A longtime reliance on property tax revenues seems to have cushioned San Marino once again, with the fourth-quarter financials for the 2019-20 fiscal year indicating only a 4% drop in net income over the same period in the previous year, even with the presence of the coronavirus pandemic.
The city weathered the springtime financial crisis in a way similar to how it sailed through the Great Recession, posting relatively small losses from commercial sources and downsizing its own expenses to compensate. Strong and lasting residential property values have provided San Marino a bulwark that cities with more diversified planning lack — more than 70% of its revenues are from property taxes.
“As the city overall experienced decreases in revenues, we did also see an offset on the expenditure side as well,” Finance Director Paul Chung told the City Council last week. “We did some salary savings, of course, and also contract and consulting services, as the mandatory shelter-in-place [order] took effect and many of the contractors and consultants could not work during that period.”
Gross general fund revenue from April through June fell by $777,000 from the same period last year, reflecting a 7.8% downturn; this was partially offset by a $281,000 decrease in salaries during that period (down by 17% from last year) and a $211,000 fall in contract service costs (14% from last year).
As a net sum, the loss for the city was $276,000 for the fourth quarter. Net income for the entire fiscal year was off by only $107,000, not even a 1% difference, Chung reported.
Additionally, auditors have said they expect to report no troubling findings for the 2019-20 fiscal year, Chung said.
“We were very fortunate,” he added. “Revenues for our property taxes continue to be intact, but there were certain weaknesses — sales tax and business license taxes; recreation programs, as recreation pretty much came to a halt; and then library revenues as well, as the facility closed. Passport revenues pretty much stopped, as travel in the world has pretty much stopped.”
This certainly paints a rosier picture in San Marino than those of its neighbors in the wake of the pandemic, which for months forced the closure of most retailers and limited eateries to takeout or delivery. Municipalities heavily dependent on sales taxes or vacation seasons are navigating choppier waters as states begin to gradually allow facets of society to resume activities.
In June, Los Angeles County was at more than 11% unemployment, Chung said, and was anticipating a drop of $1 billion in sales tax revenue. He said he agreed with economic forecasts in identifying a V-shaped economic recovery.
“We were very much in crisis mode at that time,” he said. “Looking back now, the bright side I believe is that the recovery is on its way. I do feel that the fiscal impact is a little more clear for agencies and in San Marino.”
City Finances Escaped Heavy Damage in Fourth Quarter
