“Studies, studies, studies”, the council of Hermosa questions the budget
by Kevin Cody
Hermosa Beach’s four main sources of revenue are expected to increase in the coming year, according to the 2022-23 budget overview presented by the city’s chief financial officer, Viki Copeland, to the city council during his workshop. budget of Thursday, June 2. But the increases will not be enough to balance the planned budget of $48 million.
To balance the budget, the city will spend $1.3 million of the remaining $2.3 million in American Rescue Plan Act (ARPA) funds, Copeland told the council. The city received $4.6 million in ARPA funds. It spent $2.3 million of it in the 2021-22 fiscal year.
“We are fortunate to have funds from the American Rescue Plan Act,” City Manager Suja Lowenthal said.
The budget preview shows property taxes rose 5.3% to $17.7 million due to average home prices exceeding $3 million in 2022.
The Transient Occupancy Tax (TOT) is expected to rise 7.4% to $3.9 million, surpassing sales tax as the city’s second largest revenue earner for the first time. Copeland said occupancy rates have skyrocketed from a low of 23% during the pandemic to 73% currently. The opening of the H2O hotel and the five downtown Airbnb rentals helped boost the projection, Copeland said.
A Hermosa hotel manager said recent increases in room rates of 15-20% will also help increase TOT revenue.
Sales tax revenue is expected to rise 2.6% to $3.6 million, led by “restaurants/bars.” Restaurant and bar sales tax revenue jumped 46% in the second half of 2021, accounting for 30% of the city’s total sales tax, according to the budget overview.
The Utility User Tax (UUT) is expected to rise 1.2% to $2.3 million. Copeland said streaming services are a potential source of new UUT revenue, which has remained flat in recent years.
“Our advisory firm is suing streaming companies including Amazon, Disney and Netflix. Hopefully we will come to an agreement where our UUT order will apply to these services, but negotiations are moving slowly,” Copeland said.
Another potential source of municipal tax revenue is a sales tax increase of 0.75 cents, which would require voter approval. Although discussed at previous board meetings, a sales tax increase was not discussed at the budget workshop.
The budget outline received general approval from the board, with the exception of board member Ray Jackson, who questioned the need for so many proposed studies. Costs of the proposed study were over $2 million
“Studies, studies, studies. I sometimes think we have paralysis by analysis with all the studies,” Jackson said.
City manager Lowenthal replied, “I never allow anyone to borrow my watch to tell me the time.”
Jackson asked if the money proposed for the studies wouldn’t be better used to reduce the backlog in capital improvement projects.
“It’s not one or the other,” Lowenthal replied.
She defended Jackson’s questioning of a proposed $100,000 city procedures study as necessary to address complaints about the city’s slow permitting processes.
“What is the ultimate goal of spending $500,000 studying the bollards along the Strand,” Jackson asked then. “Are we considering blocking off all access to Pier Plaza and The Strand… Ultimately it could be the ‘train to nowhere’… If we want to secure Pier Plaza, we can install concrete planters. ”
Chief Paul LeBaron replied: “We had many high speed car breaches on The Strand. It’s usually someone tracking their GPS. Permanent barriers will not work. We need something retractable, that will go up and down.
“Do you want the ability to shut down the entire Strand, at any time?” Jackson asked.
“To the movement of vehicles. That’s right,” replied the leader.
Jackson then questioned the need for a “facility condition assessment” of the civic center.
“Do we need a study to tell us that we have inferior facilities? It’s still $600,000. Would it be better to use this money to consider moving the town hall to the storage lot? [a city-owned property across from City Hall]?”
“We did a condition assessment several years ago. We would like to update it,” Lowenthal replied. “If the reconstruction [city hall] was pre-arranged, so we wouldn’t go to that expense. But I don’t think that’s the case, for financial reasons.
Jackson asked if the proposed $500,000 parks master plan and separate bleacher, lighting, and pickleball studies should be combined into one “complete look.”
Lowenthal replied, “The pickleball, bleachers and lights are for running programs. The master plan is to provide feedback for future park programs.
She noted that the last master plan for the city park was completed in 1990.
Councilman Justin Massey asked if the $2.2 million budgeted to improve the municipal court included the $500,000 proposed to study the improvement of the municipal court.
Chief Financial Officer Copeland said the numbers are not inclusive.
“The total is $2.7 million,” Copeland said.
A proposed $420,000 business license fee study and a $60,000 traffic analysis of the downtown lane configuration are also included in the budget overview.
Council member Stacey Armato asked the city manager about the proposed spending on the new parking meters.
Meter upgrades are proposed as current meters are not compatible with new mobile network services.
Armato suggested, “Maybe allocate the $150,000 for parking meter removal, which is a maintenance headache. I doubt we want to invest in more parking meters when there are better parking solutions. Metlox Plaza (in Manhattan Beach) moved from meters to a central payment terminal.
The board supported the proposed hiring for six positions left vacant during the pandemic.
Lowenthal said the workforce was down 15-20% at the height of the pandemic.
Massey, expressing a sentiment shared by his fellow board members, said: “I am happy to see that we are adding staff in public works so that we can catch up on capital improvement projects, and that we are unlocking police stations.” Emergency room