Pared down budget adopted windfall funds for restored programs


The City Council on Tuesday adopted a $95.5 million budget severely compromised by the COVID-19 pandemic, with the understanding that the economy could dictate changes for better or worse in fiscal year 2020-2021.

Slashes were made to the budgets in every city department to cover anticipated losses in revenue, but layoffs were avoided. The balanced budget included reductions in expenditures with cuts in salaries and benefits, contract services, overtime, maintenance, equipment replacement, downtown and beach cleanups, deferment of capital improvements, agreements with Municipal Employees’ Association and Management personnel to forgo a 2.5 percent salary increase scheduled to take effect July 1, and a dip into the 20 percent Reserve Fund.

City Manager John Pietig based the budget on the better of what he termed “bad” or “worse” revenue scenarios. The hardest hit source of revenue in either scenario was the anticipated $11 million reduction in the combined Transient Occupancy Tax (TOT), the Business Improvement District Assessment (BID), and sales tax. Reduced consumer spending is also significantly lower, both reductions attributed to the impact of the virus on the travel and tourist industry, and locals observing the stay-at-home advisory. 

 “We made decisions based on the ‘bad scenario.’” said Councilwoman Sue Kempf. “When do you think we will get actual numbers? I am worried that in a few months, we may trend toward the ‘worse’ scenario.”

Administrative Services Director Gavin Curran assured council members they would be kept in the loop on a regular basis. The quarterly report on the revenue from the TOT, also known as Bed Taxes, is due August 1. Sales tax revenue takes longer. The report goes first to the state and takes four to six months to filter down to the cities, Curran said.

Pietig said anecdotal information from the Chamber of Commerce and Visit Laguna Beach on bed and sales tax revenue was included in the preparation of the proposed budget.

“It is difficult to predict with lagged information,” he said.   

A $125,000 windfall in estimated investment interest restored funding for downtown steam cleaning; porter service for litter, downtown restrooms, and trashcans; and additional summer porter service for Main Beach and Heisler Park restrooms. The hiring of two police officers was unfrozen which did not affect the budget in which they were already funded. 

Fire Chief Mike Garcia told the council the desired hiring of a Defensible Space Inspector will take about six months of preparation, and staff will return to the council at the mid-year budget review with the costs. 

Due to budget restraints, exceptional performance awards were limited to a maximum of 2.5 percent. City Treasurer Laura Parisi received a 2.5 percent award, .5 percent higher than last year. City Clerk Lisette Chel Walker also received a 2.5 percent award, half of what she received in 2019. 

“Lisette is the first person at City Hall in the morning and the last one to leave at night,” said Mayor Pro Tem Steve Dicterow. “If anyone deserves the maximum, it’s Lisette.”

The final actions prior to approval of the budget were the review, amendments to, and approval of the Community Assistance Grants, funded by the Festival of Arts; approval of the recommended Cultural Arts Grants, funded by a share of the Bed Tax voluntarily contributed by the lodging industry of Laguna Beach; and disbursement of the funds accordingly. 

As recommended by the council-appointed subcommittee members Toni Iseman and Sue Kempf, the Community Assistance Grants totaled $254,242, with only one disagreement between them: Kempf recommended a $10,000 grant to KX 93.5 and $7,242 for the Chamber of Commerce. Iseman did not recommend funding for either organization.

Both were bumped up to $15,000 by the council. The radio station also received a $5,000 Cultural Arts Grant. 

Increases were also approved for the Assistance League, Laguna Beach Pride 365, and Laura’s House. Other increases were awarded, pushing the total over the available funding, which the council augmented by $9,000 from the interest windfall and $5,258 from the General  Fund Contingency. 

Funding of the grants is contingent on confirmation that programming will take place in fiscal year 2020-2021.

Recommended Cultural Arts Grants totaled $200,000 and were approved without change. 

The complete lists of Community Assistance and Cultural Arts Grants are available on the city website at, along with the budget, as well as at the links below.

Click here for list of Community Assistance Grants.

Click here for list of Cultural Arts Grants.