What was once projected as a substantial shortfall for the upcoming fiscal year has now been zeroed out as Long Beach city staff reported to the city council Tuesday night that it may have found a solution to the city’s impending budget woes.
Using a series of “budget balancing actions”, Director of Financial Management John Gross said his team has found a few tools, that if deployed, could erase the earlier projection of about a $15 million shortfall for the 2019 fiscal year. They could include increased fees for parking tickets and collecting revenue from Airbnb operators in the city, but Gross said it could close the gap.
“If the preliminary projection holds, after further upcoming updates, and if the city council approves the balancing actions we should have a balanced budget,” Gross said.
Gross said that an estimated $4 million has been identified by increasing fees and fines in parking revenues and ambulance service fees while another $900,000 could be collected by the city by taxing short-term rentals.
Additionally, the city has exceeded expectations of the Measure A sales-tax revenue with projections showing a 12 percent increase of what was expected. Gross said those additional funds will allow for the reallocation of some money to help offset the roughly $15 million shortfall. The reallocations are not expected to impact the city’s continuation of a 3-year $150 million infrastructure improvement plan already underway. Gross said that yet another $3 million in savings could be seen through current job vacancies or cutbacks.
The city’s budget remaining balanced rests on the assumption that no other large budgetary impacts are sustained over the course of the next few months. The city is currently weighing placing a charter amendment on the ballot this year which could erase a recent court settlement, and stifle another case currently working its way through the courts regarding the city’s practice of charging access fees to its municipal-owned utilities then transferring those fees into the city’s general fund.
The city settled a suit involving its water department in November of last year and is currently fighting a similar challenge involving its gas department. If it were to lose that case the deficit could balloon by an additional $10 million annually.
That case is not expected to be decided for another two years. However, a majority of voter approval of a charter reform could render both cases null and return those funds back into the city’s general fund helping the budget’s revenue stream going forward.
Gross noted that the updated projections do not include the impacts that could be felt by litigation. The water/sewer suit, if left unchecked by the city’s charter reform effort, could add an $8.3 million hit to the upcoming budget, and the suit involving the city’s gas department could further pile on if the city loses or settles that case.
Because of the level of uncertainty surrounding the budget process this year, city staff is preparing contingency budgets to account for the charter reform—there’s no guarantee that the council will vote to put it on the ballot—and will also start the process a month early.