ENCINITAS — City Council adopted a new two year budget May 25 that increases spending on some services but keeps a surplus of revenue on hand. Unlike other cities in the county that are drawing upon reserves or cutting services, city finance staff told the council that Encinitas is poised to weather the financial storm.
Finance Director Jennifer Smith told the council that the budget was realistic and took a conservative approach to spending. One of the biggest additions to the fund outlays is the Hall property park. The city is set to open the 44-acre park midway through the second year of the budget cycle. It will add $172,000 in new maintenance and operations expenses that year alone according to budget documents.
In fiscal year 2011-2012, the city’s general fund revenue is expected to total $52.5 million, while two years from now that figure is anticipated to be $53.4 million. When the city entered the current fiscal year in July 2010, revenue was forecast to be $50.2 million.
That figure was steadily adjusted upward as economic conditions improved. In November, City Council revised 2010-2011 revenue expectations to $50.8 million and increased the figure to $51.3 million in April of this year.
Expenses for 2010-2011 weren’t adjusted as much as the revenue figures, but they did increase. When the city entered this fiscal year, expenses were expected to total $45.8 million. That figure has recently been revised to $46.2 million.
In the 2011-2012 fiscal year, expenses are expected to increase to $48.6 million. In two years, expenses are anticipated to be $49.8 million.
Approximately 52 percent of the city’s general fund budget goes for employee payroll related expenses, while 44 percent goes for contract employees. The lion’s share of the contracting expenses goes for policing provided by the San Diego County Sheriff’s Department according to Smith.
Ed Wagner, president of the Encinitas Taxpayers Association, took issue with several of the assumptions made in the city’s budget proposal. His main concern is the lack of transparency in the basis for the economic assumptions in the budget.
“It seems the projections are made behind closed doors by staff and consultants, and our elected representatives accept them at face value without question,” Wagner said.
He also took issue with the pension liability that the city will incur in future years.
“As with revenue assumptions, there was appallingly little discussion of pension costs in the council meeting approving the budget,” he said. “Discussing this huge and growing liability is apparently taboo in polite Encinitas company.”