As a result of the COVID-19
pandemic, the City was forced to shift its focus from
the FY 2020-2022 Biennial Budget development process and
reassess the drastic change in the financial landscape.
The COVID-19 emergency prompted the State to issue a
stay-at-home order requiring the City to temporarily
suspend public meetings to comply with State and County
directives. In addition to the interruption in the
traditional budget development process, the COVID-19
emergency presented significant, albeit unquantifiable,
challenges to City finances. It was immediately apparent
that the stay-at-home order, the temporary shutdown of
many City businesses, the closure of City facilities,
and the suspension of some City services would
significantly impact City revenue sources. What was
unknown during the emergency budget process and after
the adoption of the budget has been how long the
shut-down will last and what the economic recovery would
look like.
As a result of these challenges,
the City instituted an emergency budget process that is
compliant with the City Charter. Staff, working in
conjunction with the City’s various boards and
commissions, will recommend intracycle budget updates to
the adopted FY 2020-2021 emergency budget as more data
becomes available during the fiscal year.
On June 16, 2020, the City Council adopted a one-year $1.2 billion emergency budget, inclusive of a $110 million capital project budget. The adopted General Fund budget is $271.4 million, a decrease of $7.7 million as compared to the FY 2019-2020 amended budget adopted by the City Council on June 18, 2019. In response to COVID-19, General Fund projected revenues were reduced by 10% ($28.1 million), and multiple balancing measures were incorporated, including: $15.7 million targeted vacancy savings; $7 million savings in pension costs resulting from the issuance of a Pension Obligation Bond; sustained Measure Z support levels and use of unspent contingency funds; and the use of Section 115 Trust funds to pay a portion of the annual required CALPERS UAL payment.
Immediately upon the declaration of
the local emergency, the City restricted all spending to
emergency and essential needs and suspended personnel
recruitment. The City continues to seek all available
state and federal funding to help the City government,
local businesses, and residents with the impacts of the
pandemic. Periodic fiscal updates will be provided to
the City’s applicable boards and commissions and to City
Council as more information becomes available.
Adjustments to the adopted emergency budget will be
recommended as the fiscal impact of the COVID-19
emergency on City finances becomes more apparent. The
City is also taking immediate action to pursue a new
budgeting methodology referred to as Priority Based
Budgeting. This methodology will allow the City to be
more nimble in response to fiscal emergencies.
Additionally, the methodology facilitates the alignment
of monetary and personnel resources to services and
programs that align with the City’s strategic goals.
This is the next important step in fiscal transparency
and public engagement in the budget process.
Navigation Guide: Budget Transparency Portal