Over the next five years, Glendale may still face multi-million dollar budget gaps, even if revenues from property and sales taxes continue to climb at a steady rate, city officials said at a budget meeting Tuesday.
But unlike in recent years, the shortfalls may not be as difficult to surmount as they've been in years past, thanks to a variety of ways to increase revenues, including new taxes, officials said.
Rather than the $15.4-million and $18-million gaps of the past two years, respectively, the city may see deficits of $1.2 million to $11.3 million over the next five years, according to a city report.
However, if the city gets money from the state to pay off a roughly $67-million loan it made to its defunct redevelopment agency, those deficits may instead peak at $6 million in fiscal year 2017.
"We're as streamlined as we've ever been," said City Manager Scott Ochoa, as he and other officials spent about 90 minutes discussing Glendale's financial future and revenue-generating options, such as increasing the so-called hotel bed tax and implementing a parking tax.
While salaries and pension costs will continue to grow, Glendale will be able to cover those expenses if revenues rise by more than 2% each year. But when other post-employment benefits — such as healthcare and in-the-red internal service funds, such as one for workers compensation — are added in, the financial gap worsens.
"They're all projections based on the economy," said Mayor Dave Weaver. "If the economy turns, we rewrite the book."
Officials have proposed a General Fund budget of roughly $171 million — which pays for police, library, parks and other general services — with a $1.2-million gap driven mostly by increased salaries and pensions. The budget is set to be approved next month after more study sessions.
The tab for salary increases next fiscal year is expected to be roughly $877,000, and higher still in the future despite a freeze on new hiring and pay raises for most employees. That's because employees will continue to benefit from guaranteed annual income boosts, known as "step increases." Also, firefighters are scheduled to get a 3.5% cost-of-living adjustment in 2015.
While layoffs are an option, officials don't recommend it. Last year, the city laid off employees while others took early retirements, so more staffing reductions would have significant impacts on services, Ochoa said.
The transfer of nearly $21 million from Glendale Water & Power's electricity fund is set to continue, but there are plans to decrease that amount by $250,000 each year until it gets down to $19 million, Ochoa said.
The council also reviewed the possibility of increasing the hotel bed tax by 1% or 2% — it's currently 10% — and implementing a parking tax of about 10% to 12% at city-owned parking garages. The former could bring $300,000 to $600,000 annually to city coffers, while the latter may drum up $1.5 million to $1.9 million.
However the City Council comes down on the proposals, a special tax would require two-thirds voter approval.