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Council Sends 2021 Budget Back to Finance Committee for One More Look

COVID-19 economic impact ‘tremendously damaging,’ says city manager; ‘Nothing is sacrosanct,’ says Councilmember Madison

Published on Tuesday, May 19, 2020 | 4:55 am
 

Six weeks before Pasadena’s 2021 budget is due to be approved, the City Council Monday unanimously agreed to send it back to the Finance Committee for one more look before finalizing it for approval.

The economic impact of the COVID-19 crisis has been “tremendously damaging,” said City Manager Steve Mermell, during the council’s afternoon public hearing.

The pandemic crisis, as it has across the nation, will have a dramatic impact on the city’s new budget, work on which was begun in December of 2019, “before the world changed in two weeks,” Mermell added.

Noting the seriousness of the impact on the City’s finances, Councilmember Steve Madison told the council “nothing is sacrosanct,” as they considered recommended budget cuts.

Both Councilmembers Steve Madison and John Kennedy have even suggested that the Pasadena Unified School District (PUSD)’s yearly portion of revenue from Measure J be re-examined.

Measure J, passed overwhelmingly two years ago, requires that a third of yearly annual revenue from a quarter cent sales tax be given to the PUSD.

Mayor Terry Tornek told the Council that he has spoken to PUSD Board President Patrick Cahalan about scheduling a meeting to discuss the school board’s past and upcoming expenditures, “in light of what (the PUSD) is confronted with” in terms of the pandemic.

But City Manager Mermell also pointed out, with some measure of alarm, that the City is currently facing just over $11 million in three debt service payments—due between now and the end of February 2021—from  the Rose Bowl Operating Committee.

Mermell recommended taking those payments from the city’s reserves.

As Mermell explained, the city’s five reserve fund is just over $12 million, which would be consumed by the debt service, but Finance Director Matthew Hawkesworth also located a debt service reserve fund with almost $3 million, which would offset some of the debt payment costs, said Mermell.

“But still,” said Mermell, “You’re looking at about $8 million out of the City’s reserves, and we still don’t know, if after February, the Rose Bowl will be able to operate, and what the marketplace will be like. So, frankly, for me, that is the most pressing financial concern.”

Hawkesworth also pointed out that, “The Rose Bowl was in trouble even before the COVID-19 crisis.”

While the city’s charter requires that the annual operating budget for the upcoming fiscal year be submitted to the City Council on or before the third Monday in May, City staff had recommended that the Operating Budget be approved in a single Council meeting, “given the extraordinary circumstances brought on by the COVID-19 pandemic.”

According to the City Manager’s office staff report, “The City entered the COVID-19 pandemic in a strong fiscal position, (but) the projected economic losses are significant and unprecedented.”

Responding to a question from Councilmember John Kennedy, Mermell assured the council that no public safety resources or expenditures would be affected in the new budget.

The new budget, while balanced, proposes $ 2,469,021 in total reductions, with more than half a dozen unfilled positions to remain empty, including a risk manager, a collections specialist, a fire administrator,a librarian, and two senior office assistants.

According to the staff report, City staff, “facing a host of economic questions posed by the pandemic, changed course during the annual budget process and modified its original plans in order to present a balanced Operating Budget while preserving essential services.”

The report also pointed out that the main adjustment to help offset projected operating losses in FY 2021 was the reprogramming of approximately $8.5 million in General Fund dollars originally intended for the FY 2021-2025 Capital Improvements Budget.

“It is worth noting,” said the staff report, “that the Recommended FY 2021 Operating Budget is balanced without drawing upon the General Fund reserves. Nevertheless, staff will continue to monitor the financial realities of this public health crisis and recommend additional budget adjustments, if necessary. Staff has identified a series of immediate budget reductions that are not expected to significantly impact existing service levels.”

The Recommended FY 2021 Operating Budget has  total recommended appropriations of $273,011,522 in the General Fund and $878,636,771 in all other funds.

A copy of the city’s recommended FY 2021 Operating Budget can be found here.

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One thought on “Council Sends 2021 Budget Back to Finance Committee for One More Look

  • Eddie—Your article correctly summarizes the discussion at Council yesterday, but I want to point out that Measure J does not “require” the City to provide direct funding to PUSD; that ballot measure was advisory in nature. The Council needs to decide each fiscal year whether to provide funding to the District and if so in what amount and under what terms and conditions. I’ve been an advocate for clear and measurable goals and objectives for any City funding, with an emphasis on getting the money into the classroom to help teachers and kids, and demonstrated additive use of the resources in periodic reviews with the District. Thanks for covering this important issue.

 

 

 

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