Finance South Pasadena: City management is prepared to blow past the normal June 30 deadline for a new budget if that’s what it takes to ensure public confidence, Interim City Manager Don Penman said during the Council’s first meeting of the year Jan. 15, 2025.
His statement came in response to comments by long-time city finance critic and former city finance director Josh Betta, who implored the Council to be forthright about the prospect after a discussion during which Management Services Director Luis Frausto and Budget and Purchasing Manager William Castrillon seemed to dance around the possibility.
It’s a sensitive matter for the Council, which last year was forced to delay budget adoption nearly two months after serious discrepancies were identified in budget documents submitted to the Council and Finance Commission.
The topic reemerged Wednesday with the Council’s discussion ahead of its approval of a $41,378 amendment to the $112,875, five-year contract it signed in September, 2023 with Questica for budget software services, and a $17,500 authorization for a year’s subscription to the associated “budget book module.”
The additional investment “is imperative to the progress and improvements of the City’s Finance Department,” according to a staff report. It will reduce “time intensive and inefficient practices” currently used, and reduce errors because staff currently uses both Excel spreadsheets and Word documents to produce its budget and capital improvement plan.
Council Member Sheila Rossi wanted to know why the budget book module wasn’t part of the original contract; Mayor Braun said the Council had been under the impression the existing contract included this function. Castrillon, who did not work for the city when the software was purchased, didn’t have an answer but affirmed the need for the module.
The Mayor also got Castrillon’s assurance staff will get the module up by March, so as not to further impede the FY 2025-26 budget development schedule, already at risk due to delays cleaning up previous years’ financial figures and preparation of last year’s audit.
Council Member Jon Primuth sought further clarification of kinds of financial reports the Questica software will generate. Frausto did so but–alluding indirectly to the city’s recent financial management problems–added presentation of five-year general fund balances would not be available–not due limitations of the software, but rather because “we don’t have data that we can trust that goes back that far.” Current finance staff, working with multiple consultants, have only been able to “clean and scrub” three years’ of financial data. Any reports going back longer will require manual preparation, he said.
Castrillon emphasized that while implementation of the module will commence in March, the Budget Book itself likely won’t be ready until the end of June, when the fiscal year ends.
More detail on the budget schedule will be disclosed during a Finance Commission meeting Feb. 23, Frausto said. While a mid-year budget report will come in March, mid-year adjustments won’t be ready until May as “that’s when we’ll have a real understanding of where we’re at with the numbers.” The city is simultaneously working on current mid-year adjustments, next year’s budget and last year’s audit, he said.
“It’s a transition year for us,” Mayor Braun explained. “The good news is we’re in the right direction and we’re going, once-and-for-all, to get to the right numbers.”
Council Member Omari Ferguson wanted to know if there would be a budget “dashboard,” or what Frausto called a “public portal that displays budget numbers,” but which he said won’t be ready before June or July.
It is plain the city “will not have an audit before budget, the most crucial moment financially,” Betta told the Council. But there’s nothing “sacrosanct” about adopting a budget by June 30, he added, and a resolution of continuing appropriations would be “absolutely the right thing to do” if the trade off is “a budget that is well constructed,…meets the needs of reversing 15 years of financial history” and gives staff “the breathing room to give you an honest estimation of when a good product is coming to us.
“It’s OK that we got it wrong for so long, as long as we get it right.”
That’s wen Penman, who recalled being asked to present a budget four days after being hired July 31 of last year, stepped in.It’s clear the city wants to present a budget the Council and community can have confidence in, and if it cannot do that by June 30, he will recommend the budget be “carried over. Confidence and reliability is the most important thing this time.”
Also at Wednesday’s meeting, South Pasadena Tenants’ Union Steering Committee member Lula Cummings read a letter SPTU submitted demanding the Council adopt a rent freeze, an eviction moratorium and higher relocation fees.
The SPTU letter notes the Council directed staff in July to prepare a report on a rent freeze pending implementation of the Housing Element the city adopted last May, but that no action has taken place. The need for a moratorium, meanwhile, “has been ignored for far too long.” Further, the recent wildfires have exacerbated the housing crisis. “If residents are forced out of their homes by investor landlords or profiteering agents seeking to replace them with fire victims desperate for housing, how will they survive on a relocation fee of just one month’s rent?”
Cummings said they’d gathered 129 signatures for the letter from residents in less than 24 hours.
Anne Bagasao, also of SPTU, said the fires displaced 100,000 Angelenos, more than doubling the existing 70,000 unhoused population.”There’s no place for those people to go, especially renters” and those living paycheck to paycheck. She also advocated a moratorium on the demolition of any existing multi-unit housing. “This is an emergency,” she said.
Previous temporary relocation payment ordinances were adopted in response to the pandemic. The City’s Housing Element calls for staff to review those and propose a permanent ordinance “with permanent and/or temporary relocation assistance requirements.” It also calls for a rent stabilization program aimed at setting “a low cap on rent increases” compliant with the Tenant Protection Act (AB 1482). It does not call for any moratoria.
Interim City Manager Don Penman said a report on rent stabilization is set for presentation to the Council at its Feb. 19 meeting. He did not offer a timeline for the mandated relocation fee ordinance.
In a related matter Wednesday, Community Development Director Alison Becker introduced Eduardo Lizarraga, a new senior management analyst, who will be overseeing the city’s many housing programs, including implementation of the Housing Element.
The Council also agreed to postpone until March a discussion on the creation of two new council committees, one on traffic corridors and one on infrastructure financing, both with members from the City Council and members of the community.
