Fiscal Outlook and FY 23 Budget Development
Update
City Council Study Session – March 8, 2022
1 Strong Fiscal Management has Prepared the City for Challenges 2 Strong Revenue
Recovery and No
Reduction Targets Issued
• Long Beach economy is
bouncing back very well
• No service cut targets to
departments
• Important to remain fiscally
prudent and disciplined
Focus on Infrastructure
• This Budget will focus on
developing and investing in a
transformative infrastructure
plan for the City
• Looking at opportunities made
available by Measure A and
potential federal funding
Strong Fiscal Management
has Prepared City and Many
Accomplishments Achieved
• Years of strong fiscal practices
positioned us to face the pandemic –
with reserves that helped cover
shortfalls temporarily and the ability
to scale back costs to save
• This along with federal support
allowed us to respond swiftly and
effectively to serve the community
• The City became an early leader in COVID-19 vaccine distribution – over 330,000 residents vaccinated
• Continued a robust COVID-19 testing program – 800,000+ people tested at City sites and over 1.1 million tests administered in total
• Implemented a COVID-19 booster program –16,000+ booster shots administered • Continued to implement CARES Act programs and support in basic needs, early child supports, youth development, food access, nonprofits, local businesses, renters, etc.
• Launched the BizCare Hotline, BizCare Pop-Ups, and BizCare Outreach teams to help small businesses survive and recover
• Implemented the Emergency Rental Assistance Program assisting over 4,000 tenants and landlords with past due rent and utility payments. • Continued Open Streets Initiative and temporary parklets • Adopted the Long Beach Recovery Act – A nearly $250 million dollar program, the size of an entire budget for some cities
• Safely reopened City Hall and City facilities following COVID-19 closures FY 21 – FY 22 Accomplishments and Achievements
3 • City has managed the longest
coordinated disaster response in City’s
history with EOC activated since March
2020
• Assisted with humanitarian family
reunification efforts becoming one of
several emergency shelters set up
around the country
▪ 1,583 migrant children were
reunited with family members or
sponsors
▪ Partnered with LB Community
Foundation to raise $100K to
enhance the experience of the
children in the emergency shelter
FY 21-FY 22 Accomplishments and Achievements, continued 4 • Continued Progress on Homelessness Efforts
▪ Atlantic Bridge Housing Community continues to
provide a year-round interim housing site for 125
people experiencing homelessness
▪ Project Homekey – purchased a 102-room hotel for
transitional supportive housing
▪ Project RoomKey – opened the temporary 47-room
Days Inn for transitional supportive housing and linkage to services
▪ Permanently housed 458 people and stabilized 560
people in transitional housing.
▪ Served 3,512 people at the MSC in 2021 – a total of
approx 33,000 total visits in the year/avg. 132 per day ▪ 4,600 enrollments in different homeless services
▪ More than 900 outreach contacts.
▪ Conducted 860 homeless encampment cleanups
FY 21-FY 22 Accomplishments and Achievements, continued 5 • Continued implementation of the Racial Equity and Reconciliation Initiative with Racial Equity 101 trainings, action plans, and development of tools
• The Language Access Program has managed more than 500% increase in translation requests to ensure wide-spread access to information • Created new or re-envisioned existing programs throughout the City’s parks including: 4th Street Senior Center and Bixby, Drake, El Dorado, Rancho Los Cerritos, MacArthur, Houghton and Cherry Parks • Loaned out over 767,000 digital and physical items from City libraries, including chromebooks and hotspots as part of the new Tech To-Go service • The Clean Team has collected 2,400+ tons of litter and illegally dumped items
• Abated nearly 1.5 million square feet of graffiti and filled 25,000 potholes • Updated and re-launched Go Long Beach app
FY 21-FY 22 Accomplishments and Achievements, continued 6 7
General Fund Trends, Forecast, &
Budget Balancing Strategy
Revenues Projections have Greatly Improved
8 FY 23 Revenue Projections Improved From Previous FY 23 Projections by $21 million (Increased from FY 22 Budget by $34 million)
Note: Oil is budgeted at $55/bbl for structural purposes due to volatile nature of revenue source. Any revenues above budget generated during year net of oil expenses will contribute to one-times available that may be allocated for citywide one-time purposes $9.9
+14%
$5.6
+17% $3.1
+2%
$(1.6)
-8% $(4.0)
$(2.0)
$-
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
Sales and Use Tax Utility Users Tax Property Tax TOT
FY 23 Revenue Change from Previous FY 23 Projection – Examples ($ in millions)
Notable Expenditure Trends in General Fund
9 CalPERS
Pension Costs
$500K increase in
FY 23 – lowest in
years. Currently
projecting cost
decrease
beginning FY 24.
