Revenue Shortfalls Place Downward Pressure on Santa Ana City Budget
In his 2017 article, “Revenue shortfalls place downward pressure on Santa Ana’s city budget,” Gerda examines the impacts of budget shortfalls in the City of Santa Ana and explores the role of council members in decision-making. The purpose of this article is to provide an in-depth understanding of budget-related issues affecting police departments and the City of Santa Ana. Likewise, the objectives outline the type of operating balance used by the city and discuss the council members’ challenges in working through budget issues. This paper examines a summary of budget issues relating to revenue shortfalls in Santa Ana City (Santa Ana City Budget).
The management of an organization’s financial resources is critical to ensure operational efficiency. Santa Anna City faced a significant economic downturn given its long-term budget shortfalls that presented possible negative impacts on its activities. According to the city’s mayor, the city had recorded significant shortfalls prompting it to withdraw its reserves (Gerda, 2021). However, considerations to avert the looming crisis necessitated downsizing the city jail’s capacity to save costs even though there would still be a significant financial gap in the next fiscal year.
Furthermore, financial projections showed significant structural budget shortfalls would increase spontaneously in the next two fiscal years after the current: $2.2 million, $14.4 million, and $19.5 million consecutively. According to the Santa Ana Police Department Information, the institution entails over 700 police officers, the area as densely populated: 300,000 people (Chen, 2016). The large workforce adds to the existing financial burden (Santa Ana City Budget).
Santa Ana City was in an economic slowdown period. The situation compelled the city leadership to consider alternatives, including examining its reserves policies (Chen, 2016). As a result, council members retracted labor negotiation efforts based on expanding the city workforce and increasing employee compensation. Budget shortfalls increased due to rising pension costs, contract termination with the US Immigration and Customs Enforcement, and the reduction of illegal transfers from enterprise transfers. Further projections depicted slow growth in tax revenues given the increasingly high pension growth rates.
The city police account for a significant portion of the city’s expenditure. Nevertheless, cutting on operational costs by downsizing the city’s primarily empty jail would insignificantly improve the situation. However, it will still have to utilize reserve resources if no other cost savings and revenue sources are established.
Company analysis by Kelly Associates Management Group found that the previous city administration did not have some budgeted for departments filled but designated the funds to other sectors in the middle of the fiscal year. This situation prompted council members to declare their stances on hiring police and code enforcement officers but only after actual assessments were provided (Santa Ana City Budget).
Although Santa Ana’s fund reserves have increased over the years, the economic downturn could deplete them. Moreover, managing the situation limiting employee costs despite the need to fill employee gaps to provide essential services. Likewise, council members proposed potential tax increases to labor groups, including the police union and the general employees’ union. A tenable solution would be to fill vacant positions. Moreover,more revenue will be collected from the OC Streetcar project and a proposed hotel project.
Operating Budgets (Santa Ana City Budget)
Santa Ana operates under an annual fiscal budget that runs for one year, from July to June. According to the City of Santa Ana (2017), the fiscal budget founded on a strategic plan composed of mission, goals, and objectives. This means that council members ought to play their roles in facilitating the city’s budget. However, during the economic downturn, the city’s leadership was on the spot for acting contrary to the budget plan. Some of its activities focused on increasing employee salary scales. Consequently, while seeking financial assistance from other departments, including fire and other police departments (Santa Ana City Budget).
The article examines the city’s approach to addressing budget shortfalls in different departments. “The City of Santa Ana” (2017) noted that the city focused more on downsizing the number of employees and shrinking departments and not identifying opportunities to increase revenue. The city’s budgetary plan stipulates a need to grow and staff more. This will generate more revenue given that the city needs to overturn budget shortfalls by coming up with $9 million.
Council members face numerous challenges in budget-making processes, particularly decision-making. During the economic downturn, characterized by budget shortfalls, Santa Ana City strived to remain financially stable by exploring various options and strategies (“Budget | The City of Santa Ana,” 2021). A significant funding source would entail tapping into their reserve fund which has $77 million but has to refrain from this option because its depletion will result in bankruptcy. In an interview, the Deputy City Manager reiterated that they would work hard not to use the reserve fund.
Another challenge is that the city’s structural budget should be addressed with utmost urgency. The budget provisions do not allow the city to improve infrastructure and tap into its reserve fund if no alternative source of revenue is established. The police workforce comprises over a quarter of the city’s employee population and is allocated more than 60% of the budget. This trend causes dire uncertainty about the financial future of Santa Ana City.
Working as a Criminal Justice Leader
As a criminal justice leader, I would advocate for collaboration with other city departments, such as the Emergency Service Department. According to the city’s statistics, anticipated pension costs for the police workforce average more than 60% of the budget (“Budget | The City of Santa Ana,” 2021). This means that the city will have to outsource and find other revenue streams.
I would propose research and grant development be the main approaches to facilitate budget needs. Moreover, cutting down on costs by reducing jail capacity and remodeling would be a step in the right direction. Before the economic downturn, the contract with the US Immigration and Customs Enforcement was the primary revenue source. Therefore, developing grants to acquire similar agreements would be a concern for a criminal justice leader (Santa Ana City Budget).
Budget | The City of Santa Ana. Santa-ana.org. (2021). Retrieved 4 April 2021, from https://www.santa-ana.org/finance/budget.
Chen, T. (2016). Puzzling Plans and Budgets: Making Sense of California’s Second Year Local Control and Accountability Plans. Education Trust-West. Retrieved from https://files.eric.ed.gov/fulltext/ED570154.pdf
Gerda, N. (2021). Revenue shortfalls place downward pressure on Santa Ana’s city budget. Daily Pilot. Retrieved 4 April 2021, from https://www.latimes.com/socal/daily-pilot/news/tn-wknd-et-santa-ana-budget-20170618-story.html.