Pasadena City Council Special Meeting, June 23, 2020 (Photo – screengrab)
Councilmembers pressed the City Manager on why Covid-19 expenses were coming out of the operating reserves rather than the emergency reserves and the need for proactive adjustments in the 2021 budget.
By Laura Hackett
Pasadena City Manager Steven Mermell advised the Councilmembers that the City of Pasadena can use 5% of the operating reserves without having to declare a fiscal emergency, and that creditors would look more closely at the City of Pasadena if it had to use its emergency reserves. Mermell went on to describe the source of funds as a matter of semantics because both funds are reserve funds. When the Rose Bowl was shut down because of the pandemic, the $8.3 million needed to resolve the Rose Bowl’s debt was taken from the operating reserves. Small grants for businesses also were taken from operating reserves.
The document accompanying the 2021 budget stated no fiscal impact. It is anticipated, however, that COVID-10 will have a $33 million impact on the City of Pasadena in 2021, and that it may be necessary to dip further into reserves or reduce the City workforce. Mermell stated that the budget for the City of Pasadena is balanced with positive income of $500,000.
Councilmember Victor Gordo (Dist. 5) expressed concern that revenues might not come in as anticipated, and that the 2021 budget is based only on what we know at this time. Gordo said, “revenue losses are only assumptions. It is important to track the assumptions and see if we are hitting them.” Gordo further stated, “It is important that we are not cutting services that people rely on, that seniors, children, and families rely on…. Let’s not wait until we are pushed into a corner which can affect the quality of life. We cannot just hope it goes well.”
Mermell replied to Councilmember Gordo’s concerns by stating that, “Hope is not a strategy and that is why it is always necessary to present a balanced budget.” Mermell added that in fact he had presented just that.
There was discussion of the need for everyone to understand how long the economy may be on a downward trend, and that the City of Pasadena cannot just cut 5% or 10% and then just do what it does well. The City of Pasadena’s Finance Committee will convene and recommend cuts.
The discussion ended with Councilmember Gordo saying that the Councilmembers need “resources to study the issue now so we can be proactive.”
> Click to watch the full Pasadena City Council special meeting on June 23, 2020.
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