The city of Santa Clarita hosted another hearing Tuesday for the 2023-24 fiscal year budget, with its projections tightening by several million dollars since the city’s preliminary estimates that were discussed in February.
The projections moved from $139 million in revenue to $142 million, and the expenditures shifted from $135 million to $141.2 million, while the total budget stands at $322 million, which includes funding for the capital improvement program, personnel, the redevelopment successor agency, operations and maintenance, and debt services.
This year’s city budget represents about a 7.7% increase, roughly $23 million, over the previous year’s budget, according to city officials.
City Manager Ken Striplin started the staff presentations by discussing the changes in the two forecasts through the lens of the continuing uncertainty that looms in the national economy.
“During our budget kickoff meeting in February, I spoke about the economic uncertainty we faced and the consensus among financial experts pointing towards a slowdown later this year,” said Striplin. “Although a few months have passed, the economic data uncertainty remains. The national economy continues to be at a crossroads that will be heavily influenced by the Federal Reserve and its monetary policy.”
While the nation’s gross domestic product grew by 1.1% in the first quarter of 2023, according to the U.S. Bureau of Economic Analysis, the Federal Reserve raised its key target lending rate a quarter-point this week — the 10th hike in 13 months and the highest rate in 16 years.
Federal Reserve Chair Jerome Powell noted the move was to further the goal of bringing inflation down to 2%, although even Powell acknowledged the cumulative effect of Congress’ debt-ceiling standoff, as well as recovery from the recent bank failure and the pandemic, “remains uncertain.”
“These challenges have had a major impact on the city’s budget and operations during this last year and will continue to be a challenge as we enter the next fiscal year,” Striplin said. “Under these circumstances staff has done a tremendous job in finding creative ways to stretch resources to remain within the current year’s budget and while … continuing to provide superior service.”
Uncertainty looms in the local economic picture as well, as the city’s second-largest economic driver after the auto center, the Westfield Valencia Town Center, is expected to be sold in the coming months, if not weeks.
The city is hosting a meeting 6 p.m. Thursday at City Hall to receive input from residents on what they’d like to see in a new Town Center Specific Plan, a quasi-triangle stretching from Magic Mountain/McBean parkways to McBean/Valencia Boulevard and then Magic Mountain/Valencia.
Uncertainty also remains on how the writers’ strike will affect the area, as TV and film production brought in an estimated $43.9 million in overall impact to the area in 2021-22, according to city estimates in July for the previous fiscal year.
“In regard to the writers’ strike, the city will continue to monitor and reassess all city revenue estimates,” said Tyler Pledger, senior management analyst with the city of Santa Clarita. “As new information becomes available, adjustment will be made as necessary.”
Despite these uncertainties, city planners forecast a 5% increase in the city’s largest source of income, sales tax, a total of $48.3 million, or approximately 34% of the city’s revenue.
The city declined to answer questions over the phone Wednesday afternoon, instead emailing the following statement in response to a request for the three biggest changes in its forecast from February to May:
“For expenditures, there are several proposed additions that make up the difference,” Pledger said, “including the Sheriff’s Station contract increase, Building & Safety contractual services and Liability Trust Fund increases.”
Striplin also mentioned during Tuesday’s meeting that staff is “requesting a variety of one-time adjustments to operational budgets” to help absorb increases in the city’s cost of doing business, including $200,000 for parks maintenance, just under $200,000 for general services and $20,000 for library facilities, among other areas.
The next meeting for the budget is also slated for City Hall in front of the Planning Commission on June 6. Following that meeting, the Santa Clarita City Council is expected to have a hearing June 13 for the budget, which would then be adopted at the following council meeting June 27.
Striplin also noted this year’s budget is the first time the city budget surpassed $300 million, a stark contrast from the city’s first approved budget in 1989, which was $30 million.