By Emilie St. John
Contributing Writer
INGLEWOOD — The city manager’s office has presented its modified midyear budget for fiscal year 2023-24, which shows a projected deficit.
The City Council adopted the 2023-24 fiscal year budget last September, which projected revenue of $189,494,516 and expenditures projected at $203,244,522, which would create a deficit of roughly $13.75 million.
A staff report accompanying the June 4 City Council agenda indicated “$21.4 million in expenditures for carryover of prior year encumbrances and amendments” contributed to the projected deficit. The report also indicated the modified budget “does not include anticipated carryover of $20.3 million in revenue” that was factored into the budget when it was adopted in 2023.
“If at such time the deficit is realized at year-end, general fund reserves will be used to support the deficit,” the report said.
During the budget presentation, Budget Manager Keauna Buchannon made no mention of the projected deficit indicated on the staff report but rather alluded to the “good news” of the anticipated $20 million surplus which was removed under the modified budget.
“We have received 62% of the projected revenue thus far,” Buchannon said. She later corrected herself, saying that the revenue collected only represented four months and not six months of receipts.
According to Mayor James T. Butts, the city is in its best fiscal health over the last four years. Interim City Manager Mark Weinberg agreed with Butts.
Butts routinely points to the city’s general fund reserves as an indicator that the city is financially solvent.
According to the most recent publicly available financial reports on the city’s website, the reserves were attained through refinancing its pension obligation bonds, which the city transfers into the general fund instead of paying down the pension debt.
According to the 2021-22 Inglewood Basic Financial Statements, the outstanding debt on its general obligation bonds at the end of 2022 was $205,770.
The auditors said that “general bonded debt is the debt payable with governmental fund resources and general obligation bonds recorded in enterprise funds (of which the city has none).
Despite this, the city issued $52 million in new pension obligation bonds in 2017 and another $101 million in 2020.
The 2021-22 balance sheet indicates the city has total assets of $711 million and liabilities of $763 million, leaving a negative net position of more than $50 million. The city’s pension liabilities alone total more than $231 million.
According to documents on the city’s website, the city has been able to cover its deficits through general fund reserves, which is comprised of proceeds from the selling of the new bonds.
The midyear budget review is expecting $29 million of bond proceeds that will count as revenue. The City Council unanimously voted to issue new pension obligation bonds last Sept. 12.
The city declared a fiscal emergency in August 2021 after receiving $31 million in American Rescue Plan Act funds due to the COVID-19 pandemic.
The fiscal emergency allowed the city to push for increased taxes. Voters approved raising the Transient Occupancy Tax from 14% to 15.5%, but rejected raising the Real Estate Transfer Tax to a sliding scale based on a property’s sale price.
The latter tax was designed to create a revenue stream to finance the Inglewood Transit Connector project. The city continues to frontload costs associated with the project while waiting for reimbursements from the Los Angeles County Metropolitan Transportation Authority under its joint powers agreement.
Another source of contention with the midyear budget was the amount derived from admission taxes from the Sports and Entertainment District.
When the City Council adopted the current budget, it projected the city would receive close to $16.2 million in admission tax fees, a $200,000 decrease from the prior year.
The city has capped admission taxes assessed to SoFi Stadium at $15 million, based on the calendar year, and have so far collected only $718,071 during the first six months of the city’s current fiscal year which began Oct. 1, 2023.
The council’s newest member, Councilwoman Gloria Gray, asked how the city came up with the numbers cited for the admissions tax.
“The admissions tax rates were passed in 1980,” Weinberg answered.
There was no discussion as to why the city capped SoFi Stadium at $15 million when the Inglewood Municipal Code indicates the city is entitled to more.
According to the code, the admissions tax rate is 56 cents per ticket and 10% on tickets in venues with more than 22,000 seats.
According to the code, the rate will be adjusted upward by the percentage of annual change in the Los Angeles/Long Beach Consumer Price Index as identified each June 1. Should the June 1 change be a decrease over the prior year, the tax will remain the same.
Butts, Buchannon and Weinberg said that SoFi Stadium will pay $17.3 million in admissions tax receipts this year, due to inflation. which isn’t reflected in either the adopted or modified budget that was presented to the public on an official City document.
When the Intuit Dome opens in August, it is expected to pay the admissions tax in accordance with the established tax rate of 56 cents per ticket due to the venue’s maximum occupancy of 18,000 seats.
The city didn’t indicate how much admissions tax revenue was derived from the Kia Forum and YouTube Theatre.
Mayor Butts insisted the city will post a $20 million budget surplus by Sept, 30, the last day of the 2023-24 fiscal year.
Emilie St. John is a freelance journalist covering the areas of Carson, Compton, Inglewood and Willowbrook. Send tips to her at emiliesaintjohn@gmail.com.
