When Lompoc Measure I2020—the temporary 1 percent tax measure—was proposed, city leaders said they would use the money to “maintain and improve public services, including neighborhood police patrols, firefighter staffing, gang enforcement, crime and vandalism prevention, street improvements, community and recreational services, and park upgrades.”
After several statements made by council members, I was skeptical that they could honor their commitment to voters; I was wrong. On June 3, the council discussed its plans for the new tax revenue and an analysis of the first year of the current two-year budget.
According to the staff report, a year ago the council approved a budget with a first year “structural deficit of $315,507”; that means they were short by that much. And now “the current year-one budget was projected to have a total general fund deficit of $1.2 million, which included $585,700 of one-time capital improvements (pool demolition and police HVAC system), leaving an estimated operating deficit of $633,170.”
According to the council agenda, several actions were taken to help make up for the shortage of funds. “The city did take aggressive action to mitigate and reduce the exposure to potential downturns in revenues. This was achieved by taking immediate steps by laying off over 100 general fund employees, large reductions in expenditures, including but not limited to, critical review of all unfilled positions, elimination of all training and travel, and voluntary budgetary reductions in discretionary expenditures by all divisions.”
I realize that several temporary and seasonal employees at the library and recreational venues weren’t hired because of required closures, but you would have thought that “laying off 100 employees” would have been big news.
City officials blamed it on COVID-19, saying that due to the “shelter-in-place order, the general fund operating deficit is estimated to increase by over $1 million.” Finally, they say, “The projected operating deficit will increase the city’s general fund deficit by $2.2 million, resulting in a $1.8 million operating deficit, after removing capital projects.”
Next, the council members discussed how to spend the new tax revenue. Even after acknowledging earlier in the staff report that “currently, experts are now predicting the pandemic could impact revenue streams for years,” the staff is still standing by the $4.9 million new revenue prediction.
So, after talking of deficits for the first couple of pages, the staff now concluded that “the projected estimates for FY 2020-21 (year two of budget) … would be a $1.9 million surplus.”
To their credit, the staff were proposing to spread the anticipated revenue to pay down retirement obligations, hire police officers, and fill other general fund vacancies. That seems consistent with their commitment to voters.
Councilmember Gilda Cordova questioned “how the staff could be projecting a general fund deficit of $1.2 million in this fiscal year and a $1.9 million surplus next fiscal year.” The staff agreed that there were “a lot of unknowns” and that they too were concerned about how much revenue increase there would be.
She then questioned what the status of the general fund reserves were; the answer was that for the current fiscal year they were zero, however the staff anticipated that they would have a little more than $1 million at the end of the next fiscal year.
Even after all these concerns, Councilmember Jim Mosby, who has consistently rejected any ideas presented by the two female members of the council, made a motion to adopt a resolution binding the City Council to the proposed new retirement payment schedules and reinstate three police officer positions and some park employee positions.
Paying down the retirement obligations would net a savings of somewhere near $20 million over the next 15 years in interest payments. In other words, it is money that wouldn’t be spent on supporting retirements but could be spent on other projects that the staff and City Council felt were important. The average would be about $1.3 million a year.
Councilmember Dirk Starbuck observed that “saving $20 million was a lot of money” and that “this was the first time that some long-range thinking was going on.” If these were more stable economic times, he’d be right, but these aren’t stable times.
Councilmember Cordova once again expressed caution. She said, “I don’t feel comfortable with these projections and that we weren’t really assessing the aftermath of COVID-19” because the city was “already on a downward path before it happened.” She was also concerned that the “unemployment rate would be there for some time to come” and that could adversely impact the sales tax revenue prediction.
She further cautioned that if the projected revenue gains were wrong, that locking in a new payment schedule at this time would be premature.
Councilmember Cordova then asked how many funded positions there were open in the police department; the city manager answered that there were 13 open positions. She then said, “If we fund the three unfunded positions we’ll look like the good guys, but the reality is we can’t even fill the positions that are currently funded!”
She then offered a substitute motion to instead adopt an internal policy and see how it worked out during the next two-year budget discussions, which will occur early next year, before making a commitment concerning the retirement fund that the city couldn’t back out of. The motion was quickly seconded by Mayor Jenelle Osborne.
Councilmember Mosby strenuously objected to this motion, citing budgeting actions by previous councils that occurred decades ago as his justification. Predictably, Cordova’s motion failed on a 3-2 vote with Councilmembers Mosby, Starbuck, and Victor Vega voting no. And, equally predictably, Councilmember Mosby’s motion passed 3-2.
Councilmember Cordova’s motion was the best course.
With all the current uncertainty, why not hold off six to 12 months to assess COVID-19 recovery economic trends more accurately before locking in a 10- or 15-year obligation on retirement repayments? And why are the three so bullheaded about the use of funds that they didn’t even support until overwhelming public demand forced their hands?
Ron Fink writes to the Sun from Lompoc. Send your thoughts, comments, and opinionated letters to letters@santamariasun.com.
This article appears in Jun 18-25, 2020.
