Finance Commission Looks at the City Budget Pre-COVID-19

Finance Commission Meeting
Monday, April 6th at 5:30 p.m.
Agenda
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Two Important Agenda Items Below:

  • Fiscal Year 2019-20 Second Quarter Budget Update (The City’s fiscal year is July 1 through June 30)

The FY 2019-20 Second Quarter Budget Update captures financial activity from the first two quarters (July -December 2019). The Second Quarter Budget Update states:

“The financial state of the City remains positive, but there are long-term shortfalls to be addressed. It is unclear if continued growth is sustainable in the City’s top revenues sources, Property Tax and Sales Tax. Negative impacts are expected from Covid-19 (Coronavirus) and the volatility in the stock market. Additionally, the City continues to face fiscal challenges, such as pension funding liabilities, shortfalls in the Building and Safety Fund, and unfunded labor agreements.”

Through the second Quarter of the 2019 City Budget, Irvine anticipated a $2.6M “cushion” for the remainder of the year. However, the budget report prepared for tonight’s meeting does not reflect the current economic conditions from COVID-19. Through December 2019, the report states that revenues should exceed expenses by $2.6M, but it’s not clear if the growth is sustainable as expected in 3Q and beyond as the COVID-19 crisis continues. Losses will surely result from hotel, sales and property tax revenue expected in 3Q and beyond as the crisis continues. Also of note, the city is maintaining a contingency fund of over $50M dollars, which represents over 25% of the total annual budget. Clearly, some of this will come in handy if the COVID crisis impacts revenue for an extended period.

  • Contract Renewal For Tree Trimming Services – New Liability Insurance Costs Kick-In

The tree service contract with the existing vendor, Great Scott Tree Service, Inc. is up for a 2-yr renewal, and if approved the City will spend approximately $3.7 million annually on tree maintenance and trimming functions for our 76,000 trees in City parks, street medians, and parkways. The tree maintenance contract has a 9% increase due to new insurance requirements and a 3% planned cost of living adjustment. The contract will go to the City Council for final approval.

To submit a public comment on any agenda item or non-agenda item email FMSP@cityofirvine.org or by mail to: Attn: Finance Commission, 1 Civic Center Plaza, Irvine, CA 92606.