Pasadena could lose $30 million in revenue due to the Coronavirus outbreak according to City Manager Steve Mermell.
“We are anticipating a loss of revenue between the balance of this current fiscal year, which is through the end of June 30 and next fiscal year,” Mermell told Pasadena Now. “We’re currently assuming a loss of about $30 million. So that’s a lot of money, and consistent with other local cities that I’ve talked to on kind of a proportional basis, so that does pose a challenge for us.”
Mermell will be laying out plans to deal with the expected loss at Monday’s 2 p.m. telephonic City Council meeting.
Mermell expects a $19 million revenue loss in the remainder of the fiscal year, but the loss won’t impact city services, like trash pickup, water services and public safety
Mermell is proposing the removal of eight projects from the 2021-2025 Capital Improvement Program (CIP) budget to free up financial resources to support the continuation of essential city services funded by the Operating Budget, including $2 million to provide suicide mitigation in enhancements at the Colorado Street Bridge. An additional $1 million earmarked for sidewalk improvements would also be moved to the operating budget.
The funds for the capital improvement came from Measure I, a three-quarter-cent sales tax increase which was passed by voters in the last election. The tax raises about $21 million a year.
A companion measure allows the city to use proceeds of the tax hike, up to $7 million, to help fund local schools. So far, the money is being used to replenish the district’s state-mandated reserve fund.
In February, the City Council voted to direct the City Attorney to prepare an ordinance amending the city’s municipal code to change the name of the Human Services and Recreation Department to the Parks, Recreation and Community Services Department. The proposed changes are also expected to relieve the burden on the Public Works Department by allowing the department to focus more closely on a growing number of capital projects, that came about due to Measure I.
Originally, city officials planned to place $8.5 million into the Capital Budget next year.
“If we reallocate it through our Operating Budget, we can also get by without cutting services,” Mermell said
According to Mermell, the city’s reserves are adequately funded with about 20 percent of the general fund operating budget.
The city also has a backup for other liabilities like pension liabilities. The city remains conservative in its spending.
“The only money that is actually coming out of our reserve is the money being used on feeding programs and assembling the alternative care facility at the convention center.”
Although some local residents have criticized Mermell for purchases related to city services. However funds related to items like the $237,000 for refuse vehicles in Monday’s consent calendar don’t come from the general fund come from specific budgets assigned to specific city services can only be used for purchases related to those specific services.
Mayor Terry Tornek said the loss of revenue will blow a hole in the budget.
“There’s no question about it,” Tornek said. “How big a hole is a function of how long it takes us to reopen and you know getting businesses back to work and paying sales tax and transient occupancy tax. We have the reserves that we need and we are still being prudent in terms of how we use them.”