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By Shawn Raymundo
The passage of the city’s proposed budget for the upcoming fiscal year was held up in a deadlock between a divided city council on Tuesday, June 2, leaving the city’s appropriations for services beginning next month in a state of flux.
With the end of the current fiscal year looming on June 30, city leaders were unable to agree on moving forward with next year’s FY 2020-2021 budget, which proposes to cut general fund spending by roughly $8.4 million compared to the current year’s adjusted budget.
According to the proposed budget, general fund expenditures for FY 20-21 would be set at $70 million, with the bulk of those coffers earmarked for public safety such as police, fire and marine safety services.
Anticipated general fund revenue for the next fiscal year is projected to reach just north of $68.2 million—about $1 million less than what the city had anticipated collecting this year. The lion’s share, or 54%, of the city’s general fund coffers come from property-tax revenue.
The spending cuts and reduction of projected revenues were meant to represent uncertainty in the time of the coronavirus pandemic, which has put the nation on the brink of a financial meltdown largely due to record unemployment levels.
Hoping to see more significant cuts in spending than what had been presented, however, acting Mayor Laura Ferguson and Councilmember Gene James said they wouldn’t support the budget without at least having contingency reductions in place should the economic situation worsen because of the public health crisis.
“What I think is being presented to us right here is ‘take it or leave it,’ and if you don’t like it, too bad. I would much rather direct staff to go back and look at where we can make cuts,” James said, adding: “We’re not refusing to do it; we’re asking for more cuts.”
Councilmembers Chris Hamm and Kathy Ward argued that the budget city staff had presented was balanced, and they implored the colleagues to pass the budget on Tuesday night, noting that they can adjust the budget in the future—a common practice among government agencies and municipalities.
“Staff said they’re going to look at revenues monthly; every single month, they’re going to look at our revenues, and if any trend starts to happen where we lose more revenue than anticipated, they will make the cuts,” Ward said.
The city noted that in order to slash spending, the reductions were made to salaries and benefits, as well as travel and training, among other sources. The city also deferred capital improvement projects and issued a hiring freeze on vacant positions.
According to the city staff’s report on the proposed budget, deep cuts were made to nearly all of the city’s departments, with the exception of police and fire services. Had the budget passed as is, spending on Public Works would be $15.4 million—a drop of 20% from this year’s adjusted budget—while General Government operations would receive $7.7 million, a 35% cut from FY 2019-2020.
One major departmental cut that was proposed, however, drew staunch criticism from the public, as well as from Ferguson, who was adamant about maintaining spending on public safety divisions.
The FY 20-21 budget proposed to reduce spending on Marine Safety by 20%, allocating $1.9 million to the department. The $478,340 reduction, the city notes, was a result of a $400,000 one-time payment on the lifeguard pension liability and the recent retirement of former Marine Safety Chief Bill Humphreys.
Ferguson asked city staff on Tuesday where the decision came from to not fill the vacant chief position.
“I don’t recall there being a council directive,” she said.
Assistant City Manager Erik Sund explained that during a previous council meeting in April, staff had notified the councilmembers of the hiring freeze across the board as part of the mitigation efforts to address unanticipated spending due to coronavirus-related matters. He also noted that the position and funding for the chief isn’t cut.
“So this position is currently vacant, but I want to be clear that it’s not cut,” he said, adding: “It’s the intent of staff that these positions won’t be frozen forever. . . . We will be coming back to council at different times to update . . . if things look good, we could recommend to fund or fill a position.”
According to the city, the proposed budget for Marine Safety does include $165,000 in coffers to pay for a chief. The budget also notes that funding for public safety, including police and fire services, increased by $862,460 from this fiscal year’s adjusted budget.
Ferguson, strongly believing that Marine Safety should fall under that public safety umbrella, proposed a motion to have city staff come back with a budget that didn’t cut funding to those services. She also asked that staff come back with proposed contingency cuts of 10%, 15% and 20%.
Before voting on that proposal, Hamm proposed a substitute motion to adopt the FY 20-21 budget with the caveat that it specifically include funding for the lifeguard chief position.
Both motions died in split votes among the councilmembers.
City Attorney Scott Smith explained to the councilmembers that if a budget isn’t passed by June 30, the council would essentially go on a month-to-month plan until the fiscal year budget is adopted.
“You would file an estimate of funds to be received and then monthly file a list of expenditures with the county. So that’s your legal mandate,” Scott said.
Going forward, he further clarified, the city council would need to go meeting-by-meeting to look at each expenditure and then adopt a budget appropriating that amount of money spent.
As of press time, it was unclear whether the council will pick up discussions on the budget during the next meeting on June 16, when it’s currently scheduled to also consider the proposed law enforcement contract with the Orange County Sheriff’s Department.
Shawn Raymundo is the city editor for the San Clemente Times. He graduated from Arizona State University with a bachelor’s degree in Global Studies. Before joining Picket Fence Media, he worked as the government accountability reporter for the Pacific Daily News in the U.S. territory of Guam. Follow him on Twitter @ShawnzyTsunami and follow San Clemente Times @SCTimesNews.