CALIFORNIA CITY — Nearly five months after the start of the 2021-2022 fiscal year, the City Council approved a budget, on Tuesday.

However, there remained some doubt over whether the 3-2 vote, with Mayor Jeanie O’Laughlin and Mayor Pro Tem Nick Lessenevitch dissenting, was sufficient. Lessenevitch contended that, because the budget as a whole was balanced using reserve funds, it required a supermajority vote of four of the five members of the Council to approve.

The City Council, in September 2019, agreed to a policy that required a supermajority vote to spend any reserve funds. It was unclear, on Friday, if that amendment to the policy manual was ever formally enacted.

Deputy City Attorney Russ Hildebrand said, following the vote, he could not find anything in the city’s Municipal Code requiring a supermajority to spend reserve funds.

“You’ve passed a budget,” he said.

The budget, as proposed by Interim City Manager Anne Ambrose following several months of discussions and workshops, shows $7.6 million in expenses and $7.3 million in revenue for the General Fund, which supports most general city functions.

The General Fund budget includes an infusion of $705,000 in grants from the federal American Rescue Plan Act.

While the General Fund is balanced, about a third of the city’s other funds, including the Police Department, Tierra Del Sol Golf Course, California City Airport, Dial-A-Ride, Sewer Capital Projects and Streets Capital Projects, will run deficits this year, according to the staff report.

Some of them, such as Dial-A-Ride, are due to a lag in receiving grant funding, according to the staff report.

“This is the starting point. There is still work to do,” Ambrose said in presenting the budget for approval.

Lessenevitch put forth a series of motions suggesting changes to the budget as proposed, many focused on eliminating shortfalls immediately to balance the entire budget this year.

Ambrose cautioned that the city’s financial issues were more complex than could be solved in a single — and already very late — budget. Some steps in that process were already being made, and more are planned as the year progresses, and the audits for the past two years are completed so that the city has more certainty in its financial picture.

“This isn’t something that the Council is going to be able to solve in one year,” she said. “I don’t think it’s something that the Council needs to correct immediately, but it’s something that we need to continue to work toward how we’re going to address it.”

Lessenevitch put forth a motion to rewrite the Police and Fire Department budgets, with a $7 million total for both, evenly split between the two.

The public safety departments are supported by a special parcel tax approved by the voters, in 2018. When it was passed, the special tax was estimated to generate $7 million annually. The tax rate would be reduced as cannabis taxes grew to supplement city revenues.

The special tax is scheduled to end in 2024.

With this looming deadline, the city can not afford continuing increases to the departments’ budgets, Lessenevitch argued.

“At the end of all this (the special tax period), they will be the city. There will be nothing else,” he said. “Every penny that’s in this budget for them is beyond all the (General Fund) revenue received this last year, which includes cannabis, which has been flat for this entire year.”

“You’re approving an increase in expenditures beyond our source of income. I think that’s a mistake,” he said.

The proposed budget for the Police Department showed overall expenses of $4.4 million, against projected revenues of $3.35 million, but with a starting deficit of $903,000. The proposed budget did not, however, include any support from the General Fund and used grant revenues to balance the department’s budget, Ambrose said.

The Fire Department’s proposed budget was $3.64 million in expenses and $3.36 million in revenues, with a starting fund balance of $508,000.

“What the Council is proposing is a significant cut,” Ambrose said.

Especially for the Police Department, which has decreased its operations budget as much as it can, the cuts would have to come from personnel costs. Such reductions to salaries, benefits, layoffs and such must be negotiated with the unions and can not be made unilaterally as part of the budget, she said.

Ultimately, the motion failed, with only Lessenevitch and O’Laughlin voting in favor of it.

The budget, as proposed, included a handful of new staff positions: an executive administrative assistant shared between the city manager and human resources department; a deputy city clerk; a senior building official; a cannabis program manager; and increasing the existing part-time finance director to a full-time position.

Lessenevitch argued for eliminating the executive administrative assistant and deputy city clerk, and adding a human resources director, parks grounds superintendent and economic development director.

He stated the leadership positions were more necessary than the requested administrative support staff.

O’Laughlin said the city is coming from a situation where it had more support staff than directors.  

“We have choices to make. We can’t afford both again. Do we want directors or do we want admin support? That’s where we’re at,” she said.

Councilmember Karen Macedonio, however, said she could not support removing the support staff positions.

“Being top heavy with no administrative support does not get us where we want to go,” she said.

The economic development director position has been requested by the Council, but Ambrose said she wanted to wait to add it until she could determine how it would be classified.

Eventually, the Council approved adding the executive administrative assistant, a human resources director, full-time finance director, cannabis program director, senior building inspector and economic development director on a 4-1 vote, with Lessenevitch dissenting.

Since the start of the fiscal year, on July 1, the city has been operating under a series of resolutions, approved each month, that allows for spending at the previous year’s levels, minus 15%.

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