Fiscal Year 2018 proposed budget ‘fiscally responsible’

Long Beach officials aim to invest in ways to cover increasing costs

Infograph by Sebastian Echeverry | Signal Tribune
The pictured pie chart displays all funds of Long Beach’s Fiscal Year 2018 proposed budget. The General Fund is the City’s discretionary portion of the $2.6-billion budget plan. Officials hosted a press conference on Monday, July 31 in which they spoke about adding more positions in emergency services using funds from the General Fund and Measure A.

As Long Beach continues its goal of becoming a “21st century city,” via modernized construction plans and housing projects, the City stands on a balanced budget despite some underestimated revenue gains, according to officials this week.

Long Beach Mayor Robert Garcia, City Manager Patrick West and other officials on Monday presented the Fiscal Year 2018 proposed budget during a press conference, in which Garcia pointed out that the $2.6-billion budget remains balanced, fiscally prudent and pays down the City’s pension liabilities.

“I’m proud that our budget is fiscally responsible and makes critical investments in public safety and infrastructure,” the mayor said. “This is the largest investment to street and sidewalk repairs in a generation.”

The budget boasts major infrastructure improvements, indicating that every neighborhood in Long Beach will be impacted by the proposed spending. More than 50 miles of streets and sidewalks are to be renovated under the budget. Additionally, 34 parks, 10 libraries and 21 other facilities would benefit from the funding.

“We are continuing our park programs and expanding a lot of services,” Garcia said. “We are ensuring that we are responsible toward our communities.”

The recent passing of Measure A– a transactions-and-use sales tax, lasting a period of 10 years, on all personal property sold in the city– allows officials to focus on public safety and infrastructure concerns.

The proposed budget will use Measure A funds to support 37 new positions in the Long Beach police and fire departments. Police academies are expected to expand, and an additional 28 LBPD officers will oversee the Metro Blue Line.

Funds allocated in the budget are in place to support four citywide cleaning crews, called Clean Teams, to tackle graffiti and urban blight. These teams consist of two individuals each with seven dedicated vehicles to be shared.

Safety was a key topic of conversation during the conference. Garcia said that Long Beach’s 911 emergency contact phone number would receive an upgrade under the proposed budget that would allow emergency services to locate the position from where the call originated. This technological upgrade would also introduce one single phone number to contact the City’s services, replacing the current list of different municipal contact phone numbers.

The mayor mentioned that specific services citizens wanted were kept in mind when proposing the budget. These services include increased pet adoption efforts, maintained Sunday library hours and full financial support of the municipal band.

Sebastian Echeverry | Signal Tribune
During a press conference on Monday, July 31, Long Beach Mayor Robert Garcia said the Fiscal Year 2018 proposed budget is “fiscally responsible and makes critical investments in public safety and infrastructure.”

All these highlighted areas of the budget fall under the General Fund– the only discretionary portion of the City’s $2.6-billion budget. It only accounts for 17 percent, or $461 million, of recurring costs, of the Fiscal Year 2018 proposed budget.

The General Fund is then further broken down, and those funds are shared between various City departments. Slightly less that 70 percent of the General Fund is devoted to public safety. The remaining 30 percent supports all other departments that rely, to some degree, on the General Fund.

According to city officials, 82 percent of expenditures are used to pay the salaries and benefits of the employees that perform municipal services.

The General Fund primarily depends on general tax revenue to raise funds. In the Fiscal Year 2018 proposed budget, approximately 59 percent of all General Fund revenue comes from taxes. The City receives 21 percent of Los Angeles County property taxes.

There are several challenges that the City faces when deciding how to structure the budget. The first is a reduction in the City’s ability for revenue growth. The main cause for the revenue decrease is the erosion of the sales tax base due to Internet sales and the State Legislature-directed exemptions or reductions to taxes and fees. Adding to economic concerns is the volatility of oil prices. The drop in oil prices impacts services and one-time spending.

Another major challenge that City officials face is the unfunded liabilities worth $1.2 billion. Expenses to cover CalPERS– an agency in the Californian executive branch that manages pension and health benefits for more than 1.6 million State employees, retirees and their families– are expected to increase by over $10 million to the General Fund each year for the next several years. The recent restructuring of CalPERS’ funding plan is to blame for the increase, despite the plan’s efforts to reduce spending in the years to come.

Lastly, healthcare costs have been increasing for years at rates much higher than anticipated. According to officials, the City has been undergoing independent healthcare eligibility verification reviews, which have resulted in savings for calendar year 2017.

“The City of Long Beach, like other cities in California, will be facing challenges in future years, due to expenses growing faster than revenues,” West said. “Accordingly, we are planning for the future, with an intent to maintain core services.”

The Long Beach City Council will review and vote on whether to adopt the proposed budget in late August and early September.

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