In response to the ongoing COVID-19 pandemic, the Walnut Creek City Council at its Tuesday meeting approved $6.5 million in spending cuts and moved to use $3.6 million in reserve funds to close a projected $10 million budget gap for the fiscal year that ends June 30.
The cuts will come from a variety of places, including delays in hiring, redirecting money from existing capital projects, restricting city purchases to essential ones only and suspending travel and training expenses.
City staff projects a $13 million loss of revenue, moving the city from a $3 million surplus to a projected $10 million general fund deficit for the 2019-20 fiscal year.
The cited reason — loss of sales tax revenue, transient occupancy taxes and program revenues related to the cancellation of the arts and recreation classes and programming as a direct result of the COVID-19 coronavirus pandemic and resulting Bay Area-wide shelter-in-place order.
In mid-April, the City Council was told to expect a budget deficit of between $5.5 million and $10 million for the current fiscal year, depending largely on when the shelter order is lifted. The lower figure was based on a May 3 end to that order; it has now been extended to May 31.
Councilman Justin Wedel told his fellow members that using reserve money amounted to “kicking the can down the road,” and that more cuts in city spending are needed to solve the problem. He equated using reserve money to throwing good money after bad.
“To this point, it seems like that’s exactly what we’re doing,” Wedel said.
The four other council members strongly disagreed, saying that they are glad the city has set aside ample money over the years for such a rainy day.
“If a 60 percent drop in revenue overnight isn’t an emergency, I don’t know what is,” Councilman Matt Francois said.
Mayor Loella Haskew challenged Wedel to return to a future City Council meeting with more specific potential cuts to discuss, and Wedel accepted the challenge.