Reductions on the heels of declining revenues
Santa Clara, CA- The Proposed Biennial Operating Budget for fiscal years (FY) 2021/22 and 2022/23 is presented for consideration and continues the biennial budget process that alternates between an operating and capital budget. This year’s budget focuses on our day-to-day operations that support vital City services. Amendments to the FY 2021/22 capital budget are also included.
As part of the budget deliberation process, two City Council study sessions are scheduled for May 25, 2021 and June 8, 2021 before the public hearing and planned budget adoption on June 22, 2021.
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The Proposed Budget is presented at a challenging time as the City continues to face a COVID-19 induced General Fund shortfall of $29 million in FY 2021/22. COVID-19 has already impacted two fiscal years by declining revenue (e.g.,FYs 2019/20 and 2020/21).
Unfortunately, more difficult budget reductions are necessary to bring the budget into balance and the use of one-time federal stimulus funds avoids more severe service impacts that would otherwise have been required. At the same time, there is cause for cautious optimism as economic conditions are projected to significantly improve later in 2021.
Federal stimulus funds
With the effective roll out of the COVID-19 vaccines, business and the community are expected to begin resuming a greater degree of normal activities in FY 2021/22. This enables the judicious use of one-time solutions, primarily federal stimulus funds, to solve a portion of the budget shortfall, allowing time for General Fund revenues to recover. This Proposed Budget incorporates Phase 2 reduction proposals to close more of this gap. The Phase 2 reductions, however, are less than initially contemplated when the balancing strategy was presented as part of the Council Priority Session in February given the availability of $25.9 million of federal stimulus funds and the prospect of improved economic performance in 2021.
The budget actions brought forward in this Proposed Budget are considered Phase 2 of the budget actions necessary to address the COVID-19 impacts. On March 9, 2021, the City Council approved the Phase 1 budget reductions, which included the freezing of 43.50 positions and ongoing General Fund expenditure reductions of $12.7 million. This second phase of balancing actions relies less on ongoing expenditure reductions, with those totaling $5.0 million, and more on the use of federal stimulus funds, other reserves, and additional revenues.
To continue read the full report of Santa Clara’s proposed expenditures and cuts, downloading the proposed budget below.
Need just the Highlights? Proposed Budget highlights begin on page 18.