A wave of red ink is projected to hit Westminster within two years, the city council was told at another long meeting Wednesday night.
Eventually, the council approved – on a 5-0 vote – the budget for fiscal years 2021-2023 that is calculated to reach a deficit of $10.4 million by the second year of the spending plan.
Finance Director Erin Backs laid out a grim scenario of what would happen to the city treasury if Measure SS – a one-cent sales tax levy approved by city voters in 2016 – were not renewed.
Is there some way to cut costs and balance the books?
“We are definitely bare-bones,” said City Manager Marwan Youssef.
Westminster has struggled financially over the past decade and suffered many layoffs before Measure SS was approved. That sales tax increase will expire on Dec. 31, 2022.
In 2020, the city council rejected proposals to put the tax on the November ballot, so if a renewal goes to voters again, it would likely not be before 2022.
The city struggles under the burden one of the lowest property tax rates in Orange County and one of the lowest in California, one that is locked in place by Proposition 13.
The coronavirus pandemic has had its impact on the city, cutting sales tax revenue as stores and eateries were required to close or curtail operations. However, pandemic relief funds from the federal and state governments has offset some of that.
Under the new budget, the positions of assistant city manager and economic development director will be added to the payroll.
The latter part of the meeting was a lengthy criticism and critique of the role of Youssef into retaining former city councilmember Tyler Diep as a lobbyist without informing the council.
Diep has since withdrawn from the contract.
“Kinda shady,” was how Councilmember Carlos Manzo described it. “I’m very disappointed in the city manager,” said Councilmember Kimberly Ho. Councilmember Tai Do went even further, saying “I’ll be happy to receive your resignation.”
Youseff admitted to some areas in which he could improve, and vowed to bring any future contracts back to the council “even if it’s only for $1.”
The council also voted to lower the city manager’s authority to execute a contract without council approval to $50,000 – excluding public works projects – down from $175,000.
Additionally, the council voted to consider at a closed session at the June 23 meeting the matter of seeking to require that Diep return the money paid to him to date.
Wednesday’s open session started almost an hour late, at 7:55 p.m., and the regular session ended at 12:19 a.m. Thursday.