Local News

Council majority favors budget cuts despite federal COVID relief funds

City Council held their second budget study session on September 14 to give direction on the use of the nearly $33 million the City has been allocated from the American Rescue Plan Act (ARPA).

City Council discusses budget priorities at a September 14 study session.

The ARPA funds have not yet been factored into the City budget, which was adopted in June, as the City was waiting on requirements from the Department of the Treasury regarding how these funds may be spent.

Eligible uses of ARPA fall into two categories: (1) to reimburse the direct or indirect costs associated with responding to the COVID pandemic, or (2) to replace decreased revenue due to the pandemic (property tax, sales tax, hotel tax, etc.).

It was previously believed that ARPA funds could not be used for street and road repair. However, upon questioning from Mayor Pro Tem Nick Dunlap, who has said he would like to use the funds for this purpose, Director of Administrative Services Ellis Chang said the majority of ARPA funds could be used “on whatever City Council should elect to do,” including road repair.

“We believe that we can probably utilize the majority of the $32.7 million as revenue loss, allowing the City the greatest amount of flexibility to apply ARPA monies, which would allow for street and road [repair],” Chang said.

Prior to use of ARPA funds, the City planned to fill a nearly $10 million deficit with savings from 37 unfilled city positions in the amount of $3.8 million and $6.2 million from contingency reserves.

According to Chang, without use of ARPA funds, the City is projected to deplete its contingency reserves by fiscal year 2023/24.

Chang presented Council with four options for use of ARPA funds, and how these will impact the budget. They are as follows:

Scenario 1 (No cuts plus ARPA): Continue to hold around 37 positions vacant while spending $19.4 million of ARPA funds over a 5-year period to support government operations. This would maintain a 13% contingency reserve. About $13.3 million of ARPA funds could be used at the discretion of City Council.

Scenario 2 (2% cuts plus ARPA): Continue to hold around 37 positions vacant and make 2% budget cuts (14 additional positions) while spending $8 million of ARPA funds to support government operations over five years. This would maintain a 13% contingency reserve. Twenty-four million dollars of ARPA funds could be used at the discretion of City Council. According to Chang, this choice would result in significant reductions to public service levels, increased public/business complaints with little ability to address issues, cause unknown consequences of shutting down parts of the City organization, and precipitate a potential staff exodus.

Scenario 3 (5% cuts plus ARPA): Continue to hold around 37 positions vacant and make 5% budget cuts (35 additional positions) while spending $2 million of ARPA funds to support government operations over five years. This would result in a 17% contingency reserve over time. Thirty million dollars (nearly all) of ARPA funds could be used at the discretion of City Council. According to Chang, this choice would result in extreme debilitating impact to all City departments. Essentially whole divisions/services will be cut in several areas. This could also create a potential loss of businesses and residents due to the impact of these cuts.

Scenario 4 (No cuts plus ARPA with 17% reserves): Continue to hold around 37 positions vacant while spending $24 million of ARPA funds over a five-year period to support government operations. This would maintain a 17% contingency reserve. About $8.6 million of ARPA funds could be used at the discretion of City Council.

Council Discussion

Councilmembers were reluctant to say which of the four scenarios they preferred, however they did give general feedback as to their priorities.

Mayor Pro Tem Dunlap said that he favors 2-5% cuts and using a large portion of ARPA funds for road and infrastructure repair. “The ARPA funding was kind of a gift from out of nowhere and I think our ability to properly invest that into our roads, streets, and infrastructure at this point in time is absolutely critical,” he said. “I certainly support something with probably the 2-5% cuts.”

Mayor Bruce Whitaker said that “it would send the wrong message to make no cuts, to just have a status quo type budget” though he did not say whether he favored a 2% or 5% cut. He added that investment in infrastructure, rather than staffing, yields less overhead in terms of long-term pension costs.

Councilmember Jesus Silva said he does not favor staffing cuts and would like to reduce the City’s current 37 staffing vacancies. “If we move forward with those 2-5% cuts, we’re going to get closer to shutting down units, departments, and perhaps becoming a contract city,” he said. “We were in a lockdown, things are opening up, and we are going to be required to provide additional services.”

Councilmember Fred Jung said he favors a 2% cut across the board, “utilizing ARPA money to fill in gaps along the way.” He added that he doesn’t think a 2% cut requires the City to eliminate positions and that “we have to be smart about how we staff those positions.”

