Pasadena’s budget process (the Cliff Notes version)

Inquiring minds want to know: How does Pasadena put a half-billion dollar budget together?

Here’s how it was done previously (in relatively general terms):

About January of any given year, the City Manager asks Department Heads to begin compiling budget requests for the next fiscal year. Most or their requests follow what was budgeted the year prior, though most departments ask for enhancements to add services or perform additional tasks.

The City Manager and Finance Director go over the requests and determine the anticipated revenue for the upcoming year.That is usually based on anticipated revenues from the state and federal government, as well as property tax, utility transfers, sales tax revenues, fees and charges. Ideally, that revenue projection is cross-referenced with City Council and City priorities as the basis for the City Manager’s recommended operating budget.

That budget is then presented to the City Council, generally sometime in late April or early May. The Council refers te proposed budget to the Finance Committee which then holds joint public hearings on the budget. Those are, usually, held throughout May and most of June. There is a hearing where the City Manager and Finance Director present an overview, which includes revenue and expense projections, reserve requirements and expenditures already committed. The Finance Committee then hold public hearings where the budget is examined department by department. As those hearings are held, committee and council members who are present express their concerns, opinions and talk about what they would like to see reflected in the budget. Once all the departmental hearings are completed, the City Manager and Finance Director return to the committee with a list of those items that were asked to be considered in the budget, along with cost estimates for those. The Finance Committee then discusses and comes to agreement on what the final budget should look like. That then goes to the City Council where it is considered by the full council during one or more public hearings. The council makes it’s changes and then approves the budget at a public hearing.

That’s the simple process. It is complicated by moneys and expenditures that are limited to certain funds either by revenue source or expected work product.

Also, the Council has complete discretion over General Fund expenditures but is limited by federal, state or other requirements on how about 2/3 of the entire budget can be spent. So, of the $500,000,000 or so in the entire operating budget, only about $180,000,000 is able to be directed as the Council determines. Of that, the vast majority is committed to expenditures that support public safety, especially salaries for police and firefighters. After all is said and done, there is not a lot of money to be allocated as the City Council chooses, unless the choice is to forgo expenditures in one place to support activities in another area.

As an analogy, the General Fund money may be fungible and able to be spent at will, but it would be as if one were to make a decision to not pay the rent so one could buy a car. The decision can be made, and one has the power to do it, but the consequences aren’t necessarily positive and the decision is not necessarily a good one to make. As budgets get leaner, that Hobson’s Choice faces the City Council as it balances what it would like to fund with what it is able to fund. As budgets get leaner, relations among Council members often get more and more strained, as a result.

While it is easy to argue that “government has lots of money” it is not always easy to find it, and more difficult to reallocate funding toward new priorities.

Again, that’s the Cliff Notes version of Pasadena’s budget process. I’d advise anyone wanting to have input on the final budget reviewed by the Council to monitor Finance Committee meetings and plan to attend to tell the committee your priorities. Those “special interests” everyone is so wary of will be sure to come out. You should, as well.

At some point, I’ll attempt the Cliff Notes version of Restricted Funds and what determines how much of Pasadena’s money can be spent.

Paul