First published in the April 30 print issue of the Burbank Leader.
The city of Burbank expressed cautious optimism this week that its budget will return to or surpass pre-pandemic conditions, though it will likely pass on rising utility costs to residents.
Department officials told the council during Tuesday’s meeting — the first of multiple budget discussions that will occur over the next month — that Burbank’s General Fund revenues are growing in several areas. After previously projecting a multi-year deficit between recurring, or annual, expenses and revenues, city staff members also said the General Fund will be in the black for upcoming fiscal years. However, they expect that difference to be within a few hundred thousand dollars for fiscal year 2022-23.
“The budget is balanced by only the narrowest of margins for the next year or two,” said Jennifer Becker, financial services director.
City Manager Justin Hess also cautioned that many factors, including potential new COVID-19 variants, ongoing inflation, supply chain issues and the war in Ukraine, could impact the city’s economic projections.
The General Fund, which represents roughly 30% of Burbank’s budget, provides money for the bulk of the city’s major departments, including police, fire, community development, library, and parks and recreation. Burbank Water and Power has a separate fund, representing nearly half of the overall budget. The utility warned its expenses will balloon with rising electricity and water costs, along with upcoming infrastructure improvements. To help offset those costs, BWP will propose to increase its rates.
The City Council will vote on whether to adopt those new rates during a May 17 public hearing, and whether to adopt the citywide budget on May 24.
The proposed General Fund for fiscal year 2022-23 includes appropriations of about $220 million, $16 million or 7.7% higher than this year’s adopted budget. Becker said the increase is predominantly attributable to some one-time requests. Recurring appropriations total about $202 million, reflecting a more modest 4.5% rise from this fiscal year.
Department officials project the city’s recurring revenues will increase from an anticipated $192 million this fiscal year to about $202 million next year, representing a 5.1% increase. Sales and property tax revenue, which compose well over half of the city’s recurring General Fund revenues, have experienced boosts from rising prices.
While there is still some room for recovery, particularly in hotel tax revenue, Becker noted that the city’s current financial state is a far cry from previous pandemic years, when Burbank faced millions of dollars in deficits. Federal aid, budget cuts and a better-than-expected local recovery helped bridge the gap.
Still, because of one-time department costs and ongoing pension payments, city staff members believe the General Fund balance will decrease by about $1.6 million to roughly $29.6 million at the end of fiscal year 2022-23. But they also project that balance will grow to $41.3 million by the end of fiscal year 2026-27.
New department requests include $400,000 for replacement firefighter breathing equipment, $200,000 for election-related contractual services and about $100,000 for supplies and a new vehicle for the Burbank Animal Shelter, which is moving from the Burbank Police Department to the Parks and Recreation Department.
BWP REQUESTS RATE INCREASES
While the General Fund will benefit somewhat from the increased cost of goods, the same will have a negative impact on BWP’s budget, representatives said Tuesday.
BWP will propose next month to increase its rates starting July 1, a measure officials said would allow the utility to address water and electricity prices, implement sustainability initiatives and improve critical infrastructure.
The electricity rate, which rose 2.5% this fiscal year, would grow by 6% next fiscal year. BWP officials also plan to request similar hikes through at least fiscal year 2026-27. The water rate, which increased by 6% this fiscal year, would jump by 9% next fiscal year, with growths of 6% to 9% planned for following years.
BWP representatives argued their rates would remain below that of many other local and regional utilities, noting that Burbank had to draw from its financial reserves after putting off increases during and prior to the pandemic. They estimated that the average apartment and condominium unit would see a $3.56 rise in monthly electric bills, or a $5.40 increase during the summer months. Single-family homes are projected to experience a $7.91 monthly increase, or a $12.39 increase during the summer months.
Monthly water bills for single-family homes would rise on average between $4.17 and $7.60, depending on usage. No estimated dollar increase was given for apartment units.
BWP is also proposing a 2% rate increase for sewage and a 4% increase for refuse collection, with new fees planned for businesses affected by the state organic waste recycling law. The utility is also crafting a new assistance program that would provide bill discounts to income-eligible customers.
Dawn Roth Lindell, BWP’s general manager, explained that the utility’s electric revenue remains below pre-pandemic levels, and that supply chain impacts have prevented Burbank from receiving its usual share of electricity from the Intermountain Power Plant. She added that the statewide drought is driving up the cost of water, with the Metropolitan Water District board of directors passing a 10% price increase.
Burbank must also comply with state deadlines to reach 60% renewable energy by 2030, a requirement enforced by heavy fines. While BWP’s energy is roughly 40% renewable, Lindell said, but has only increased that figure by 1.5 percentage points in six years.
“We didn’t move the needle because we weren’t staffed to do it, and we’ve got to make the change to make that happen,” Lindell said.
Besides increasing rates, Lindell said BWP has saved about $27.5 million by selling excess energy, renegotiating contracts and receiving state funds. BWP also plans to request $60 to $70 million in electric bond issuance to fund infrastructure projects.
Those initiatives include replacing two substations and old water pipes, improving the Magnolia Power Plant and hiring more engineers.
“We are dealing with a climate crisis, and no time is ever good to tackle that issue,” said Councilman Nick Schultz, “but we’ve been kicking the can down the road for a really long time, and we literally cannot afford to do that anymore.”
BWP will again present rate-related information during the May 17 public hearing.