CARLSBAD — The City Council approved its operating and Capital Improvement Program budgets, along with two council policies regarding pension liabilities and the General Fund reserve fund on June 18.
Additionally, the council will pull back on several new positions requested by City Manager Scott Chadwick. He asked for 39 new positions to help alleviate various pain points among several departments.
Another source of discussion was the city’s pension debt liabilities, although the council approved a one-time $20 million payment. The city’s obligation was a source of concern for Mayor Matt Hall, who said the gap between the liabilities and assets has grown significantly since 2010.
Still, the latest payment puts Carlsbad near or at its target goal of 80% funded.
“If the next recession is half of what it was in 2008, I don’t think we’ll ever recover,” he added.
The city’s preliminary operating budget for Fiscal Year 2019-20 totals $296.9 million, an increase of $20.8 million (7.6%) compared to the FY 2018-19 Adopted Budget. Operating revenues are estimated at $291.8 million, which is a decrease of $1.9 million, or 0.6%, over the current year’s projections.
The recommended Preliminary General Fund Operating Budget is $166.8 million, with estimated revenues of $170.5 million.
This is a 1.8% increase in the estimated General Fund revenues as compared to the projected FY 2018-19 revenues, and a 7% increase in General Fund budgeted expenditures compared to the FY 2018-19 adopted budget.
The city is projecting a $3.7 million surplus, although the actual number may change based on the personnel decisions by the council. The General Fund reserve find is estimated to be $89.9 million.
“The city is in excellent financial health,” Chadwick said. “We are being very careful, deliberate and thoughtful so we are not living beyond our means.”
The council also approved moving some traffic and lighting concerns in the Village and Barrio up on the priority list. Additionally, some on the council wanted to put more funds toward open space, parks and trails (specifically on the south shore of Agua Hedionda Lagoon) and targeted Veterans Park.
However, the funds for Veterans Park ($23 million) are protected through the Community Facilities District No. 1 fund, which is specific to the park and funds cannot be moved.
Councilwoman Barbara Hamilton, who represents the Village and Barrio in District 1, championed safety and decorative lighting in the Village and Barrio, traffic circles and jump-starting the Grand Avenue promenade.
The council moved forward with the first lighting, although no additional funding was put in place as those projects, plus the promenade, already have funding mechanisms in place through the updated Village and Barrio Master Plan and CIP.
“I feel these items should be prioritized in this budget cycle,” Hamilton said. “I don’t want to leave here and another year goes and we’re still not working on these projects because they prioritized years ago.”
Also, increases were approved in development impact, solid waste, ambulance and safety training center rental fees.
Property taxes, which account for $71 million of the General Fund, are expected to increase by 3.8%, while sales tax ($37.3 million) is to rise by 3.6% and transient occupancy tax (hotel tax projected at a record high of $28.5 million) will increase by 3.5%.
As for the council policies, Laura Rocha, deputy city manager, broke down three policies presented to the council. The first centers on the California Public Employees’ Retirement System (CalPERS).
The five objectives focus on actuarially determined contributions (ADC), funding discipline, intergenerational equity, contributions as a stable percentage of payroll and accountability and transparency.
The second policy covers the General Fund surplus so the city may meet reserve policies and long-term liabilities, such as pension costs, and the Innovation Fund split equally. However, the council tabled the policy until a later date.
The third policy focuses on the General Fund reserve to serve as a framework to meet the city’s financial requirements and unexpected events such as natural disasters or a recession.
Each policy must be reviewed at least every five years or at the council’s discretion.
“Reserve levels are above policy levels,” Rocha said. “It’s important we look beyond our operating year.”