$50 million budget balanced, AI lurks over unfunded jobs

by Chrissa Olson

A $50 million 2023-24 city budget, half going to public safety, was approved by the Hermosa Beach city council at its June 13 meeting.

Revenue is projected to increase 7 percent over the 2022-2023 fiscal year, with taxes making up 74 percent of general fund revenue, City Finance Director Viki Copeland said in her presentation to the council. The transient occupancy tax, or “hotel tax” also makes up a significant portion of revenue, at 13 percent, as travel rebounds following the relaxation of COVID-19 restrictions. 

“Although there is uncertainty in the overall economy, trends in our local economy seem to be pretty good for now,” Copeland said during the meeting. “The recommendations in the budget represent improvements in operations, technology and infrastructure. We do have a lot of improvements in the budget.”

Copeland said $3.8 million left over from the previous fiscal year has been added to the contingency fund, which equals 20 percent of general fund expenditures. 

The city’s five year forecast shows expenditures exceeding revenue beginning in 2028-2029. However, the five year forecast suggests “ample time” to adjust for the approaching deficit. 

The five year forecast noted that a top priority is improving city facilities, which are “deficient” in space and require renovation. 

One option for averting the looming deficit, Councilmember Justin Massey suggested is AI (artificial intelligence) to help fill unfunded staff positions.

The council left 15 city staff positions unfunded, among them a mental health clinician, a homeless outreach coordinator and a code enforcement officer. 

“It needs to be demonstrated that we’re leveraging technology and efficiency as much as possible before we add staff,” Councilmember Justin Massey said. “Obviously tech is in the beginning of taking leaps and bounds with artificial intelligence. I’d say AI is something we should look at closely when we consider whether additional personnel are needed.”

Mayor Raymond Jackson suggested approaching neighboring cities about sharing staff, such as the mental health clinician. 

Jackson said Hermosa Beach Measure B, a proposed .75 cent sales tax increase voters rejected last November would have prevented the impending shortfall. However, the city hopes to place another tax measure on the November 2024 ballot, the Mayor said. In addition, he said, the city hopes to increase revenue by auditing the transient occupancy tax, hiring a business license tax consultant and reviewing parking fines, which have not been increased in 10 years.

The largest portion of the new budget, about $28.4 million, goes to public safety. Of this, $16.7 million is for the police department, which employs 38 personnel. The budget notes the police department will receive two new vehicles.

The second largest expenditure is $12.3 million for capital improvement projects, including  streets, parks and sewers. ER