Prudent City Manager Addresses Potential Deficit Early On
By Gus Herrera
Last week, the Pasadena City Council amended the Fiscal Year (FY) 2017 Operating Budget, making $2.1 million in reductions and eliminating seven vacant full-time equivalent (FTE) positions.
The actions on the budget were the first in an upcoming series of efforts to reduce the potential for deficits down the road. The particular reductions approved, “were deemed to have less than significant impact on city operations” and were chosen, in part, because they could be applied immediately.
Departments losing positions are: the city manager’s office, finance, public works, planning, transportation, and human services and recreation. Positions eliminated include: one project manager, a public information coordinator, three management analysts, a maintenance assistant, and a transportation administrator.
Although the budget is balanced for the current fiscal year, “trends indicate that beginning FY18 and continuing for the foreseeable future, the city’s General Fund will spend more than it receives in revenues thereby creating a structural deficit that will grow larger over time.”
Furthermore, the current General Fund’s designated reserve stands at $33.5 million, 20 percent lower than the goal adopted by city council (reserve should be $47.6 million). During the last recession, the city depleted “roughly $25 million in reserves,” according to city staff.
The FY17 operating budget was originally presented to council on May 9 and adopted on June 27, but recent projections have driven City Manager Steve Mermell to take action sooner, rather than later.
“I equate it to home economics – do you just sort of get by and live check-to-check or are you saving money for a rainy day, putting money aside to fix the roof … this is very much akin to that,” said Mermell.
Given the circumstances, the city will take forth a comprehensive effort to accomplish three goals:
- “Determine the appropriate and sustainable level of city services.”
- “Ensure that any realignment or reduction in services be managed to minimize negative impact.”
- “Take every reasonable measure to enhance city revenue.”
Thus in addition to cuts, the city will also be undertaking an overall study of its services, expenditures and revenue streams in the coming months. Studies will be done, for the most part, department-by-department and results will be presented to the council/public as they arrive.
Among the services being studied are the city’s police air services, the fire department’s emergency response services, the library system’s scope of operations, and more.Mermell stated that it is never easy making cuts and that the $2.1 million being eliminated was not just “laying around.” “During the recession we eliminated 300 positions, laid off over 40 people – there is no more low-hanging fruit,” said Mermell.The city will host a series of public meetings to discuss the budget after Jan. 1, 2017.
Mayor Terry Tornek commended Mermell’s efforts to attempt to tackle the issue as soon as possible, “This is an opportunity to make small down payment towards future problems … If we wait and don’t take action, the hole gets deeper. Everything that we do in the city, all the services we provide, are ultimately dependent on how responsible we are as decision makers on behalf of our residents and how we allocate our dollars. This is going to be an ongoing discussion … a lot of these issues … are beyond are control and we don’t have the answers we need. But we do have a responsibility to deal with what we do know.”
The city will also look to increase revenue through a variety of forms including, but not limited to: parcel taxes, real property transfer taxes, sales taxes, parking taxes, and business license taxes. Particularly, the city will look to the expected legalization of marijuana as a potential form of tax revenue.
Thus, in addition to cuts, the city will also be undertaking an overall study of its services, expenditures, and revenue streams in the coming months. Studies will be done, for the most part, department-by-department and results will be presented to the council/public as they arrive.