South Pasadena is facing a growing budget deficit that will continue to grow if cuts are not undertaken or new revenues are not realized.
The City Council gave its unanimous approval at its Feb. 20 meeting to develop a plan to include the public in budget discussions that may require cuts to some important services.
City officials are going to have at least two town hall-type meetings that will encourage the public to participate. Also, they will be taking their budget deliberations to various community groups such as Rotary, Kiwanis and Women Involved in South Pasadena Political Action (WISPPA), to name just a few.
“Staff is working on the five-year budget forecast to be presented to the council on (March) 6th,” John Pope, the city’s public information officer, told the City Council during its meeting on Feb. 20. “At this point we are anticipating some degree of a budget deficit. And, so, the purpose of this plan is to go out to the community and present potential solutions to close the budget gap and those will be presented by our city manager and finance department.”
The council also received a staff report by City Manager Stephanie DeWolfe that was prepared by Pope, which also was presented at council’s meeting. The report asks the council to approve, which it did by unanimous vote, the Budget Outreach Communications Plan.
“The city of South Pasadena is facing a budget deficit that is projected to grow larger over the next five years if no actions are taken,” the report states. “The city’s goal is to take steps to close the budget gap using an approach that is most acceptable to the community. The city will engage in a comprehensive community outreach effort during the month of March 2019 to gain input on potential solutions to the deficit. The deficit projections will be presented to the City Council on March 6, 2019.”
Although the cause for the deficit was not a topic of conversation at the Feb. 20 meeting, past discussions has attributed the gap, in some measure, to the increasing burden of employee pensions.
The CalPERS obligations project that the deficit to the city will be realized in fiscal year 2020-2021.
“Staff is working with CalPERS and with independent actuarial consultants to refine the impacts in future years and to develop plans to offset the costs,” a DeWolfe report that was presented to the council back in May of last year states.
City officials also said they understand that difficult choices are ahead when it comes to services and that’s why the outreach is being implemented.
“I want to point out a couple of things,” said Mayor Dr. Marina Khubesrian. “This is a very robust budget-information-to-the- community proposal. Of note, this is a first for our City Council. It’s the first I’ve seen since I’ve been on the council to have the outreach plan laid out in such a thorough manner, so everything looks predictable and transparent and the community knows what to expect and where they can go to hear the information that staff will present about our budget, any shortfalls and opportunities for increased revenues.”
This year’s 2018-2019 General Fund (GF) revenues are at $27,049,618 while the GF expenditures are at $26,286,835, according to city officials.
“The FY (Fiscal Year) 2018-19 adopted annual budget represents a three percent increase in general fund expenditures,” the report states. “The city’s main expenditures can be attributed to personnel (72 percent) and operations and maintenance (22 percent). The city did not increase wages as part of the approved 2017-2019 Memorandums of Understanding with the represented labor groups. The increase in expenditures is largely due to increases in mandated pension liability, workers’ compensation, and health insurance costs.”
A public survey last May indicated 95 percent of residents thought South Pasadena had an excellent quality of life.
“The intent of this Communications Plan is to map out strategies and tactics to educate target audiences about the budget, the challenges it presents, and the potential solutions,” the report states. “The city will seek community input on the most (and least) preferable solutions to closing the gap.”
The outreach plan also will include identifying the target audience, the key messages, outreach tactics that will include materials development, media relations, special events/community meetings, City Council, Finance Commission and publications, among other things.
City officials acknowledge that this process of closing the budget gap is going to be a difficult one.
“While some of the potential solutions may be controversial, we will layout all options for community input and discussion,” city officials say.
The public input is expected to help the city draft the fiscal year 2019-2020 budget as well as develop a long-range financial plan to combat the deficit.
One of the challenges the city faces, though, is to avoid cutting funding that was believed to be saved by the passage of the utility users tax (UUT) last November.
“Retaining the UUT in November 2018 did not eliminate the budget deficit,” the report states. “If the city had lost the UUT, it would have resulted in significant and immediate cuts in vital city services on top of the budget deficit.”
The proposed elimination of the UUT was on the November ballot but was soundly defeated by nearly 80 percent. It comes up again in front of the voters in 2020.
The actual deficit projections in dollar amounts are anticipated to be presented at the City Council’s March 6 meeting.