CERRITOS COUNCIL PASSES BUDGET WITH $2.2 MILLION SURPLUS

BY BRIAN HEWS

The 2018-19 Cerritos City Budget was passed at the last City Council meeting boasting a record $2.2 million surplus with over $52 million in reserves.

The overall budget included an administrative and operating budget of $96.5 million inclusive of all capital outlays, a capital improvement budget of $15.5 million, and a Successor Agency budget at $18.3 million for a combined total of $130.3 million.

The budget maintains full funding for all core services such as public safety, public works, tree trimming, and economic development.

The City also endeavored to fully fund all projects within the Capital Improvement Program (CIP) at $15.5 million, allocating money from other projects and “deferring revenue.”

Later some of the CIP identified by Staff would be cut.

Projected 2018-19 revenues for the City  continue a growth trend, projected at $108 million, $3 million more than last year, which is a 3 percent increase.

Sales tax, the largest revenue source for the City is forecasted to hit a new high at almost $35 million, and “is due to the strong production of local business.” 

Cerritos contracts with a sales tax consultant to obtain the projections; with this forecast Cerritos will ranked 41st in the state for total sales tax collected ahead of Beverly Hills, Ventura, and Brea.

The landmark settlement agreement between the City and the state enabled the City to buy the Towne Center, Lincoln Station, Jaguar and Kia Dealerships.

At the end of their lease terms, the land with be valued at $2.72 billion dollars.

Ground rent is projected at $7.2 million and includes the Moore street property recently leased.

Budget modifications were discussed including a labor contingency of $1.2 million in the general fund as an estimate of personnel expenditures tied to the COLA.

Staff also reviewed the CIP sources and identified those projects that could be deferred until next year, in effect drawing less money from the City’s reserves while not impacting revenues.

In Parks and Open spaces category, $697,000 was tagged for removal; the Sports Complex refurbishment was removed at $612,000; government projects were tagged at $1.35 million including the deferring Mulliken building maintenance.

The total reduction of CIP’s was $2 million.

Staff also looked at equipment deferral identified in the capital outlay portion of the budget. The equipment ranges from trucks to fitness equipment. Total potential reductions totaled $1.2 million.

Councilmember Hu was first to speak and said, “we have a responsibility to balance our budget. For the last ten years the City has taken $42 million from the reserves, we need to balance the budget like we did last year.”

Mayor pro tem Solanki asked, “how much are we going to borrow from the reserves in 2017-18 and how much 2018-19?”

“Based on the estimates $4.2 million 17-18, and $1.8 million 18-19 use of reserves going to CIP’s,” said Budget Manager Jeff Thielke.

City Manager Art Gallucci interjected saying, “there is only three ways to cut money from the budget; staff, program, or CIP’s. We presented the CIP cuts at the request of the Council, we stayed away from staff and programs cuts.”

“Project money is not spent concurrently,” Gallucci said, “we finish programs first, as we do that, new revenue comes in on a monthly basis, just yesterday we got a $200,000 grant, we can put that into the general fund. The budget is in flux, it always moves.”

Hu once again asked, “we are going to draw at least $1.8 million from the reserves?”

Thielke said, “yes, if the budget is approved as is without other modifications and if all CIP’s are completed.”

Hu then asked for more cuts other than CIP’s, “what about the CCPA, it has a $4 million deficit? We only cut $150,000. Let’s discuss everything, I would like to see a balanced budget.”

At public comment, Resident Anantha Ramachadran chided Staff for their quick fix using the CIP’s. “I feel it is a knee jerk reaction, it is good, but it is knee jerk. We are running a deficit how will you plug the hole and not draw from reserves?”

After public comment, Council member Hu made a motion to discuss finding the $1.8 million to cut from the budget. She criticized the CCPA Manager for being absent from the meeting.

Mayor Pulido pointed out the Council could consider the $2 million cuts Staff had identified from the CIP.

Mayor pro tem Solanki brought up the CCPA once again, “what can we do with the CCPA.” 

Council member Yokoyama asked to comment, “the City Manager and Staff provided budget modifications that have been reviewed, the modifications present a cut of $2 million. I agree with Council member Hu to be fiscally responsible and protect our reserves, I would be ready to make a motion to go with the modifications to the CIP, and also removing the capital outlays that total $1.2 million, in that way we will not touch the reserves.”

With that motion, Yokoyama put the City and the budget in the black (revenues exceed expenses) by $1.489 million. Yokoyama then made the motion to approve budget with the modifications. 

Mayor Pulido called for a vote. The budget was approved 4-1 with Mayor Pulido, Mayor pro tem Solanki and Council members Hu and Yokoyama voting yes, and Council member Edwards voting no.