San Marino’s interim Finance Director Terry Shea presented the City Council a 2023-24 midyear budget snapshot, reporting that revenues are up compared to last year, projecting a year-end surplus of $1.8 million.
The Council approved budget amendments to reflect this fiscal year’s positive revenue streams, though Shea projects the city will be operating at a deficit by next fiscal year, according to the five-year forecast, due largely to the Public Safety Parcel Tax ending in 2024-25.
While reviewing the midyear financials of the city, Shea reported that the General Fund balance is standing at $13.1 million and the Capital Improvement Plan Fund balance is $13.2 million as of Dec. 31, 2023.
The midyear financial review, long-term projections and budget amendments were approved at the Feb. 23 Council meeting. As part of the presentation, staff recommended that $2 million be transferred to the Capital Projects Fund and $500,000 be set aside for the city’s Pension Section 115 Trust from General Fund reserves, which the Council passed.
“The Pension Section 115 Trust is important, because we can earn a higher rate of return and it’s our money that sits there, and so in a couple of years when the unfunded liability amount goes up, we can use a portion of this money to cover that to free up more money for the General Fund,” Shea explained.
Also highlighted in the 2023-24 year-end revenue projection was a 4% increase in property taxes, an 8% increase in sales taxes, a rise in property transfer taxes, a 30% increase in investment income due to rising rates in return, a rise in charges for service in the Public Safety Fund for paramedic services and lower than budgeted expenditures.
New budget amendments outlined by Shea included $138,395 in the General Fund for legal services for personnel matters/licenses Microsoft Office 365; $35,000 in the Public Safety Fund for contract services for Verdugo dispatch and Ground Emergency Medical Transportation fees; $9,967 in the Capital Equipment Fund due to savings from Microsoft Office 365 implementation; $10,161 in the Fourth of July Fund to assume management and responsibility of the city’s Fourth of July Parade; and $1,510 in the Donation Fund to procure a park bench at Lacy Park for a future donation.
Long-term forecasts show the city spending more money than it brings in through revenues. Over the next four years, the city is expected to operate at a deficit, with staff estimating a $5.3 million deficit by the close of the 2027-28 fiscal year.
The city projects revenues will decrease by about $3.8 million following the 2024-25 fiscal year.
This is due, in large part, to the Public Safety Parcel Tax coming to an end, among other contributing factors, though a renewal of the tax measure could be green-lit by voters in November.
First published in the March 14 issue of the San Marino Tribune
