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|(April 14, 2020, 9:55.a.m.) -- City management has advised the City Council (which decides City Hall spending) and the Mayor (who can veto spending subject to a 2/3 Council override) that at least five City Hall funds (General Fund, Measure A, Special Advertising and Promotion Fund, Tidelands Operating Fund, and the Airport Fund) face at least $38 to $44 million in overall revenue losses or expenditure increases as a result of COVID-19's economic effects..
(in $ millions)
The April 13 memo from Financial Management Director John Gross to City Manager Tom Modica for the Mayor/Council says the amounts above don't necessarily mean shortfalls of the funds above because these depends on whether revenues and expenses trend above or below budgeted levels and "will be impacted by what corrective budget actions the City is able to take."
The memo forecasts "Projected General Fund shortfalls from COVID-19 and Measure M litigation in the table below (in millions):
[Scroll down for further.]
Management's memo indicates that if reserves (intended for other purposes) or a potential reallocation of planned one time Measure A capital funds one-time funds or other sources aren't available, "the City's operating and emergency reserves may need to be used" and "the need to use operating and potentially emergency reserves in FY20 and FY21 seems possible."
It cites General Fund shortfalls [current spending exceeding now expected revenue] as a result of COVID-19, the Measure M litigation [utility rate transfer held unconstitutional in a taxpayer lawsuit by Diana Lejins and Angela Kimball, ruling appealed by City Hall] and "other required operating costs and general updates to revenue and expenditure projections as of Feb. 2020."
And those figures may understate the amounts. They don't include possible Cal-PERS (pension fund) losses that management's memo says "seem likely to be significant." And they don't assume an economic recession or slowdown that the memo acknowledges would "likely significantly increase the projected shortfalls."
The memo says "The City Manager is taking strategic actions in FY20 to minimize the shortfall and protect the City financially.
It indicates actions being taken include
The April 21 Council agenda includes an item on FY20 budget performance with an agendizing memo that acknowledges the $14-$22 million potential General Fund shortfall without corrective actions. It summarizes management's approaches (detailed in its April 13 memo to the Mayor/Council.
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