Escondido council bristles at taking $8.5 million from pension fund to cover projected budget deficit

The painful budget cuts face Escondido City Council as the city faces a projected budget deficit of $ 8.5 million for the fiscal year starting July 1, the council was told during a seminar session in the City Hall on Wednesday.

City staff presented a clear picture of the city’s financial perspective over the next 20 years, during which Escondido faces annual budget deficits ranging from $ 9 million to $ 21 million because revenues are not kept at the cost of providing utilities.

City officials are considering putting a measure on the November ballot that would require voters to approve a sales tax increase of up to one cent (the current rate is 7.75 percent) to close the projected budget gap.

Meanwhile, city staff recommended a one-time withdrawal of $ 8.5 million from a reserve fund for future pension liabilities to close the gap projected in the 2022-2023 budget. But a majority of the council, including members Mike Morasco, Joe Garcia and Tina Inscoe, instructed staff to return with a balanced budget and consider withdrawing the pension reserve fund as a last resort. Mayor Paul McNamara was traveling and did not attend the council meeting.

Last year, the council authorized a $ 6.1 million withdrawal from the fund to close a budget gap for the current fiscal year, although higher-than-expected revenues could reduce that amount.

Garcia said the city should live within its means and he backed down against a graph given in the staff report showing that Escondido’s spending per capita is behind other cities in the Northern county.

Citing statistics given at a Northern County Economic Summit, he said Escondido, with an average household income of $ 62,000 a year, could not spend on the same level as cities like Carlsbad or Poway, which he said have average income of $ 120,000 and $ 105,000. respectively.

“These are cities that have an incredibly high amount of average household income,” he said. “It does not exist in Escondido.”

“So I would like to see a budget that is balanced without cuts in fire and without cuts for the police, and that is within the possibilities we have,” Garcia said.

City manager Sean McGlynn warned the council that “major cuts” would be needed in some areas of the city government if the city does not use the reserve fund and also avoids any cuts in police, fire and public works budgets as required by members of the council. .

“We’re going to bring in a balanced budget,” McGlynn said. “I was just making sure the council knew it was going to be a painful conversation.”

The council was originally scheduled to approve next year’s budget at its June 8 meeting, but members said further discussions would be needed and final approval is likely to be postponed until later in June.

As presented Wednesday, the city’s preliminary general-budget budget projected revenue of $ 120.6 million for next year, including all revenue sources. The bulk of the city’s operating income comes from sales and property taxes.

The operating budget, including all expenditures, is projected at $ 129.1 million, for an operating deficit of $ 8.5 million.

City staff had proposed additions to this year’s budget, such as a new grant writing position, two new criminal intelligence positions in the police department, equipment for the cleaning crew of the homeless department of the public works department, repair of roof for city buildings and furniture and firefighting equipment. .

The staff report also listed possible budget cuts, including a freeze on hiring and pay for city employees, which would save up to $ 2 million and require negotiations with employee unions; and a reduction of up to $ 5.6 million spent by the city each year to support various community organizations.

One of the largest sums in that category is $ 2.7 million budgeted this year for the California Center for the Arts, Escondido.

“For me, one of the biggest, most visible areas is the annual support the city provides to multiple community organizations and how we can be able to see potential reductions in those areas versus watching fire, police or public works. . ” said Morasco.

McGlynn stressed that once the council agrees on a final budget for next fiscal year, the city still needs to address the ongoing structural imbalance between spending and revenue.

McGlynn said he agreed with council members that Escondido should live within his means.

“If there is no additional revenue, we need to have a conversation with the community about what the right size of organization is,” McGlynn said.

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Escondido council bristles at taking $8.5 million from pension fund to cover projected budget deficit Source link Escondido council bristles at taking $8.5 million from pension fund to cover projected budget deficit

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