a few weeks, there is a lot to digest.”

Finkel states sales and transient occupancy tax revenue (T.O.T.)  measured through August, indicate an increase from last year.

“General sales tax revenues through August show there is softening, but it is still up from over a year ago,” he states. “T.O.T. was strong in July and August, it was higher than last year.”

It is too soon to start analyzing other taxes like business tax or developer fees. “I would assume in our community, that all taxes could be impacted by a serious recession,” said Finkel. “Given that Beverly Hills is the community that it is, it would be less impacted than other areas, as our real estate values were.”

Due to the delay of the 9900 Wilshire project, “some developer fees will be delayed, but assuming the property is built and sold, it will have a positive impact on real estate tax,” he said.

In regards to the City's investments, Finkel says, “They are doing just great.” Beverly Hills was not affected by the bankruptcy of Lehman's or by the take over of any banks or brokerage houses.

"The City's funds are invested in treasury bills and top-rated corporate bonds,” said Wood.  “We are prohibited by law from investing in equities.  The prohibition was enacted after the bankruptcy of Orange County."

The City's investment philosophy is safety first, liquidity second and rate of return third, he says.  

“We have been running over 4 percent since I have been treasurer (March 2005),” said Finkel. “There are limitations on what we can invest in. We must invest in a government or agency debt that matures in five years or less. Since I have been treasurer, they buy in large have been six months or less.”

In these economic down times, Finkel said his role as treasure has not changed.

“I don't think it really changes,” he said. “ (The City's) investments have not changed substantially. With respect to looking out for the long term financial interest of the City, we need to be cautious, we need to do what makes sense for the City's finances.”

Finkel suggests using caution when converting commercial property to residential property, as approved by the City Council for the 9900 Wilshire project and proposed by The Beverly Hilton.

“(It's) not in the best interest of the City long term,” said Finkel. “This is supported by the consultants of the City hired to look at the general plan. What they found is that office space devoted to tenants such as the entertainment industry provide more revenue for business and sales tax. These high income individuals do a lot of entertaining, they do a lot of shopping in our City.”