First published in the March 5 print issue of the Burbank Leader.
Burbank officials said this week that the city’s projected revenues have nearly returned to pre-pandemic levels, but inflation and supply chain issues have raised some expenses.
The city’s anticipated recurring revenues — primarily consisting of taxes — for this fiscal year are nearly $192 million, financial services director Jennifer Becker told the City Council during its Tuesday meeting, close to the pre-pandemic figure of about $195 million. She also said that, based on the encouraging revenue reports in the first half of the fiscal year, from July to December, the deficits officials projected the city to face in future years could be cleared.
For this fiscal year, Burbank is expecting a recurring deficit — recurring revenues minus regular expenses such as payroll and department operations — of about $884,000. City finance officials, who originally projected that deficit at $6.7 million, attributed the better outlook to funds received from the American Rescue Plan Act and the economic recovery spurred by the availability of COVID-19 vaccines.
Becker projected a $1.1 million recurring budget surplus for fiscal year 2022-23, with a smaller surplus the following two fiscal years. In prior budget meetings, officials said they anticipated Burbank to be in the red by millions of dollars in those years.
But Becker warned that the projected margins between a deficit and a balance are narrow, and that other economic effects of the pandemic linger. Like entities across the nation, she said, Burbank is paying more for goods and operations. Burbank Water and Power officials said Tuesday that those increased costs were part of the reason they were requesting about $9.7 million from the electric fund.
Dawn Roth Lindell, BWP general manager, explained to council members that the utility needs the funds to complete repairs to a Lake One power plant turbine that unexpectedly failed, with supply chain issues delaying the process and increasing the price. BWP officials also said natural gas is more expensive, and that they must buy energy usually provided by the coal-fired Intermountain Power Project, which they noted is producing less power because supply issues are disrupting coal deliveries.
Lindell added that BWP usually sells the excess energy it receives from the Utah power project, whereas now it isn’t even producing enough to address Burbank’s retail needs. That issue, said BWP Chief Financial Officer Bob Liu, and the rising cost of natural gas will likely continue into next fiscal year.
“It will impact our rates,” Liu said. “Ultimately, it will get passed on to our customers.”
The City Council approved BWP’s request, along with funding several other smaller projects. These included about $165,000 for playground equipment at George Izay Park, roughly $125,000 for consulting on a new Burbank Central Library and $495,000 to augment workplace investigations. A staff report noted that such investigations have increased from an average of three or four a year to 11 current open investigations, with another five anticipated this fiscal year. Officials attributed the rise to renewed awareness of sexual harassment and racial justice.
SALES, HOTEL TAXES UP
Despite BWP’s unexpected cost increases, Becker emphasized that Burbank’s overall financial health continues to improve. In some cases, rising prices benefited the city, with quarterly sales tax revenues exceeding pre-pandemic levels.
Officials project Burbank will receive nearly $52.6 million in sales tax revenue this fiscal year, about $2.8 million more than was estimated and more than $6 million more than in fiscal year 2020-21. Becker attributed the rise to pent-up demand for dining and travel, as well as increases in auto and gasoline prices.
The city is expected to receive another $8.4 million, $1.4 million more than projected, in hotel tax revenues as domestic travel ramps up, and $3.2 million, nearly twice what was projected, from taxed parking operations.
“I’m a little relieved to see our finances doing so well after the pandemic,” said Vice Mayor Konstantine Anthony. “I know a lot of other cities have not fared as well as we have.”
Utility tax revenues, however, are expected to come in at about $1 million less than anticipated — $15.7 million, changing little from fiscal year 2020-21. Becker said that businesses asking employees to work from home has reduced commercial electricity usage, and that wired and wireless connections continue to decrease as more customers turn to data plans.
The city government will also have to navigate several unknowns in the future, Becker added, including development, fluctuations in travel, transitions to online sales and potential COVID-19 variants.
The City Council voted 4-0, with Councilman Bob Frutos absent, to approve the midyear budget, while also directing officials to research whether Burbank should increase the amount of funds kept in reserves.