Welp, I had a feeling that the budget woes hitting other Orange County cities might eventually come to haunt us, too. And now we have the first indication that might be the case. In the recently released materials for the Tuesday, March 11 Study Session, the City is disclosing that projected revenue is likely to come in at only $183.5 million, which is $6.4 million less than the originally projected revenue of $189.9 million. However, city expenditures have also been slightly lower than expected as well, leading to a net budget shortfall of $3.6 million.

Yuck. It looks like the Study Session is going to be used to deliver the bad news and point to some potential solutions.

So, how do we get out of this mess?

In the immediate term, the Staff is recommending first shifting about $720,000 of street sweeping expenses from the general fund to the gas tax fund. If I’m understanding this correctly that will not result in any disruption of services, as it is more of a budget gimmick than a cut. Basically, the city is allowed to use gas tax funds, which are effectively California State funds, to subsidize road projects and maintenance, and due to the way we’ve spent our gas tax money thus far, we are eligible to shift some more expenses onto this State pool of money and off of our local books.

But obviously that isn’t enough. To make up for the rest of the gap, Staff is further proposing to defer $2.9 million of capital improvement projects to the next fiscal year (or later). But don’t worry, the Agenda Report assures us: these deferrals will not impact city health or safety and only apply to projects “that have not yet been initiated.”

What is ominous is that, other than providing these criteria, the Agenda Report doesn’t say which capital improvement projects are being deferred.

I have a sinking feeling it’s going to be parks projects that aren’t supported by grant funding. The other category that pops into my mind are cherry-on-top active transportation projects. The case for cutting either is pretty straight-forward: both areas have been buoyed by outside grant funds in the last couple of years, and accordingly, the city has made a lot of progress in both areas. Deferring a few projects to future years won’t disrupt momentum for those programs.

And with respect to active transportation, actually I agree. But I vehemently disagree about parks, simply because neighborhood parks have been getting the short end of the stick for years. Continuing to punish them for the success of big grant-funded parks like Fairview, Shalimar, Ketchum-Libolt and now Lion’s Park as well would be grossly unfair. But hopefully I’m wrong.

Finally, to prevent further budget erosion, City Hall is enacting a soft hiring freeze effective April 1. It’s a soft freeze because it carves out all health and safety personnel, including the Costa Mesa Police Department. And that’s a relief, because not only have we been lagging behind in police hiring and retention for years, I understand that the CMPD now is optimistic it can get to full department staffing by the end of this year. It would be terrible to disrupt that process now when more officers are so desperately needed.

But: are there more messes on the way?

Also tucked into the Study Session for the Agenda Report is the long-awaited report on how federal spending may affect Costa Mesa’s budget. While it is helpful to understand the City’s current exposure — for example, it’s somewhat encouraging to learn that the vast majority of this exposure is in capital improvement and events, rather than in recurring spend — it doesn’t address how the city plans to unwind its rental assistance program (formerly funded by COVID-era American Rescue Plan Act funds) nor does it address potential risks associated with Federal funding disappearing elsewhere, outside City Hall. For example, Council Member Arlis Reynolds asked an excellent, if poignant, question about what the City might end up needing to do if Social Security or Medicaid benefits were suddenly cut. Equally, I wonder about the impact of curtailing federal housing programs like Section 8.

But like many of us City Hall is likely finding it quite difficult to keep up with the pace of the news. Hopefully we’ll get more insight on Tuesday.