CARLSBAD — Despite a pandemic, the city is projecting a modest surplus, along with the formation of a new homeless department in its Fiscal Year 2021-22 preliminary operating budget.
Additionally, the Carlsbad City Council will also consider adding a diversity, equity and inclusion position, as lobbied by Councilwoman Priya Bhat-Patel during the council’s May 18 meeting. The city is also investing a significant amount of money into its information technology infrastructure to be more vigilant against potential cybersecurity threats.
In total, the operating budget is estimated at $303.6 million, with the General Fund operating budget projected at $184.2 million and revenues of $178.8 million.
The council must approve the final budget before July 1.
“We focused on our attention in fashioning this budget based off the four priority goals and why we really married those funding sources to match those,” said City Manager Scott Chadwick.
According to Chadwick, this was one of the most difficult budgets to produce because of the challenges of the pandemic. Chadwick said the city will no longer allow departments to roll over excess funds for the next year as those monies will be reallocated to the General Fund for the next fiscal year.
And due to the constraints, he said some projects will not get done this year.
Also, the council will consider staff’s recommendation to allocate $10 million to its pension debt liabilities for CalPERS, and transfer $3.5 million from the General Fund reserves to the infrastructure replacement fund.
Mayor Matt Hall, though, hesitated at the allocation for CalPERS, saying he wants a deeper look into the city’s obligations, noting the city has paid $50 million over the last several years.
City staff is also proposing hiring 31 new positions including three for homelessness, 15 firefighter, paramedics and emergency medical technicians and creating the Housing and Homeless Services Department, which includes at least three new positions, according to the staff report.
The operating budget is increasing 2.4% from FY 2019-20, much of it due to the economy rebounding from the COVID-19 pandemic and associated losses of revenues from all sectors of the economy.
General Fund revenues are projected to increase by $6.1 million with the largest projection coming from Transient Occupancy Tax (hotels). The city estimates a 46.5% increase in TOT, 10.5% more in sales tax and 4.8% in business license taxes, according to the report.
Additionally, expenditures are expected to increase by 8.1% including by $20.6 million for General Fund expenditures.
But the $483,000 surplus is a result of one-time expenditures of $5.9 million associated with the City Council’s goals. Excluding those one-time costs, the operating budget provides a surplus, according to the staff report.
As for the IT upgrades, it’s part of the city’s Strategic Digital Transformation Investment Program, which was designed in 2019 and led by Maria Callander, director of IT. Over the next five years, the city will invest $26.9 million, although $11.5 million has already been appropriated and the FY 2021-22 budget calls for an additional $2.8 million.
This year’s projects include pursuing up-to-date security, hardware, software, data analytics, problem-solving and helping meet environmental, mobility and sustainability goals.
“One project that is essential to the city’s digital transformation is the consolidation and replacement of our core systems,” Callander said. “The city is investigating ways to consolidate these number of systems to as few as possible.”
Laura Rocha, deputy city manager, updated the council on unemployment, real estate and the workforce and how those tie into the budget. Rocha said unemployment is at 5.6% in Carlsbad and 6.9% in San Diego County, while commercial real estate vacancy rates are 9.3% for industrial, 14.7% for office and 8.6% for retail.