Budget Process 2020-21

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2020-21 Budget Message from City Manager Tara Schultz

On behalf of the City staff, I am pleased to present the budget for fiscal year 2020-21. This has been an especially challenging budget season that has been peppered with a great deal of uncertainty for our future. The City began the budget process facing a structural deficit of $0.8 million in 2020-21, growing to $2.8 million in 2023-24. The failure of Measure CR, the City’s Sales Tax Measure that would have provided an additional $2.5 million in General Fund annually, has left the City without additional revenue sources to help us maintain more than our core services. Staff has been tenacious in their efforts to find creative solutions to preserve our core functions and generate the savings that were needed to balance this budget. Much of our work was completed prior to the COVID19 pandemic that has swept through our world, altering all assumptions related to our future and leaving us only with uncertainty. The budget, at this point in time, is balanced based on the information that is available to us.  

We began our budget process with a goal of cutting $2 million in an attempt to get ahead of our structural deficit, cover unavoidable expenses for the 2020-21 fiscal year, and create a “cushion” for the following year. We successfully found $1.9 million in cuts.  These cuts were not easy recommendations to make due to the impacts that they will have, not only on City programs, but also on the community organizations that we work closely with to provide the services the City cannot. These reductions force the City to revert to providing our core services and not much more.  

The 2020-21 Budget outlines $49,397,808 in total revenues and $48,913,613 in total expenditures. Of those totals the General Fund makes up $26,730,456 of the revenues and $25,230,445 of the expenditures. 

Staff has worked meticulously to balance the 2020-21 budget through reductions to services and supplies, shifting salary and benefit costs from the General Fund, eliminating several vacant full-time and part-time positions, eliminating financial support of our community partners, and deferring the additional annual payment toward our PERS unfunded liability. 

Staff successfully created a “cushion” of $911,000 at the end of the 2020-21 fiscal year that should have helped reduce the anticipated deficit for the following year and allow the City to infuse much needed dollars into our depleted General Fund Reserves. 

The City’s long-term fiscal health will require bold decision making to identify and implement new sources of revenue, or consideration of dramatic reductions and elimination of services, from a level to which the community has become accustomed.

As previously mentioned, the factor creating the greatest amount of uncertainty for our fiscal health is the unknown impact of the COVID-19 pandemic. Much of this budget was developed prior to the implementation of the Safer at Home Public Health Order in March 2020. Since the closure of commercial business in the City and the world, the City has been analyzing the financial impacts of the pandemic on its 2019-20 revenues and expenditures, as well as trying to forecast the impacts to the 2020-21 fiscal year. 

The City relies heavily on sales tax and transient occupancy tax to fund its General Fund operations. With businesses closed (stores, restaurants, auto dealers, hotels, and services) we have and will continue to experience a loss in those revenue sources that might not return for up to a year or more. To help businesses weather the pandemic, the Governor has allowed businesses to defer their sales tax remittances for up to one year, creating not only a loss from the sales that did not occur, but also a delay in the receipt of revenues that would have normally been received during the summer months. The pandemic could also so negatively impact businesses that they may not be able to recover and may close, potentially resulting in a permanent loss of that revenue. The full impact of the pandemic on businesses and the City’s revenue stream remains to be seen. As always, staff will be closely monitoring the City’s revenues and expenses throughout the fiscal year and report quarterly on the status of our budget and make recommendations on any adjustments that may be necessary to maintain a balanced budget.

Staff is estimating the impact of the COVID-19 pandemic on the 2019-20 budget to be a loss of $1,188,000, with an additional loss of $1,000,000 in the 2020-21 budget. We have made the adjustments necessary to address these impacts in both fiscal years, but the impact will decimate the $911,000 “cushion” we were hoping to have at the end of the 2020-21 fiscal year. This will put us back to where we started in January of 2020, with a looming structural deficit and no new revenues on the horizon to help reduce it.

Like every other city and government entity in the world, Claremont survives on the taxes and fees for services that are paid by the citizenry. That fact will never change. It is important that staff, the City Council, and the community look for new ways to support our businesses following COVID-19. The rapid restoration and recovery of our commercial sectors will help to restore the necessary revenues that businesses need to survive, as well as support the tax base that the City needs to continue our most basic and fundamental operations. Future development of new commercial opportunities will be necessary to increase revenues above the pre-COVID-19 levels, allow the City to keep up with growing costs, and maintain our service levels. It is important to move forward with new developments in our Auto Center, Village South, the Commons Project, the former La Puerta school site, the former Marie Calendars site, and other areas of opportunity within the City, to generate new sales tax and property tax dollars. We must look for, and be open to, new opportunities to grow our revenue base to sustain the City well into the future.

While the City Council and staff remain committed to providing quality services to enhance the quality of life of the residents, businesses, and visitors to Claremont, we know that things will be different and services will be reduced for many years to come. Although the immediate outlook seems bleak, I believe there are opportunities out there that, if taken, will create a new and brighter future for Claremont, that each brave, bold step we take will restore and preserve the traditions and values that make Claremont a unique and beautiful community.

 

Public Presentations Schedule:

At the beginning of 2020, the City Council agreed to a public process for reviewing the status of revenues and the recommended expenditures and budget cuts developed by staff. Staff prepared and arranged the following schedule of presentations, held during regular City Council meetings to reach more residents, and share important fiscal information with the community:  

  • Projected Revenues - The City’s Finance Director gave an overview of projected revenues on February 25. View Slide Presentation

  • April 14 at  6:30PM: Expenditures - The City’s Finance Director gave an overview of anticipated expenditures. 2020-21 Expenditure Projections

  • April 28 at 6:30PM: PERS Unfunded Liability - Representatives from the California Public Employees Retirement System (CalPERS) presented an overview of PERS and the City’s unfunded liability.

  • May 9 at  9:00AM: Community Workshop - City staff presented the draft department budgets and proposed cuts to services and programs. Meeting will be streamed live on the City website.

  • June 9 at 5:00PM: Final Draft Budget  - City staff presented the final draft budget to the City Council for adoption.

 

Additional Links

City Budget 

PERS Unfunded Liability

City Salaries & MOUS

This poll has closed.

What are some of the City's services and programs you feel are important to continue for the next year?

  1. Tree Trimming and Landscape Maintenance 27.27% (6)
  2. Youth and Senior Programs 18.18% (4)
  3. Village Maintenance 18.18% (4)
  4. Special Events 9.09% (2)
  5. Crime Prevention Education 9.09% (2)
  6. Other 18.18% (4)

Total Voted Answers: 22

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