The Burbank City Council approved a tentative budget this week that estimates a revenue loss of $15-$20 million during the next fiscal year of 2020-21 due to economic fallout from the coronavirus pandemic.
The council heard eight different budget presentations on Tuesday during a virtual meeting that lasted nearly six hours, creeping past midnight. Though city officials emphasized that the extent of the COVID-19 pandemic’s financial impact on Burbank remains uncertain, they expressed confidence that the city’s prudent fiscal policies over the past several years have put it in a good position to withstand economic challenges.
Those challenges will likely include a major hit to sales tax revenue prompted by widespread closures of nonessential businesses, according to Cindy Giraldo, the city’s financial services director, though she said sales would likely be concentrated at the stores that are open.
She also added in a prerecorded presentation that taxes on car and jet fuel sales are expected to drop, as are taxes from hotels.
Burbank is expected to lose over $11.2 million in revenue during the fourth quarter of this fiscal year, Giraldo said in her presentation. The projected revenue loss will bring the city’s general fund balance down to about $5.2 million from its mid-year projection of more than $16.4 million.
However, Giraldo explained that the city will have more than $66 million in reserve funds at the end of June, not including the remaining general fund balance. She credited what she called the city’s “strong financial policies and fiscal conservatism” for the resource.
Councilmember Emily Gabel-Luddy suggested those funds could be used to help the city endure a financial shortfall, if needed, though Giraldo also expressed the need for long-term solutions to the economic effects of the coronavirus.
Proposed budget leaves out COVID-19 for now
Proposed appropriations for the general fund in the next fiscal year total nearly $199 million. The police and fire departments have the largest shares, with a combined total of nearly half of what the budget calls for.
The city expects to count on more than $195 million in its general fund for 2020-21, but Giraldo emphasized that this figure, $5 million more than planned in the current budget, does not take the coronavirus pandemic into account. In her staff report submitted to the council, she added that the budget assumes that the “Stay-at-Home” order will be lifted by the beginning of the fiscal year, July 1.
Because of this, the “workload budget” essentially repeats the one from the current fiscal year, with minor adjustments. New programs and costs are only added when necessary, such as from contractual obligations or authorized one-time spending.
This, Giraldo said, will allow the city’s financial planners to make changes to the budget as more information — such as the length of social distancing orders — becomes available.
“Information is coming in … daily with changes and updates on all sorts of levels that impact our revenues,” Giraldo said during the meeting. “What businesses can open, to what extent can they open, different legislation that’s being considered — all of that is exactly why we need a little bit more time for the dust to settle so that we can come back with more accurate information on which to base our decisions for moving forward.”
Brace Canyon Park project attracts debate
The council members discussed at length one of the projects allowed to continue despite the pandemic, an installation of artificial turf at Brace Canyon Park, with a projected cost of $1.4 million. Vice Mayor Bob Frutos questioned the wisdom of using the funds during the pandemic, wondering if the city’s Parks and Recreation board had been asked about the project. Some residents who called in with public comments also applauded his caution.
“We’re already telling the community that we’re trying to be fiscally responsible and we don’t know what the priorities are for the infrastructure for the parks,” Frutos said, adding that he would vote against the budget if the renovation proposal was included.
Director of Parks and Recreation Marisa Garcia explained that the money going toward the project was approved only for her department. Mayor Cindy Giraldo and councilmembers Gabel-Luddy and Jess Talamantes also backed the proposal.
“The department head, the director of the department brought this forward for our consideration, the city manager brought this forward for our consideration, I don’t think they would have done it if they hadn’t done their homework,” Talamantes said.
The Brace Canyon Park resurfacing project was approved with a vote of 3-2, with Frutos and Councilmember Tim Murphy dissenting. The primary resolution adopting the budget was also passed with a vote of 3-2, again with Frutos and Murphy voting against.
Though the budget does not reflect the expected impact of the pandemic, the city is taking measures to save money, according to Giraldo. There is a limited hiring freeze for city employees, with departments hiring only for critical positions. The city also received $614,764 from the Coronavirus Aid, Relief, and Economic Security Act, the coronavirus stimulus package known as the CARES Act, signed into law in March.
City Manager Justin Hess said during the meeting that an update with more information and potential solutions for the economic impact of COVID-19 would come after the end of the fiscal year, perhaps near the end of July.