This article was updated to reflect the fact that the city is aiming to pay for some capital improvements to local parks by way of using unused funds from fiscal year 2019-2020 and that the City of Carson general fund reserve stands at $35 million.
Carson’s Finance Department is not allowing COVID-19 to hinder its budget process.
City Manager Sharon Landers, who works with the finance office to formulate, format and present the budget, cited organization as the key to the efficiency of Carson’s budget process.
“You want to adopt a budget on time so you can keep your finances on track,” Landers said. “The longer it takes beyond the fiscal year to adopt a budget, the bigger your gap can become and the deeper the cuts you might need to address it.”
Creating this year’s $86.9 million budget required a different mindset than usual because of the conditions COVID-19 created. Council members and city staff had to consider an estimated $2 million loss in sales tax revenue, an estimated $2.3 million loss in license and permit tax revenue, close to $1 million in franchise tax revenue and thousands from various community service programs, then recalculate expenses accordingly. Cuts came from throughout the budget — enough to make up for the losses and leave $20 million in reserves for future spending decisions.
“We were able to reduce our expenses very strategically by around $10 million,” Landers said. “The biggest single savings was a reduction in our pension liability costs for this single year by almost $6 million by issuing a pension obligation bond. The next two large reductions of just over $2 million each are for non-personnel operations expenses and maintaining a vacancy rate of 6 percent. Our current vacancy rate from staff attrition is 12 percent.”
The city focused on ensuring that a lot of its employees kept their jobs and the city continued rendering services to its constituents. It also implemented good budget management tools. The council’s decision to move forward with the pension obligation bond saved $6 million for the upcoming fiscal year, which makes up for some of the losses from one of the nation’s worst economic statuses.
“This smart initiative, along with precision belt tightening has enabled us to balance the budget, maintaining our current levels of service to the community and with no staff layoffs,” Landers said. “I’m very proud that we were able to adopt a budget that maintains the same levels of services and doesn’t lay off any of our employees.”
The city spends almost 48 percent of its budget on employee salaries. Thirty-two percent of that is used to pay city employees in the public works department and 29 percent of it to the community services department. With the cuts in community services during the stay-at-home and social distancing orders and closures of various city entities and locations, they focused on keeping their staff fully employed throughout the pandemic.
“The amount budgeted to public works enables that department to maintain its current level of operations with no cuts in service,” Landers said. “The budget for community development is to a great extent an indication of the projected level of development we are expecting to occur.”
The city council was estimating its fund balance to be $43 million before the virus hit. It is reducing its fund by $10 million even though the projected revenue loss is only $5 million. The biggest revenue losses are projected to come from licenses and permits — a combined $2.3 million loss. The city isn’t projecting a loss in property tax revenue. Carson is a low-generating property tax city.
The city’s contract with the Los Angeles County Sheriff’s Department was boosted by about $2 million for a fiscal year total of $22 million. The sheriff’s contract had been discussed already and the increase is unrelated to recent events surrounding protests.
Carson holds three budget workshops to keep the community involved and informed throughout the budget process. Normally they’re held in public, but this year because of COVID-19 they were online. The budget is deconstructed each session and then recreated. Residents can watch the budget workshop sessions and then submit comments during the council meetings.
The $35 million in reserve will play a key role this fiscal year as COVID-19 is still ravaging the nation’s economy and human health. The reserve fund is important as a safety net to the continued costs of the virus.
“The impacts of COVID have been felt throughout the budget,” Landers said. “It has impacted both revenue and expense projections and has been taken into account how the city is moving forward.”