Councilmember Ahmad Zahra was not present at the study session. At the August 17 study session, he had spoken against further cuts, saying, “Knowing that 70% of our services are labor-driven…I think that should be where we focus.”

Regarding the impact of the cuts on staffing and services, Mayor Pro Tem Dunlap said that he had not been provided with “any sort of facts that would help me understand just exactly what the impact would be on those service levels.”

Councilmember Silva held up a chart that had been provided during the last study session, showing how 2 and 5% cuts would impact each department.

These charts were posted on the City’s website with the supplemental materials from the August 17 budget study session. They can be found on the last item labeled “City Council Supplemental Materials Study Session Presentation”: https://docs.cityoffullerton.com/weblink/1/fol/1494762/Row1.aspx.

In a follow-up conversation with the Observer, Dunlap clarified that what he had requested was a comprehensive organization chart of all city employees, their duties and salaries–not just staff suggestions for cuts. He said that he thinks cuts are necessary given “a compounding deficit in the years to come.”

Public Comments

During public comment, Fullerton resident Tony Package said he prefers scenario 4, with no additional cuts, and less discretionary spending for City Council.

“The name of the bill is American Rescue Plan Act,” Package said. “And who should we be rescuing? The dozens of public works and parks and rec people released. We need these hard-working people back…Spend on people for the people.”

Resident Bernard Oh said, “Stop the cuts and stop punishing our city employees.”

Kevin Pedroza from the Fullerton Police Officer’s Association spoke against further cuts.“Our employees are the backbone of this city, and it seems like they’re the ones being attacked left and right. And our police department is down to 99 deployable members. We used to have 160.”

Mayor Whitaker pointed out that the Police Department is currently budgeted for 140 officers.

Chief Robert Dunn clarified that while the department is budged for 140 officers, the department currently has 120, which they have done to realize vacancy savings for the City. He said that the department has been “in a state of flux” while Council decides whether it will make further cuts.

Egleth Nunnci said, “Cuts are not a solution. The Rescue plan means you are going to rescue your workers and provide services for our community.”

At the September 21 Council meeting, Ed Bargas, president of Fullerton Municipal Employees Federation, said, “Our employees feel disappointed in the perceived lack of support that we feel from Council because of what we keep hearing about budget cuts. Employees are tired of trying to maintain adequate services with less and less.”

During the pandemic, the City laid off 156 non-regular (part-time) employees and seven full-time employees. Since then, only a few of these have been hired back.

Additionally, over the past year, the City has seen major losses in senior management positions. Former 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 agencies.

“If I was in your position, I would be asking, ‘Why are so many employees leaving for other agencies, and why aren’t we attracting any employees from other agencies to come work for the city of Fullerton?’” Bargas asked Council.

Council will vote on budget priorities at their October 5 meeting.

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7 replies »

  1. Council member Zahra was on a pre scheduled trip out of the country before this special session was called. The city is having trouble attracting critical employees like a water manager due to uncompetitive employment packages. The ideas of council majority Whitaker, Jung and Dunlap that current city employees can just fill in for those leaving the city for better jobs elsewhere, those who have been fired, and the additional employees they are considering dismissing shows how little they know about how a city is run. When searching for places to cut council majority should start by cutting their own positions.

    • A water manager is paid out of the Water Fund – an enterprise account. If the Fullerton City Councils hadn’t spent 50 years robbing that fund your pipes and water bill would be a hell of a lot better off.

  2. Whitaker, Dunlap and Jung understand what the term “structural deficit” means. Westminster keeps raising taxes and the cops and paramedics immediately suck it all up. The end result is going back to square one.

    • Whitaker, Dunlap and Jung said at the previous meeting they don’t support any cuts to public safety. The 20-21 budget had 70% of our revenue going to paying fire and police. The council (currently controlled by Whitaker, Dunlap and Jung) right now has proposed a budget where 80% of our revenue going to public safety. How do they understand what “structural deficit” means? We didn’t increase taxes like Westminster and yet some how found $10 million for public safety.

      • You make a very good point. If your numbers are right. 80% of your budget goes to the cops and the paramedics? Really? Please cite the Budget page with the pie chart on it.

      • Never mind. It’s 73% according to the graphic above. Your number isn’t exactly right but your point is valid. Everybody is scared of those unions.

      • We are budgeting for a deficit. 73% of $110.8 million is about $80 million, but revenue (mostly tax) is only estimated to be $100 million in 2021. That is how I came up with 80% of our taxes are going to public safety.

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