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COVID Cost Cuts
Tom McGreal | Stratford Court

The Sandpiper Regrets its Omission
Due to an editing error, the last paragraph of this article on page 9 ("Covid Cost Cuts") were omitted from the Sandpiper print version. The full article is here, and we urge readers to read the full story. We regret our error and hope that our readers understand.

By now everyone has read about the City’s Fiscal Year 2021 Budget revisions totaling $4 million in response to the COVID-19 related lost revenues. The breakdown is as follows:

Operating costs cuts $1.5 million
Project cost cuts $1.0 million
Reserve reductions $1.5 million

The City Council unanimously supported this mix of budget actions after the City Manager made the case that further cuts would impair the City’s ability to deliver essential services.

So, where does this leave us now?

It took just three of the months of a pandemic and economic shut down to trigger this kind of significant financial impact. This City’s revised budget outlook bets on a gradual economic recovery during the coming fiscal year.

Let’s hope this is right, but there are two key elements that we need to carefully consider.

This is an ongoing economic and health crisis that won’t be over until the COVID-19 risks are reduced to the point where normal routines and spending activities can resume. Experts are telling us that a vaccine or curative therapy may be a long time coming. In the meantime, we need to implement norms of behavior that allow us to coexist with the virus. This is particularly challenging in Del Mar, because our small community accommodates millions of visitors. This also makes it even more crucial that we create a culture in Del Mar where residents and visitors are committed to wearing masks, social distancing, testing and contact tracing. Management of the health crisis and the economic recovery are inextricable linked.
From a financial standpoint we need to figure out how to deliver City services in an economy that provides a reduced level of revenues. Our reserves can support deficit spending in the short term but we need a plan now that identifies what steps we will take if the recovery fails to meet the timetable in our current revenue forecast.

The City Council agreed in concept that a Resolution would be adopted at a July Council meeting requiring that General Fund Reserves would be replenished as a priority before increases can be made to spending for operating costs. This is a good first step to address the treatment of revenues in a healthier economy.

Let’s also be sure that we have a plan to adapt to new behavioral norms in the pandemic and be ready with a budget plan that addresses the very real financial risk that the recovery might take a lot longer.

Below are some questions that might help us deal with the new normal.

Can Del Mar launch an effective public persuasion campaign to get everyone wearing masks and practicing social distancing? Can we open certain Streets to pedestrian traffic only for better social distancing?

Can we keep spending in line with revenues? Can we redefine essential City Services that are triggered upon reduced levels of revenues? Is there an employee compensation model that allows adjustments to reduce costs in a crisis? Will meaningful police reform lead to reduced cost from the Sheriff’s contract? How can we rebuild reserves to ensure needed resilience?


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