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A reserve fund established by the city of Malibu to get it through the coronavirus downturn is being tapped to help fill a nearly $6 million shortfall in general fund revenue in the proposed 2021-22 budget.
At 6 p.m. April 22, officials will present to the City Council a spending plan that includes $80 million in revenue and nearly $90 million in expenses, with general fund revenues and expenditures of respectively $33 million and nearly $39 million. You can watch the virtual meeting here.
To meet the requirement of balancing general fund expenses and revenue, officials propose a one-time fix of using all but $800,000 of a $6.5 million designated reserve for operating expenditures established in 2020-21.
The staff report by Lisa Soghor, assistant city manager, emphasizes that, because of continuing effects of the pandemic response, the proposed budget “has been developed conservatively with a continued emphasis on streamlining services to reduce costs.”
It also urges the council to come up with an “ongoing solution” if general fund expenses continue to exceed revenue.
A public hearing on the budget will take place May 24 with adoption set for June 28.
This isn’t the first time the city has used one-time funds to fill a budget gap. After the Woolsey Fire in 2018, fees for rebuilding the hundreds of homes lost were waived. Then, on Dec. 19, 2019, Southern California Edison paid the city a $13.55 million settlement over the fire.
Those funds helped rebuilding efforts, including replacement of city infrastructure damaged by the fire and covered rebuilding costs in the Planning, Building Safety and Public Works departments.
Those efforts now are covered by the general fund.
Prior to Gov. Gavin Newsom’s coronavirus crackdown, revenue in all categories “were strong and had returned to pre-Woolsey Fire amounts,” according to the report. At the same time, general fund undesignated reserves were increasing.
Property taxes account for about 44 percent of the general fund revenue — a key factor to Malibu’s fiscal recovery, officials say. “Even in the aftermath of the Woolsey Fire and the loss of 488 single family residences, (property tax revenue) remains strong and steady, according to the report.
The governor’s March 2020 stay-at-home order coupled with state and county health orders have hurt a number of business sectors, declines that are reflected in general fund revenue.
“Dining and travel restrictions imposed by the public health orders have had the greatest impacts as restaurants have historically been the primary contributor to the city’s sales tax revenue,” Soghor writes. But other taxes hammered by the orders in the past year include transient occupancy, gas and parking.
Waiving Woolsey rebuild fees is expected to continue through the entire fiscal year, bringing to more than $9 million the total of uncollected revenue for the 2019-20, 2020-21 and 2021-22 fiscal years.
Officials are also looking at some revenue from President Biden’s American Rescue Plan, including $1.1 million for the new fiscal year and has been designated a general fund designated reserve. (Malibu is eligible for another $1.1 million, but it’s clear when that might arrive.)
Like most all jurisdictions, Malibu was forced to spend money related to state and county coronavirus orders, including for personal protective equipment and cleaning supplies, safety improvements to city facilities and even professional services related to managing those orders.
Excluding staff time, these costs for 2020-21 and 2021-22 are estimated at $240,000 and $710,000, respectively.
For the 2019-20 fiscal year (that includes the first few months of orders) that city incurred $815,000 in costs.
Reimbursement from the Federal Emergency Management Agency is being requested for staff overtime and for safety supplies and communication through Sept. 14.
For the 2019-20 fiscal year, Malibu received $163,000 from the CARES Act for coronavirus related expenses.American Rescue Plan funds will cover expenses retroactive to July 1, 2020, but officials say complete guidance from the Treasury Department regarding eligible uses of the American Rescue Plan funds has not yet been received.