Tough decisions ahead for Burbank council members as deficit looms
The Burbank City Council continued to receive sobering news Tuesday about its budget shortfall as talks about the upcoming 2017-18 budget inch closer.
Cindy Giraldo, the city’s financial services director, said appropriation and revenue adjustments that needed to be made to the 2016-17 budget were some of the lowest midyear tweaks the city has had to make.
While the City Council unanimously approved two budget modifications — in which $729,000 was appropriated for expenditures in the city clerk’s office as well as the fire and parks and recreation departments, and $752,600 was added to the General Fund — most of the conversation was focused on the forecast deficit in the city budget, which is expected to reach $18.7 million during the 2021-22 fiscal year.
Giraldo explained that the biggest issue contributing to the growing deficit is rising pension costs caused by the city’s decision to pay less than the employer’s normal cost from the 1998-99 fiscal year to the 2004-05 fiscal year.
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She said that with fewer General Fund expenses those years, the city was able to improve its safety services, staff a new library, help the Burbank Unified School District with infrastructure improvements and added senior and youth programs.
“However, when the economic times turned, as they always do, rates began to climb once again and the city found that the money that had been previously committed to pension costs was now committed to new services and infrastructure expenses, generating a recurring deficit that we are still struggling with today,” Giraldo said.
With the implementation of the Public Employees’ Pension Reform Act, known as PEPRA, in 2013, the state Legislature required all cities and their employees to contribute the minimum cost for the pension plan and prohibited agencies from going on a “pension holiday,” like Burbank and many other cities did before the recession.
Giraldo said that switching from a traditional pension plan to a PEPRA system will take a while, adding that there are slightly more than 300 full-time city employees under the new plan. There are currently 1,159 full-time employees.
However, the finance services director told council members that it will take more than having more employees under PEPRA to fix the deficit.
Using hypothetical options, Giraldo outlined four ways the city could reduce its expenditures.
Burbank could focus all its financial energy on public safety, which would result in the city having to close 20 parks and two libraries and cut the city’s administrative staff byabout half.
Another option would be to make a 10% cut to all the city departments, resulting in losing 31 police officers, one fire station, one library, five parks and laying off between 125 and 150 employees.
The city could also chose to contract out about $100 million in services and have outside parties handle its ambulances, animal shelter, libraries, landscaping and payroll, to name a few services. That option would result in the city possibly laying off about 600 employees.
Additionally, Burbank could choose to create new fees and taxes, allowing new economic development to bolster its revenues.
Councilman David Gordon said the city needs to come up with creative ways to deal with the deficit and work closely with the federal government to find solutions. Additionally, he did not like the idea of contracting the city’s services to outside businesses, resulting in mass layoffs, nor did he like using taxes to get out of the anticipated budgetary red.
Whatever the solution may be, a $3-million deficit is anticipated during the upcoming fiscal year. Giraldo said she anticipates the proposed 2017-18 budget to be released in early May. anticipated
anthonyclark.carpio@latimes.com
Twitter: @acocarpio
