A sparse crowd turned out for the first of two community meetings to discuss the budget gap South Pasadena is facing over the next five years coupled with the immediate challenge of closing a gap for this coming year that could reach more than $1 million.
In fact, latest estimates presented Wednesday night, March 13, at the South Pasadena Public Library’s Community Room indicate the budget gap could increase to possibly as much as $2 million for the upcoming year.
The gap is being driven, in large measure, by increased liability with pension costs as well as unexpected infrastructure needs, such as a $3-million water treatment plant to keep up with more stringent state water requirements.
The fact is, according to City Manager Stephanie DeWolfe and Finance Director Craig Khoehler, who ran the public meeting Wednesday, the budget has too many variables at this time to be specific about the exact size of the gap, except there is one and it has to be fixed.
City officials also presented those in attendance Wednesday night a survey scheduled to be available on the city’s website last Friday, southpasadenaca.gov, that includes ways to increase revenue and cut services. There were 17 people in attendance on the warm Wednesday evening.
The survey contains recommendations for increasing revenue that includes installing parking meters in the business district of Fair Oaks Avenue and Mission Street ($245,000 a year); impose a retail cannabis tax, which would involve changing the law because cannabis is illegal in So Pas ($48,000 a year); tax short-term rentals such as Airbnb’s ($50,000 a year); tax on visitors to small boutique hotel, which doesn’t exist now ($930,000); enhance recreational opportunities in the Arroyo Seco Golf Course (Unknown); and maximize use of city parking lots (Unknown).
The survey asks to indicate the level of support for any of the items from 1 being strongly oppose to 6, strongly support.
The survey also recommends a hike in the sales tax by .75 cents per $100 of sales (about $1.5 million a year) and a new public safety parcel like the one in neighboring San Marino ($947,000 a year at a cost to landowners of $24 – $384 per parcel, depending on the size).
The survey also recommends ways to trim expenses by reducing video production quality of City Council meetings (savings of $25,000 a year); eliminate crime prevention programs such as women’s self-defense courses and neighborhood watch ($26,000 savings a year); library books purchase reduction ($40,000 savings a year); reduce lawn maintenance and trash pickup at city facilities from weekly to bi-monthly, ($70,000 savings a year); eliminate police cadet program ($60,000 savings a year); eliminate special events like Concerts in the Park ($25,000 savings a year); and reduce teen center activities and events along with classes for seniors ($25,000 savings a year).
DeWolfe said there would be no full-time employees effected but part-time employees could lose their jobs.
Moreover, there was some discussion about the property tax issue with 18-year resident Greg Kawai saying the city should lobby state legislators to change the percentage of the property tax that goes to So Pas, which is between 24-25 percent.
“That percentage is ridiculous,” Kawai said. “We should talk to our legislators that are representing us. They should stand up for us and try and increase the percentage of the property tax. Twenty-five percent is ridiculous.”
Councilperson Diana Mahmud countered by saying the city has no control over the percentage divvied up by the state. In fact, she says the primary reason So Pas and other cities get so low a percentage of the property tax is because of the schools.
“It’s primarily for the schools,” she said during the meeting. “The schools carry an IOU and the state has an obligation to repay what they were owing the schools and were unable to pay.”
Mahmud was referring to the 1998 bill that created a state formula for setting a minimum annual funding level for K-12 schools and community colleges.
Resident Chris Bray questioned the city’s ability to cut spending at the administrative level before asking residents to pay more on additional taxes or lose needed services.
“It seems to me that that there is at least a chance that there’s outsourcing, streamlining and administrative restructuring that we can do,” Bray said during the meeting. “One of the things organizations do when they find out they are running out of money, that there’s a gap coming, is that they institute a freeze. They say, ‘we need a moratorium on new spending. No more programs. No more personnel. No more new initiatives.’ Is there any discussion going on in the city about for a while until we figure this out, not looking for new ways to spend more money like transferring tens of thousands of dollars out of reserves to pay for more expensive electricity that we weren’t forced to buy?”
Bray was referring to the recent change in South Pasadena’s power supply when the city went over to the Clean Power Alliance, which now provides clean energy to So Pas residents. The city was forced to transfer $32,000 out of the general fund reserves recently into the general fund to allow city facilities to run 100 percent clean energy through the CPA.
DeWolfe reminded the small crowd that attended the meeting that the city’s financial gap is a modest one compared to other cities in the state.
However, she also mentioned that if the city wanted to expedite some of the tax proposals they would have to declare a fiscal emergency.
“I am hesitant to do that because of the message it sends,” she said. “
The city’s fiscal year runs from June 30, 2019, to July 1, 2020.
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. The city also is looking at ways to increase revenues by additional taxes like an increase in the sales tax and adding a public safety parcel tax.
City officials have planned for 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.
The projected budget increases are driven by two primary factors: strategic investment in City infrastructure, and increased costs of pension obligations.”
DeWolfe cites the increase spending on South Pasadena’s infrastructure such as street repairs, water infrastructure, which included replacing three older reservoirs, as a major cause for the deficit.
City officials also identified nearly $100 million in, what they characterized as, “critical infrastructure spending needs, with funding identified for just half of the projects.”
And then you add the CalPERS liabilities, which also are projected to increase over the next few years, and the deficit has to be managed now, not later, DeWolfe said.
The next community meeting is scheduled for 2 p.m. on Sunday, March 24, at the Senior Center, 1102 Oxley St.
Officials are hoping more people come out to attend and contribute in what they characterize as a crucial time in the city’s financial future.