VISTA — The COVID-19 pandemic has ravished municipal budgets across the state and country, although the City of Vista is doing better than others.
The Vista City Council was briefed on its budget during its Sept. 8 meeting, and thanks to healthy reserves, is surviving the drop in tax revenue. Sales, property and transient occupancy (hotel) taxes are the three largest sources of revenue for the city, according to Sara Taylor, a Vista senior management analyst, who presented the report.
The city transitioned to a two-year budget cycle last year, so Taylor’s mid-cycle review showed revised estimates, revenues and expenditures for Fiscal Year (FY) 2020-21.
The total operating budget for all funds is $149.2 million with a General Fund budget of $83.5 million for FY 2020-21. The operating budget is nearly $1 million less than projected in 2019, a result of the COVID-19 pandemic, according to the staff report.
“It has drastically impacted sales tax, transient occupancy tax (TOT), also known as the hotel tax, charges for services, recreation and community services and gas tax revenues,” Taylor said. “Over 80% of the General Fund revenues are generated from three sources — sales, TOT and property tax. Sales tax, however, is highly dependent on continued employment and consumer confidence.”
As for the city’s modest surplus projected last year, Vista is tracking to break even for FY 2020-21. City Manager Patrick Johnson said the city took the lessons from the Great Recession in 2008 and applied those new tactics to help avoid layoffs, and cuts to programs and city services.
As such, the city has been aggressive in building up two of its reserve accounts, the Emergency Reserves, which has $23.65 million, and the Structural Deficit Reserve, which began the year with $9.3 million.
Due to the pandemic, the city has used $3.5 million of its Structural Deficit Reserve to mitigate expenditures and to ensure fewer cuts and keeping services running, Johnson said.
“From that experience, starting around 2011 to 2012, we started setting money aside,” Johnson said. “The councils for the last eight years have been very diligent setting aside, we’ll call it a rainy-day fund, so that way when the next … downturn in the economy occurs, we’re somewhat protected.”
Johnson said over the past several months, city staff has been keeping close tabs on the budget. He noticed their early projections for a drop in sales tax came out better than originally predicted.
Those projections, initially, were tabbed at $2.5 million, but the actual total is a $1.8 million decrease.
“We are in a really good place as a city financially because of some big decisions we made a couple of years ago coming out of a recession,” said Councilman John Franklin. “We have planned for a small recession and our council … put some funds back for a short-term deficit.”
Charges for services dropped by an estimated $2.2 million, sales taxes are down by $1.8 million, transient occupancy tax (hotel tax) is down $1 million and property tax adjustments show a decrease of $243,000. In total, Vista is projecting a decrease of revenues by $5.4 million for the 2020-21 fiscal year.
One bright spot is the injection of tax revenue from medicinal marijuana dispensaries, Taylor said. She reported the sector brought in an increase of $1.7 million in tax revenue from the 2019-20 budget projection. The 2019-20 projection estimated $1.3 million in taxes but has now been adjusted to $3 million for 2020-21.