A few weeks ago, I said, “The local government budget is usually the last thing anyone thinks of or is even interested in. The last 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 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,” (“Follow the money,” June 3).
So, in case you missed the budget hearing, I’ll try and recap what happened. On June 15, the Lompoc City Council adopted a two-year budget that starts July 1. This time there was no drama, no theatrics designed to belittle the staff, and a noticeable absence of micromanagement by council members, as there have been over previous budget cycles. Instead, discussions ran smoothly, and ultimately the council approved the budget in a unanimous decision.
During the staff report, the management services director said it was a sound budget, however, “everything could change on July 1.” Of course, he was being facetious, but it will certainly change considering other actions taken by the council both during this meeting and potential revenue changes in the months that follow.
The first change will be the impact of an earlier hearing during this meeting concerning a request by the Strauss Wind Energy project to transport wide and heavy loads through the city. Previously the council had rejected a meager reimbursement proposal by Strauss LLC. In this hearing, however, a much better proposal had been negotiated to recover nearly $3 million for any impacts to the city.
Much of these funds will be used for repairing any damage caused by transporters, but a half-million will be added to the general fund to be used for “public benefit.” This will be the first of many other changes that could occur. In addition, Strauss LLC will reimburse the city for all support related to pre- and post-engineering studies of the roadway route, staff and legal expenses, and any other costs to support their project.
Then there is the first of two $6 million installments received as a result of the American Rescue Plan Act grants from Washington, D.C., to use during the coming fiscal year. Since the U.S. Treasury hasn’t finalized a list of allowable uses, the staff cannot provide spending plan guidance to the council.
The city manager anticipates that the feds will be finished in mid to late July, but considering the way government works and all the “special interests” awaiting their rewards, it may take longer. A second check will arrive in the second half of the two-year budget cycle, and both will offer significant relief either through direct application or by replacing other budgeted expenditures, thus freeing up funds for other projects.
Next is a proposal to levy a cannabis manufacturing tax; this measure will go to voters in a special mail-in election in August of this year. If approved, the city would begin collecting the proceeds late next spring. While this tax would have little impact on what local consumers pay, it would provide a significant rise in general fund revenue for the foreseeable future.
Lastly there will be the proceeds from any appreciable post COVID-19 economic recovery. As the supply chains are restored to meet consumer needs, businesses are fully reopened, new businesses are started, and shelves are restocked, there should be an increase in sales tax revenue. Local hotels should see an increase in visitors too. While opening the economy will likely return tourists to Lompoc, the lost revenue will be lost forever; however, it could return to pre COVI-19 levels.
Another factor is that automobile sales, a major contributor to the general fund, suffered when an overseas factory producing a critical electronic component was destroyed. Once these components reach manufacturers, the local lots should begin being restocked with new vehicles, and this sector of the business community should regain its former tempo.
Considering all the anticipated changes, it’s important to note that the staff didn’t include assumptions or rosy projections of future revenue gains as part of the plan. Instead staff used proper budgeting protocols as opposed to recklessly allowing for unsustainable programs that ultimately lead to the elimination of reserves, as was the case with the previous council majority’s budgets.
The city is still far away from the established policy level for reserves in the general fund, so providing needed services is at risk when the next economic shock strikes the local area.
While the approved spending plan probably won’t change on the day after it goes into effect, it will certainly change many times during the life of the document. Any change to the plan must be approved by the City Council, so this isn’t the last of this discussion.
Ron Fink writes to the Sun from Lompoc. Send your thoughts, comments, and opinionated letters to letters@santamariasun.com.
This article appears in Jul 1-8, 2021.