The city of Chino Hills will have an anticipated budget shortfall of $3.5 million for fiscal year 2019-20 because of expected reductions in sales tax, hotel tax, and charges for service due to the coronavirus.
The losses were revealed during the online budget workshop held Wednesday afternoon.
The shortfall is from the following areas: $1,031,245 from sales tax; $430,700 from hotel tax; $81,000 from street sweeping parking ticket revenues; $1,010,093 from community development service charges; $839,915 from charges in the community services department; $91,073 from the general fund; and $82,151 from passport services.
The shortfall however is not included in the preliminary budget for fiscal year 2020-21.
City manager Benjamin Montgomery said the 2020-21 budget is balanced and the city’s significant reserves will act as a safety net.
The $124 million budget will have general fund operating expenditures of $44,242,867 and estimated general fund reserves of $43,838,984.
Mayor Art Bennett said the city’s reserves are the envy of other cities.
He said $36.9 million of the general fund reserves are unrestricted, which means the council has discretion on how the money is spent, unlike “restricted” funds that are tied to certain uses.
‘Pie in sky’
Councilman Ray Marquez raised concerns that projected revenues from sales tax, development impact fees, and community services in the fiscal year 2020-21 budget are too high.
Mr. Marquez said these “pie-in-the-sky” projections are being used to balance the budget when the city does not truly know the outcomes.
“If we’re anticipating a $3.4 million shortfall this fiscal year, which only encompasses 3½ months, why don’t we feel this situation will continue in the next six to eight months,” he said on Thursday.
He said neighboring cities are projecting shortfalls in the 2020-21 fiscal year, but Chino Hills is not.
“I just want us to be cautious,” he said. “I don’t like the idea that we’re not worrying because we know we have big reserves.”
Mr. Montgomery said city staff made informed assumptions about revenue, looked deep into the budget, and identified cost reductions.
Each department made a cut of at least 5 percent, he said, and several capital improvement projects were postponed, including artificial turf at Community Park.
He said the city has a diverse revenue stream which provides stability even though some of those revenues have been dramatically impacted.
The city manager said the budget will be analyzed frequently and action will be taken as quickly as possible when adjustments are needed.
He said the city’s large reserves are not being used because the anticipated shortfall is an estimate and “now is not the time to commit reserves to those projections.”