The Laguna Beach City Council approved a modified fiscal year 2020-21 city budget on Tuesday to address an $11 million revenue loss expected because of the economic fallout from COVID-19.
City officials are hoping to save more than $2.1 million through cuts to city employee’s salaries and benefits.
“The proposed budget does not layoff any employees, includes only limited furloughs, and recognizes the cooperation of employees to give up negotiated raises,” City Manager John Pietig wrote in a letter to councilmembers. “Resources are focused on preserving services, with a priority placed on public safety”
The Laguna Beach Municipal Employees Association—which represents a large segment of city workers in Public Works, Recreation, Community Development, and full-time lifeguard staff— along with part-time seasonal lifeguards represented by the Marine Safety Association, management employees, and City Manager John Pietig agreed to forgo a previously agreed 2.5% raise that was scheduled to take effect on Wednesday. The Municipal Employees Association has about 110 members among its ranks.
The Police Employees Association is scheduled to receive a 2.5% raise on Jan. 1, 20201. City officials said they may need to revisit that increase later this year if the economy doesn’t improve.
City officials are mainly concerned about how the downturn in tourism caused by the pandemic will impact the revenue connected from transient occupancy tax and sales tax. These two streams of cash account for 22% of the General Fund revenue, according to city document.
Laguna Beach will also seek cost savings by not filling two full-time planner positions and a contract planner for Community Development, cut 30 percent of its funding to building inspection and code enforcement, and eliminate a vacant part-time arts program coordinator position. All together this will save the city about $386,000 this fiscal year.
The City Council directed city staff to steer clear of freezing two vacant police officer positions so Laguna Beach police can at least start the recruiting process this year.
One of the casualties of the revised budget was a $966,300 transfer to the Wildfire Mitigation and Safety Fund. Among other projects, this fund was supposed to help pay for a new water reservoir that would allow firefighting helicopters to use a snorkel to take in water without needing to land.
Laguna Beach Fire Chief Mark Garcia said the city encountered some challenges with securing water, electricity, and environmental for the site making it a longer-term project.
Due to the fluid nature of the pandemic, city administrators are planning for bad and worse scenarios. For now, they’re basing their budget projections of a bad scenario that assumes social distancing requirements will be in effect until Spring 2021.
Gavin Curran, director of administrative services, noted Tuesday that the city will have a clearer picture Aug. 1 of how Laguna Beach hotels performed from April to June.
“I’m concerned that in a couple of weeks we’re going to have another Covid lockdown and that will make us trend more toward the worse scenario than the bad scenario,” Councilmember Sue Kempf said.
City staffers have done their best to plan for how revenues might dip over the next 13 months with the information currently available, Pietig said.
“It is very very difficult in this environment to project that far forward with lagging revenue,” he said.
