Anaheim is set to use a combination of pandemic bonds and reserves to keep its budget balanced until 2027, a year before the city expects a massive influx of money to be freed up once 1990s resort bonds are paid off.
Using pandemic bonds and reserves will prevent the city from having to look at service cuts or raising taxes, officials said.
Anaheim is eyeing a $2.3 billion budget for its next fiscal year beginning in July, the largest of any city in the county. Driving that huge sum is Anaheim owning its electric utility, the convention center and pension obligations. The total budget is largely restricted for how it can be used and adjusted.
The city’s general fund budget is $490 million. The general fund represents more day-to-day services such as paying for police officers, firefighters, libraries and parks and is more malleable. Projected revenue for the new general fund budget that begins in July falls short of covering expenses by $42 million.
“Like everyone, we are contending with higher costs for just about everything,” City Manager Jim Vanderpool said at a budget workshop on Tuesday, June 11. “In our case, we are specifically working with higher labor costs.”
Anaheim will have a structural deficit in its budget for the next three years. The city has $76 million in reserves for its general fund and will draw it down to $30.5 million by mid-2027 to cover the shortfall between what it will spend and what it will be getting in revenues.
Vanderpool called the situation temporary since the city by 2028 expects to have $140 million a year in additional revenue available once 1990s resort bonds that were issued to build the Mickey & Friends parking garage at Disneyland are paid off.
The freed-up money will without a doubt draw heightened attention in the coming years for how best to be utilized. Last year, the city began planning to prioritize uses for the money, according to a city budget overview. The top priority will be repaying $138 million in pandemic bonds that are now being utilized to help cover the gap between spending and revenues. The city took out the bonds in 2021, but didn’t draw on them right away since federal relief money came in soon after.
Councilmember Stephen Faessel, serving his last year on the council because of term limits, said his going away request is for the city to consider using the infusion of money expected in 2028 on community services such as libraries and parks.
“Try to get into a library in the afternoon and they are completely packed,” Faessel said. “The weekends, every one of our playgrounds is full of families recreating. It has been a disappointment to me and others who have sat in these chairs over the last few years that for a number of reasonable reasons we can’t seem to push the needle a little bit. I hope we will be able to do that.”
Vanderpool replied that he would consider that as staffers make recommendations for service improvements in the coming years.
There are a few new positions the city proposed to add next fiscal year to its staff of more than 1,200 employees that are budgeted in the general fund. The city hopes to hire an additional three firefighters, three police records specialists, three code enforcement officers, a new senior administrative analyst for homeless programs and two street maintenance workers.
Other Orange County cities face budget struggles. Orange is looking at whether to ask voters to approve a local sales tax to add revenue. Westminster voters recently approved a sales tax increase to 9.25%, which will bring it in line with the highest rates in the county.
The City Council will hold another budget workshop at its upcoming meeting on Tuesday, June 18. It’s expected to vote on the budget’s adoption at that meeting.
City sells parking garage
Anaheim will sell its share of a parking garage next to the Hilton Anaheim to get a net total of $43 million.
The garage is called Car Park 2 and is located at 777 W. Convention Way. The city owns the upper levels of the parking garage and the airspace.
The garage is co-owned by the city and the Abu Dhabi Investment Authority, which owns the Hilton Anaheim.
The company approached the city last year to buy out the city’s share.
Some of the proceeds will be used for maintenance at the convention center. Vanderpool said he would hold meetings with councilmembers to determine how else the money could be used.
The California Department of Housing and Community Development confirmed to the city that the sale is not subject to the state’s Surplus Land Act since it does not own the land the garage is on.
The City Council unanimously approved the sale on June 11.
