Pasadena Council Opens FY2019 Operating Budget Public Hearing

City Manager Steve Mermell described Pasadena’s budget challenge as the “most critical issue facing the city.” – Screenshot courtesy KPAS

With structural deficit looming, the city’s budgetary gap could grow in excess of $32 million over next five fiscal years

By Gus Herrera

On Monday, May 21, council opened the public hearing on the FY2019 operating budget and heard presentations from the police, fire, human services, and library departments – discussions that spanned two meetings, from the afternoon, until late into the night. In fact, council had to postpone some items from the evening’s regular agenda in order to accommodate the lengthy budget discussions.

The recommended figures for the FY2019 budget are as follows: $245.6 million for the general fund (FY2018 adopted was $236.7 million) and $815.1 million for all funds (FY2018 adopted was $782.9 million). Although the FY2019 operating budget is balanced, projections for the near future reveal a structural deficit that will more than likely require the city to re-assess its level of services and capacity to maintain critical infrastructure.

“Taken as a whole, the need to balance the operating budget and identify sufficient funding to maintain the city’s capital infrastructure is the most critical issue facing the city,” wrote City Manager Steve Mermell in his operating budget transmittal letter.

The FY2019 operating appropriations for all funds (in millions), excluding affiliated agencies and capital improvement program. – Courtesy photo / Office of the Pasadena City Manager

This impending challenge was first identified in June 2016, when a five-year projection revealed that “a gap would arise between anticipated revenues and expenses beginning in FY2018 and would grow more pronounced over time.”

Despite council’s approval of multi-million-dollars’ worth of reductions each year since and the city manager’s fiscal stewardship and constraint to not draw down the city’s emergency reserve funds, the “budgetary challenge is structural, i.e., projected to get worse over time” and the “elimination of services is inevitable as early as FY2020 (July 1, 2019),” according to Mermell.

Although residents may not yet feel the impacts of all the reductions made over the past few years, the repercussions of future cuts will only grow more prominent, especially since the city has trimmed most of the low-hanging fruit: “over the past 10 years the city has already made $19 million in ongoing reductions including the elimination of 123 full-time-equivalent (FTE) staff positions.”

This year’s estimates project that the budgetary gap could grow in “excess of $32 million over the following five fiscal years,” so unless new revenue streams are identified, then the city will indeed have to make some changes to its service levels.

In order to close the FY2019 gap, the city is recommending $2.349 million worth of departmental budget reductions, including the elimination of 14.8 FTE vacant positions. These set of reductions are similar to those made over the past few years (the adopted FY2018 budget included $2 million worth of reductions and the elimination of seven positions), but, beginning with next year’s budget cycle a more substantial set of cuts will more than likely have to be considered.

Mermell’s transmittal letter revealed that next year the city could be faced with closing some neighborhood libraries, downgrading the city’s advanced life-support ambulances, reducing after-school youth programs, eliminating park security staff, and reducing police officer staffing.

In addition to these operating costs, the city’s list of unfunded capital needs continues to grow, as well. The 2019-2023 capital improvement budget revealed that Pasadena has $745 million of identified but unfunded capital needs, which include 670,000 square feet of damaged sidewalks, obsolete 911 emergency response communication systems, 17,000 street lights on “failing hi-voltage circuits,” and aging libraries, community centers, and fire stations.

The city council will continue the public hearing on the FY2019 operating budget during each of their regular meetings, up until Monday, June 18, at which point they will most likely be asked to adopt the recommended budget.

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