Revenue for Burbank’s municipal government is projected at lower levels than previously anticipated, city staff members said this week, due mostly to underwhelming tax receipts during the pandemic.
In a report to the City Council on Tuesday, interim financial services director Jennifer Becker said projections for this fiscal year’s sales tax revenue dropped nearly $2.45 million compared to the estimate given during the first-quarter update in October. Projections for revenue from the transient occupancy tax, also called a “hotel bed tax,” decreased by $2 million.
Altogether, recurring revenues for the city’s General Fund are now expected to be roughly $172.59 million for this fiscal year, down from the original projection of $195.05 million. In fiscal year 2019-20, the General Fund received more than $185.36 million in recurring revenues.
“I should point out this does not mean a financial recovery isn’t on the horizon,” Becker told council members. “As you know, COVID cases in [Los Angeles] County and throughout the country are dropping precipitously. … For Burbank, it just means our recovery is pushed out a few months, and we’ll likely see the bulk of it take place in the next fiscal year instead of the current one.”
But while revenue is expected to gradually grow back, Burbank’s General Fund will likely face a recurring deficit for years to come, as city staff members have previously warned, with recurring expenses estimated to surpass recurring revenues in this fiscal year by nearly $15.4 million and in fiscal year 2021-22 by about $6.1 million.
This is due in large part to municipal employees’ pension costs, though the deficit projections don’t include several nonrecurring cost-saving measures, such as the use of the more than $23.3 million one-time funds the city received when California dissolved its redevelopment agencies.
“The current financial forecast projects that the city will not have sufficient General Fund dollars available to contribute toward the last two years of the pension funding plan without also tapping into reserves or other one-time resources,” municipal staff members said in a report.
“As such, the five-year forecast assumes the continued use of [Redevelopment Agency] Loan Repayment Set-Aside funds to provide the General Fund’s portion of the additional pension contributions in FY 2021-22 and FY 2022-23.”
Becker also said the city had received a total of $1.3 million in direct funding from the Coronavirus Aid, Relief and Economic Security Act, with the final payment collected in October. An ongoing hiring freeze of about 70 positions will also save Burbank about $1.41 million this fiscal year and an estimated $1.57 million the next fiscal year.
As a result of these and other measures approved by the City Council this week, the city either saved or gained one-time funds equaling more than $14 million for this fiscal year.
The city is projected to have an ending spendable General Fund balance of just under $3.6 million at the end of fiscal year 2020-21.
RECOVERY SUBCOMMITTEE APPROVED
City staff members also updated the council on economic recovery efforts for local residents and business owners, including planning a month of meetings with local industries.
Along with those meetings, a date for which was not available when the council approved the plan, the city will also send out a survey and hold an online forum to receive recommendations from the public regarding economic recovery. The City Council economic development subcommittee, on which Vice Mayor Jess Talamantes and Councilwoman Sharon Springer serve, was also tasked with participating.
The idea was birthed from a somewhat different concept Councilman Nick Schultz campaigned on during his candidacy last year: an economic recovery task force that would solicit suggestions from the local business community.
However, as economic development manager Mary Hamzoian told council members, that approach has some drawbacks.
“While there is merit in further engaging the community in the economic recovery process, the creation of a formal advisory board to the council is time-consuming and cumbersome to manage,” she said.
After some discussion, council members agreed on a compromise, temporarily directing the preexisting subcommittee to provide monthly or quarterly updates on the city’s response to the pandemic’s economic effects. They also asked city staff members to invite representatives from the Burbank Housing Corp., the Hollywood Burbank Airport and other groups to the input meetings.
City staff members also highlighted some programs the council will consider implementing during its meeting next Tuesday, March 2. For example, with the arrival of additional federal funds, the city could resurrect a rental assistance program for those affected by the pandemic, similar to the initiative that was offered last year.
Hamzoian also said staff members will ask the council to approve another round of loans for small businesses and self-employed workers.