The American Rescue Plan Act signed by President Joe Biden could bring Pacifica $7.25 million in two installments over the next two years, said City Manager Kevin Woodhouse. He said at the April 12 City Council meeting that he got the information from the National League of California Cities.
The U.S. Treasury will release guidelines for using those funds on May 11, he said.
Sheila Tioyao, financial services manager, presented the long-term financial forecast for 2021-2031 as well as this year’s 2021-22 budget to discuss budget strategies recommended by the city manager to address financial shortfalls from the COVID-19 pandemic.
“The city is expected to have expenditures outpace revenues through 2023-24,” she said.
Assistant City Manager and Director of Planning Tina Wehrmeister said the current estimate of lost revenues is between $4 million to $5 million. Retail sales and transient occupancy tax have declined, as have business licenses, and gas- and roadway-related sales taxes. The cancellation of events and programs led to an additional loss of $863,600.
“City reserves can temporarily address these financial losses, but not while also funding one-time priority infrastructure projects and other priority one-time budget needs,” she said.
Pacifica’s share of state and county taxes from online sales is higher than normal. Quick service restaurants did better than traditional dining establishments, Wehrmeister said.
Woodhouse said the vehicle license fee shortfall owed to Pacifica from the state for fiscal year 2021-22 is essential to balance the general fund. He explained his strategies for balancing the budget.
The $7.25 million in federal funds should be used to cover losses from the pandemic to offset declines, and it should be considered temporary, city officials say.
The city plans to use dedicated grants and programs for small businesses in addition to the federal funding. It would like to invest in studies to address housing and homelessness exacerbated by the pandemic.
One bright spot: cannabis. Cannabis businesses have been performing well and additional businesses will open during the 2021-22 fiscal year. Therefore, Woodhouse recommended increasing the cannabis revenue estimate to $800,000 from $500,000.
The city spent a total of $1.4 million from the unassigned general fund balance for various programs, including the Civic Center conceptual design services. That brought the reserve down to $6.5 million.
The wastewater enterprise fund has been making an annual payment transfer to the general fund for its share of administrative support services. Woodhouse recommended increasing that from $744,000 to $862,388 with an additional catch-up payment of $263,979 for the previous year.
“The city will conduct a citywide cost allocation plan update in the future, and the enterprise fund allocation and annual increase will be adjusted at that time,” he said.
Councilmember Mike O’Neill wanted to discuss that point at a future meeting. The hour approached midnight and council members wanted to give this and his point their full attention, so it was put off until May 10.
“We’ve already set our rate. We have borrowed from this fund. Are we going to take another $1.1 million out of this? When is that going before the ratepayers?” O’Neill asked.
Woodhouse replied, “The general fund will be repaying this loan with interest.”
The next City Council budget meetings are: April 26, to discuss Civic Center funding; May 10, on the general fund and master fee schedule with O’Neill’s request for a discussion about borrowing from the wastewater enterprise fund; and May 24, for budget preparation with departments, leading to June discussions.