The South Pasadena City Council got its first look at the city’s draft 2018-19 fiscal year budget of about $27.4 million as it struggles to meet the increasing demands of retirement benefits.
Moreover, the elephant in the room is the possibility of the losing the Utility User Tax, which represents about 12 percent or $3.5 million of the budget. South Pasadena City Manager Stephanie De Wolfe said the UUT would not be included in the budget deliberations. (See related story Pg. 1)
“We will not be talking about the impacts of the potential UUT repeal during the budget process,” DeWolfe said in an email to the Review. “We will bring a separate report to council in July that will discuss the fiscal impacts of the initiative … and outline the specific cuts that will be made if the repeal is successful.”
Although not discussed during the budget’s deliberations, Mayor Pro Tem Dr. Marina Khubesrian said the UUT is of vital importance.
“The City Council has significantly increased the investment in our streets and efforts to maintain robust public safety services which has been made possible, in large part, by the revenues from the UUT passed by voters in 2011,” Khubesrian said.
The city is prohibited from advocating for the UUT, but officials have indicated that a citizens committee, separate from the City Council, is in the process of being formed to advocate for the UUT.
“This is a very important issue,” Councilwoman Diana Mahmud said during a recent South Pasadena Public Safety Commission meeting. “The city cannot legally advocate for the UUT, but we can educate the community. The citizens committee can advocate for it.”
Meanwhile, the general fund revenues are going to are projected to be $27,468,618. That’s a three percent increase over last year because of sustained increases in property taxes, which is the city’s largest revenue source, according to a staff report presented to the council Wednesday night. Over the past five years, the report continues, total revenue has increased at about one to two percent annually.
The revenue breakdown is as follows: property tax, 51 percent; UUT, 12 percent; sales tax, 11 percent; and user fees, 4 percent.
On the expenditure side, the total comes in at $27,413,142. Personnel represents 72 percent of the budget, while 22 percent represents operations and maintenance, according to the staff report. The city’s reserve fund is about 25 percent of the budget.
During Wednesday’s presentation, each department head presented their respective budgets, including where the money is spent and goals for the upcoming year. As an example, the police budget came in at $8,815,924, with personnel bearing the greater burden of costs at $7,905,897 and operations and maintenance at $910,027.
“Your police department does an awful other than our core services,” Police Chief Art Miller told the council Wednesday meeting on May 16.
Councilmembers are encouraged by the budget but look to the future with caution because of pension requirements.
“The city is again in a strong and prudent financial position, even though rising pension obligations are facing all cities and regional and state agencies,” Councilmember Michael Cacciotti said. “We are also investing millions of dollars in street and sidewalk repairs, nearing completion of the Garfield reservoir project, moving forward with the Graves reservoir project, engaging in a General Plan update, nearing completion of the Arroyo Seco pedestrian bicycle trail, besides providing adequate staffing for our daily police, fire and emergency services, public works, library, parks and recreation services in our small town.”
The CalPERS obligations project a deficit to the city in fiscal year 2020-2021, according to the staff report.
“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,” DeWolfe says in the staff report presented to the council Wednesday night.
– The proposed budget for FY 2018-19 is a very conservative one with maintenance of current efforts in mind,” Mayor Pro Tem Dr. Marina Khubesrian said. “Additionally, we have a new five-year capital improvement plan initiative which is an important planning tool as we face fiscal challenges in the next few years from CalPERS and increasing retirement costs along with all other cities. The five-year CIP is critical for an older city like ours with many public amenities and infrastructure needing maintenance for continued use by our residents. The city is currently in the process of developing long range financial sustainability plans to offset these PERS costs. I’m particularity glad that this year we can focus our energies and more resources on the financial and economic needs of the city without the time, energy, and resource consuming albatross of the 710-tunnel looming over the city. It’s a good time to be beyond the 710 and moving forward to address these challenges and opportunities for our wonderful little City.”
The City Council will be holding public hearings during its budget sessions coming up in May and June, as they craft its fiscal plan for the upcoming year. The first such hearing was this past Wednesday.