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Measure Z projections help balance Vista’s budget

VISTA — The city’s finances are steady, yet in a precarious position should another economic downturn occur.

The city released its draft budget during its May 28 City Council meeting. The city is projecting a small surplus for its 2019-20 fiscal year and an even smaller one in 2020-2021.

The council recently approved presenting two fiscal year budgets as a way to project further ahead. And as a result of the latest budgets, the council also directed staff to come up with a five-year, high-level projection so the city can see the potential challenges in the future.

Councilman John Franklin said he is concerned about the upward trajectory of the budget, noting the public safety budget.

“The increases in our expenditures are rapidly outpacing the increases in our revenues,” he said. “I’m looking at within the next five years, if our growth continues the way it’s continuing, I don’t understand how we could live with our revenues.”

Sara Taylor, senior management analyst for the city, said the 2019-20 General Fund revenues total just over $83,100,142 with an ending balance of $35,539. Expenditures, meanwhile, tally $83, 064,613. The total operating budget for 2019-20 is $149.3 million and $150.2 million for 2020-21.

The following year, meanwhile, shows an even leaner budget as revenues are projected at $85,472,231 and expenditures at $85,469,108 for an ending fund balance of $3,123.

According to the staff report, the city had gaps of $930,000 and $2.5 million in 2019-20 and 2020-21, respectively, so cuts and adjustments were made to ensure a balanced budget.

However, one saving grace for the budgets was the addition of estimated revenue from Measure Z, which is estimated at $250,000 and $1.3 million in 2019-20 and 2020-2021, respectively. Measure Z was approved by voters in 2018 to allow 11 medicinal marijuana dispensaries in the city.

Councilwoman Corinna Contreras said she wanted a comparison of the $1.3 million so the city doesn’t over project future marijuana revenues. The rest of the council also expressed concerns with the dispensaries and revenue projections.

Assistant City Manager Aly Zimmerman, though, said the comparison was based on other cities’ marijuana businesses and was very conservative so staff wouldn’t have to adjust the figures downward.

“We are pretty confident in those conservative Measure Z numbers assuming … that we have a reasonable number of them opening,” Zimmerman said. “These estimates assume maybe 50% are open by the second year.”

The city’s largest revenue stream is property taxes, accounting for $24.1 million and $25 million for 29% of each budget over the two years. Sales taxes are projected at $18.8 million and $20.3 million, which includes the Measure Z estimates.

As for expenditures, the city’s largest expense is the public safety budget at $49.8 million and $51.4 million, respectively, followed by general government ($8.1 million and $8.4 million) and community development ($7.1 million and $7.3 million).

Another issue facing the city is its contribution to the California Public Employees’ Retirement System. The projections show a 49% increase from 2018-19 to 2023-24.

The city’s contribution in 2018-19 was $7.5 million and will see a 13% increase (to $8.5 million) in 2019-20 followed by a 10.34% increase in 2020-21 ($9.3 million). By 2023-24, Vista will be responsible for $11.2 million to CalPERS.