What are the effects of the high inflation, massive deficits and Fed monetary policy? The people of Pasadena, for instance are seeing the cost of government, in that small city go up by $10 million—blowing a hole in their budget. Watch for cut backs in services and public safety.
“Staff performed an analysis of current contracts that contained a standard clause allowing for a price adjustment for goods and services after their first year.
A City staff report showed the City has 846 active contracts, of which 132 contracts totaling $81,225,815 in Fiscal Year 2023 include price adjustment clauses. Based on these clauses, the estimated annual increases range between 3% and 9.6%, which is an additional $9,893,198 for these contracts.”
What about your city? How much are the Biden fiscal failures going to cost you?
Pasadena Now, 3/13/23
The City of Pasadena is experiencing increased costs for its contracts and energy procurement due to CPI rate hike adjustment clauses triggered by inflation and market fluctuations.
Staff performed an analysis of current contracts that contained a standard clause allowing for a price adjustment for goods and services after their first year.
A City staff report showed the City has 846 active contracts, of which 132 contracts totaling $81,225,815 in Fiscal Year 2023 include price adjustment clauses. Based on these clauses, the estimated annual increases range between 3% and 9.6%, which is an additional $9,893,198 for these contracts.
Three of the largest categories of procurements are trending up: gasoline prices averaged $5.03 a gallon in November 2022 in the Los Angeles area, an increase of $2.06 higher than November 2020; construction costs have increased 9.3% over the past 12 months; and raw materials costs have increased 18% compared to a year ago.
The Pasadena Water and Power department (PWP) has also been facing higher energy costs and has had to buy more expensive energy from the market as a replacement. The amount Los Angeles area households paid for electricity in December 2022 was 57.6% more than the nationwide average.
Since PWP is required to make energy purchases to meet customer demand, PWP is assessing whether to increase future positions with forward energy contracts if doing so would lower the cost of energy purchases in the future.
A document prepared for the Council’s Finance Committee said the City is exploring ways to mitigate the impact of these rising costs on its budget and services.
“The City will continue to evaluate contract renewals and option year extensions on a case-by-case basis to determine if contracts will be renewed under existing contract terms, or if it is in the City’s best interest to process a new solicitation,” the City memo said.
