OCEANSIDE — After accounting for higher inflation costs and more city employees across several departments, the city of Oceanside is projecting a $2.4 million surplus at the end of the fiscal year, according to an April 13 staff report.
The city’s proposed revenue for the Fiscal Year 2022-23 is $189.19 million with $186.06 million in expenses and a transfer of $1.09 million to capital improvement projects, leaving a surplus of $2.4 million. The city’s revenue comes from a projected $79.79 million in property tax, $27.55 in sales tax and $8.8 million from transient occupancy tax.
The projected surplus is less than what staff originally reported to the Oceanside City Council during its five-year financial forecast in February— a reduction largely due to ongoing costs related to several new city positions.
The latest positions include: an additional associate engineer, lead public works inspector and code enforcement officer to Development Services; an office specialist and three EMTs to the city’s Fire Department, and a new Parks and Recreation director. Jill Moya, the city’s financial services director, said about $1.4 million in these ongoing costs have been added to the budget.
The creation of these new positions breaks the city-implemented hiring freeze over the last two years of the COVID-19 pandemic.
The budget also accounts for a 5% inflation increase, which is greater than the previous year’s inflation assumptions (0% to 2%) because of the current economic environment. The city has also added $350,000 to the city’s vehicle fleet fund to account for rising gas prices.
“Our treasury manager is monitoring the rising interest rates to take advantage of investment opportunities within our investment policy as they become available,” Moya said. “It’s important to note that we’re continuously monitoring the status of the city’s revenues and expenses and as needed as we did during the pandemic, we can cut back on expenses or initiate a hiring freeze to manage our costs.
Councilmember Christopher Rodriguez was pleased to see the 5% inflation increase accounted for in the budget.
“One of my biggest concerns was preparing for inflation,” Rodriguez said. “Everything is going up in cost and we have to be wise as a city to prepare for those additional costs especially if those continue and we head into recession, so I’m happy to see the 5% placeholder to absorb those costs so we’re not surprised by them in the future.”
Rodriguez was also excited about the new Parks and Recreation director position being added to the roster. Mayor Esther Sanchez said she was supportive of funding a Parks and Recreation director, but wants to see an assessment on what exactly that position would be doing and what the department needs to return service levels back to pre-COVID.
“I have been asking the same questions for the last six to eight months, and that is what this position would do,” Sanchez said. “I think it’s very important to know what this person would be doing, and I understand we’re trying to expand and we do have a lot of vacancies… I would like to see some kind of study to see number one, what would it take to do the things we were doing before COVID, and number two, the things we have on the daïs and what we would like to see more of and what the structure would look like.”
Other assumptions already included in the budget are a $4 million increase in water utilities for the city due to the Pure Water Oceanside water purification facility beginning operation earlier this year. Water Utilities Director Cari Dale reported that there would not be any rate increases to water or sewer either this year or next.
Residents will see an increase in solid waste rates beginning in 2024 under the city’s new contract with Waste Management.
As recently reported by The Coast News, waste pick-up rates are expected to rise by 38% for commercial and 40% for residential consumers mostly to account for the new state law that targets reducing organic materials from landfills. The city is also adding a new position to help manage the organics program.
The city also has $164 million lined up in capital improvement projects. City Engineer Brian Thomas noted that development impact fees began trending down last year, and if they continue to do so the city may have to dip into the general fund to fund more projects.
The city collects development impact fees through thoroughfare signals, citywide drainage, park and public facility fees.
Bikewalk Oceanside Chairman Tom Lichterman is concerned about the lack of work on the Oceanside portion of the Inland Rail Trail that is supposed to connect Escondido to Oceanside with a bike path following the Sprinter rail corridor.
The project was first approved in 1995, and while much progress has been made in Escondido, San Marcos and Vista, Oceanside’s portion has yet to be completed with the path ending at Melrose Drive.
“Oceanside residents are still waiting to see something get started on this project,” Lichterman said.
Interim City Manager Jonathan Borrego explained that the city has been unsuccessful in obtaining grant funding for the Inland Rail Trail as of this point but will continue trying anyway.
“It’s only a matter of time because it is a priority project of ours,” Borrego said.
As for Oceanside Harbor, with revenues and expenditures both exactly about $8.8 million, there isn’t any money left to go toward direly needed improvement projects like dock replacements and other infrastructure.
Public Works Director Hamid Bahadori said the current year’s J-dock replacement project will need to carry over about $436,000 into next year’s budget, though the harbor may not need all of that money in the end.
About $2.19 million is being pulled from the harbor’s current $3.6 million reserve funds for infrastructure improvements. Bahadori said this move was necessary until staff can present a needs assessment study for prioritized harbor improvements at a later date.
Liz Rhea, chair of the Harbor and Beaches Advisory Committee, doesn’t want to increase slip rent fees in the harbor to pay for the capital improvement projects, but Councilmember Peter Weiss noted that rate increases most likely have to happen in the future to increase revenues.
“They have to go up at some point,” Weiss said.
The City Council is expected to approve the final 2022-23 fiscal year budget at the June 8 council meeting.