Glendale's first budget snapshot of the year marks a shift from the doom-and-gloom that pervaded City Hall over the summer as officials closed a $15.4-million budget gap, largely through staff reductions.
According to the quarterly budget update scheduled for the City Council on Tuesday, not only did Glendale end last year with more reserves than expected, it’s close to hitting the savings target for this year.
“We were really prepared for the worst case,” said City Manager Scott Ochoa in an interview Monday.
As officials charted out plans for fiscal year 2012-13, they took into account big losses due to the end of local redevelopment. But the city ended last year with about $59 million in reserves — $15.1 million more than projected.
That’s partially because the state, which in February redirected property taxes from nearly 400 local redevelopment agencies to state coffers to close a budget gap, didn’t seize as much from Glendale as predicted.
Still, the city’s total fund balance dropped to roughly $60 million from $134 million at the end of last year.
Glendale then went about cutting $15.4 million from this year’s General Fund budget, which pays for police, libraries and other general services, through more than 120 layoffs and early retirements and other program reductions. The retirements netted $13.9 million in savings, but the savings were cut by $4.3 million as the city refilled 32 of the cut positions due to operational necessities, according to a city report.
If hiring remains low and city departments continue to operate with less, the city could save $30 million over five years, Ochoa said. If more positions are refilled, the city must first have new revenue, he added.
So far, the city has identified $15.3 million in savings, just below the $15.4-million gap closed during the budgeting process, but rising sales tax and permit revenues are on the rise.
General Fund expenditures as of Sept. 30 were $41.4 million — about $300,000 more compared to the same time last year. The increase is mostly due to the cost of the early retirement incentive and is expected to drop by the next quarterly report, according to the city.
Although the first budget outlook is promising, there are still three more to go before the end of the year and several outside factors could affect the city’s bottom line.
If Proposition 30, the state tax increase that minimized cuts to schools, hadn’t passed, Ochoa said he feared that could have meant more state raids of city funds.
“I thought that if Prop 30 went down, they’d come knock on our door,” Ochoa said.
If the federal government goes over the so-called “fiscal cliff” — a mix of harsh spending reductions and expired tax cuts — Glendale could feel the impact by of fewer grant dollars.
The City Council election in April could also shake up spending priorities.
If the numbers stay promising by the third quarter, though, Ochoa said the city will know it’s at the right “fighting weight.”
“If they’re not, then we have to understand why,” he said.
-- Brittany Levine, Times Community News