During the November 18 Santa Paula City Council meeting, the Council heard a status report on the City’s financial health presented by City Finance Director Christy Ramirez. Next month, the City Council will move forward on voting on the budget revision proposed by the City. Although the Santa Paula community has experienced many challenges this past year due to the novel coronavirus, the City has both maintained its balanced budget and continues to deliver important programs and services to Santa Paulans.
The COVID-19 pandemic caused significant variance in overall revenue compared to original budgeted projections. Revenue procured through building and inspection fees, building permit fees and the transient occupancy tax fell short of the City’s forecast due, in part, to slowed economic development and COVID-19 travel restrictions. However, despite these financial challenges, the City saw higher than expected sales and property tax revenue in Fiscal Year 2019-2020.
“Like all cities, COVID-19 has impacted Santa Paula’s businesses, families and community as a whole,” said Christy Ramirez. “With global uncertainty, the City prioritized maintaining a balanced and healthy budget to reassure our residents that the City will be well-positioned to address any future uncertainties that may come our way as well.”
In anticipation of unforeseen coronavirus-related expenditures unaccounted for in last year’s budget, all City staff agreed to a 2.6% reduction in salaries through six furlough days along with other concessions such as the cancellation of vacation cashouts. However, due to the City’s favorable financial position, the City plans to reduce staff salary concessions from 2.6% to 1.3% in addition to cancelling the furlough days for the second half of the year. On top of the City’s anticipatory actions, Santa Paula also received federal CARES Act funding from the County to assist with actual coronavirus-related expenses.
To augment the City’s financial security, the City also refinanced its wastewater bond in October of this year. The refinancing generated $930,000 annual cash flow savings through fiscal year end 2050. These savings will contribute to previously underfunded City capital improvement projects such as the Reverse Osmosis Project, which is required for the City’s compliance with water quality standards.
In addition to summarizing the City’s financial health, Ramirez presented revised budget projections for Fiscal Year 2020-2021. The Council will later vote to amend the budget, which plans to utilize increased sales tax to fund necessary projects and unexpected expenses. The new budget would also increase the City’s General Fund reserve to allow the City to “save for a rainy day.” If approved, the City also plans to transfer $300,000 in revenue from the City’s General Fund and generated by Measure T to augment the City’s Gas Tax fund in order to assist with street improvement projects that would have otherwise suffered from local transportation funding shortfalls.
Revising the budget would allow the City to meet the Council’s short-term goals, such as such as creating a vehicle replacement fund, working towards a 20% reserve balance and bringing the final unassigned fund balance close to the $60,000 minimum, while also continuing to deliver the day-to-day programs and services that are so valued by the community.
“We are pleased with the City staff’s dedication to not only achieving a balanced budget despite the significant, unforeseeable obstacles, but finding a path that allows the City to move forward with our future goals,” said Santa Paula Mayor Rick Araiza. “Although COVID-19 caused a decrease in revenue and increase in expenditures, the City has found a way to continue providing services and community programming, like the Santa Paula Beautiful Event, that has been a way for our community to safely join together in these increasingly isolated times.”
Any unexpected excess revenue that may be realized will be conserved for use in the event of further negative financial trends that could result from COVID-19. The City will continue to be strategic and prudent with its funding in ensuring the City’s financial health and flexibility.