City implements $2.1 million budget cut

City implements $2.1 million budget cut
The newest Pasadena City Manager, Steve Mermell

Pasadena City Manager Steve Mermell indicates that government spending will outstrip income and create a budget deficit that will continue to grow unless addressed soon.

After a lengthy discussion Monday night, the City Council unanimously approved a plan to implement a $2.1 million budget cut for fiscal 2016-17 and eliminate seven full-time positions.

The plan, submitted by City Manager Steve Mermell, was described as the first phase of a longterm strategy to keep Pasadena fiscally sound. None of the jobs eliminated are public safety positions.

Current economic projections suggest the city will have a significant budget shortfall  by 2019 if savings aren’t implemented citywide.  The projected shortfall is related to a $388 million unfunded pension liability that continues to grow.

“When we get to 2019 we’re eating into the general fund reserve,” Mermell said. “Either you are making money or you are losing money … every time we find more revenue it seems the pension system is asking us for more money.”

City Councilman John Kennedy expressed concern about the unfunded pension problem.

“I believe that it is going to grow significantly if we don’t do something to stave off that growth and deal with the actual unfunded pension obligation,” Kennedy said.

Mermell said his office would begin hosting public budget workshops after the start of the new year with the intent of educating Pasadena residents about the current state of city finances.

While the city had some good news on the revenue side over the past several months, as the result of a $7.4 million influx of cash due to “extraordinary one-time occurrences,” officials can’t count on luck going forward, creating the necessity for the budget cut.

Ultimately, the loss of sales tax revenue resulting from the closure of Avon’s distribution facility and growing costs in all departments will require a complete examination of city finances and a determination of whether or not the city is charging appropriately for items like emergency response and the police department helicopter.

“We will return to the council with specific recommendations as appropriate,” Mermell said.