While Long Beach had previously projected a budget deficit of $19.6 million for the current fiscal year, which ends in September, it now could close the year with a $20 million surplus, as the local economy’s continued rebound helps to fill the city’s coffers.
Things like property taxes, sales taxes and charges assessed to utility customers are expected to finish the year with more revenue than forecasted, helping to drive down the shortfall and turn it into an expected surplus.
The additional funds are expected to be used for priority projects, with city management slated to present options for exactly how to spend it to the City Council when the proposed budget for 2024 is revealed in the coming months.
There are a number of underfunded projects that could benefit from the extra funds, including the Studebaker Road overhaul that could now cost as much as $50 million, or the Belmont Pool replacement project that has stalled because of a funding gap and may now need a redesign to make it cheaper.
Fees paid by utility users for natural gas consumption are expected to result in a $9.6 million overage for the city, with $3 million of that being tied to the historically high gas prices paid by customers earlier this year.
While the City Council did approve $1.5 million from these fees to go toward a larger pot of money to help residents in need, the fund is still projected to finish with additional cash tied to those high gas prices, according to the report.
Taxes assessed to hotel guests ($4.4 million), oil from the city’s land-based operations ($3.5 million) and non-Measure A sales taxes ($6.5 million) all are projected to finish over budget.
Measure A, the 1% city sales tax that city officials have pledged to spend on public safety and infrastructure, is projected to finish $4.5 million over budget. The Tidelands Fund, which pays for projects and operations along the city’s coast, is projected to finish with a $15 million to $17 million surplus, with $11 million of that set aside for projects in the coastal zone.
The budget surplus isn’t entirely due to more money coming into the city; it’s also due to unfilled positions across multiple city departments. A shortage of trash truck drivers has led to pickup days being skipped across the city. Police officers also began working mandatory overtime shifts earlier this year because of the vacancies in that department.
The budget update projected that the Police Department could end the year with $12.7 million unspent due to vacancies.
Despite the update given to the City Council on Tuesday night, the city is still projecting budget deficits in future years through 2027, with shortfalls ranging from $8 million to $11 million still anticipated despite this year’s big turnaround, according to a city report.
The upcoming budget process that will start over the summer and conclude before the start of the fiscal year in October could require the city to make some cuts but not as many as it had originally anticipated when the estimated deficit was over $40 million.
An update given to the council in March said that the new expected deficit was about $6 million, but it’s unclear how labor negotiations with the city’s largest employee union, the International Association of Machinists and Aerospace Workers, could affect the final budget approved by council in September.