Latest news with #CarolMolina
Los Angeles Times
4 days ago
- Business
- Los Angeles Times
Costa Mesa adopts budget, closing gaps without cutting public works projects
After some last-minute reconfiguration, the Costa Mesa City Council Tuesday passed a 2025-26 budget that prevents the city from dipping into reserves and moves ahead with public works projects, but at the expense of some planned IT infrastructure upgrades. Officials had been grappling over how to compensate for projected revenue declines without violating a local ordinance mandating 5% of the city's $186.9-million general fund be set aside for capital improvements. Given its other expenses, namely employee salaries, the city could not cover the $9.3-million earmark for such improvements. The capital asset needs (CAN) requirement had been funded in prior years but was breached last month when city leaders needed to close a $2.9-million gap forecast for the current fiscal year, in the face of slumping sales tax receipts. Exercising an emergency exemption clause that includes unforeseen economic downturns, council members waived the mandate for 2024-25 but promised to pay back the money over the next five years. As the city headed into another daunting economic forecast for 2025-26, with a projected $3-million decrease in revenue, finance staff Tuesday recommended another CAN exemption during a council budget hearing. Finance Director Carol Molina explained a portion of the $9.3-million funding requirement could be covered by CAN balances left over from prior years ($2.2 million), lease revenue and money from a bond payment for a new fire station ($3.8 million) and an increase in city user fees ($300,000), approved earlier at Tuesday's meeting. The proposal would spare layoffs, but the remaining $3-million capital needs deficit would mean having to postpone nearly $1.8 million in public works projects earmarked for CAN funding, including upgrades to the city's TeWinkle and skate parks, a new roof at the Norma Hertzog Community Center and City Hall maintenance, among others. Addressing concerns provided by council members during earlier budget discussions, Molina floated three options for addressing the gap. The council could waive the $3 million in required funding through the CAN exemption, pay the full amount back over 10 years and not move forward with the $1.8 million in public works projects. If council members wished to keep the projects on track, they could alternately take $1.8 million from a general fund facilities reserve account, narrowing the CAN gap to $1.2 million, then pay that back over the next decade. Or, they could do essentially the same thing, but apply $1.2 million in slated IT infrastructure upgrades toward the leftover gap, then pay back the IT fund. Molina said using the IT money now would not harm the city's tech maintenance plans, as the department was in the process of developing a five-year strategic plan. 'There is technically no plan in 2025-26 for these dollars. As a result, I am OK moving forward with reallocating that $1.2 million,' she said. Council members debated the merit of postponing capital projects, particularly those already being designed or bid out to contractors, and potentially dipping into the city's reserves, which could tarnish Costa Mesa's AAA credit rating as the city seeks to use $12 million in bond funding for renovating Fire Station No. 2. Mayor John Stephens proposed continuing the budget talk to later in the month, saying he needed time to approve recently incoming information regarding the city's consultant contracts and employee positions and vacancies — areas that could potentially result in suggested cuts. But Councilmembers Arlis Reynolds and Andrea Marr supported moving forward with waiving the full $3 million CAN requirement now and possibly revisiting the budget, and the ordinance itself, during the city's mid-year review process next year. By that time, Reynolds reasoned, a facility condition assessment already in the pipeline would be completed and could provide new direction for prioritizing capital projects. 'Let's give ourselves some runway, get the assessment in and see what the economy looks like,' she said. 'I just think we're going to be a lot smarter at the mid-year than we are now.' However, Reynold's plan later shifted to an un-presented 'fourth alternative,' proposed by Molina. The finance director suggested the $1.2 million IT funding could be used, along with an additional $600,000 in leftover CAN balance money, to prevent taking $1.8 million from facility reserves. It would still leave the city $1.8 million short of the $9.3-million CAN ordinance requirement but would leave reserve funding in place, while preventing any interruption in public works projects. Reynolds made a motion, and Molina's fourth option was approved in a 6-1 vote, with Stephens opposed. In remarks, Marr said she'd like to revise the CAN ordinance mandate, potentially applying it to only hard infrastructure improvements and capital maintenance and not broader items, like the repayment of bonds. 'The idea that we've got a separate pot of money that is sacrosanct, that we won't touch because we're going to use it for infrastructure, that's actually not true — that's not how we're using the CAN,' Marr said, suggesting a narrowing of the law's scope. 'I'm OK with waiving it [now] because I think we can do better and we can continue to do it in a way that serves the original intent of why, I believe, the CAN was created.'
