The economic outlook in Goleta is extremely uncertain as a result of the COVID-19 pandemic.
The Goleta City Council voted unanimously Tuesday to adopt a resolution amending Goleta’s operating and capital improvement program budget for fiscal 2019-20. The capital improvement program was adopted in June 2019 as part of the city’s two-year budget plan.
The mid-term and long-term impacts of COVID-19 are highly unpredictable, and the need to ensure financial stability over the next few years is great, Finance Director Luke Rioux said.
Rioux and City Manager Michelle Greene presented the third-quarter financial results for the 2019-20 fiscal year and the estimated COVID-19 financial impacts to the Goleta City Council on Tuesday, emphasizing these are extraordinary times with no assured models from the past that can predict the future.
The staff report recommended budget adjustments due to the pandemic’s economic uncertainty, including Goleta’s cost-containment plan and preliminary financial outlook for the new fiscal year.
The pandemic’s length is unknowable and the effects are unlike anything Goleta has seen before, according to city staff.
No one knows how long closures and a statewide stay-at-home order will last, or how they will impact future consumer behavior, the travel industry and the ability for UC Santa Barbara and Santa Barbara City College to return to in-person instruction, according to Goleta staff.
“There’s lots of uncertainty and lasting impacts we are anticipating over the next course of fiscal years,” Rioux said.
There has been a massive decrease in spending on certain goods and services, Rioux said.
In Goleta, major impacts are expected to be felt among all industries except for online sales and food and drugs, including cannabis, liquor, grocery and drug stores.
Transient occupancy tax is Goleta’s largest general fund revenue source.
Rioux said COVID-19 has significantly impacted the leisure and travel industry in Goleta, with record-low occupancy levels around 10 percent to 22 percent of normal in mid-March, and room rate declines.
Transient occupancy tax revenues are estimated to drop by $1.9 million through the last quarter of the fiscal year (April through June), Rioux said.
The actual impacts are unknown until August and slated to be reported in September.
According to Goleta staff, tourism is expected to remain slow, and prolonged losses are expected in fiscal year 2020-21. City staff estimates a loss of about $4.9 million, and further discussions will occur during a budget workshop for the new fiscal year starting July 1.
On May 28, the city will hold the first budget workshop for 2020-21.
Property tax is Goleta’s second-largest general fund revenue source and mainly received during December and April, Rioux said.
Goleta staff acknowledged there is a significant amount of uncertainty as it relates to sales tax and the governor’s executive order that allows small businesses to defer up to $50,000 of their sales tax liability for 12 months.
Sales tax is the city’s third-largest general fund revenue source.
The city projected a shortfall of about $922,300 in sales tax, for a total of $5.9 million.
Goleta’s top three revenue sources — transient occupancy taxes, property tax and sales tax — account for about 87 percent of total general fund revenues.
With 75 percent of the fiscal year completed through March, the city’s general fund revenues overall are at 63.4 percent of the budget, compared to 64.9 percent at the same time last year, according to Goleta staff.
Following the staff presentation, Goleta Mayor Paula Perotte said, “There is certainly a lot of uncertainty that we are going to have to take a look at and just don’t know.
“I think what made the city of Goleta in such good financial shape when we weathered through the recession before was the fact that from day one the first council has always been fiscally responsible,” she added. “They always maintained caution and were conservative with funding.”
Goleta Council Approves Solid Waste Rate Increase
Also on Tuesday, the council approved an increase in rates for solid waste collection.
The approved rates will be effective July 1.
The new rates are the result of an increase in the county’s tipping fee costs, which is the rate charged for disposal at the Tajiguas Landfill, among other reasons. The landfill is county-owned and operated.
“These are operational cost increases from the landfill for tipping fees and also a CPI (consumer price index) increase,” said Kimberly Nilsson, CEO and one of the founders of Solid Waste Solutions. “These are not city instituted increases.”
Nilsson said the total rate increase is 4.25 percent.
The county trash and recycling fee is going from $150/ton to $158/ton, Nilsson said.
The county green waste fee is going from $46/ton to $50/ton, she said.
“These increases are a lot smaller than we had last year,” Nilsson said. “Last year, we went up $48/ton in refuse alone.”
In 2011, Goleta approved a franchise agreement with MarBorg Industries in effect until June 2021, according to Nilsson.
“They have been doing a great job,” Perotte said.
The council conducted a public hearing to accept both verbal and written protests against the increased solid waste fees.
Notices in English and Spanish were mailed to all affected parties, including property owners and residential and commercial ratepayers in advance of the public hearing, Nilsson said.
“We sent out for our first mailing to a total of 18,153 notices,” Nilsson said.
Nine protest letters were received, City Clerk Deborah Lopez said, noting there’s not a majority protest by property owners within the assessment area.
The city also allowed members of the public to comment by phoning in, and zero people spoke during the public comment period.