While Glendale ended last fiscal year with more money on hand than expected, the city can expect to experience deficits in the millions of dollars, according to the annual comprehensive financial report released this week.
The 208-page report gives a detailed look-back at the government’s finances in fiscal year 2012-13, which ended in June, from the city’s net worth — $1.6 billion — to the city’s annual pension cost — $28.5 million.
According to the report, citywide cost increases, mostly driven by employee compensation, including pensions and healthcare benefits, must be matched with ongoing revenue increases. The good news is the costs can be met with modest increases. The bad news: the estimated revenue bump necessary, 3.2%, outpaces the city’s projects for revenue growth, 2.3%.
By fiscal year 2017-18 and 2018-19, the city could experience deficits of about $6 million and $2 million, respectively, which are much smaller than the $15.4 million deficit faced in 2012.
The city recently hired a consultant, Cerrell Associates, to determine how likely voters are to approve tax measures as a new revenue stream for the city on the June 2014 ballot.
If the tax measure is successful, that will help, said Finance Director Bob Elliot.
“However, our main focus will have to be over what we can control, and that is our costs, which…will mean looking at additional strategies to control them,” he said in an email. “I think our performance over the last few years has shown that we have done just that.”
In 2012, the city cut 189 personnel through early retirements and layoffs, according to a Human Resources report. As the city lost employees, its annual pension cost for 2012 reduced to $28.5 million from $30 million the year before, the first time there had been an annual pension cost dip in at least three years.
Officials expect to be structurally balanced in the next five years.
Other data points mentioned in the financial report include the following, which are comparable to the prior year:
Total debt increased by about $42.5 million, or 11%, due to a combination of items, including increases in post-employment benefits and the issuance of water bonds.
Property tax decreased by about $13 million, or 22%, due to the dissolution of redevelopment.
Sales tax revenue came in at $31.7 million, which was $425,000 more than forecasted as the state’s retail taxes have risen on strong demand for California’s retail sales.
License & Permits revenue was $8.3 million, about $1.4 million more than what was projected, due to new City Council approved development projects that began during the fiscal year.