Half of Irvine’s City Council largely brushed off warnings of a potential $47 million shortfall in the next five years amid calls from their colleagues to immediately reign in spending, saying they have time before they need to make any decisions.
Concerns around the budget boiled up publicly Tuesday night after Councilman James Mai announced he’d been told in a private briefing by city staff that they’d overspent their budget for the year by $6 million.
[Read: Irvine Wrestles With Budget Shortfall Amid Questions on Future Stability]
Residents got their first look at the projections shown to council members on Tuesday, showcasing that the city is also expecting a $9 million deficit next year without a change in spending.
Projections showed deficits soared even higher in the years after that, reaching an annual high of over $47 million by the end of the decade according to presentations by staff, citing a 50% increase in staff costs over the past five years along with several new programs as the driving force behind the deficit.
Mai called on city leaders to immediately institute a hiring freeze and several other spending reductions as they dive into the details of the budget.
“If the problem is not addressed the deficits will get much worse,” Mai said. “My exploration is not about locking in one final solution tonight. This is about making sure we begin a disciplined and public process now.”
He also said the city council should only consider tax increases and reserve spending as a last-ditch effort to bail the budget out.
Mayor Larry Agran said the deficits are not a “fiscal crisis,” pointing to the city’s $135 million reserves and claiming the city is the most financially stable in the nation.
“I think it’s way too early in this process to be imposing a prescription for the difficulties that we’re anticipating,” Agran said. “We’re not in dire straits.”
Under the current projections, that $135 million reserve would be completely wiped out by 2030 without changes to the budget.
City Council Deadlocks On What’s Next
While Mai called on his colleagues to institute a suite of spending cuts, council members deadlocked in a 3-3 vote.
Councilman Mike Carroll was absent from the meeting.
Councilwomen Melinda Liu and Betty Martinez-Franco joined Agran in opposing any immediate action, saying they wanted to get more information and discuss possible budget changes at a special meeting on May 5.
“Lets get a diagnosis before we start treatment,” Liu said.
Councilman William Go joined Treseder and Mai in calling for immediate measures, with Mai stating they needed to move forward as transparently as possible after the closed door conversations.
“I would’ve pulled back a lot of the things I proposed myself if we’d known the condition,” Mai said. “This is a call for transparency and action. I implore you to take that stance with me.”
Could Irvine Residents See a Tax Increase?
For years, Irvine leaders have enjoyed one of the most stable budgets in Orange County, avoiding hard conversations about possible tax increases that cities like Fullerton, Orange and Santa Ana have regularly wrestled with.
[Read: Santa Ana Faces $19 Million Budget Deficit if Cuts Aren’t Made]
Now, there’s an open question on possibly asking Irvine residents to increase their own taxes.
That conversation started behind closed doors earlier this year, when City Manager Sean Crumby briefed Agran on the city’s budget problems.
Agran then had Crumby look at hiring a polling firm to ask residents about their feelings on a tax increase without consulting other city council members, who weren’t told about the city’s budget issues until nearly two weeks later.
“If we weren’t in dire straits, why was polling done?” Mai asked. “That should be council action, that should come to us.”
Mai then asked Crumby if he was ordered by Agran not to tell the other council members about the polling, which ultimately did not move forward after Mai started raising questions on it.
“The conversation centered around being prepared for conversations with other council members,” Crumby said. “That’s not the same thing as being asked to withhold information.”
“You don’t want to answer that’s fine,” Mai replied.
Councilwoman Kathleen Treseder said she was “uncomfortable” with the fact that Agran got briefed first, citing the city’s charter that gave them all an equal vote.
“We are all equals up here, that is this form of government,” Treseder said. “In terms of getting information from the city manager, the staff, he does not get primacy there.”
Agran called their complaints “performative politics” and said there was nothing nefarious about his conversations with the city manager about possibly increasing taxes.
“There’s no secret relationship here. Maybe I just pay a little more attention than some of you on these matters,” Agran said. “Call me cautious, call me focused on these things, but if you’re going to keep options open, you can’t be stupdid about it, you’ve got to explore those options.”
Noah Biesiada is a Voice of OC reporter. Contact him at nbiesiada@voiceofoc.org.
