Council voted 3-1 (Zahra “no”) to approve the City’s 2021/22 budget at their June 1 meeting. During discussion of the budget, Councilmember Zahra expressed concern over the fact that the budget appropriates no funding for the Fullerton Museum Center.
The Operating Budget for all City Funds, including the General Fund, Enterprise Funds, Special Revenue Funds, and the Capital Improvement Program totals $214.1 million in expenditures to be supported by $211.4 million in revenues.
The General Fund Budget totals $110.8 million in expenditures supported by revenue of $100.9 million. The resulting $10 million deficit will be filled with savings from unfilled city positions in the amount of $3.8 million and $6.2 million from contingency reserves.
Per City Council direction at a May 18 budget study session, the City Manager’s Office will identify an additional 2%-5% expenditure reduction measures for City Council consideration to assist in balancing the City’s Operating Budget and/or replenishing contingency reserves.
The City received the first tranche of American Rescue Plan Act (ARPA) federal relief of $16.3 million on May 17. This funding has not yet been factored into the budget as staff is waiting on guidance from the Department of the Treasury on how these funds may be used.
Property and sales taxes, the two main sources of general fund revenue, are expected to increase in the next fiscal year. However, hotel tax is expected to decrease.
City Employee Losses Over the Past Year
The pandemic heavily impacted Parks and Recreation and Library services.
The Museum has been closed to the public since the onset of the state’s shelter-in-place order, and there is no funding allocated to the Museum in the 2021-22 budget. The City Council will discuss options for the disposition of the Museum at their June 15 meeting.
Over the past year, during the pandemic, the City laid off 156 non-regular (part-time) employees and 7 full-time employees. Since then, only three of these have been hired back.
Additionally, over the past year, the City has seen major losses in senior management positions. City Manager Ken Domer and Parks and Recreation Director Hugo Curiel were both laid off, and Director of Community and Economic Development Matt Foulkes and Deputy City Manager Antonia Castro-Graham both left to take jobs in other cities.
When asked about the impact of the American Rescue Plan Act (ARPA) funding, Acting City Manager Steve Danley wrote to The Observer, “ARPA will likely be able to fill a significant portion of these gaps but there are restrictions on ARPA fund usage, which have not been fully identified. What we do know at the moment, is that there are essentially two ways that ARPA funds can be used and both have their own requirements. One use of ARPA funds is for the reimbursement of COVID related costs incurred from March 3, 2021 to present. The other use of ARPA funds is for city revenue lost due to COVID. The City Council will make their determination on the specific application of ARPA funds in future Council meetings.”
When asked about general city employee morale, Danley wrote, “Employees have experienced a lot over the past few years: pay reductions, layoffs, reduced hours, working from home, frustration from not being able to provide full-service levels to businesses and residents, and COVID uncertainties. Our staff has been asked to give a lot and do a lot. Until City finances are stabilized, and we learn the manner in which they will be stabilized (e.g., increased revenues, use of ARPA funds, further cost cutting), there will be much for employees to consider. City management wishes to thank employees for the sacrifices they have made and we are looking for ways to minimize any further impacts to staff and the services they provide to the Fullerton community.”