Carson Passes Budget on Time, But Dips Into Reserves
At 3:30 a.m. on June 19 after a marathon 10-hour meeting, the Carson City Council passed a nearly $92 million budget for the new fiscal year. Although passed on time for the first time in years, the $91,627,456 budget, will create a $2.9 million deficit for the city’s general fund.
Ten years ago, the City of Carson annual budget was just over $60 million. Carson has run a deficit in at least half of the years since, forcing the city to frequently spend out of its reserves, like it’s doing again this year. This trend is expected to continue as expenditures continue to increase faster than revenue.
One of the biggest costs to the city is its staff. Employee compensation, which includes wages and benefits, is approximately 40 percent of the general fund budget. This expense together with the sheriff contract, which received a 5 percent or $1 million increase this year, comprises 80 percent of the city budget. Part of that cost includes a 3 percent increase in wages for city employees as a result of negotiations with the city’s bargaining groups last year.
Additionally, employee pension and retiree health insurance costs have risen dramatically in recent years and will continue to do so. The city’s CalPERS payment, the fund for city retirees, will increase $2.4 million this year, totaling $7.3 million of the budget.
Altogether, employee retirement costs are expected to further grow to more than $16 million by 2022, more than double what the costs were in 2011.
Why is the City Continuing to Operate in a Deficit?
Despite growing concerns regarding elevated staffing costs, the council earlier this year voted to increase their own salaries per the new city charter, passed by Carson voters last year. The city council’s salaries have increased from less than $21,000 to more than $77,000 a year, plus benefits that include a nearly $2,000 monthly allowance for phone and car usage. This is nearly a $300,000 total increase across the four councilmembers and mayor, guaranteeing the five-person body a full-time salary for what is traditionally a part-time job.
In addition to the changes to their own salaries, the council has also made motions adjusting staff salaries and positions. At a previous meeting the council voted to defund three full-time senior positions, and with a motion by Councilmember Lula Davis-Holmes, added more than $100,000 back into the budget for three part-time field representatives that would assist councilmembers.
City Clerk Donesia Gause-Aldana addressed the council asking them not to defund positions within the clerk’s office. Despite support for this request from Councilmember Jawane Hilton and Mayor Al Robles, the request was denied.
That motion from Councilwoman Davis-Holmes also included an increase to the cost of photography services for the city. Additionally, the city’s special events budget for this year has now nearly tripled, from $100,000 to $290,000, according to budget documents. Among the significant changes is $20,000 each to the Jazz Festival, Juneteenth Celebration, Women’s Health Conference, Cinco De Mayo and other events.
The dire straits of the city’s finances cannot be stressed enough. According to a city staff report from May 2019, “the City is not prepared for the next recession. The structural budget deficit has not yet been cured; and the City’s major revenue sources are not increasing as fast as expenditures. The City must continue to determine which services are necessary or which need reduction.”
Efforts to plug the budget gap with new revenue have faltered.
In 2017, voters passed Measure C, a tax on oil refineries which was expected to generate another $24 million a year. However, the city is still unsure how much revenue is coming in from the Oil Industry Business License Tax, collection of which began in January 2018. And this year’s estimate is far less than expected at just $4.7 million.
Residents should watch closely whether these revenues materialize as they are designed to represent more than 5 percent of the city’s budget, and without them the city would be below its designated “rainy day fund” reserves.
The city is receiving $2.5 million from Measure W, a countywide measure passed in 2018 by L.A. County voters. But that will fund construction of a catch basin, which will capture water for irrigation use in the city and for transfer to the sanitation district for cleaning. The city was also set to receive money from taxes on local cannabis businesses, but recent council actions may reduce or eliminate those projects and as a result, the revenue to the city.
Quick Facts About the City Budget
Total is nearly $92 million, with a $2.9 million deficit
Pension costs are up nearly 50 percent since last year
City special events budget nearly triples
Salaries for councilmembers and mayor increased by 300 percent per the City Charter