By Eric Licas
The Review
South Pasadena city officials identified more than $2.5 million in unused funds that may alleviate a projected spending deficit, and set a timeline to develop next year’s budget during a meeting of the City Council and Finance Commission on April 17.
Analysis conducted earlier this year found that if the city’s budget remained unaltered, its spending would outpace revenue by $3.7 million. In order to avoid falling into the red, the City Council directed staff to dive into the city’s finances and find ways to save or generate money.
As of March 31, just more than $3 million of the city’s $6.85 million budget had been spent, and an additional $1.28 million has been allocated to various projects, according to reports from city staff. That leaves another estimated $2.54 million in unencumbered funds, Finance Director Jim Downs said.
“Worst case scenario, it’s only $2 million by the end of the year,” Finance Commission Chair Pete Giulioni said, adding that officials found the money after they started the year thinking “we’re out of budget.”
A significant portion of the spare funds come from projects that had been budgeted at the start of the fiscal year but never actually broke ground. The city’s fiscal year ends on June 30, and it’s unlikely that the city would approve contracts to take on any of that work before then, Downs said.
“We were hoping to accomplish more, but it has been a challenging year,” City Manager Arminé Chaparyan said. “…There are a number of projects; we’re barely getting them off the ground.”
Meanwhile, officials have implemented a temporary hiring freeze on several vacant positions. These include full-time jobs in the city manager’s office, the Community Development Department, the Public Works Department and four positions in the South Pasadena Police Department.
Leaving those positions unfilled should save the city almost $368,000 this year, city staff estimated. And if officials decide to leave the job posts vacant or eliminate them for the next fiscal cycle, that could potentially shave off more than $1.4 million from the budget.
South Pasadena’s current financial concerns coincide with projections at the state level of a multibillion-dollar deficit. Lawmakers at the state level are clamping down on spending as economists project a $37.9 billion budget deficit in the next fiscal year.
Amid the dysfunction at the state level, city officials expect more hardship in the years to come, and plan on making “hard decisions,” in the near future, Downs said.
“We’ve given guidance to all the departments that this budget is going to be a very lean budget; don’t ask for anything new and even, quite frankly, if you haven’t spent money from the 23-24 budget, we’re going to be very critical on that and [asking], ‘Why do you need that for 24-25?’”
Staff have identified a variety of expenditures that may be dropped to save money, with an extension of the hiring freeze accounting for a large portion of the potential savings.
Meanwhile, the costs associated with certain long-term projects are expected to decline in the coming year.
“The poster child for that is the housing element,” Downs said. “We have a lot of programmed-out money in the housing element. That number is not going to increase, but it’s going to diminish.”
City officials are soliciting input on the budget from the public via surveys. Residents will also be able to speak on the matter at community meetings scheduled for May 13 and May 15.
Staff expect to present a proposed budget to the Finance Commission on May 29, and if approved, it could be adopted as soon as June 5.
However, Giulioni said the commission would be “laser-like,” in their review of the document, so it is possible that could take longer.
The process must be completed before the current fiscal year ends on June 30.
Giulioni thanked staff during the meeting for providing a detailed breakdown of the city’s finances. However, he continued to note that the same level of finance reporting had not been provided in the past.
“This is what the Finance Commission was asking for for the last eight months, this kind of understanding,” Giulioni said. “And we weren’t getting it. I want to be very clear with you: we were not getting that, which is another reason why the [recently disbanded] ad hoc committee looked like a reasonable thing.”
First published in the April 26 print issue of the South Pasadena Review.
