City officials are grappling with a $1.3 million budget shortfall this coming fiscal year, which is only expected to widen over time as costs soar amid sluggish revenue growth.
City Council members are divided on how to conquer the deficit, with some are advocating outsourcing city jobs to save costs, while others firmly opposed to the idea.
What is clear is the problem: revenues are growing at 2.6% annually, but costs are growing at 2.8%.
Pension costs are soaring and the city’s unfunded pension liability — or the shortfall when comparing the obligation to employees and retirees to the value of the city’s assets held with the California Public Employees’ Retirement System — is $252 million.
Public works officials have identified an $85 million backlog in street repairs, and Burbank is still owed $27 million by the now-defunct redevelopment agency.
“We have no comprehensive plan that I’ve seen that addresses any of these serious issues,” said Interim City Manager Ken Pulskamp, adding that the city needs to either identify more sources of revenue, or cut services. “The road we are on now is not one we can afford to stay on.”
Department heads are submitting budget reductions of 1% and 2% — representing $1.2 million or 2.4 million, respectively, in cuts — to Pulskamp as he works to balance the budget.
But closing the $1.3-million deficit wouldn’t solve the ongoing problem since the gap is expected to grow to $3.2 million in five years, officials said.
“Solving it this one year doesn’t eliminate any future reductions or budget balancing strategies that council will need to take just to close our re-occurring deficit,” said Financial Services Director Cindy Giraldo.
That leaves the city with some difficult decisions.
“We either create more sources of revenue, provide less services, or a combination of both,” said Councilman Jess Talamantes.
Among Pulskamp’s ideas for creating additional revenue were charging parking fees, implementing franchise fees on private-sector waste haulers and increasing hotel taxes, an idea that fell flat with Councilman David Gordon.
“We don’t want to, shall we say, increase tax but lose volume,” he said. “In a booming economy, maybe yes.”
Pulskamp’s cost-cutting ideas included consolidating city departments to streamline administrative services and outsourcing jobs.
Councilwoman Emily Gabel-Luddy opposed cutting employees to save costs on contractors, which Mayor Dave Golonski called “irresponsible.”
“I’m not willing to go to the public and ask for increased revenue until I can look them in the eye and tell them we’ve done everything on the other side,” Golonski said. “Raising fees and cutting services is going to be at the bottom of my list.”
The city is scheduled to release a proposed budget on May 1 and host six study sessions throughout the month before a public hearing June 4 on the spending plan. The draft would then go to the City Council on June 11 for a vote.
Residents can also send comments or suggestions about budget priorities to email@example.com or fill out a survey on the city’s website.
-- Alene Tchekmedyian, Times Community News