By Julie BUTCHER

On Tuesday morning, the Glendale City Council held the first of seven budget study sessions, heard a third-quarter financial report, and previewed the budget for FY 2022-23 as well as five-year general fund projections.

According to the financial update for the third quarter of the current fiscal year, property, sales and the city’s transient occupancy taxes are all trending upward – better than forecasted, city staff told the Council.

“And there have been some budget savings, thanks to every department stepping up,” City Manager Roubik Golanian noted. “Our priorities remain housing, infrastructure, mobility, connectivity, safety and environmental stewardship.”

Glendale Chief Information Officer Jason Bradford presented the financial report. The city continues to rebound from the pandemic, he said. Sales tax is up 17%; licenses and building permits are ticking up and the city expects to reduce the amount of federal recovery funds needed to balance the coming year’s budget from $14 to $5 million, allowing the city to save the ARPA (American Rescue Plan Act of 2021) money for coming years. ARPA funds can be used for any COVID-related municipal costs including public safety and equipment.

The city will show a reserve of 32.5% at the end of this fiscal year in July.

“It’s a pretty hefty reserve due to the Council’s conservative approach, far higher than our neighbors,” Golanian said. Pasadena and Burbank have reserves of 20%; Long Beach and Huntington Beach maintain reserves of two months of operational expenses, currently 16.7%; Santa Monica’s reserve is 15%; Torrance’s is 10%.

For FY 2022-23, the city is expecting revenue to increase by 3.7% and for expenditures to go up 5.9% necessitating the use of $17.9 million in ARPA funds to balance the budget (the city has received approximately $43 million in these funds and has $38 million left).

Approved by the voters in 2018 to protect essential services, Measure S added three-quarters of a cent in tax revenue to the city coffers. So far, the city has spent $52 million on affordable housing and land acquisition, low income and housing subsidies, bike lanes and year-round aquatics, street art, crossing guards and fire safety apparatus.

“The foresight to shepherd through this Measure passed by the voters is unprecedented and has enabled us to help businesses and residents in this economic recovery,” City Manager Golanian boasted. “Fifty-two million is a lot of money used to improve the life of every single resident in the city.”

Councilmember Vrej Agajanian argued that more of the Measure S funds should be used for housing.

“I went on TV to promote Measure S and we talked about affordable housing,” he said. “That’s what we focused on.”

Councilmember Ara Najarian recalled the history of the measure: Measure S passed in 2018 with 55% of the vote; the campaign to pass it highlighted public safety and community services along with housing.

“There was a list of eight things and housing wasn’t even the first – I’m proud of spending for affordable housing but we have to balance it out and provide improvements to the quality of life for all parts of the city,” Najarian responded.

Financial projections for the next five years are not as rosy. According to Bradford, “We think the landfill may close in 2024-25 so we needed to lower those revenue projections by $4.5 million.”

The city’s financial staff predicts future growth in revenue at around 2% while they estimate increases in appropriations increasing at 2.5%. ARPA funds “are gone in 24-25,” Bradford added. The five-year forecasts show budgets balanced for the next three years but not beyond that.

“What’s coming down the pipeline is a very concerning picture,” Mayor Ardy Kassakhian offered.

Councilmember Najarian pointed out that indications are that reserves will decrease steeply over the next five years.

“The chart shows our reserve going from 32% and dropping by half to 16% at the end of five years because our expenditures are exceeding our revenue – and that is not a sustainable model,” he said. “If we were a company on the stock exchange, they’d be selling off our stock. We can deal with it on the expenditure side or on the revenue side and either one is painful. Cutting expenditures is tough – I mean, we’re a service organization.”

“I am confident in the Council coming together and with our fully capable staff figuring out how to keep the city running smoothly, but it won’t be easy, and it will require some give and take,” Mayor Kassakhian said, wrapping up the first budget study session.

Here is the schedule of upcoming budget hearings:

May 3 at 9 a.m. Quality of Life * community services and parks; library, arts, and culture; community development

May 5 at 9 a.m. Infrastructure * public works and GWP

May 10 at 9 a.m. Public Safety * fire; police

May 19 at 9 a.m. Central Support * city attorney; clerk; treasurer; manager; HR: IT; finance

May 24 at 11 a.m. follow-up items

June 14 at 6 p.m. Budget hearing and adoption of the budget by Council