First in a series on the city’s strategic planning workshop.
“Expenditures are outpacing revenues.” Those words appeared on a printout of the slide presentation to the council.
Seal Beach Finance Director/Treasurer Barbara Arenado essentially said the same thing when she gave the council a five-year projection of the city’s finances on Tuesday, April 4. The occasion was the day-long Strategic Planning Workshop on April 4.
The council took no action during the meeting.
This is the first in a series about the matters that the council discussed during the workshop.
Arenado told the council that early estimates were showing the city growing revenue over the next five years at approximately 2%.
“But our expenditures are growing at 5.7%,” Arenado said.
She put the gap at about $3 million, referring to a slide projected on a screen.
She said in the past few years revenue had been robust. However, according to Arenado expenditures are outpacing revenues.
“It’s really difficult to budget right now. We’re in a highly volatile environment, and most economists are projecting a recession in the near future,” Arenado said.
She said on the revenue side, property taxes are anticipated to grow 7.1%.
According to Arenado, transient occupancy (hotel bed) tax and utility user tax revenues are returning to pre-pandemic levels.
She said the business license fee hasn’t changed since 2016.
On the negative side, she said the city was already seeing sales tax reductions. Arenado also cited costs for services and programs, an aging infrastructure, and multiple unfunded mandates from the state.
Arenado also raised the issue of staff workloads. “Their workload has substantially increased in the last 10 years,” Arenado said.
“Salaries and benefits are increasing; increasing inflation on the cost of health care continues to increase. Minimum wage increases are mandated by the state so each year we have to increase those in our budget,” Arenado said.
She said the city did a facilities condition assessment in 2011 that identified structural and operational needs. “The needs, of course, have compounded since those years have elapsed,” Arenado said.
“It’s more expensive now to fix those deferred costs,” Arenado said.
Arenado went over four proposals for revitalizing Seal Beach.
• Proposal 1: Focus money on one-time items throughout the city, including such things as a $250,000 additional payment to CalPERS for the Fire Safety Plan, and $400,000 Fiber Connectivity lines for the Lifeguard tower.
Arenado told the council that there is no connectivity on a consistent basis to the Lifeguard Headquarters.
Later, Marine Safety Chief Joe Bailey addressed the connectivity issue.
He said it was windy that day (Tuesday, April 4), which meant he had no connectivity—no internet or phone.
Bailey said Marine Safety has a rule that when there’s a lifeguard performing a rescue, there’s a lifeguard on the beach backing them up and there’s a lifeguard in dispatch to call for additional resources.
“So right now, every time it’s windy, and it rains we have no connectivity to our phones, so there’s no way to call 911, for instance, if we need fire or police, except on our personal cell phones, and that makes me nervous,” Bailey said.
Bailey said Marine Safety needs to be hardwired in so they don’t have this issue any more.
District Two Councilman Tom Moore asked if he had looked at Starlink or satellite internet.
Bailey said they were looking at those alternatives. However, according to Bailey, Starlink is not available in this area. He said he needed hardwired connectivity.
• Proposal 2: the swimming pool
Arenado also brought up the city swimming pool. “Currently, there’s $4.4 million [set aside] for the pool,” Arenado said.
According to Arenado, even with $3.1 million ARPA funds, Seal Beach would still need $11.5 million to fund the swimming pool.
District Four Councilwoman Schelly Sustarsic asked if there was a way to get interest on the money set aside for the pool.
According to Arenado, the city is restricted on how it can build on that savings.
District Five Councilman Nathan Steele said Leisure World just built a pool. He asked about comparable costs between the two projects.
According to Arenado, there were differences. One difference: the city has to pay different wages, which adds 30% on top of costs that others might have to deal with.
Marine Safety Chief Joe Bailey. said the city needed to build the infrastructure for the pool. “So it’s not just the pool it’s the bathrooms, it’s the locker rooms, all those things according to the laws,” Bailey said.
Bailey said the city doesn’t have suitable facilities there right now.
Steele said it seemed extraordinary that a pool could cost $15 million dollars.
“It’s because, as we speak, the costs are going up,” said District One Councilman Joe Kalmick. The McGaugh Elementary pool is located in his district.
• Proposal 3: Lifeguard headquarters/police substation replacement. Her slide put the cost of replacing the building at $11 million.
(In 2021, staff put the cost of replacing Lifeguard Headquarters at $9.5 million. For details, “Seal Beach staff to re-evaluate options for Lifeguard Headquarters building” at sunnews.org.)
Arenado said the Lifeguard Headquarters and police substation was arguably in the worst condition in the assessment. She was referring to the building next to the Seal Beach pier.
“One of the problems that we all experience at various levels is getting our constituents to understand these problems,” Kalmick said.
“You know, they’re feeling is take care of it,” Kalmick said.
“Well, we’ve just discussed all those reasons. And so I suggested something that would be akin to a government white paper, where we put together something a document or some kind of brief notation that could be distributed to our residents, whether it’s mail, whether [it’s] physically,” Kalmick said.
“The goal was to get our residents sort of buy in to what we’re faced with and what we’re trying to do about it,” Kalmick said.
“Our costs are going up and our revenue is slated to be flat or slightly lower or dramatically low,” Kalmick said.
Proposal 4: Set aside the $3.1 million and revisit at another time.
Moore asked if staff wanted direction at that time.
City Manager Ingram said staff planned to bring it back during the budget workshop. Ingram said obviously they hope to have more members of the public in attendance.
Moore said he liked proposal one (the one to set aside the money).
“We have the money each year using 10% interest and buying power,” Moore said.
“The buying power is just eroding right in front of us,” Steele said.
