SOLANA BEACH — Despite an expected decrease in tax revenues, the Solana Beach economy remains fairly stable. However, the city is not immune, City Manager David Ott said. With that in mind, City Council held a fiscal sustainability workshop Feb. 2 to discuss budget projections and reductions for the current and upcoming fiscal years.
“It’s fairly evident that the fundamental structure of our economic model has changed … and it filters down right into our region and right into the city of Solana Beach,” Ott said.
The primary areas of vulnerability — state funding and sales, property and transient occupancy taxes — are no different from other cities, he said.
To avoid the financial crises other cities are currently facing, Solana Beach took a proactive approach, with staff members proposing across-the-board cuts in every department.
The list included everything from putting some capital improvement projects, or CIPs, on hold to a one-day loss of the neuter scooter, which could save the city $1,500.
Nearly every division proposed a reduction in spending for travel, conferences, meetings and training, although such a move could result in council members and staff having difficulty staying current on issues and trends.
Other cost-saving recommendations included reduced funding for Friends of the Library, the community grant program and special events such as Paws in the Park and the annual tree-lighting ceremony. Reductions in tree trimming, park maintenance and the frequency of storm drain cleaning were also proposed.
Eliminating the ability to broadcast City Council meetings could save the city $45,000, but that was not supported by most council members, even though it was done in the past.
“I didn’t like doing it then. I’m not going to like doing it now,” Councilman Joe Kellejian said.
“These are all difficult, but this one I find to be almost unacceptable because I think government needs to be transparent,” Councilwoman Lesa Heebner said.
“I don’t think this is acceptable either,” Councilman Dave Roberts said. “There’s got to be a way we can figure this out.”
Most council members did support changes to Shorelines, the community newsletter. Reducing it from four issues to three, limiting the page count to 12 or producing it in black and white could translate into a $7,400 savings. Roberts recommended offering only an electronic version, which is currently available. But the city’s e-blast system only goes to 1,200 recipients, while the newsletter is mailed to all 6,500 homes.
Council members were also presented with five revenue-generating options, three of which were taxes that would require voter approval. About $1.3 million could be generated from either a half-cent sales tax increase or a 5 percent tax on all five utilities. A business tax, which Ott said is common in San Diego, could net the city an additional $700,000.
Ott proposed doubling the current fire benefit fee which, when enacted in 1996, supported almost 30 percent of the fire budget. It now accounts for only 14 percent. Ott also recommended reducing the minimum short-term vacation rental stay from seven nights to three — something property owners say could result in a 20 percent to 25 percent increase in TOT funds.
The majority of the council members did not support a sales tax increase. “There’s too much going on at the state level with regard to that,” Kellejian said. “I don’t think it’s prudent for us to go in that direction right now.”
Most also opposed the utility and business taxes. “I think people are just tired of being taxed,” Councilman Tom Campbell said.
“The utility (tax) is interesting, but I’m not sure that’s the way to go,” Heebner said.
On the other hand, council members generally supported increasing the fire benefit fee and adjusting the short-term vacation rental requirement.
Kellejian said the current fire benefit fee is putting the city “deeper and deeper and deeper in the hole.”
“We’re not making it,” he said. “It’s not (anywhere) near supporting the budget of the Fire Department. The short-term rental seems to be something we can instrument fairly quickly.”
“If the folks are OK with (the short-term rental change) and we can package it to offset some of these shortfalls and increase revenue, it seems like a no-brainer,” Mayor Mike Nichols said. He did say that the people who are impacted will need to be talked to.
Nichols said increasing the fire benefit fee “makes sense from an inflation standpoint.”
“It was supposed to provide a basic supply of income for a certain, specific use,” he said. “That use costs more now and we’re not paying as much for it, so we should adjust that.”
Because CIP projects create jobs, Nichols said he would prefer to keep those going.
“It helps to stimulate the economy,” Nichols said. “We should probably consider sucking it up and (spending) a little bit of money to keep people working, and (if) we actually get a product out of it … it might make sense for us to not just stop all CIP projects.”
Council members said they will strive to maintain the services the community has become accustomed to receiving, but the adjustments may result in some inconveniences.
“I know that we’d all like to keep funding everything,” Nichols said. “But we have to be real about some of these tough decisions.”
“There are some things here that I think are terrible,” Kellejian said. “But the community has to share in the pain.”