By Iris Neal
May 4, 2020 (La Mesa) – A general fund financial forecastpresented to the La Mesa City Council on May 28 revealed significant anticipated impacts on city revenues due to the COVID-19 pandemic. The Council also heard concerns raised by Councilmember Kristine Alessio over financial hardships faced by small businesses, but voiced skepticism over her suggestion for city funding to help businesses survive the shutdown and postponed consideration of the proposal until Tuesday, May 12.
The Council also advised the public of new county health requirements and food distribution sites. In addition, Councilmember Colin Parent raised concerns over fairness issues in the allocation of home ownership loans locally.
The Council advised that the County has issued new guidance. "Starting on May 1st, 2020, everyone must wear face coverings anywhere in public they come in contact within 6 ft. of another person." They will post updates as they become available.
Community Bulletin reports included Vice Mayor Bill Baber stating that the Joan Kroc Salvation Army is helping to feed folks and if anyone wants to help them, they can go to Joan Kroc Salvation Army #SHAREMYCHECK.
Councilmember Alessio announced that there are several food banks open throughout East County, including Journey Community Church in La Mesa and Grossmont Center, which has a drive-through food bank provided through the Cushman Family. Check the City’s website for changes and updates.
Councilmember Akilah Weber, M.D., stated that there are currently three COVID-19 mobile testing sites in San Diego County, including one in Mission Valley, one in Chula Vista and one in Escondido. She hopes that mobile sites will open in East County in the near future.
Presentations included proclaiming April 2020 as
"Volunteer Appreciation Month" and May 15, 2020 as "Law Enforcement Officers’ Memorial Day."
Councilmember Parent discussed a resolution authorizing renewal of an agreement to participate in the San Diego County Home Consortium program for fiscal year 2021-2022 through fiscal year 2023-2024, with possible automatic renewal in each successive period. He called it a "red flag" that most home ownership loans were issued in Spring Valley, with none in La Mesa. Staff agreed to explore other programs for use of home funds, and coordinate with the County to look into allowing some of the funds to be used for multi-family homes.
The Council unanimously voted to authorize hiring Sarah Waller-Bullock for an interim appointment as Director of Finance. Waller-Bullock retired April 30 and will be a retired annuitant as of May 6. Under current law, a 180-day wait period is required post-retirement. The Council had toapprove the motion in open session, even though Gov. Newsom issued an executive order on March 12 to suspend the wait period for such vital positions.
Sarah Waller-Bullock gave an extensive presentation of data compiled by the City’s consultant, HDL, concerning the City’s General Fund Financial Forecast Update 2020-2031, based on updated revenue estimates which have changed significantly due to the COVID-19 public health crisis.
Statistics indicated how much the economy has been affected by this pandemic. To illustrate, the country’s unemployment rate increased to 4.4 percent and the state’s unemployment rate increased to 5.3 percent, with new claims for unemployment reaching historic highs in April. Additionally, the Consumer Price Index (CPI) for all items decreased 0.4 percent in March, with energy sectors (crude oil) experiencing the most dramatic declines. Forecasts are mixed from ‘doom to gloom’ to ‘wait and see’, but the critical point is how quickly the economy will recover from this.
The Council discussed financial resources such as the federal COVID-19 funding and reimbursement, which include Community Development Block Grant (CDBG) funds through Housing & Urban Development, Dept. of Justice funds designated for public safety, Treasury Dept. for Families First Act paid sick leave reimbursement and the Federal Emergency Management Agency (FEMA) for all other COVID-19 related expenses.
Mentioned was the CalPERS Retirement Fund, which in past years took a hit, but is currently doing better. The Council will be looking at investment losses as of June 30, 2020, which the City of La Mesa won’t see until fiscal year 2022-2023. Also covered was the status of their Section 115 Retirement Trust Fund.
The State of California is taking actions to allocate funds to the COVID-19 public health emergency. They include: SB89, which passed March 16, 2020 to allocate up to $1 billion for COVID-19 response, SB117, which passed March 16 to appropriate $100 million of Prop 98 funds for school facilities and transferred $1.3 billion from the Special Fund for Economic Uncertainties to the Disaster Response Operations Account.
Members of the Council explained that its General Fund revenue sources immediately sensitive to the current COVID-19 Shelter in Place and potential ongoing recession include: Sales Tax, Prop L Sales Tax, Transient Occupancy Tax (Hotel Tax), Community Services affected by closures include facility rentals, swimming pool admissions, recreation class fees, senior and sports activity fess, and Gas Tax & Prop 172 Funds.
Additionally, long-term General Fund Revenue funds sensitive if the effects of COVID-19 last for an extended time (past June 30), or if a recession continues after shelter in place ends, will include: Property Tax, Property Transfer Tax, Development related fees (engineering, planning & building fees) and community services, facility rentals and services.
After the presentation, Councilmember Kristine Alessio, who is also a small business owner, asked about La Mesa taking action as El Cajon has done to help residents and businesses. El Cajon authorized a million dollars for those purposes.
Alessio suggested setting aside a million dollars into a reserve fund or loan program to assist small businesses in La Mesa affected by the pandemic. Speaking from personal experience, she alluded to how difficult it is to get federal funds. “It’s shocking to me as a business owner, how little help there is. The federal government has failed small businesses,” she said.
She suggested using funds such as the parking funds or Downtown Fun Fund, which would normally be allotted to planning community events which at this time, aren’t going to happen due to Governor Newsom’s statewide ban on gathers.
Alessio met with resistance by Waller-Bullock and some councilmembers who are not small business owners, explaining how that could negatively affect the general fund reserves.
Staff will explore this motion as well as other budgeting factors at the next meeting, scheduled at 6:00 p.m. on Tuesday, May 12.
Meetings are scheduled the second and fourth Tuesday monthly and are broadcast on local Government Access channels and until further notice, streamed live on the City’s website. For additional information and COVID-19 resources, please visit to the City of La Mesa’s website.