20-21 February Budget Study Session

Global Economy

IMF cut its growth forecast for 2020 to 3.5% after already reducing estimates for 2019 from 3.9% to 3.2%

Momentum is continuing to slow this year, particularly in manufacturing

Monetary policy and actions like the rate cuts in the US have provided a temporary cushion

Global outlook remains uncertain

National Economy

Experts predict growth to continue slowing in 2020

Kiplinger projects growth at 1.7% in 2020 after growth of 2.3%

in 2019

UCLA Anderson Forecast predicts a slowdown in the 2nd half of 2020 at only .04%

Uncertainty in trade policies and impeachment have slowed business investment

Consumer spending and low unemployment rate are the only positive signals

National Economy

California Economy

UCLA Anderson Forecast predicts CA to outperform US in 2020 at 3%

Growth is expected in technology, hospitality, health and construction

State's unemployment rate will rise to 4.6% up from

4% in 2019 as market continues to tighten and cost

of living continues to rise

Santa Clarita Economy

Number of jobs has increased to 114,000, up from 96,000 in 2016

Unemployment rate is 3.7% (Dec 2019), down from 4% in 2018

Number of businesses reached a high of 7,610

in 4th quarter of 2018

Needham Ranch

Tourism, Film & Construction

54 significant tourism events were held in Santa Clarita

in 2019

5,067 trackable room nights and $3.4 million in TOT

526 film permits were issued, generating an estimated economic impact of $33.4m

Building and Safety issued more than 5,700 permits-

a valuation of construction estimated at $413m

Sales Tax

Key indicator of future economy

Sales Tax is one of the City's largest revenue sources

Experiencing some leveling off with revenue estimated

to be flat in FY 20/21

Primarily due to consistent decline in Auto Sales, which has had 8 straight quarters of decline

New Facilities

Two new City facilities alone in SC2020 will exceed $100m

(not including the ongoing operational costs and long-term maintenance)

CalPERS Pension

Performance for the overall fund is only 5.8% for the past five years

Last year, the fund achieved a 6.7% return

Both figures are below the downgraded 7% expectation

Some cities with police and fire services are faced with significant challenges as average pension costs have now reached 50% of pay

Our City's obligation is targeted to be 90% funded in the next three years

Public Safety

Part 1 crime rate reduced by another 15% in 2019 to a new record low

Impact of recent events in the community

Additional staff training and resources

Probable increase to Sheriff's contract and liability insurance

Homelessness

Measure H is entering it's third year (generating $355m annually)

Community Plan to Address Homelessness was developed in 2018

Local Task Force was formed in October 2018 and

meets monthly to implement action items

Bridge to Home opened their shelter year-round for

the first time in April 2019

Bridge to Home is currently designing a permanent

services center

Affordable Housing

Crisis in California

Legislation

Anticipate statewide policies that

override local control

18 bills signed in 2019 to jumpstart

housing production across the State

Governor's target: 3.5 million new

homes by 2025