Los Angeles Times
14-03-2025
- Business
- Los Angeles Times
Costa Mesa seeks to fill $3.6M gap in current budget, as threat of federal cuts looms
Costa Mesa officials are considering scaling back on promised public works projects and eliminating unfilled job vacancies to cover a $3.6 million revenue shortfall in this year's budget, as the threat of federal cuts looms on the horizon. The fate of several civic positions and programs was considered Tuesday during a council study session, during which finance director Carol Molina delivered a mid-year update on the city's $189.9-million general fund budget. Molina said while most sources of income were tracking with assumptions made during the 2024-25 budget adopted last June, sales tax revenue was weaker than projected. Finance staff anticipated receiving $81.6 million, but current trends suggest by the end of the fiscal year, receipts may total as low as $75.2 million. 'This is mostly attributed to slowdowns in consumer goods and in our auto sectors primarily,' Molina said of the $6.4-million gap. Other revenues are slightly stronger than forecast, including the cannabis tax at an additional $100,000, and other smaller streams that will net an additional $400,000, while expenses pencil out $2.8 million lower than budgeted. To cover the $3.6-million deficit, finance staff proposed refinancing $700,000 of the city's annual street sweeping costs, using gas tax revenue instead of general fund money, and implementing a soft hiring freeze starting April 1, during which nonessential vacancies would be eliminated. For the remaining $2.9 million, Molina offered the council some options. The city could defer an equivalent amount of capital projects slated for this year's budget, targeting items of lesser importance or ones not yet begun. Some of those projects include $100,000 for butterfly gardens, nearly $1 million in City Hall improvement projects, a $250,000 commitment to improving streets and an HVAC system at the Costa Mesa Senior Center estimated at $725,000. Another option would be drawing from the city's general fund reserves, which have grown steadily in recent years as income has eclipsed expenditures. The city has cached nearly $56.8 million — above a council recommendation to maintain a minimum balance of $55 million — including $9 million of economic reserves intended to address economic instability. While a short-term fix, that could leave the city short in the event the federal government moved ahead with a potential freeze of funding commitments, a Trump administration move paused by a legal challenge. 'We may need to tap into these resources to fill in some of the funding gaps that we may experience if we do get federal funding reductions,' Molina warned. She described three major programs that rely on federal funding, including the Community Development Block Grants (CDBG) and the HOME Investment Partnership Program, which together provide nearly $1.4 million in code enforcement staffing, public service grants and capital projects, like a new roof at the Senior Center. The city also receives federal grants for infrastructure projects, street improvements and other active transportation programs, including a pedestrian safety festival. This year's earmarks total more than $13.4 million. Council members expressed a desire to take a deeper look at the city's capital improvement project (CIP) list and staffing vacancies to see what's essential and what might be culled. 'The fact is there is a bit of a slowdown of the economy, there is fear of a recession, and so as a city we need to do everything we can to be responsive to that without cutting so deep to the bone that we are unable to provide the things we are known for as a city, the things that make us great,' said Councilwoman Andrea Marr. Mayor Pro Tem Manuel Chavez said he hoped city leaders would use what could be considered a crisis as an opportunity to be more efficient and look at ways to increase revenue. 'About 75% of our budget is employees. If we're seeing positions not be filled, maybe it's time for us to look at those and say if we need them or don't need them. [And] there are items on the CIP that no one on the council is championing, because they were from a prior council,' he said. 'I look at this as an opportunity for us as Costa Mesa to really look at ourselves and our processes and see how we can tweak things to improve our services.' City staff plan to bring back a prioritized CIP list, along with vacancies and data on city fees that could be raised to reach parity with nearby cities, to future budget talks slated for April and May.
