With a looming $9 million deficit in the next fiscal year, Fullerton has a lot of cuts to make, administrators have warned the City Council.
Hours for the city’s library, once it reopens, could be cut by nearly half. The city’s museum could remain closed even when the state lifts its stay-at-home order. Employees could be asked to take a furlough on two Fridays a month, while department administrators and council members could take a 10% pay cut. And vacant positions could remain open for a while.
Even if all of those actions suggested by city staff are taken, Fullerton would still be facing a projected $1.3 million deficit for the 2020-21 fiscal year starting July 1, officials said at a recent council meeting. And using its reserves to cover the shortfall would deplete its $9.5 million savings by 2023-24.
Council members are already brainstorming where the city could cut further. More city-owned properties could be sold; some even floated having the county take over the city’s library.
“It’s time for all of us to decide what is the core service the city has to provide for its people. In my mind, that’s public safety. That’s roads, sewer and water,” Mayor Jennifer Fitzgerald said. “Everything else is on the table for me.”
The city has struggled with its budget for some time. But the coronavirus pandemic and resulting veritable halt to the economy has put an even tighter squeeze on the city’s finances.
The city has already laid off 153 part-time employees in its library, parks and recreation and public works departments. And it is using $3 million in its reserves to replace the revenues lost in the last few months.
For the next fiscal year, city staffers are projecting 10% less will be received in sales tax revenue and a 20% loss in hotel tax revenue.
Those revenue losses come as the city’s spending increases – including a $2.9 million rise in pension costs, $820,000 in previously negotiated salary and benefit increases for its workers and $1.1 million in commitments added to the current budget earlier this year such as new contracts for parking enforcement and jailers.
Like many others in Orange County, the city is looking to the state and the federal government for pandemic relief. Still, nothing is assured, city leaders said.
“It’s a wait-and-see game,” Councilman Jesus Silva said.
The city’s budget analyst, Steven Avalos, noted staffers are “projecting a really conservative estimate with the best available information.” If the economy improves quicker than Fullerton expects, the city’s budget outlook could improve, he told the council.
But council members all acknowledged they will have to make some tough choices.
“We can draw from reserves for a year or two, but it dries up very rapidly,” Councilman Bruce Whitaker said. “It’s a very poor practice to have no reserve.”
Fullerton’s partnership with the Muckenthaler Cultural Center, which Fitzgerald said costs the city $100,000 a year, may need to be reexamined. Councilman Ahmad Zahra wanted to examine how much the city is paying its consultants.
Before the pandemic, some council members had looked at putting a local sales tax measure on the ballot in the near future. Their efforts could continue.
Fitzherald said if “this city wants to keep the same service that it has now, the only sure hope we have now is to increase the local sales tax.”
For Whitaker, he’s wondering whether Fullerton should even remain “a full-service city” with its own police and fire departments, or contract with the county for potential cost savings.
“We have to get our expenses to match our revenue,” he said. “The idea of dictating tax increase may not be something that flies with voters at all.”
Councilwoman Jan Flory said it’s her priority to maintain the city’s museum, calling the building and its nearby plaza “the hub of the city” and “a historical heart of our downtown and our city.”
Still, the city needs to cut somewhere, wherever that maybe, she said. “We are making the decision at the City Council level that people are making at individual households every night.”
The council will take a look at a proposed budget for the next fiscal year on June 2, but would likely revisit it every quarter or more regularly as needed, officials said.
Source: Orange County Register