The local government budget is usually the last thing anyone thinks of or is even interested in. The previous Lompoc budget document was 189 pages of numbers, staffing charts, service descriptions, and explanations of how much funding it takes to run the city.
Even though it is a tedious read, you should show some interest in the budget and budget hearings; after all, it is your money they are spending to provide services you use every day and those you only need in an emergency.
In the opening statement of the current, in-use budget document, the city manager explains, “The fiscal year 2019-21 adopted biennial operating budget has been developed after a considerable review process. Departmental budget submittals were prepared and reviewed by line item in connection with projected revenues.”
Of course, when the current budget was prepared no one could foresee a near complete shutdown of most businesses or the impact to workers whose jobs suddenly disappeared because of business closures. The draft 2021-23 budget states, “Sales and use tax has historically increased year over year, however, revenues decreased 2.4 percent in [fiscal year] 2019-20 due to COVID-19 restrictions and the resulting economic downturn.”
Another impact was how the former City Council majority chose to use a new revenue source created by the passage of a 1 percent sales tax. By a 3-2 vote the draft budget indicates that the council “changed the payments methodology from a variable 30-year payment schedule to a more aggressive fixed 15-year payment schedule. While this is estimated to save all of Lompoc’s operating funds over $20 million in interest, payments will be substantially greater than under the previous payment schedules in order to gain the estimated savings.”
This means that less money will be available to provide needed services for the next 15 years. While the allure of “saving $20 million” sounded great, their decision will ultimately result in a yet to be determined adverse impact. Two of those council members—Dirk Starbuck and Victor Vega—are still in office and both terms expire in 2022; the other councilman who voted for this lost his seat by a landslide in the November election.
The next budget must be approved by June 30, which is the end of the current two-year budget cycle, or the city cannot legally continue to operate. This year’s budget hearings didn’t start until May 20, and there is precious little time remaining to hold hearings, make adjustments, and approve a new budget.
Late into the May 20 hearing, it was revealed that council members did not receive any hearing materials prior to the meeting; this did not allow them time to dig into the substance of what was being presented.
A municipal budget has a lot of moving parts; a simple read or listening to presentations won’t help a person understand the complexities of fiscal management. Not having the information prior to the meeting does little to facilitate a meaningful discussion. Despite this handicap, the council did have some good questions.
The Sun reported last week that City Manager Jim Throop said the draft budget was balanced without any staff reductions, furloughs, or operational cuts for the first time in more than a decade (“Lompoc Fire Department needs funding to mitigate safety concerns, staffing gaps,” May 27).
But as the various departments made their presentations, some of the staff increases that they were recommending had somehow been eliminated from the draft budget. For example, the fire chief was requesting that a fire inspector and clerical assistant be added to facilitate support to businesses; the draft budget did not include funding for these positions.
Another big item slated for discussion was how to spend nearly $14 million in American Rescue Plan Act funding that was to be sent to “respond to the COVID-19 emergency and bring back jobs.” It seems that 10 days prior to this council meeting, the federal government issued a 150-page change to the rules dictating how funds could be spent; so, this portion of the discussion was delayed until the first week of June so the staff could digest how the changes would impact their plans.
Initially the act that was approved by Congress stated that money was not to be used for employee compensation; however, a new administration is in charge in Washington and their goals are substantially different than the previous crew. After reading a summary of the new rules published by the U.S. Treasury on May 10, their version now includes many allowable employee compensations, so this could dramatically impact funds previously thought available for tangible improvements.
There could be some wiggle room, though, based on this statement in the U.S. Treasury’s summary: “Recipients may use these funds to replace lost revenue. Treasury’s interim final rule establishes a methodology that each recipient can use to calculate its reduction in revenue. Specifically, recipients will compute the extent of their reduction in revenue by comparing their actual revenue to an alternative representing what could have been expected to occur in the absence of the pandemic.”
Council members emphasized the importance of providing them with a summary of how the funds could be spent; perhaps no one on the city staff knew about the Treasury Department summary, which was readily available online 10 days before this meeting—I found it with three clicks on Google.
The council will have at least two more looks at the budget prior to final approval; if they can’t agree to certify the draft budget, a continuing resolution will allow the city to continue providing services after June 30.
Ron Fink writes to the Sun from Lompoc. Send your thoughts, comments, and opinionated letters to letters@santamariasun.com.
This article appears in Jun 3-10, 2021.