Employee layoffs and furloughs, fewer library hours, reduced support of local programs and community groups, cuts in capital project funding and parking changes are likely in the offing to allow the city of Walnut Creek to plug an anticipated $15.7 million budget gap, the result of revenues lost because of COVID-19 and its effect on businesses and arts programs.

“There is a lot not to like in these budget proposals,” City Manager Dan Buckshi told the Walnut Creek City Council this week during a discussion of budget strategies. “The choices are ‘tough’ and ‘tougher.'”

Initial estimates call for laying off as many as 22 full-time-equivalent employee positions, at an anticipating savings of almost $3 million. Also, 183 part-time, seasonal hourly employees have already been furloughed, though some of those positions will likely be filled again when the city’s arts and recreation programs resume operation when the COVID-related shelter-in-place order is lifted.

On May 5, Buckshi, City Attorney Steve Mattas and other department heads gave up a 3 percent cost-of-living adjustment and took a 2 percent pay cut for 2020-21, saving about $100,000 for the city.

A symbolic gesture

And Tuesday night, council members said they would take a 10 percent pay cut. They recognize that, getting paid $650 a month, the move is more symbolic than substantive.

These and other strategies are in response to a projected $12.1 million general fund budget deficit for the 2020-21 fiscal year, and a $3.6 million deficit in the city’s parking program budget.

The city’s finances have been devastated by the loss of sales tax revenue, transient occupancy taxes from hotel stays and program revenues related to the cancellation of the arts and recreation classes and programming — all direct consequences of the COVID-19 pandemic and resulting shelter-in-place orders.

More than 90 percent of California cities are considering employee layoffs or furloughs, or cutting public services; 72 percent are considering doing both.

League of California Cities

Council members also mulled cutting support to various community groups by 14 percent — about $79,000. Several notable entities get both direct and in-kind city support; they include the Lindsay Wildlife Experience, the Gardens at Heather Farm, the Walnut Creek Historical Society and the annual Walnut Festival.

School crisis counselors, school crossing guards, the Walnut Creek Concert Band and Community Service Grants also come from this pot of money.

The council also said the city should seek more financial contributions from local groups like the Walnut Creek Library Foundation (to help make up for city-funded library hours that figure to be cut) and the Diablo Regional Arts Association.

These and other prospective cuts for next year’s budget come after the City Council 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.

Closing the budget gap

Those cuts will come from delays in hiring, redirecting money from existing capital projects, restricting city purchases to essential ones only and suspending travel and training expenses. These moves were in response to a projected $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 about to end.

Council members also gave early approval to strategies to close the $3.6 million shortfall with the city’s Downtown Parking and Enhancement Enterprise Fund. Balancing this fund will likely take a combination of layoffs, reduction of capital projects (like installation of EV charging stations) and less money spent on enhancements like the downtown “trolley” bus service.

But many factors, including the return of shoppers to the downtown in coming weeks and months, make predicting specific actions fluid. Some decisions, Buckshi said, may have to wait until shortly before the budget’s final approval.

On Tuesday night, the council gave general indication it would favor using city reserves to help close the budget gap, but not “one-time” funds already promised for specific uses, including upgrades to the Clarke Memorial Swim Center.

The League of California Cities has said that every single city in the state, regardless of size and population, faces significant projected revenue loss for their 2019-20 and 2020-21 budgets — a total shortfall of more than $7 billion. More than 90 percent of California cities are considering employee layoffs or furloughs, or cutting public services, the League said; 72 percent are considering doing both.

With direction given by council members, Walnut Creek city staff will now craft a final 2020-21 budget, which will still be open to changes and modifications. The City Council plans to discuss more budget specifics in the next few weeks, with an eye to finalizing its 2020-21 budget at its July 14 meeting.