Lingering concerns about the retail market, the cost of public safety and the purchase of William S. Hart Park were among the topics of discussion during Monday’s Budget Committee meeting at Santa Clarita City Hall.
The gathering gave the committee, which consists of Mayor Jason Gibbs and Councilman Bill Miranda, its first opportunity to ask questions of staff regarding the planning process, a monthslong staff effort expected to culminate in the last week of June. (The city’s fiscal year, like most agencies, begins July 1.)
Miranda started by asking if staff was factoring in the recent challenges to the retail sector in Santa Clarita for its forecast, particularly the Westfield Valencia Town Center.
“I’m looking at JC Penney’s hanging by a thread. I’m looking at The Canyon just closed,” he said and then added he and his wife went to a movie at the Regal theater at the mall Sunday night for a big-budget movie, and they were the only ones inside.
“That worries me in terms of the sustainability of Regal and, of course, the issue of Westfield in general … with them not paying their debts,” he added.
While neither of Santa Clarita’s two Regal theaters was on the list of 39 closures the company announced Jan. 20, Miranda was referring to the mall recently missing a deadline to pay a $195 million loan. The Valencia shopping center was the “largest contributor to losses” of all the properties attached to the loan, according to the report.
“So, my question about that is, are we looking at that closely, and monitoring it, and do we have a plan should all those things go south on us?” he said, putting the question to staff for next week’s session.
City Manager Ken Striplin noted the city was predicting its sales tax revenues to remain flat this year, citing a variety of elements that portend concern on the state, national and even global levels.
The general fund revenue estimate for next year represents a $6-million increase over the previous year, while expenditures are predicted to rise by a little more than $2 million. The city expects to again meet its goal of having a $20 million general fund reserve, Striplin added.
Miranda also asked about the city’s efforts to secure more Measure H funding from L.A. County to fight homelessness. Striplin noted Supervisor Kathryn Barger recommended more money should go to local coffers as part of her work with the Blue Ribbon Commission on Homelessness. He added the issue is currently being worked on by council members Cameron Smyth and Marsha McLean, who are on the city’s ad hoc committee to fight homelessness.
In addition to Barger working on the allocation formula for that funding, Striplin said city staff conducted its own local count of the homeless population that preceded the county’s count last week with the L.A. Homeless Services Authority to get a better idea of the numbers.
“I mean, that’s good to hear,” Miranda said, “but L.A. County doesn’t really love us, obviously, and there’s still a lot of Measure H dollars we’re not getting.”
The discussion also touched on public safety, the city’s biggest expenditure, which was expected to be more costly in 2023-24 due to a number of factors.
Striplin kicked off the pre-planning session by talking about the city’s recent success with its fiscally conservative policies, as well as the challenges expected in global markets, federal forecasts and Gov. Gavin Newsom’s budget plan, which projects a $20 billion deficit.
While those outside forces don’t determine the city’s budget directly, there are impacts from costs that are passed down.
“On Tuesday (Feb. 7), we’ll share a more in-depth outlook on the global, national and state economies,” Striplin said.
Among the points of concern mentioned that influence the budget outlook: The International Monetary Fund predicts the weakest growth profile (2.7%) since 2001 (excluding the Great Recession and the pandemic); seven consecutive increases in the Fed’s interest rate to counteract inflation; and increases to the Consumer Price Index.
The city monitors these indicators because they can affect things like contract costs, Striplin said, giving the example of the city’s contract with the Sheriff’s Department. As the CPI increases, the cost-of-living adjustment that’s factored into contracts with agencies like LASD increases, impacting the budget.
Striplin also discussed the proceeds from another record-breaking year for local filming, which saw news highs for the number of permits sold, as well as the city’s number of filming days for 2022.
The initial estimates for the revenue and expenses for Santa Clarita’s general fund — $139 million and $135 million, respectively — were mentioned ahead of the first council study session, which is scheduled to take place Feb. 7.
When asked by Miranda, Striplin declined to estimate the cost of the purchase of Hart Park, noting there was still some work being done on the deal. Similarly, a city roller rink, which had a design contract approved in April, is in the early-development phases, Striplin said.
Following next week’s meeting, the Budget Committee is expected to meet again April 24, with the city expecting to have a proposal to release to the public in May. On June 6, the Planning Commission is expected to have a chance to review the plan, with the first of two council hearings slated for June 13 and then June 27, when, if all goes to plan, the budget would be ratified.