Facing Future Deficits, City Council Begins Process with $2.1 Million in Cuts

Pasadena’s City Council this week unanimously approved a plan to reduce the fiscal 2016-2017 budget by $2.1 million, which according to the City Manager’s office is the first phase of a long-term strategy to keep Pasadena fiscally sound.

The budget cut includes the elimination of seven full-time positions, two of them from the City Manager’s office. The seven positions, City Manager Steve Mermell said, are currently vacant.

Mermell presented the plan Monday during the City Council’s regular meeting. He explained the according to current economic projections, Pasadena will have a significant budget shortfall by 2019 if the budget reduction is not implemented.

He also said that a $388 million unfunded pension liability that continues to grow is one of the major factors in the projected shortfall.

“In the current year, we have money which is above the general fund reserve of about $14 million, but if we start to spend more than we bring in, we start to eat away at that reserve,” Mermell. “When we get to 2019, we’re actually eating into the designated general fund reserve.”

The cuts, as presented by Mermell and approved by the City Council, came from a reallocation of a portion of engineering costs to the Capital Improvement Program, a reduction of waters cost through conversation, service and supply reductions, and a reduction in the overtime budget, all of these at the Department of Public Works. Public Works also eliminated a full-time position for Maintenance Assistant at its Parks Division.

At the Planning Department, the reduction involved a reallocation of personnel costs to the Building Services Fund and the elimination of a Management Analyst IV position. The Transportation Department is eliminating a Transportation Administrator position and reallocating costs to various city parking funds. Human Services and Recreation will also be eliminating a Management Analyst II full-time position.

A Project Manager position and a Public Information Coordinator position at the City Manager’s office will be eliminated, as well as a Management Analyst II position at the Department of Finance.

Mermell emphasized that this is only the first phase in a multi-phase reduction plan that will be comprehensively analyzed as the need arises. The city’s various departments and services will have to take part in this analysis to make sure any further reductions are justified.

At the meeting, Councilmember John Kennedy said he is concerned about the unfunded pension problem, which he said could grow significantly if the City doesn’t do anything to stave off the growth and deal with the pension obligation.

Mermell further explained that further reductions in expenditures will not be easy but are necessary to ensure a balanced budget. He said these will also likely result in some service reductions but will only be recommended after thorough program analysis, such as what is now ongoing.

The City Manager also presented data that said in the future, cost reductions may have to be applied to the Pasadena Police Department particularly its air division, the Pasadena Fire Department’s ambulance services and the City’s library services. He said his office is taking care not to cut into essential safety and law enforcement services in this effort.

Pasadena may experience a budget gap of about $12 million by the year 2021 if it doesn’t move to reduce expenses now or get new revenues, Mermell said.