Pasadena budget projections: revenues down, expenditures up

Pasadena's mid-year budget report doesn't look particularly bad at first gasp: a drop of $1 million in their projection of revenues, due mostly to a drop in the city's sales tax revenues. That is to be expected, of course, with a national economic downturn.

The concern the city appears to have, based on the staff report from a Tuesday council meeting, is that spending is already projected to go up strongly in the next few years, due in part to over $11 million in raises to city staff that were greenlighted a few weeks ago. At the same time, the city expects revenues to grow only marginally. The city is also unlucky because its payments on debt from bond issues in 1999 and 2004 are set to spike in 2010 and 2011, according to City Manager Michael Beck, who I just got off the phone with. That will make the next couple of years particularly challenging for the city, fiscally.

That means that the budget deficit in 2012 could be as much as $20 million, according to staff reports. That deficit is already about projected to be $15 million for this year.

Usually that deficit is generally closed because the city overestimates its spending, and underestimates its revenue, according to City Manager Michael Beck, who I just got off the phone with. Last year, for example, the city left the budget projection with a similar projected gap, and closed the deficit to $3 million by the end of the year.

However, that trend will not happen this year, according to the staff report. It warns instead, that the city needs to realize it could easily overestimate revenue from here on out.

Staff has recommended several solutions, including a hiring freeze, department reorganization, asking vendors for reduced rates. Worst of all from the employee perspective, could be the final suggestion on the list: voluntary furloughs.

Beck says most of these solutions are already being put into place, and the voluntary furlough system has already been in place a long time. He said though, that the city will be a little more active in promoting it.

The city will look more at these issues at another joint financial committee/city council meeting next month.

One final note: the city fudged on my $13.50 tape of the meeting (see previous post). I had to choose between waiting 30 minutes for a new tape to be made, coming back later, or relying on the staff report. I chose the latter, for now. It is pretty informative.

We'll be running an article on this, probably this weekend. Incidentally, I did not link to the staff report on this, because as far as I know it is not online.