Malibu enters austerity time
Michele Willer-Allred, Staff Reporter
7:00 am PDT June 10, 2020
The COVID-19 pandemic has hit revenue sources for the city of Malibu, including sales tax and planning and building permit fees, and the pain will most likely last through 2022.
That was the warning from this week’s City Council meeting where the 2020-21 budget was unveiled.
“At this time, it is unclear how, or when, the Malibu business community will recover from the COVID-19 pandemic, and how this will impact the city’s (ongoing) revenue stream,” said Lisa Soghor, assistant city manager, during the remote meeting held on Monday.
Soghor said the pandemic could result in a decrease of more than $2 million in anticipated revenue, and possibly more than $5 million in subsequent years.
“This is austerity time. It’s belt-tightening time,” agreed Mayor Karen Farrer. “If we can’t figure out how to (cut and balance the budget) now, then next year we’re looking at something like a $5 million cliff. We don’t want to do that.”
During the budget item which was included in the almost seven-hour meeting, city priorities such as public safety were discussed.
In addition to agreeing to consider possible cuts to Malibu’s contract with the Los Angeles County Sheriff’s Department, the council also directed staff to look at retirement incentives for employees, possibly eliminating positions or consolidating work functions, and possible cuts to community services and special events.
To raise revenue, the council agreed to consider placing on the November ballot an increase in the hotel tax, from 12 to 15 percent.
The city’s proposed 2020-21 budget currently includes $54.3 million in revenue and $63.1 million in expenses. General fund annual revenue is $30.2 million, and general fund annual expenditures for ongoing city operations is $30.2 million.
Soghor said that Malibu’s reliance on property tax as its main general fund revenue has allowed the city to recover “robustly” after the Woolsey Fire in 2018, and will continue to assist the city in its overall fiscal strength.
However, she said that the budget assumes restaurants, businesses and hotels will begin to reopen and operate this summer at limited capacity. The budget also doesn’t anticipate a second wave of COVID-19 cases later in the fiscal year that could see a return of mandated business closures.
Sales tax alone is expected to decrease by $750,000 due to the pandemic, and revenues from city licenses, fees and service charges are expected to also decrease by a total of $1.2 million.
“Additional stay-at-home orders will carry revenue losses far beyond one fiscal year and will impact the city’s ability to operate with a balanced budget and maintain necessary general fund reserves,” said Soghor, adding that other potential significant hits to the budget could occur if there is another disaster, such as an earthquake or wildfire.
Soghor said it is unclear when the Federal Emergency Management Agency will reimburse the city $7 million for Woolsey Fire costs, so it is essential for the city to maintain a strong general fund reserve.
In anticipation of losses of one-time Southern California Edison settlement funds, and increases for debt service and safety expenses for the 2021-22 fiscal year, Soghor urged the council to consider looking at ways to reduce the operating budget.
She said cuts have already been made in every city department, job positions left unfilled, and employees filling multiple jobs.
Council member Rick Mullen said the council and the community are passionate about many things they want to do, including environmental issues, but he suggested that they tighten the city’s belt and focus on top priorities, such as public safety and Woolsey Fire rebuild efforts.
Malibu is spending more than $8.5 million on its contract with the Los Angeles County Sheriff’s Department, which represents 28 percent of the city’s annual operating budget.
The new sheriff’s station proposed at the Santa Monica City College satellite campus set to open next year in Malibu could add up to $3 million to the contract.
Council member Skylar Peak suggested cutting the sheriff’s budget 5 to 10 percent, while Mayor Pro Tem Mikke Pierson suggested taking away two deputy positions and replacing them with two CHP officers to focus on Pacific Coast Highway.
Mullen said he wasn’t in favor of defunding police at all, especially after recent world events.
Council member Jefferson Wagner said the city just got a new sheriff captain, and the city needs to give him a chance before making any budget cuts.
City Manager Reva Feldman said her gut instinct was that public safety “isn’t the right place to start with making cuts.”
“I think public safety is so important to everyone and in particular to this community. I think we have issues that come with the number of visitors that come into our community and I would hate to put any of our residents at risk by trimming some of the budget,” Feldman said.
She agreed with the council’s direction to open the conversation with the sheriff’s department about a reduction in their contract and possibly transferring some of the duties to CHP.
Also discussed was a request by residents of Big Rock for the city to pay $75,000 for emergency generators to be installed at water tanks in their neighborhood on Malibu’s eastern end. The residents have been also contributing their own money to add the generators.
Mark Pestrella, head of Los Angeles County Department of Public Works, said a Malibu-wide study will be finished this summer to determine where the generators are needed, where mobile generators can be deployed and if adding pumps can be supplied.
Feldman said she’ll bring back a final budget to the council on June 23. Because of the fluid business, another budget discussion will take place in August.
Feldman said she’s particularly worried about the next year, and also concerned about what would happen if there was another disaster in the city.
“I’m not dire in my predictions ever with my budgeting, but right now I really feel we all have to say this is a dire situation. We need to be very, very careful at this point.”