I present to you the FY 2020/2021
Operating and Capital Improvement Program Budget for the City of Rosemead. As we
all know, we are living in historical times with a COVID-19 Virus crisis that
has never occurred in our lifetimes or in the City of Rosemead’s lifetime. The
product of this virus is not only sickness and death to some of our residents, but
an unprecedented time of economic uncertainty and adversity that hasn’t been
seen since the 1930’s.
In this environment, staff has
developed a budget that: 1) attempts to minimize the negative effects of the
current financial situation keeping expenses as low as possible; 2) keeps the City
prepared for a better financial future; 3) navigates the uncertainty in terms
of delivery quality city services and programs to the residents; 4) provides economic
stimulus and certain breaks to the City’s business community, and, 5) protects the
long-term policies and direction of the City Council.
To these ends, and to be totally transparent,
the Proposed FY 2020-21 Budget has no surplus. Actually, it proposes a combination of
shifting certain costs to non-general fund special revenues, eliminating a
total of 4 budgeted but vacant full-time positions, better utilizing part-time
staff to save dollars and only increasing operational expense increases to
under 1% of what was appropriated last fiscal year (FY 19-20). But, unfortunately
even with all of these measures, the proposed budget’s revenues are severely
impacted by the national and state financial environment and will require the City
to use up to approximately $1,700,000 in General Fund Reserves to balance the FY
2020-21 General Fund budget. Staff acknowledges this is a “worst case” scenario
and we all hope things get better. This is the first time the City of Rosemead
has had to face this situation in many years.
Past staffs and Councils have carefully
implemented financial policies and have approved budgets that prepared the City
for these types of financial circumstances. This was not because of luck, it’s
because staff and the City Council understood the importance of general fund
reserves and approved policies and budgets that allowed the City to save and
grow the Reserves until a rainy day. We are in that rainy day.
I want to reiterate that FY 19-20 and
the proposed FY 20-21 budget revenue shortfalls are not caused by any action on
the part of staff, Council, residents or City businesses. It’s not caused by economic
market failures or bad fiscal policies like the 2007-2009 recession or even a terrorist
disaster like the 2011-12 recession. Its’
cause is a biological pandemic that has engulfed the United States and most of
the world and ground the United States economy into a severe recession.
In an effort to protect people and save
lives, the State of California and the County of Los Angeles has implemented emergency
measures that, as a consequence, closed many local businesses including hotels,
dine-in restaurants, small businesses and required most consumers to stay at
home. These practices, while saving lives, brought the economic vitality Rosemead
and the State were sharing to a virtual halt.
The result has been a significant loss
of City general fund revenues in FY 19-20 (an projected almost $3.8M or a 18%-20%
decrease over the approved budget) and is continuing into FY 20-21 with an
estimated general fund revenue loss of $2.2M from a normal year’s revenue estimate.
The General Fund FY 19-20 Estimated and FY 2020/21 Proposed general fund revenue
and expenditures are summarized as follows:
Table 1
Projected FY 19-20
vs Proposed FY 2020/21 General Fund Comparisons
|
FY 19-20 Projected Budget
|
FY 20-21 Proposed Budget
|
REVENUES
|
21,264,900
|
21,866,200
|
EXPENDITURES
|
24,022,300
|
24,743,150
|
General Fund CIP
|
445,000
|
0
|
Surplus/(Deficit)
|
3,757,000
|
2,876,950
|
In FY 20-21 the budget is further exasperated by cost increases not under the control of the City. This includes an approximately $500,000 increase in our Law Enforcement Contract with the County of Los Angeles Sherriff’s office, cost increases of approx. $233,000 in Insurance premium costs, multi-year contract services increase, and the general cost increases associated with inflation and contract cost increases.
The proposed FY 20-21 budget does contain
some good news for the General Fund. These
include: 1) achieving a CalPERS Annual Assessment savings of approx. $483,000
for FY 20-21; 2) acquisition of State and Federal grants (including CDBG) of approx.
$5,000,000 to fund capital projects, CDGB and other projects; 3) the movement
of certain general fund expenditures to special revenues funds of over $250,000
thus saving the general fund those dollars, and 4) a decrease of 4 budgeted
full time employees due to work load efficiencies and more efficient use of part-time
positions.
Even in these economic times, staff has
developed a Proposed FY 20-21 Budget
that: 1) continues many of the Strategic Plan goals set by the Council in their
last Strategic planning effort; 2) continues to provide the basic services that
residents and businesses rely on from the City; 3) keeps City staff, residents,
businesses and visitors safe and protected during this health crisis; 4) continues
to improve and maintain the public infrastructure and aesthetics of the
community through the City’s CIP projects, and 5) allows the City to stay in a
position to take advantage of the future improving financial environment (be it
during the end of FY 20-21 or in FY 21-22).
Staff firmly believes
the Proposed FY 20-21 Budget will enable Rosemead to continue its quality of
life as a welcoming and thriving community that honors tradition, unites in diversity
and works for a bright future.
It
is my sincere pleasure and honor to serve as your City Manager. Under the
leadership of the City Council, I look forward, in an increasingly challenging
year, to a healthy, safe, and improving fiscal year.
View 2020-21 Fiscal Year Budget