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Due to the subsequent hit that the coronavirus pandemic has taken on the local economy, city officials say there will be a $4.2 million revenue hit for fiscal year 2020 (FY20) and a tentatively estimated $6 million hit for fiscal year 2021 (FY21).

On April 7, 2020 Staff informed the Dana Point City Council that it was working on assessing the full impact of the economic toll that hotels and other industries were experiencing, along with the resulting impact on city revenues.

“We immediately dove back into the financial policies this council spent a lot of time on,” said City Manager Mike Killebrew. “There is work being done at the federal level to get money back to cities. We worked with department heads and staff to reduce budget line items throughout budget in order to minimize impacts to services.”

During his council staff report on Tuesday, May 20, Killebrew emphasized that assessment will continue for many months as the full effect of COVID-19 impacts come to light.

“We took to heart not only the policies to maintaining infrastructure and facilities but really the extent of which council put emphasis on this in developing financial policies,” Killebrew said. “So investments in maintaining city infrastructure was high priority.”

After reviewing line items within the budget, Killebrew presented $1.45 million in savings. According to the staff report, other revenues performing better than budgeted add up to about $212,000.

Staff also recommended dipping into the economic stability reserve to use about $935,000, and reducing about $2 million total in money for unfunded pension liability and the community investment account.

While Councilmember Debra Lewis lauded city staff for putting in the work to find savings, she expressed concerns for an adjustment of $734,000 for the city attorney’s budget.

“We were going down the road of a deficit before COVID and we knew a recession was coming but we weren’t expecting this,” Lewis said. “I have tried to propose bids from other law firms… This is an opportunity to look at things like this and save a substantial amount of money without lessening our services.”

Lewis, who teleconferenced into the council meeting, had to abruptly disconnect the call due to a family emergency.

Later during comments on the budget adjustments, Mayor Pro Tem Jamey Federico stated that the majority of legal expenses were unanimously approved by city council.

“Quarterly, we review our legal strategies and we’ve unanimously approved those,” Federico said. “We may need to address some of the strategies and services we provide.”

To conclude the presentation, Killebrew stated it was still difficult to forecast fiscal impacts as it is unclear how quickly businesses will reopen and when. City staff has been meeting with the hotels twice a week, and initially, in March, staff met with hotel officials five days a week.

“Our hotels have been very forthcoming in projected occupancy numbers,” Killebrew said. “With things changing every day, I’m suggesting we wait prior to taking massive actions until we see what happens with our local economy. I’m not saying wait until we know for sure, but give it time because so much has changed. We need to see what happens with federal relief packages and whether we get some help.”

Killebrew added that he would likely discuss the budget at each council meeting going forward, with possibly scheduling additional special meetings in August.

After Killebrew provided a separate presentation on COVID-19 updates, Councilmember Joe Muller requested that staff present the Dana Point Chamber’s plan on reopening businesses to state and county officials for feedback.

Councilmembers unanimously approved the budget adjustments and the motion to renew an amended proclamation of a local emergency, although Lewis was absent for the votes.

“We all understand we are here tonight because of a situatuion that is almost unprecedented,” Viczorek said. “These types of events don’t happen very often. When they do, you hope you’re in a position to deal with them. I think the approach that was taken by this council, the work done by staff has put us in as best a position as we’d hope to be.”

The next city council meeting is scheduled for 6 p.m. on Tuesday, June 2.

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