Benefit of CalPERS
21% investment
return 6/30/21
General Liability Costs
No change for FY 23. General Liability
Fund budgetary funds available still
negative but made improvements in FY
21 and on track
Worker’s Comp Costs
Savings of $1.4 m for FY 23 due to good
performance of WC fund in FY 21 and
cash available in WC Fund
Salary Changes
FY 23 projected to increase $18 m
based on negotiated agreements with
bargaining units and general inflator if
no contract
Budget Alignment
Projection includes some alignment of
budget to actual costs of services and
potential mandated/critical needs, offset
by projected vacancy savings
FY 23 Expense Projections Stayed the Same As Previous FY 23 Projections (Increased from FY 22 Budget by $22 million)
CalPERS Costs Trending in Positive Direction in Outyears 10 Positive trends may fluctuate and even change back to cost increases depending on variables such as investment returns which contributes to some volatility of funding plans. Staff will continue to assess each year. 0 20
40 60
80 100
120
FY
17 FY
18 FY
19 FY
20 FY
21 FY
22 FY
23 FY
24 FY
25 FY
26 FY
27 FY
28 FY
29 FY
30 FY
31 FY
32 FY
33 FY
34 FY
35 FY
36 FY
37 FY
38 FY
39 FY
40 FY
41 $ in millions
CalPERS Cost History and Projection
Significant
CalPERS Cost
Increases in
the Past
General Fund has Projected FY 23 Shortfall of $11.9 million 11 Previous Projection for FY 23: $35.6 million
Updated Projection for FY 23: $11.9 million
General Fund Outlook
($ in millions)
FY 23
Previous Projection $(35.6)
Revised Projection (14.9)
Measure A Maintenance* 3.0
Surplus/(Shortfall) (11.9)
* Measure A proposed to be used to cover eligible public safety costs Change of $21
million due to
revenue
projection
improvement
General Fund Budget Balancing Approach for FY 23
12 Good News!
No General
Fund Reduction
Targets for
Departments
$11.9
million
shortfall
Good FY 21 revenues required less Long
Beach Recovery Act (Securing our City’s
Future) assistance, making $12 million
available for FY 23
$11.9 million
covered by one-
times funds
made available
from LBRA
Important to Move Forward with Fiscal Prudence and Discipline 13 • One-time solution in FY 23 increases the projected FY 24 shortfall problem $11.9 m
shortfall from
FY 23 carries
over to FY 24
• Available federal funds intended for this very purpose; provides more time to stabilize
General Fund Outlook
Surplus / (Shortfall) - $ in millions
FY 23 FY 24 FY 25
Prior to budget balancing solution (11.9) (8.9) 0.3
Solving FY 23 with one-times -- (20.8) 0.3
Assumptions & Uncertainties
• Measure M litigation – plan to cover FY 22 and FY 23 escrow requirements with one-times • Negotiations with Bargaining Units – POA, FFA, LGA contracts expire in FY 22; Miscellaneous expire in FY 23 • Future costs that may occur but are not currently factored in, such as conversion to cleaner energy options • Assumes no future recession
14 Measure A & Other Funds
Measure A Plan
15 • Residents voted to extend the Measure A on the March 3, 2020 ballot, authorizing the continued collection of additional revenue at a maximum annual rate of 1%
• Revenue projections below are expected to cover past structural adds and planned expenditures as part of the Measure A plan adopted in previous years FY 21
Actuals
FY 22
Projections*
FY 23** FY 24 FY 25 FY 26 FY 27
$73.5 $79.2 $66.5 $63.3 $65.2 $67.1 $69.1
* Adopted FY 22 was $69m. Figure above represents updated estimates after FY 21 year-end results **In FY 23, the rate drops from 1% to 0.75% from Jan 2023 through Sept 2027 due to County Measure H in order to stay within the tax rate limit
Measure A Revenue ($ in millions)
