ESCONDIDO — Earlier this month, the City Council adopted the upcoming fiscal year’s operating budget, again using one-time funding and other cuts to city services to help close another $11.3 million shortfall.
The city has been facing an ongoing structural budget deficit in its general fund for the last few years, having also closed a $11.3 million budget shortfall last year.
According to staff, the city’s operating revenue has not kept pace with the growing costs of providing city services, sending the general fund spiraling into a structural deficit.
While staff continues to make cuts, Financial Services Director Christina Holmes warned the City Council during its budget adoption hearing on June 19 that if the city continues to go without a significant increase to its revenues, the city’s reserve funds and one-time funding resources would be gone by 2030 – and more dire cuts will be necessary.
Although the city avoided using reserve funds this year, one-time funds from the American Rescue Plan Act helped close some funding gaps.
Approximately $3.033 million in ARPA funds will cover the next two years of the library management agreement to Library Systems & Services, a private for-profit organization that runs the city’s library system; meanwhile, $1.84 million will cover the California Center for the Arts management agreement and utility costs.
ARPA funds must be dedicated for use by the end of this year.
Additionally, the city anticipates its contract with the San Diego Humane Society to expire on Dec. 31 of this year, which will also help to cover the budget shortfall by $857,570. The City Council is expected to return in August to review options for the next steps after the contract expires.
The council also agreed to eliminate 10 full-time vacant positions from various departments, reducing employee service expenses by $915,000.
Right before approving the budget, a 4-1 majority of the council approved raising user fees related to development permits, public recreation and other community services.
According to Holmes, the annual cost for the city to provide services under building, planning, engineering, fire prevention, city facility rentals and recreation programs is about $12.8 million. On the other side of the ledger, these programs earn only $7.8 million, meaning the general fund covers the $5 million gap.
The council also voted in favor of full cost recovery rather than staff’s and a third-party consultant’s previously recommended three-year phased-in approach to raising user fees, with the exception of some of the recreation program costs, which would be phased in over two years.
The council also supported increasing the Learn to Swim participant fee from $40 to $62 during the 2024-2025 fiscal year, which is higher than the staff’s previously recommended increase to $45.
Since the program costs the city $449 per swimmer, the price would jump from $62 to $449 by fiscal year 2025-2026 if the city implemented full cost recovery terms.
Council members acknowledged that a steep fee increase would effectively dismantle the Learn to Swim program.
Councilmember Mike Morasco said full cost recovery isn’t possible for the swim program.
“There’s no way we could charge $449,” said Councilmember Mike Morasco. “It can’t happen.”
Instead, the council directed staff to return next year with options for sustaining the program.
Mayor Dane White cautioned that if nothing changes financially, the city may have to consider eliminating Learn to Swim in the next few years.
Ballfield lighting fees also increased from $5 to $24 per hour, and facility rental fees would increase from $80 to $135 for commercial or business-related users that fall under the “Class E” category on the city’s facility user guide. The facility rental fee includes tables, chairs, a projector and other amenities, while using a kitchen space would cost extra.
While the new fiscal year begins July 1, the user fee increase will not affect recreation programs like Learn to Swim this summer.
By increasing user fees to achieve full cost recovery among most of its services, the city expects to make approximately $1.27 million in revenue in the first year.
That funding will go toward expanding the police department’s COPPS unit from six to 10 officers, four patrol cars, new safety equipment and supplies, two maintenance technicians and a public works truck – altogether costing approximately $1.26 million in the first year of implementation.
The COPPS (Community Oriented Policing and Problem Solving) Unit supports patrol operations by focusing primarily on ongoing crime and issues often related to homelessness and encampments in the community.
According to Police Chief Ed Varso, the COPPs unit relies on the city’s public works department for help with encampments and cleanup, which is why the expansion request included components for public works and police.
With additional resources in tow, Varso hopes to increase the COPPS unit’s weekly operation from five to seven days.
The City Council unanimously approved an expansion of the COPPS unit along with its adoption of the operating budget.
Councilmember Consuelo Martinez, who voted no to going full cost recovery on the user fees for fear of its impacts on residents, acknowledged that expanding the COPPS units would better meet residents’ requests to improve how the city responds to crime and other homelessness-related issues.
“There’s a lot to unpack here – we need resources at many levels – but I do acknowledge this is definitely a need that the community has been asking for,” Martinez said.
