City Finance Director: So Far, So Good This Fiscal Year

Revenues are tracking higher and expenditures slightly lower than anticipated at the halfway point for San Marino’s 2019-20 budget, according to the city’s new finance director.
At the end of December, general fund revenues were $655,672 higher than they were at the same point in the previous budget year, reflecting a 7% increase year on year. In terms of revenue sources, property taxes, utility user taxes, charges for service and investment income are projected to exceed expectations this year, while sales taxes and license and permit fees are projected to fall short, according to Finance Director Paul Chung.
As it stands now, Chung said he predicts the city will have a surplus of about $4 million when the year ends on June 30, with expenditures around $576,000 lower than expected, thanks to a combination of those over-performing revenue streams and a notable number of staffing vacancies for the first half of the year.
“Now, please be mindful that this is a straight line projection with six months of data,” Chung told the City Council during a presentation at its meeting last week. “In the next two months, I’ll be meeting with the departments regarding their year-end estimates, and I’ll be reviewing those so that we’ll have a better projection as we progress toward the operating budget [planning].”
The $7.035 million collected in property taxes for the first half of the year represents a 4.7% increase from the prior year, Chung said, likely thanks to the median home sale price climbing year to year in San Marino. Although the collected amount is only about 42% of the projected revenue, the county issues property tax payouts to cities in large, infrequent chunks throughout a fiscal year. Chung said he expects the remaining payments to cover that gap and then some.
Of note, miscellaneous revenues are showing a 154% increase year on year — $525,892 so far — thanks to interest income and significantly more tree fines being levied than in the same period the previous year, Chung added.
Of the projected $12 million in expenses budgeted for the city’s police and fire departments, about $6.284 million — 52.3% — was spent through December. Chung emphasized that was because the city front-loaded the full year’s payment of pension obligations in July, instead of paying every month.
In long-term forecasts, Chung projected gradual growth in both expenditures and revenues, with the former overtaking the latter for more than a decade after the public safety parcel tax is scheduled to sunset for the 2025-26 fiscal year. That, of course, assumes voters decide to buck the trend and not renew the tax that has been in place since 1980. With Chung asserting that such a long-term projection is at best speculative, his charts indicated the city would escape from this supposed deficit spending by the 2043-44 fiscal year.
“It’s difficult, obviously, because there are so many uncertainties,” he said, laughing to acknowledge the limitations of the exercise. “Hopefully I’ll be here in 2043-44 to make sure my forecast is accurate.”
Vice Mayor Ken Ude said he and Councilwoman Susan Jakubowski have enjoyed their roles as budget liaisons with Chung since he was brought aboard in November and appreciate the chance to get into the weeds of the city’s finances. Ude, a businessman who has banged the drum for fiscal accountability since his election in 2017, urged a comfortable caution for the city moving forward.
“I think the state of the finances of the city is really solid, but there are a couple of trends that really concern me,” he said. “One is, we have our assumptions for revenue going up and the assumptions for expenses are going up faster than revenue, so at some point, that crosses. I think as we go through the budgeting period this next year, expenses must be less than revenues in percentage increases.”
Ude added that Chung plans to begin delivering special budgetary reports to the council on a quarterly basis.
“An example of a special report might be, ‘What’s the full cost of Stoneman?’ or ‘What’s the full cost of maintaining the fleet?’ or ‘What’s the full cost of training and getting our firemen up to speed?’” Ude explained, “You know, some of the things that we think will be interesting for us.”