As we enter the third month of COVID-19 restrictions, even the government is feeling the pinch. They have finally figured out that all those closed businesses were paying their wages, and with considerably less- sales and bed-tax income, many government employees could be furloughed until more revenue is found.
While some private-sector businesses have received help in the form of Payroll Protection Plan (PPP) loans (really grants since the loans will be forgiven), counties like Santa Barbara and all the cities in the county aren’t eligible for any help from the federal government.
And, instead of helping local government, Gov. Gavin Newsom entered a questionable $1 billion contract with the Chinese and provided illegal aliens financial assistance. He then advised local governments’ to “declare bankruptcy.”
Now the body politic is becoming worried; how will they pay their bills and continue to provide services?
On April 21 county staff told the Board of Supervisors they might have a “reopening plan” ready in four to six weeks. That means the earliest we could expect their ideas was in June. But we have watched county governments pace for many years.
Something this big could take months not weeks to put together as the staff and stakeholders arm wrestle over the details. The big speed bump is the governor‘s six-point plan to reopen the state.
It appears the governor and public health officials favor a risk-free approach to this one communicable disease as a condition for reopening the state.
In Lompoc, the City Council discussed the fiscal condition of the city on April 21. However, they could draw no conclusions since they couldn’t figure out how much revenue they were losing or when the reopening plan would be ready.
There were some hints though; one was that CalPERS investments, just like our own retirement investments, are in a state of flux. The value of the fund is changing weekly and predicting how much city contributions will increase as a result of the market downturn would be unreliable at this time.
The staff then warned “that with the present financial downturn, the current estimate is that all General Fund reserves will be depleted by June 30, 2020.” That means they will start the new fiscal year with no emergency fund to fall back on.
During the staff presentation, the management services director said he anticipated a $2.5 million surplus in the next fiscal year. Councilwoman Gilda Cordova questioned where he was getting that number.
He then said it was based on spending more money up front to pay down the CalPERS debt. She then questioned where the money was going to come from to implement his plan, considering he had told them during the last council meeting that the city could have a revenue shortfall of up to $1 million as a result of business closures.
He answered by trying to provide an optimistic outlook for next year and beyond.
Cordova went on to say, “If we had at least an action plan for the financial stability of this city that we could show this community (then I could believe your positive comments more), but we don’t.”
She then said she wanted a better idea of how the city was going to plan for the economic future. Government budgets are like a 1,000-piece puzzle: unless you have a picture to go by, you don’t have a clue where the pieces fit. While other councilmembers were content to focus on individual pieces, Cordova wanted to see the big picture first.
However, instead of responding to her concern, the staff started explaining that they were planning for short-term staffing actions.
Cordova only got some support from Councilman Victor Vega who seemed to agree that a picture was needed to put the puzzle together. Instead, the council chose to look for one piece, how to pay for CalPERS.
The council and city ztaff are faced with the task of trying to operate the city without the benefit of a financial-stability plan to overcome the current and future challenges. The next fiscal year is just 10 weeks away and it appears they will start with no reserve funds and reduced revenue.
I am sure that when these councilmembers ran for election, they never anticipated a problem of this magnitude. Now is the time for leadership but it appears only Councilwoman Cordova has what it takes to direct actions that would manage fiscal matters in a responsible and methodical way.
— Ron Fink, a Lompoc resident since 1975, is retired from the aerospace industry and has been active with Lompoc municipal government commissions and committees since 1992, including 12 years on the Lompoc Planning Commission. He is also a voting member of the Santa Barbara County Taxpayers Association. Contact him at news@noozhawk.com. Click here to read his previous columns. The opinions expressed are his own.