On Tuesday city staff will present a draft city budget that, in spite of the economic downturn, will maintain all city services at their current high levels and focus on the City Council’s goals of managing growth, reducing homelessness, and investing in fire and emergency services.
The city operates on a fiscal year that runs July 1 to June 30. Tuesday’s meeting is the first opportunity for the City Council and public to provide feedback on what is being proposed. The City Council is scheduled to hold a public hearing June 8 to formally approve the new budget.
In March, the City Council identified goals to be prioritized in the city budget:
Engage the community through a citizens committee to create a new plan to manage growth in Carlsbad in a way that maintains an excellent quality of life
Reduce the homeless unsheltered population, among those who want help, by 50% within five years
Bring the Fire Department into conformance with the Standards of Cover evaluation
A fourth goal, related to City Council communication and an ethics ordinance to support the delivery of superior public service, did not require funding in the fiscal year 2021-22 budget.
The effects of COVID
When last year’s budget was approved, the City Council asked staff to return quarterly with an economic and budget update. This has allowed the City Council to keep close tabs on city spending and revenue projections during a time of great economic uncertainty. During the last update in April, city staff said economic projections were starting to look up, but it’s too soon to know exactly what shape the recovery will take.
According to the draft budget, the city’s general fund revenues, which pay for most day-to-day city services, are projected to be up only slightly in the new fiscal year, about 3.5%.
As a result, new ongoing spending on projects and services that use the “general fund,” which depends primarily on sales tax, Transient Occupancy Tax and property tax, was limited to the most urgent needs and community priorities. Services that get funding from other sources, such as utility fees, did not face such strict constraints.
General fund reserve
The City Council has a policy to maintain the equivalent of 40% of the annual general fund operating budget in a reserve account. This helps ensure, among other things, that during economic downturns, the city can continue to meet the community’s needs.
The projected general fund reserves in the draft budget are $95.9 million, or 54% of the general fund operating budget. This is 14% over the City Council’s target. The City Council decides how funds in excess of the 40% goal should be invested. On April 27, the City Council approved two expenditures:
A payment of $10 million to CalPERS to pay down existing unfunded pension liability. By paying this money now, the city will save $5 million in interest.
A transfer of $3.5 million from the general fund to the infrastructure replacement fund. The infrastructure replacement fund is a way for the city to save up for future infrastructure needs and make sure water, roads, drainage and other systems are in good working order.
The draft budget includes allocating $5.9 million in excess reserves to fund one-time costs associated with the City Council goals, including two new ambulances, contracts with social workers and a hotel voucher pilot program to reduce homelessness. A portion of the voucher program is also eligible for federal funding.
Other investments planned
In addition to the operating budget, city staff will present an overview of recommended investments in technology infrastructure and physical infrastructure like roads and pipes. These projects are typically funded by funds set aside for these purposes.
A total of $4.9 million is included in the draft budget for technology investments, and $56.2 million is included for construction projects. The majority of the $56.2 million will go toward road and other mobility projects.
Water and recycled water
Staffing increases are also focused in the areas that support City Council goals, including:
3 full-time positions in the Police Department to support the City Council’s goal to reduce the city’s unsheltered homeless population.
A new director, housing services manager, program manager and management analyst for a newly created Housing & Homeless Services Department, also in support of the City Council’s goal on homelessness.
9 full-time paramedic firefighters, 3 full-time emergency medical technicians and the equivalent of 3 hourly, “full-time equivalent” part-time EMT personnel in the Fire Department in support of the City Council’s goal of ensuring it can meet future needs for fire and emergency services.
In all, the draft budget includes 24.5 new positions. In addition to those supporting City Council goals, two new positions consolidate several part-time positions, which can now be eliminated. Two others are in the Utilities Department and not funded by the city’s general fund.
New projects The main new spending for capital projects include:
Avenida Encinas widening, south of Palomar Airport Road, $3,776,000
Fixing the stairs and upper seawall from Tamarack to Pine, $2,500,000
Buena Vista Creek channel maintenance at El Camino Real, $2,820,000
Citywide Drainage Improvement Program, $2,297,500
Desalinated water flow control facility, $7,950,000
Pavement Management Program, $4,290,000
Improvements to the water operations computer system, $4,400,000
Terramar Area Coastal Improvements project, $2,450,000
Road projects Other new road projects will focus on the following areas: