SOLANA BEACH — A one-cent sales tax adopted by Solana Beach voters last November is projected to bolster the city’s budget by over $4 million each of the next two years, providing crucial funding for maintenance and public safety efforts.
The Measure S tax was put on the ballot as a new source of revenue for street maintenance, public safety services, and maintaining safe and clean public spaces like beaches and parks.
The ballot measure was approved by over 66% of voters in the 2022 election, increasing the total sales tax in the city from 7.75% — factoring in existing state and SANDAG-imposed taxes — to 8.75%, one of the highest in San Diego County.
Measure S has brought in an estimated $750,000 in its first two months since going into effect in April. In the 2023-24 fiscal year that began July 1 and the following 2024-25 fiscal year, city leaders expect the tax to bring in $4.4 million annually.
Revenue from the tax is part of the city’s general fund, but leaders are careful to separate Measure S funds from the rest of the budget. Finance Director Rachel Jacobs said this is because of proposed legislation on the 2024 ballot focused on increasing transparency around local taxes.
“There is currently the Taxpayer Protection and Government Accountability Act Initiative, which could pose some issues related to the spending of that money, and that’s why we’re kind of tracking it separately to wait to see how that turns out,” Jacobs said.
Under the act, state and local officials must clearly define how proposed tax increases would be spent and clarify the differences between taxes and fees. All state and locally proposed taxes would also require voter approval by a two-thirds majority.
Millions in Measure S funds are already spoken for in budgets for these next two years, adopted by the Solana Beach City Council on June 28.
A total of $674,000 will go toward the La Colonia Playground Project, construction expected to begin this fall, and $60,000 will go toward management costs for the tax itself.
Starting this year and continuing over the next four years, the city will also begin allocating hundreds of thousands of Measure S dollars to the asset replacement reserve to fund a $2.2 million new fire truck and $1.25 million fire engine.
Councilmember Dave Zito said while Measure S funds are ultimately part of the general fund, the city should not depend on the tax for recurring costs like replacing fire trucks and engines.
“Measure S was supposed to be more than what we’ve been doing so far, and we should [already] be planning to replace our fire truck,” Zito said at a June 14 meeting.
City Manager Greg Wade said while they are relying somewhat on Measure S to fund a new fire truck, the tax also allows the city to save for the new fire engine.
“The engine, we’re getting a head start on,” Wade said. “The fire truck, to be honest, snuck up on us, and we have the money available, so we will be making a concerted effort to replenish those asset replacement funds.”
Budget highlights
Within Solana Beach’s $28 million budget for 2023-24, the city plans to spend $13.5 million on capital projects.
The majority, $8.3 million, will go toward pedestrian and biking improvements along Lomas Santa Fe Drive, including a multi-use trail, widened sidewalks, extended curbs, and improved ADA access.
Additional capital improvement projects for this year include the $710,000 annual pavement management project and the $500,000 for further planning for the city’s Marine Safety Center and the Measure S-funded La Colonia playground.
Solana Beach leaders are only budgeting $2.2 million for capital projects in 2024-25 to cover storm drain improvements, sewer pipeline rehabilitation and another year of pavement management.
At a June 28 meeting, Councilmember Jewel Edson emphasized the importance of keeping a conservative budget mindset and accounting for the rising costs of construction materials, general inflation, and the continued possibility of a recession.
“I don’t believe the sky is falling, [but] I do believe it’s best to take a conservative approach,” Edson said. “The budget before us tonight supports that approach.”
Another focus is on saving money for unfunded pension and benefit liabilities. This includes contributions to the PARS (Public Agency Retirement Services) and OPEB (Other Post-Employment Benefits) trust funds.
The city transferred around $800,000 into this PARS fund over the last fiscal year, bringing the current balance to just over $4 million. Over the next two years, the city anticipates adding around $180,000 to the fund.
“I am a big fan of the PARS trust fund and want to keep socking away money as much as we reasonably can,” Edson said.
The largest sources of revenue for the city’s general fund are property tax, which accounts for around 36%, and sales and use tax, which will account for about 16% starting this fiscal year. Other smaller sources include the transient occupancy tax, permits and fees, and internal service funds.
When it comes to general fund expenditures, around 45% goes toward public safety, 18% to general government costs and approximately 12% to public works. The remainder is split between community development, community services, internal service funds and transfers out.