Measure A Plan, continued
16 • The Proposed FY 23 Budget will provide details of a Measure A out-year plan • Approximately $20 - 22 million of unallocated Measure A revenue available annually from FY 23 – FY 27 based on current projections
• Plan expected to cover past structural adds and planned expenditures as part of the Measure A plan adopted in previous years
• Significant focus on infrastructure with 3 potential bond issues ($50m every two years) o Total $150m bond-funded projects from FY 23-FY 27.
o Annual debt service of at least $3.5m for FY 23-FY 24; $7.5m for FY 25-FY 26; and $11.5m for FY 27 and beyond.
• Also cover public safety cost increases to maintain services, including Fire’s carried-over budget reduction target and Police cost increases like crime lab lease. • Other items may include things such as long-term funding of Engine 17 and Police’s Neighborhood Safe Streets
Other Funds
17 • Related Funds that impact the General Fund are not getting reduction targets similar to the General Fund. However, looking to keep costs down in these other funds.
• Special Advertising and Promotion Fund –Transient Occupancy Tax is rebounding slowly. Currently anticipated to draw down its $5 million budgetary funds available in FY 22. To avoid reductions in FY 23, any additional one-time funds made available should be set aside to help replenish any draw down. • Refuse Fund –Cost of Service study underway. Significant rate increases will be needed to provide structural balance of the fund, including to cover cost of SB 1383 (Organics Collection) and meet State mandates. Study and initial rate increase anticipated to come to City Council in FY 22.
18 Community Engagement
Community Engagement Efforts
19 • For the first time, community engagement was done at the beginning of the budget process with two virtual
meetings in January
• Budget Survey conducted in January
• The meetings prioritized Language Access with
interpretation services and translated materials
• Detailed demographic tracking to better inform future outreach with goal to better engage with diverse and
underrepresented members of community
• Equity Lens emphasized with departments requested to
provide additional context on equity impacts on any
budget proposal, as applicable
Virtual Meetings Participation
20 Survey Respondents by Council District
Council
District
1 2 3 4 5 6 7 8 9 Don’t
Know
Non-
Resident
# 14 5 8 8 9 3 3 7 3 1 1
% 22.6 8.1 12.9 12.9 14.5 4.8 4.8 11.3 4.8 1.6 1.6
Survey Respondents by Age
62 total responses
62 total responses
141
Total estimate of
Attendees from
both meetings
Not including City staff
0 3
9 7 6
4 11
3 2
6 8
30 5%
15%
11%
10%
6%
18%
5%
3%
10%
13%
5%
0 2
4 6
8 10
12 0-17 18-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-74 75+ NUMBER
AGE GROUP
Survey Respondents by Race/Ethnicity
Virtual Meetings Participation, continued
21 65 total responses
Survey Respondents by Gender
Expression or Identity
62 total responses
6 8
27 20
0 2 1 1
9% 12%
42%
31%
0% 3% 2% 2%
0 5
10 15
20 25
30 NUMBER 40
20 2 0 0
65%
32%
3% 0% 0%
0 5
10 15
20 25
30 35
40 45NUMBER
Budget Survey Participation
22 Survey Respondents by Council District 723
Total Survey
RespondentsCouncil
District
1 2 3 4 5 6 7 8 9 Don’t
Know
Non-
Resident
Skipped
Question
# 47 82 210 90 105 26 25 35 19 32 3 49
% 6.5 11.3 29.0 12.4 14.5 3.6 3.5 4.8 2.6 4.4 0.4 6.8
0 14
49 70 55 50 58 54 73 67
143
50 400%
2%
7%
10%
8% 7% 8% 7%
10% 9%
20%
7% 6%
0 20
40 60
80 100
120
140
160
0-17 18-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-74 75+ Skipped NUMBER
AGE GROUP
Survey Respondents by Age
674 total answers.
