CARLSBAD — The city’s final Fiscal Year 2021-22 operating budget was passed during the Carlsbad City Council’s June 8 meeting, although the surplus was revised to about $300,000 — lower than earlier projections.
Staff’s draft budget had projected a surplus of about $500,000, although the number was changed as the budget came more into focus. Additionally, the $300,000 will be further reduced as the council approved a full-time position for diversity, equity and inclusion senior program manager for $162,000.
Also, the city had to dip into its reserves to the tune of $5.9 million to balance the budget, according to Laura Rocha, deputy city manager of administrative services. Operating revenues are projected at $303.6 million with General Fund revenues at $178.8 million, while operating expenditures is projected at $316.8 million with General Fund expenditures at $184.4 million.
“Our local economy was deeply impacted by the COVID-19 pandemic,” Rocha said. “The city revised General Fund projections to reflect the positive impacts from the acceleration of the COVID-19 vaccine.”
Finance Director Ryan Green said the city is optimistic some of its biggest tax revenue sources — sales, property and transient occupancy (hotel) — will rebound a little faster due to the state relaxing most COVID-19 mandates on June 15. He said those three sources account for 78% of total revenue for the city.
Another issue was over the city’s pension debt liability. Mayor Matt Hall expressed concerns to staff as the city has made little headway in reducing its liability over the past four or five years, even as the city has paid an additional $50 million since FY 2016-17.
One of the challenges for the city to keep as current as possible is the state is lagging by about 18 months on its reporting of those obligations to public agencies, Rocha said. She said the debit liability is “not a mortgage we will ever buy down” and “managing an 80% funded portfolio is an excellent strategy.”
Green added the city has undergone two pension reforms and in 2021, 49% of employees in the lowest reformed pension tier, which was adopted in 2011.
“If we don’t come together on this, we’re not going to have a retirement system,” Hall added “I still think we’re in for a few years of a tough economy.”
Hall also expressed concerns over the increase in homelessness and crime, specifically along the Avenida Encinas corridor off Poinsettia Avenue. The city held four public town halls over the past two weeks — one for each district — addressing homelessness, crime and the voucher program, to name a few topics.
Mickey Williams, assistant Carlsbad police chief, and Carlsbad Fire Department Chief Mike Calderwood, each said their departments have the necessary staffing to address the issue. However, Wiliams said how the state has approached reclassifying thefts and drugs has put police in difficult position to combat lower-level crimes.
Hall called for the council to take up the issue and consider possible actions to assist the police department and residents.
“More felons and others taking up occupancy and it’s really an impact around Avenida Encinas south of Palomar Airport Road,” he said.
The council also approved the diversity, equity and inclusion position, which was brought forward by Councilwoman Priya Bhat-Patel. City Manager Scott Chadwick said the job will address internal and external DEI trends locally and globally.
“A position like this isn’t only related to ensure we’re taking appropriate steps for individuals of color or LGBTB, but we’re also talking about age,” he said. “It’s another opportunity for us to tap into a rich environment and expand our recruiting efforts.”