While it’s more than 7,500 miles away, continued activity in the Strait of Hormuz could have an impact on the city’s budget projections, City Manager Ken Striplin said Tuesday.
Demonstrating the myriad factors that go into creating the city’s spending forecast, Striplin offered a “truncated” look at changes to the state, national and global forecast since the City Council budget committee’s last meeting in January. He also said he would be giving a broader presentation to the whole council and all city commissioners next month.
“The forecasts have changed, mostly related to lower GDP and higher inflation, and I think that’s still going to be working its way through the economy for the next couple of months at least,” Striplin said. “So, we’ll talk a little bit about that in terms of the proposed budget.”
The economy’s forecast has grown, he said, but so has the inflation forecast. Kiplinger, which specializes in publishing business forecasts, moved the national growth projection to 2.4%, up from 2% in January.
However, notes in Striplin’s presentation indicated the continued uncertainty about the situation in the Middle East was likely to impact the marketplace, noting “economists continue to expect modest growth; although, if the conflict continues, they expect inflation to rise significantly.”
Last month, the Consumer Price Index for the U.S. rose by 0.9% to 3.3%, compared to 2.4% in February, primarily due to increases in oil prices, according to information gathered by city staff. For the regional market of L.A.-Long Beach-Anaheim, the increase was 3.4%.
The total overall Santa Clarita budget is expected to grow to $361.4 million, a 5% or $16.8 million increase to the current picture.
By this point in the monthslong process, Striplin explained Tuesday, the city’s budget team has met with the heads of departments, who all have given estimates for their spending needs over the next 12 months.
General fund revenues are expected to increase by 3.4%, according to the forecast Striplin gave, to $157.8 million, which he described as “positive signs,” as the general fund spending is expected to come in at $157.4 million, predicting an operating surplus of just under $400,000. The city budget plans to add to the city’s goal of a 20% operating reserve for emergencies, which is currently at $27.8 million.
