City council declares ‘fiscal emergency,’ passes balanced budget
The Claremont city council passed a balanced budget on Tuesday and took the first step in placing a sales tax measure on the November ballot.
The budget initially faced a $1.3 million deficit, but the city balanced it by cutting out a number of improvement and maintenance projects, one-time deferred purchases, and cuts within city departments.
“It was a lot of work on staff’s part to get to this point,” City Manager Tara Schultz said at the beginning of Tuesday’s special budget meeting.
The goal, she said, is to maintain current levels of services to the community, while looking at ways to bolster the budget in the future. But the city painted a grim picture of Claremont’s financial future, while laying the foundation for a possible sales tax increase.
Overall, the 2019-2020 budget includes $48,802,044 in revenues and $50,887,871 in expenditures. In the general fund, revenues totaled $26,913,419 and expenditures totaled $25,310,992.
The major impacts that led to the deficit, Ms. Schultz explained, were manifold—general liability and workers compensation increases, personnel cost increases, landscape and maintenance contract costs, and ongoing CalPERS retirement costs.
Deferred maintenance cuts totaled about $461,000, according to Finance Director Adam Pirrie. Deferred projects include a $103,000 HVAC replacement at the Hughes Center, roof replacements at city hall and the Hughes Center and a $123,000 boiler replacement at the Claremont police station.
The city also cut $283,000 infrom department budgets, including tree and landscape removals, park equipment replacements and reductions in supplies, training and contract service budgets, Mr. Pirrie said.
The city deferred on replacing aging police vehicles for an additional year, saving $160,000. Ms. Schultz warned this could not be repeated in future budget considerations.
This year’s budget is again a one-year forcast, like last year, when the city made $3.4 million in cuts. Normally, a two-year budget is passed, but tighter financial times have called for single-year budgets to be presented.
The city also passed a declaration of a fiscal emergency, which is seen as the first step toward calling a special election for a possible sales tax increase.
While no formal decision has been reached yet on whether or not such an increase would be pursued, the city says it’s facing an up to $2.8 million deficit by 2023. City Manager Tara Schultz said the city has hit a wall in cuts, and would have to dip into cutting programs and services if the deficits continue.
“We are at a point that if we have to make cuts, we are no longer maintaining our current service levels,” Ms. Schultz said.
The city is already facing an $800,000 deficit for next year’s budget, she said.
If passed, a sales tax measure would increase Claremont’s sales tax from current levels of 9.5 percent to the state cap of 10.25 percent. The city says that could translate to $2.5 million annually, which would make a big dent in future budget deficits.
Of the city’s current 9.5 percent sales tax rate, one percent goes to the city, with the rest going to state and county measures, including Measure M for the Gold Line extension and Measure H for homeless initiatives.
The city previously said it is important for Claremont to capture the rest of that .75 percent, or three-quarters of a cent, as opposed to the county taking it through a ballot measure that may not bring extra money to the city.
Both Glendora and Arcadia passed .75 percent sales tax increases this year to hit the state cap, according to the San Gabriel Valley Tribune.
Mr. Pirrie said that if the measure were to pass, it wouldn’t be implemented until April 2020, with the first benefits beginning to trickle in the following June. The city would realize the full $2.5 million once the 2020-2021 budget is scrutinized, he said.
During public comment, Matt Magilke said he would not vote for a sales tax increase if part of the money weren’t set aside for a new police station. Mr. Magilke is the chair of the Police Station Citizens’ Advisory Committee—which has been tasked with finding ways to fund a new police station—but he stressed he was expressing his own views and not representing the committee.
Mr. Magilke referred to the city of Montclair, which passed a quarter-cent sales tax increase dedicated to capital improvements, including building its police station. He suggests the city follow Montclair’s lead and dedicate .25 percent of the .75 percent increase to police station construction, or about $800,000 a year.
“So my question to all of you is, do you want to make building a new police station a real priority, or do you just want to pretend it’s a priority?” Mr. Magilke said.
He also suggested that an undefined sales tax increase could negatively impact a vote on the police station ballot measure, which currently has a target ballot date of March 2020.
Mr. Magilke’s comments struck a chord with some council members. Mayor Pro Tem Larry Schroeder said the city is “constantly talking to different levels of governments, different representatives, on how we might finance the [police] station,” and claimed some detractors just don’t want to pay taxes, which he said is not how city government works.
“I think Mr. Magilke really knows that,” Mr. Schroeder said. “I can’t believe he’s head of that committee and learned so little about how government finance works. I’m kind of shocked at that.”
Councilmember Jennifer Stark warned against creating false equivalencies between the police station and the structural deficit.
“I think it’s very clear that we are in support of trying to build a new [police] facility, while at the same time keeping up on all the other facilities in town,” Ms. Stark said. “That’s what this sales and use tax could help us do, so not everything can turn into a matter of deferred maintenance.”
Councilmember Ed Reece called for the city to come back with a list of services that could be cut if voters don’t pass the sales tax measure.
Councilmember Jed Leano agrees that Claremont needs a new police facility, but also continued maintenance to trees, sidewalks and capital improvement projects that could be financed by a sales tax increase.
“I won’t engage in dialogue and politics of false choice,” he said. “We need all of these things, and in order to get this done we need to start with this first.”
Mayor Corey Calaycay said that although the council may disagree with Mr. Magilke, he cautioned them to allow residents to speak their minds.
“That’s why we shouldn’t disparage people from making remarks, because the last thing I want to hear is, ‘They don’t treat you respectfully, they don’t care what you think,’” Mr. Calaycay said. “And that shouldn’t be the message; the message is we should all be here.”
The council unanimously passed the budget, as well as the declaration of a fiscal emergency.
The city will be hold a public informational session on a possible sales and use tax measure at the Hughes Center on Saturday, June 22 at 10 a.m.