City staff working on budget

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The Yellow Tier, the least restrictive in the state, could be good for business—and Avalon’s revenues

Last week, Los Angeles County moved into the least restrictive of the state’s color-coded pandemic tiers.

The Islander recently asked Avalon Finance Director Matthew Baker about the potential impact on the city’s budget.

“The City has seen an increase in visitors as the County has moved from Purple to Red earlier this spring and I am hopeful this trend towards normal continues as the County moves into the Yellow Tier,” Baker wrote in an email.

The visitor counts for last month have not yet been released, but the Harbor Department recently reported that 1,010 boats came here in April 2021, versus 25 in April 2020. (See story, page ?)

“We are also closely watching developments with the cruise industry, as cruise ships accounted for a considerable portion of the harbor’s pre-COVID operating revenues,” Baker wrote.

“The City had to rely heavily on reserves to operate during the last two fiscal years, even after significant cuts to staffing and services,” Baker wrote,” Baker wrote.

“It is Staff’s goal to present a structurally balanced budget that begins to restore those reserves while recognizing the need to restore staffing and services to the community, as well,” Baker wrote.

“I still believe full recovery will be a multi-year effort but I am optimistic that we will get there,” Baker wrote.

“The goal is to have a study session with the Council and the public some time during the first half of June (date to be determined) and for the budget to be adopted before June 30,” Baker wrote.

During last week’s City Council meeting, Baker provided local officials with an update on city finances.

To summarize:

• At the time, Baker said he was working with department heads to come up with a first draft of the 2021-22 budget.

• Baker said Avalon saw a strong first six months of the fiscal year ending June 2020. (The statewide shutdown came in March of that year.)

• Avalon had already exceeded budgeted sales tax revenues with three months to go in the current fiscal year.

• He said officials will discuss weather money from the General Fund should be loaned or just transferred to the Harbor Fund.

• Baker said he recommended a loan. He said the General Fund with greater flexibility about how money is spent.

• He described the budget as structurally balanced, one that does not rely on reserves.

“State law requires that the City adopts a balanced budget,” according to the draft of budget policies that were presented to the council last week.

“However, a budget that is balanced by the state’s definition may not necessarily be structurally balanced or sustainable if recurring expenditures are covered by reserves or non-recurring or highly volatile revenues,” according to the draft.

“The City shall endeavor to adopt a structurally balanced budget. Generally, this means that recurring expenditures should be covered by recurring revenues and that non-recurring revenues should be used to fund non—recurring expenditures,” according to the draft.

• Baker told the council that re-occurring costs need to be paid with re-occurring revenues.

• Baker proposed a goal of having a reserve enough money for six months in the Harbor Fund. Finance Director Baker proposed three months of reserve funds in the Sewer, Saltwater and Solid Waste Fund.

City staff working on budget