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City Financiers’ Concerns Prompt Budget Delay

By Eric Licas
The Review

The South Pasadena Finance Commission picked apart a presentation by analysts and city staff regarding the coming year’s budget and capital improvement plan, advising that council hold off on its approval during a special meeting on June 27.

Early financial models put together by private consulting firm NHA Advisors suggested the city was set to run a deficit for the fiscal year that ended June 30. And in a worst-case scenario, previous analysis warned South Pasadena could have been at risk of exhausting its reserves within six years.

Since then, the Finance Commission and the city’s Finance Department identified more than $2.5 million in unused funds that allowed them to balance the books for this year. Updated projections presented by NHA Advisors during last month’s meeting show that although the city’s expenses are still set to outpace its revenue over the next six years, the difference between earnings and spending won’t be as pronounced as earlier models indicated. And the general fund should be able to maintain at least 30% of South Pasadena’s operating expenses in reserves.

“I’m not going to do another slight deficit for any years in the future,” Finance Commission Chair Peter Giulioni said defiantly in response to those projections. “What this implies is we either increase revenue or decrease expenses. That’s the only way to close the gap.”

He and the rest of the commission went on to question many of the assumptions regarding the city’s current finances presented by analysts and the Finance Department. Chief among the commissioners’ concerns was the fact that NHA’s updated forecasts were not formulated from its own independent analysis, but rather based on figures and estimates from city staff.

“So, we don’t actually have third-party revenue projections now for ’24-25,” Finance Commission Vice Chair Sheila Rossi said.

NHA Advisors Assistant Vice President Christian Sprunger acknowledged that the figures NHA used to rework its projections were based on city staff’s proposed budget for the coming fiscal year. Outgoing Finance Director John Downs defended the reliability of the data he shared with analysts.

“When I’m preparing the revenue estimates, I’m looking at historical trends and I’m looking at growth rates on there,” Downs said. “And so, based on my judgment, I stand by my estimate.”

Commissioners further raised issues with how city staff and advisors accounted for revenue from utility taxes and unused funds from vacant job listings. They and councilmembers also pointed out that the reports had become numerous and unwieldy, with some including out-of-date information.

These issues prevented council and commissioners from approving the 2024-25 budget proposed by the Finance Department. City staff were asked to provide further research and more streamlined documentation for further discussion.

Officials had hoped to have a budget for the coming fiscal year approved before the current one ended on June 30. Falling short of that goal, council approved a resolution that would allow the city to continue making appropriations for the next 60 days, or until a budget is formally green lit.


A special closed session of council was scheduled July 2, five days after its most recent public meeting. Items on the agenda included a “public employee performance evaluation” of the city manager, Arminé Chaparyan, as well as a “public employee appointment” of an “acting city manager.”

Chaparyan had been the subject of at least two previous evaluations in closed session on June 18 and 21. City officials declined to comment on the private, closed session meeting on Tuesday but did plan on issuing a statement after it took place.

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