[Editor’s Note: Mr. Muir is chief financial officer of Culver City.]
At Monday evening’s City Council meeting, I presented the Mid-Year Budget Report for FY ’14-‘15 and an update to the General Fund Financial Forecast.
These documents are available on the Finance Dept.’s website via this link.
Here is a brief summary. For the current fiscal year (that will end on June 30), it is anticipated the General Fund will finish in a better position than was originally anticipated when the budget was adopted.
The city continues to see gradual improvement in its revenues as a result of the improving economy.
Additionally, the city received significant one-time revenues due to the sale of two properties (the former Fire Station No. 3 site and the Pacific Theatres building).
It is estimated that total revenues will exceed expenditures by $15.9 million this year — $14.2 million of that is due to the previously mentioned property sales.
The General Fund Financial Forecast is a tool to assist the city in building a financially resilient government through long-term financial planning. The forecast takes current year estimated operating data and employs a number of assumptions and estimates to arrive at revenue and expenditure figures going out through Fiscal Year 2023-24.
These assumptions are detailed in the document, but some of the more important ones are:
- Slow but steady revenue growth through the forecast, with an average growth in operating revenues of 2.45 percent.
- No increases in current number of budgeted positions.
- Significant increases in required pension funding.
- Two percent annual salary increases, 4 percent growth in healthcare costs, with 2 percent growth in most other costs.
In the short term, it is estimated that revenues will exceed expenditures.
However, the required increases in pension funding and other areas result in expenditures catching revenues by the end of the Forecast. Additionally, Measure Y (the half- cent local sales tax approved by Culver City voters) is set to sunset in March 2023.
This would result in no Measure Y revenues for Fiscal Year 2023-24, and is estimated to create a deficit of about $11.6 million in that year.
Culver City is better positioned than most cities to be able to absorb the costs of pension increases.
Additionally, the city has already factored in the cost of retiree medical benefits into its budget, something that a majority of cities with such benefits have not done yet.
If we hold the line on other expenditure growth, we can meet our obligations. However, this is only possible due to Measure Y. Based on the current Forecast, I do not see a scenario where extending Measure Y will not be required.
The forecast argues for continued vigilance in controlling costs, encouraging economic development and a focus on maintaining service levels. It also argues further discussion and consideration regarding the scheduled sunset of Measure Y well prior to that time.
Mr. Muir may be contacted at jeff.muir@culvercity.org
