City finances reveal $2.3M reserve transfer to cover shortfall amid revenue declines

Sierra Madre City Council has approved significant budget adjustments during their regular meeting on April 8, 2025, aimed at addressing financial challenges stemming from recent events, including the Eaton Fire. The council's decision to transfer $2.3 million from the general fund reserves to cover operational costs reflects a proactive approach to managing the city's finances amid fluctuating revenue projections.

The budget report highlighted an anticipated increase of $80,000 in franchise fees, primarily from Southern California Edison and Southern California Gas. However, sales tax revenues are projected to decline, with estimates falling short of previous forecasts due to ongoing economic conditions. The city has engaged a consulting firm, HDL, to provide updated revenue projections, which have indicated lower-than-expected sales tax collections.

Business license fees are also expected to decrease by $40,000, attributed to the implementation of a new licensing system, Acela, and delays caused by the Eaton Fire. The city anticipates that some of this revenue may be recovered in future periods as businesses catch up on renewals.

In terms of expenditures, the council approved increases to various departments, including $200,000 for fire services personnel costs and $35,000 for a general plan update. The adjustments also include funding for essential supplies and equipment related to the Eaton Fire response.

The council emphasized the importance of maintaining a healthy reserve fund, which is currently projected to remain above the required 25% of operational expenses, even after the transfer. This careful financial management aims to ensure that the city can respond effectively to emergencies and maintain essential services.

As the city navigates these financial adjustments, the council remains committed to transparency and fiscal responsibility, with plans to seek additional revenue management support in the future. The discussions during the meeting underscored the ongoing challenges faced by Sierra Madre, but also the resilience and strategic planning of its leadership in addressing these issues.