Council Passes $87 Million Budget; COVID-19 Costs Limit City Revenue, Create Cuts
The City of Carson has passed an $87 million budget for a fiscal year that began in July. Ongoing uncertainty around COVID-19 and the local economy has led the city to dub this year’s budget “a living document” and will review the City’s financial position on a quarterly basis going forward.
The City Council and staff leadership clearly worked hard to make reasonable cuts to reflect the uncertainty. More than $10 million in savings were found with across the-board to cuts and some new financial tactics to pay down pension obligations. Each city department was asked to make a 15% reduction into non-personnel budget to lower costs for the city.
Despite these efforts, the final budget still forecasted a deficit of just more than $2 million.
Carson has operated at a deficit for most of the last decade, its current reserves stand at roughly $35 million.
The highest expenditure for the city is employee compensation, making up 46% of all expenses.
Personnel expenditures is estimated to increase by $1.7 million (or 4.6%) to a total of $39 million this year. This expense hike is in large part due to a rise in benefits, reclassifications, and additions to the minimum wage.
The 2nd highest expenditure goes to public safety in the form of the City’s contract with the LA County Sheriff, which makes up 26% of Carson’s total expenses. That contract is expected to increase by $1,1 million or 5.6% to a total of about $22 million. This assumes the same number of deputies, which currently stands at 63 units.
Among the biggest “savings” the City found in this year’s budget come from the issuance of a Pension Obligation Bond earlier this year. By taking advantage of low interest rates and by maintaining the city’s bond rating of AA-, the city has saved $6 million from this year’s budget, and is projecting $47 million in savings over the next 20 years. The next CalPERS valuation will show a 100% funded pension program for Carson.
The City also saved $2.1 million saved through a hiring freeze. The City currently has 39 vacant positions at City Hall, about 12% of the budgeted total. There were other minor increases to the city’s budgets for Information Technology, Human Resources, and for election administration.
Carson’s finance staff had previously assumed losses to the City’s revenue ranging between 6%-12% overall from COVID 19. The City has taken clear steps to absorb losses at that scale, and will hope that economic recovery prevents the need for further cuts this year