683 total answers.
Survey Respondents by Race/Ethnicity
Budget Survey Participation, continued
23 687 total responses. Respondents selected more than one, if applicable.
Survey Respondents by Gender
Expression or Identity
690 total responses.
384
220
12 67
7 33
53%
30%
2%
9%
1% 5%
0 50
100
150
200
250
300
350
400
450NUMBER55 40
381
126
8 20
96 29 36
8% 6%
53%
17%
1% 2%
13%
4% 5%
0 50
100
150
200
250
300
350
400
450
NUMBER
Most Popular Topics from Comments at Virtual Meetings
24 This information will be summarized in a separate memo to City Council.
1. Addressing homelessness and providing
necessary support
2. Providing sufficient affordable housing
options
3. Combatting crime and increasing the
community’s sense of safety
4. Promoting arts and culture initiatives
5. Repairing and maintaining roads and
infrastructure projects
6. Diverting police funds toward other
services
7. Alleviating traffic and parking issues
8. Elevating public health and mental
health services
9. Ensuring equitable access and
opportunity for all communities
10. Increasing library funding
11. Investing in preventive community
support services
12. Strengthening LGBTQ support and
outreach
13. Funding parks
Budget Survey Feedback
25 Top 10 Services:
Rank January 2022 (FY 23) August 2021 (FY 22)
1 Maintaining natural gas and water systems in good physical condition
Maintaining natural gas and water systems in good physical condition 2 Providing fire protection services Providing fire protection services 3 Keeping streets in good repair Keeping streets in good repair 4 Providing police patrol and response Providing services that prevent homelessness 5 Providing ambulance services Investing in mental health and domestic violence services and response 6 Maintaining bridges and alleys Improving local air and water pollution 7 Providing services that address and prevent homelessness Maintaining public parks in good physical condition 8 Maintaining wastewater and flood prevention systems Providing ambulance services 9 Improving local air and water pollution Maintaining bridges and alleys 10 Investing in mental health and domestic violence services and response
Investing in emergency preparedness and response for earthquakes, wildfires, and other natural and man-made disasters
Budget Survey Major Themes in Comments Submitted
26 • Combatting crime, investing in public safety
resources, and improving the community’s overall
sense of safety (73 responses)
• Alleviating the homelessness crisis and investing in
preventative measures (49 responses)
• Road and sidewalk maintenance, and overall
improvements to the city’s infrastructure (37
responses)
• Helping residents with mental health and addiction
(34 responses)
• Redirecting funds for the Long Beach Police
Department to social services and other
departments (33 responses)
• Investing in the city’s library, with many explicitly calling for extended hours (30 responses)
• Providing sufficient affordable housing
opportunities for residents (24 responses)
• Spending more on the city’s parks and overall
beautification (21 responses).
• Fostering a more business-friendly environment in
order to attract investment in the city (21 responses)
This information will be summarized in a separate memo to City Council. 27 Conclusion
Key Summary
28 The General Fund shortfall has narrowed enough to be covered with available one-times for FY 23 and no reduction targets for Departments Move forward with good fiscal prudence and discipline with the recognition of uncertainties and projected out-year shortfalls Great opportunity for investments into infrastructure and continued implementation of Long Beach Recovery Act programs
Thank You
29