Yorba Linda city budget expects revenue shortfalls amid coronavirus pandemic; Black Gold reopens

Yorba Linda's operating budget for the fiscal year ending June 30 faces several shortfalls in income due to the coronavirus pandemic, according to a report from Finance Director Scott Catlett presented to the City Council April 21.

“Impacts to sales and use tax from the governor's stay-at-home order have been swift and significant,” Catlett told the council. Sales taxes are the second-largest revenue stream for the city at 19% of total income, behind 52% from property taxes.

Loss of sales tax revenue from March through June is estimated at $556,000, a 7.3% decline from what was expected for the full budget year. Another $333,000 loss is expected this year due to the state allowing small business to carry over some sales tax payments into next year.

The city “can only count revenue anticipated to be received by August 31 … as available in the current fiscal year,” Catlett noted. The balance of the payments received after that date will be added to the next fiscal year's income.

The hotel occupancy tax also will see “a dramatic reduction,” Catlett stated, with a drop in occupancy reaching 90%. The loss estimate is $159,000, some 30% of revenue expected.

Catlett told council members that the city staff has taken a “conservative approach of assu-ming that this reduction will persist through May and only begin to slightly increase in June.”

The city is predicting a $340,000 decline in income due to canceled recreation classes, sports leagues and facility rentals. However, some $265,000 in expenses will be saved, resulting in a net loss of about $75,000, based on estimates.

And $182,500 less income from engineering and planning fees is expected for non-pandemic reasons.

On the positive side, Catlett stated that “no material impacts to property tax revenues are anticipated at this time,” but he cautioned, “a prolonged pandemic could result in reduced assessed values,” though the effects would not be felt until 2021-22 “because assessed values impacting next fiscal year's revenues were already established this past January.”

After closing March 18 except for take-out food and packaged groceries sales, the city- owned Black Gold Golf Club opened for limited use April 24, under several restrictions.

Before the reopening, Catlett stated that revenue dropped from $500,000 per month to as little as $20,000, and maintaining the course to avoid expensive work upon reopening and paying limited staffing would cost about $200,000 per month during closure.

Catlett had projected a $530,000 hit to the general fund for the fiscal year, “which is the portion of the operating losses that cannot be offset by the operating profits earned earlier in the fiscal year and the deferral of certain planned capital expenditures.”

Still, the city expects to keep 51.3% of the year's general fund expenses of $42.2 million in reserve, with all reserves, including cash set aside for special purposes, at 73.7%.