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Laguna Beach


Council to discuss financial impact of COVID-19 and possible solutions

By BARBARA DIAMOND

The City Council tonight will continue coping with the financial repercussions of COVID-19 on the city’s revenue. 

City Manager John Pietig warned at the March 31 meeting that revenue was taking a nosedive and severe measures would have to be taken. 

“We are going to have to reduce projects, programs – maybe some services,” he said. 

 Pietig advised the council that employees’ hours would be cut, and they have been, and that at some point, staff might have to be furloughed. He also informed the council that local hotels had requested a deferment of transient occupancy tax, better known as bed or hotel tax. 

“Of course, it would be challenging to defer revenue payments at a time when we are making reductions, but we do have some reserves that we have accumulated over the years, so we can maintain the continuity of essential services during these types of situations,” said Pietig. 

Former City Manager Ken Frank convinced the council to create a “revenue smoothing fund” when he anticipated the financial crisis in the 1980s. Now, the city has the Disaster Contingency Fund and preserves a minimum 10 percent reserve over the city’s general fund.

The city has several funds, but the General Fund is spent at the discretion of the council for public safety, recreation programs, city planning, and a goodly portion of public works.

Seventy-five percent of the general fund comes from property, bed, and sales taxes.

When asked by Mayor Pro Tem Steve Dicterow if there was a chance that the city’s share of property taxes would not be paid by the county, Pietig said that if property owners don’t pay their taxes, the city doesn’t get paid.

However, according to the staff report for tonight’s meeting on property taxes, which account for 55 percent of the General Fund, they are expected to be materially impacted by COVID-10 but might be delayed getting into the city coffers until later in the year.

According to the staff report, bed tax is expected to be $3.5 million lower than budget estimates due to COVID-19 impact, sales tax revenue is expected to be $1.3 million less than projected, and community development fees probably will be down by $1.2 million.

That is the reason staff will recommend tonight some reduction in the current fiscal year budget, with more to come in June when the 2020-2021 budget is reviewed. 

Staff is recommending the council approve modifications to the 2019-2020 adopted budget, including any changes made by the council. 

The council is also advised to consider the hotels’ request for deferred payment of bed taxes collected between June 1 and May 1, 2020 and to defer the payments until November 1 for hotels that typically average less than $150,000 in TOT and until September 1 for hotels that average more. 

Council meetings are scheduled to begin at 5 p.m. and can be watched on Cox Cable Channel 852 or on a computer at www.lagunabeachcity.net. Click on Agendas, Minutes, and Meetings and wait for the video sign to come on for the April 7 meeting.

Comments may be submitted on any agenda item or on any item not on the agenda by email to This email address is being protected from spambots. You need JavaScript enabled to view it. (there is an interactive public communications form on the front page of the City’s website or an email or Word document will also be accepted).

Written comments may be provided up to 12 p.m. today, Tuesday, April 7 (the day of the meeting). Please note that while these comments will be provided to the City Council at 3 p.m. on April 7, the Council members may not have sufficient time to review them prior to the meeting.

If you would like to listen to and comment over the phone during designated public comment period, call (669) 900-9128, and wait for instructions to dial the Webinar ID, which is 490591918#.

Let the city know you want to comment on an item that is being discussed by pressing *9 on your phone. When you hear “your phone is unmuted,” you may proceed with you comment. The time for comments may be limited, so the city recommends you prepare your remarks accordingly.

You can also click on the link here from your computer or smart phone to participation in the meeting via Zoom.

 

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