Finance Commission Supports Proposed $3.5M Budget Cut

The South Pasadena Finance Commission, in a special meeting Tuesday, gave a thumbs-up to a proposed budget that will ask the City Council to cut $3.5 million from what it would have recommended, if not for the COVID-19 pandemic.
This would bring proposed expenditures down to $27.4 million for the 2020-21 fiscal year, from what was anticipated to be nearly $31 million. The City Council will debate the matter and approve a budget in June.
“I think it’s going to be a very difficult fiscal year as well as calendar year,” commission chair Frederick Findley said Tuesday. “We always have to look for ways in which we can economize the way we run this city in terms of financial management and be prepared to make the adjustments we need to make on our expenses moving forward.”
The reduction includes a tentative $1.35 million in personnel savings and essentially defers spending $1 million for street repairs for at least a year. In a bold twist, the cuts do not involve layoffs or additional furloughs beyond those already implemented, and the plan preserves a number of community service functions that residents pined for during the outreach process.
“Those opinions and those priorities that were shared have been folded into this process and into this proposal that we’ve been talking about,” observed City Treasurer Gary Pia. “This proposed budget doesn’t require any cuts to core public safety functions. It doesn’t reduce library hours. It doesn’t impact senior services. It doesn’t reduce tree planting or environmental programs. It doesn’t require any pay cuts or layoffs of staff.”
As for reductions in personnel costs, $520,000 comes in the form of continuing a hiring freeze for five vacancies. As Finance Director Karen Aceves explained, the city also may target several employees with a “golden handshake” retirement incentive, though its success would, of course, depend on whether the employees take it. Aceves said the city also expects to engage with labor groups to try deferring $400,000 worth of cost-of-living-adjustments.
These expectations are, naturally, conditioned on the city not suffering stronger economic losses than predicted in the fallout of the COVID-19 pandemic, which for more than two months forced the closure of service and retail stores and limited eateries to takeout or delivery. Though the county this week permitted retailers — not service providers — to reopen with occupancy restrictions, it remains unclear how many of South Pasadena’s businesses will take advantage of tax deferrals to soften their own losses in the meantime.
With that in mind, Aceves said the Finance Department plans to regularly update the City Council on where things stand, quarterly at the very least.
“This is going to be the next year of ongoing monitoring,” Aceves explained. “What we’re doing in the Finance Department is operationally trying to be set up to automate everything, so that when we get a payment from L.A. County, for instance, in our tax revenues or for our sales tax, it gets automatically input to our systems so that we have the numbers as quickly as possible.”
Echoed Pia: “It’s definitely not a ‘set it and forget it’ project.”
Aceves also plans to shave $350,000 off of the operations budget by eliminating departmental travel and training for the year and also cutting back on supply purchases when possible. This will include eliminating community programs from the Police Department, Fire Department, library and other departments — programs that likely would have been canceled anyway, thanks to social distancing guidelines and other restrictions.
This version of the budget also calls for using the $600,000 of reserve funding for the storm water fund, under the rationale that that fund now has a more reliable and consistent funding source that eliminates the need to maintain a reserve.
Increasing staff levels at the police and fire departments also open the doors to potentially cut $200,000 in overtime expenses for the year.
Residents were invited to weigh in via remote outreach sessions for most of the month, and participated in exercises that asked them to consider how they’d apportion $100 among city functions and also how they would prioritize other facets of city operations. Prepared budget presentations were viewed more than 1,000 times, according to the staff report, and 130 residents responded to the presentations, well exceeding the typical 5-10% response rate.
Additionally, more than 83% of those respondents said this represented their first engagement with the city’s budgeting process.
“It’s critically important to know what you think,” Pia said, praising the interaction.