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City scales back budget mid-year

SAN MARCOS — If San Marcos residents needed any proof that the national economic crisis has become a local problem, the Feb. 10 City Council meeting offered sufficient evidence. Staff presented, for the first time ever, a mid-fiscal year budget adjustment reflecting a drop in projected revenue for 2008-2009.
“It goes without saying that times are hard,” City Manager Paul Malone said.
The new budget reflects revenues more than $500,000 lower than projected last year. City revenue over the next two years is expected to be down another $5 million. Income sources that were hit include property taxes, vehicle license fees, sales taxes, franchise fees and interest income from investments.
Thus far, the city’s position as a landlord on many properties has kept it economically afloat, but there is no telling how long it will be until rental income is also affected. The city has already received rent concession requests from some tenants.
Income is down, and that means spending is also down. Some $880,000 earmarked for the Equipment Replacement Fund has been canceled. The $65,000 budgeted for the purchase of new computers and software has been eliminated. A reduction from three to two school resource officers will save $325,000.
Some city employees deferred their cost of living raises to next year and the year following while 180 union employees accepted half of their 2 percent raise in a one-time stipend. This saved $793,000.
“It’s really commendable that they were willing to come to the table,” Mayor Jim Desmond said. “I want to say kudos to the city. We still have a balanced budget.”
The city manager and council members all declined their yearly cost of living raises.
Over the next two years, the decline in San Marcos’ revenue will be partially offset by transfers from the Enterprise Fund for the Creekside Marketplace Shopping Center. Once that well is dry, the outlook becomes gloomier.
“No one really knows if we have yet reached the bottom of this economic downturn or how long it will last,” Finance Director Liliane Serio said. “If the economy does not turn around by 2011/2012, we are facing a structural deficit in that year. Therefore, containing our expenditures is now and will continue to be our main focal point.”
Malone said that things could have been a lot worse. He and his staff have been working on making budgetary ends meet ever since the housing market began to sour in 2006, he said.
“We’re on solid footing to weather the storm as best we can,” Councilman Chris Orlando said. “I think in relation to some of the other cities in the region, we’re in pretty good stead.”