Signal Hill City Council unfreezes hiring given stronger than expected revenues

Signal Hill City Hall will partially reopen in May. (Courtesy City of SH)

After COVID-19 hit in March last year, the City of Signal Hill tightened its municipal belt by freezing new hires and making other employee concessions. 

The City was able to shave $1.3 million off its General Fund expense budget mainly through personnel cuts and deferring capital projects.

See related story: SH City Council approves 2020-2022 budget with reduced revenue and personnel cuts

However, sales-tax revenue – which accounts for 64% of the City’s total budgeted revenue – has been better than expected, according to Finance Director Sharon del Rosario.

Del Rosario had reported to the council last month that revenue in the first half of 2020 was stronger than anticipated due to higher than expected auto sales and online purchases delivered to Signal Hill.

See related storyHigher auto and online sales help Signal Hill stay in the black

Continuing the good news during the council’s Tuesday, Feb. 23 meeting, del Rosario said the second half of 2020 – which is the first half of Signal Hill’s 2020-2021 fiscal year that ends June 30 – also saw better than expected sales-tax revenue from robust auto and online sales. 

The council therefore agreed to allow essential personnel hiring and salary increases across municipal departments that had been frozen.

The Signal Hill Police Department will hire a police officer and a lieutenant. Some of those policing duties had been covered by existing staff during the past year. 

See related storyThis is Signal Hill’s 2020 Employee of the Year

The Community Development Department will hire a planning manager and a code enforcement officer. 

The City will also hire three consultants: one to review municipal-code enforcement, another to facilitate community engagement about site selection for new housing required by the State, and a third to conduct geotechnical surveying for a Public Works Department project. 

Public Works employees will also now receive overtime salaries, as will Water Department employees, under a separate budget, for completing pipe repairs. 

Part-time Community Service Department staff hired to supplement school services during COVID-19 will have their contracts extended through June 30.

In addition to loosening personnel-related restrictions, the council approved moving forward with replacing a City vehicle for $27,000 and freeing $70,000 for street-improvement design at two locations – 1905-1907 E. 21st St. and California Avenue / 27th Street.

In making its 2020-2022 budget last June, the City was faced with uncertainty, del Rosario said. Sales had fallen during the first three months of COVID-19 and so the City budgeted both revenues and expenses conservatively.

But in fact, actual sales in Signal Hill in the second half of 2020 were higher by 9.5% over the previous year, del Rosario said.

“While other municipalities experienced declines in sales-tax revenue, Signal Hill’s business portfolio has proven, in the short term, to be pandemic resilient,” she said. 

Councilmember Tina Hansen credited past council decisions for selecting which businesses to open in Signal Hill, beyond car dealerships.

“Even with e-commerce and Amazon, these businesses endure,” she said. “People still flock to Costco, they still flock to Home Depot, they still flock to Target.”

Mayor Edward Wilson also called those businesses good community partners, treating employees well and creating welcoming environments for customers, but lamented that other businesses have had to close.

City Manager Hannah Shin-Heydorn said that though Signal Hill’s auto dealership showrooms had shut when COVID-19 first hit, they then rebounded to have a “normal” year in 2020. The initial shutdown had created pent-up demand, especially for used cars, she said.

While stronger than expected auto sales drove most of the budgeted revenue surplus, online sales-tax revenue is the largest growing segment of Signal Hill’s sales-tax base, del Rosario said. 

The City collects its share of online sales-taxes from a pool of funds remitted to California and Los Angeles County from out-of-state retailers.

Online sales-tax revenue has increased over 50% since 2019, del Rosario said, underscoring the growing consumer shift toward online shopping.  

Among businesses negatively impacted by COVID-19 are hotels, restaurants and gas stations, del Rosario said.

And while lower fuel demand has also led to decreased oil production in Signal Hill, the City receives less than 3% of its revenue from oil-production taxes, del Rosario said. 

As of April 1, voter-approved Measure R will increase the sales-tax rate from 9.5% to 10.25% but the additional funds won’t reach City coffers until June, del Rosario said. The City will get its first quarterly results of that additional .75% sales-tax increase in September.

Looking ahead, Signal Hill will conduct its annual budget workshop on May 27 to set the 2021-2022 budget, which is the second year of its 2020-2022 budget cycle, del Rosario said. The council will vote to adopt the budget on June 22, prior to the new fiscal year beginning July 1.

Councilmember Lori Woods asked staff to consider budgeting funds toward celebrating Signal Hill’s 100th anniversary, officially occurring in April 2024. 


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