First published in the Dec. 11, 2021, print issue of the Burbank Leader.
Burbank’s municipal revenues, though still reduced by the effects of the coronavirus pandemic, is bouncing back faster than expected, officials said this week.
In a report to the City Council on Tuesday, financial services director Jennifer Becker said that Burbank’s tax revenues were generally higher last fiscal year, which ended in June, than staff members had hoped. The city’s recurring General Fund revenues — the receipts it anticipates with high certainty — for fiscal year 2020-21 came in at nearly $181 million, about 4.8% higher than the roughly $173 million forecasted, though they were still 2.4% lower than they were in fiscal year 2019-20.
“What this does tell us is recovering Burbank’s economy is at a faster rate than our initial projections indicated,” Becker said.
The city’s finance department estimates that recurring revenues will increase this fiscal year by about 2.9% over last year to roughly $186 million, thanks in large part to an anticipated boost in sales and hotel tax revenues. Though property values are increasing, the corresponding tax revenue is expected to decline this fiscal year after seeing a larger-than-expected rise in 2020-21, possibly because of the lower number of aircraft at the Hollywood Burbank Airport last calendar year, when the values for 2021-22’s property tax revenue were assessed.
However, the city is expected to face a General Fund deficit this fiscal year through at least 2025-26. Recurring General Fund expenditures for 2021-22 are budgeted at nearly $193 million, meaning the city will encounter a recurring deficit of about $6.7 million. Becker explained that deficit will likely shrink to around $3 million and $2 million in upcoming years as the economy continues its recovery, adding that the anticipated deficit is only roughly 1% of the General Fund.
The General Fund accounts for roughly 30% of the city’s budget, but accounts for most of its major departments (Burbank Water and Power has a separate fund).
With Burbank pulling from its second disbursement of financial assistance from the American Rescue Plan and other sources, the General Fund will easily be able to absorb this fiscal year’s deficit. The fund’s estimated spendable balance at the end of the fiscal year is $34.1 million, a significant increase from the balance of $26.8 million at the end of the 2020-21 fiscal year, which itself was $11.4 million higher than originally projected.
The American Rescue Plan, a $1.9 trillion stimulus package passed earlier this year, requires cities to allocate the funds they receive by 2024 and spend them by 2026. Becker explained that the package will provide a second release of about $12.7 to Burbank in May 2022, having already given a similar disbursement last fiscal year, and that the city will have to decide where the extra money should go.
City staff members estimate that the pandemic decreased Burbank’s revenue by about $14.3 million during fiscal year 2020-21, a better scenario than the $22.5 million impact originally projected. The ARP has already covered much of that missing revenue, Becker added.
