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."

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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

• "..[E]valuation of one-time projects and one-time spending to assess potential areas of savings; reduction of non-pandemic operating expenditures where feasible, including scaling back costs not essential for the pandemic response and assessing staffing hires; and, actively looking for funding or other mechanisms to offset costs.":

• "Where feasible, place on hold or cancel discretionary one-time non-pandemic related expenditures; avoid starting or expending approved but discretionary structural programs; reduce budgeted structural costs; and, potential other actions to preserve cash should it be needed in the future."

• Evaluate whether to make the CalPERS pension prepayment and considering a line of credit.

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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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