Irvine started this fiscal year with a balanced budget, but councilmembers discussed this week how to patch a deficit with a projected capacity to grow to $47 million by 2030.
When Councilmember James Mai learned via a March 30 briefing from City Manager Sean Crumby that the city was grappling with a $6 million deficit this fiscal year, he pushed for the council to discuss the gap during its meeting this week before it could grow. Staffers say the $6 million is a manageable 2% overage of the city’s general fund, but if no action is taken, the growing deficit could be a drain on the city’s $135 million reserves.
“The budget deficit is due to expenditures outpacing revenue growth,” the March 30 briefing presentation said, and is driven by increases in labor, contract equipment supplies and healthcare costs, and by new and expanded programs and departments. Full-time city positions have increased by 856 to 1,103 over the last five years.
Mai proffered a string of actions to the dais, Tuesday, April 14, to address the shortfall, including asking the city manager to implement a hiring freeze on all non-essential positions, pausing nonessential spending, recommendations for immediate actions and a forensic audit by a third party, and to give the mid-cycle budget update by mid-May instead of waiting until the usual June meeting.
“Acting now gives the council and public more options, not fewer. My exploration is not about locking in one final solution tonight,” Mai said. “This is about beginning a disciplined, transparent and public process now.”
The council was split on the proposal, in the end reaching a 3-3 vote impasse, with Mayor Larry Agran and councilmembers Betty Martinez Franco and Melinda Liu opposed, and Mike Carrol absent.
“I think it’s way too early in this process to be imposing a prescription for the difficulties we’re anticipating,” Agran said. “I think we ought to do this thoughtfully and carefully.”
Franco and Liu agreed, saying they wanted to explore more options, including taxes, before taking action.
“I don’t believe in knee-jerk reactions,” Liu said, adding she didn’t want to eliminate “options we didn’t even bother to explore.”
Councilmembers Kathleen Treseder and Mai raised concerns about the briefings after discovering last month that Agran was briefed first on the budget issue, and as part of that conversation, asked the city manager to research polling on possible local taxes.
“We researched appropriate firms that specialized in these types of polling (on taxes) and we solicited proposals from three firms, no contracts were executed,” Crumby said. Conducting a citizen poll on taxes would have cost the city $50,000, the briefing said.
Treseder said councilmembers should have been approached with the issue sooner.
“If I had known about these projections even back in January, I would have made different votes. I would have made different arguments,” she said. “I’m glad that I know about it now so that we can correct the course right now.”
Agran said the timing was about proactivity, saying “I’ve had a number of gatherings with our planning and staff and I look at all the quarterly reports, their trends and I get their suggestions. All of you are enabled to have access to the city manager any time regarding these matters. There’s no secret relationship here.”
The council is expected to revisit the budget issue in early May.