Downey's 2015-16 budget 'stable,' but future far from certain
DOWNEY -- With the local economy continuing to improve and unemployment at its lowest rate since 2008, city leaders are cautiously optimistic about Downey's current financial footing.
It's the next 3-4 years that has officials concerned.
City council members and department heads spent the better portion of Wednesday afternoon poring over a proposed $162 million spending plan for Downey's 2015-16 fiscal year.
The budget is mostly similar to Downey's current spending plan, with 65 percent of expenditures allocated to the police and fire departments.
"If there's one word we can come away to describe the budget, it's 'stable,'" said Mayor Pro Tem Alex Saab.
The police department plans to maintain its current level of 111 sworn police officers next year, said Police Chief Carl Charles. But he cautioned that more officers will be needed in the not-too-distant future, particularly when the Promenade shopping center opens next year.
The Promenade, a 77-acre retail and commercial center currently under construction, is expected to increase demand in police and fire services.
Charles said he would like to add five police officers within the next five years, at a total estimated cost of about $1 million per year.
Another challenge is employee pension costs, which continue to climb due to changes in discount rates and mortality assumptions.
In fact, the $2.5 million in annual sales tax revenue the Promenade is projected to generate is wiped out by rising pension costs, said city manager Gilbert Livas.
Other cities in similar situations have raised their sales taxes and created development impact fees on new construction, officials said.
"We're at a pivotal point in our city where soon we will have to make some very important policy decisions," said Councilman Fernando Vasquez.
The city's reserves stand at about $32 million and council members said they were reluctant to tap into it except for one-time costs that would bolster the city's assets.
Council members plan to use approximately $2.4 million from reserves to finance specific capital and infrastructure projects, including a new air conditioning system and bathroom renovations at the Downey Civic Theatre.
That will bring Downey's reserves down to about $29.6 million. For comparison, Downey had about $70 million socked away in 2006 before the economic downturn.
The City Council is expected to vote on the proposed budget on June 23.