Compared to the past couple of years, San Marino’s operating budget presentation this year was a breeze.
In terms of operating budget, the city is anticipating only a 1.2% increase in revenue and a mere 1.1% rise in expenses, and expects stable property tax income, which is around 70% of total revenue, to keep things buoyant even amid the swoon caused by the COVID-19 pandemic. The city is projecting just shy of $20 million in property tax income for the 2020-21 fiscal year, an increase of around 4%.
“We are in a very fiscally fortunate situation, being that a lot of local cities, as we’ve heard, are in some economic crisis,” Finance Director Paul Chung explained at a budget session at a recent San Marino City Council meeting. “When their sales tax is their main proponent of their revenues, it really hurts them especially in this current environment. For us, being that we are mainly driven by property taxes, so far that has been intact and it’s projected into next year to still be intact.”
And that increase in spending is essentially limited to obligations by the city.
“It’s really broken down into personnel,” Chung said. “Personnel is 73% of our operating budget and that’s really driven by contractual increases, the [memorandums of understanding] and our CalPERS [obligations].”
City officials discussed the capital improvement budget as well as the Community Services Department in depth in a separate meeting.
The City Council’s big decision made from the operating budget discussion concerned how it would replace six police vehicles for the year. The panel ultimately landed on purchasing them rather than leasing.
“We should just move it over to capital expense, buy it and be done with it,” Vice Mayor Ken Ude said, adding that the optics of an annual line item for lease payments weren’t to his liking.
The nature of leasing the vehicles would have created a mechanism through which they would be replaced after five years, but ultimately would cost slightly more, Police Chief John Incontro noted.
“It does cost us a little bit more, but it’s just a different way of obtaining and working on our fleet,” the chief said. “I have no preference one way or another. If we’re clearly looking at saving money per year, up front our cost is considerably less — we get six cars for approximately the cost of two vehicles, then the next year we’ll have to pay and it goes on from there, but the cost is slightly more over the last year.
“At the end of the lease,” Incontro continued, “the company we’re looking at is estimating that the vehicles will be worth a little bit over $10,000 per unit. We have the opportunity at the end of the five-year lease to take the car — it’s ours. We can continue to use it as a patrol vehicle if it is safe and running well. We can sell it ourselves — maybe we’ll get $10,000, maybe we’ll get $2,000. I don’t know what the market will bear. Or we give it back to the leasing company, they apply a percentage of that $10,000 toward a new lease if we decide to go with a new lease.”
All five council members agreed to go with purchasing.
The council is scheduled to give the final say on the budget, including modifications, at its meeting on Friday, June 26.
Proposed City Budget Reflects Stability of Revenues
