SAN MARCOS — The San Marcos City Council approved a barely balanced 2024-25 budget on Tuesday, avoiding the use of city reserves by making minor spending cuts across most departments as the need for new revenue streams reaches glaring levels.
With revenues falling behind increasing operational costs, concerns are growing about an eventual decrease in service levels impacting residents’ quality of life. On July 9, the City Council is set to discuss a potential sales tax measure to go on the November ballot as a means of increasing cash flow and maintaining current service levels.
Like many cities, San Marcos has been facing budget issues for several years due to the COVID-19 pandemic and general inflation. Last year, the city had to dip into reserves to close a $3.8 million budget gap.
City Manager Michelle Bender said in this year’s budget, cuts can be felt throughout most departments besides public safety and parks and recreation. Otherwise, the city has frozen positions, cut back staffing, “held the line” on compensation, and reduced service contracts in areas like landscaping and street sweeping.
“Very little is untouched,” said Bender. “Most contracts within the city have been looked at and reduced, some more significantly than others… The strategy has been to try to cut back where the impact isn’t going to be immediately felt by the public.”
Bender said that department heads are still unable to fill vacant roles without city manager approval due to tight budgets. The city has also found slight cost savings by bringing some services in-house, such as ballpark maintenance and street sweeping.
A key element of the city closing the budget gap was $1.3 million in “one-time” funds, including excess reserves from real estate partnership funds and Public Agencies Self Insurance System (PASIS) funds.
By not using reserves, San Marcos retained unassigned reserves at 41%, staying above the 41% minimum.
The main sources of the city’s $93.4 million projected revenue in 2024-25 include property tax at 35%, sales tax — which is projected to remain stagnant — at 24%, and charges for services at 14%.
Law enforcement and fire services combined make up over half of the city’s projected expenditures, with public works making up 14%, internal and department services each at about 10%, parks and recreation at 6%, and administration at 3%.
City staff said the city has limited revenue-raising options outside of a sales tax or other voter measures. Members of the city’s Budget Review Committee, the San Marcos Fire Department and several residents have urged the city to put the question of a sales tax before voters.
If a sales tax is not advanced to the ballot or passed by voters, Bender said the city will likely face further cuts that will be felt more sharply by the public.
“It’s going to be a very challenging conversation if we don’t get additional revenue,” Bender said. “What happens between now and November would change everything.”
Council members thanked staff for all their hard work, recognizing that burnout is inevitable among a lean staff taking on multiple responsibilities.
“It is an incredible achievement that we’re sitting here tonight passing a balanced budget without tapping into reserves. How that was done, it’s a bit of a miracle, in my opinion,” said Councilmember Mike Sannella.
Capital projects
San Marcos operates under a 5-year, $238 million capital improvement project (CIP) program through 2026. CIP budget appropriations for the 2024-25 year are $16.5 million for 54 ongoing and new projects.
Highlighted major projects include the San Marcos Boulevard reconstruction project, which features repairs and new signals between Bent Avenue and Rancho Santa Fe Road, and pavement restoration along Rancho Santa Fe from Lake Ridge to Melrose.
Mayor Rebecca Jones said she is looking forward to Rancho Santa Fe’s completion, but residents must be patient during the construction phase, which will begin this summer.
“It’s going to be amazing when it’s done, but in the meantime, it’s going to be extremely painful,” Jones said.
The main funding sources for the CIP budget are the Road Maintenance and Rehabilitation Account, which provides 38%, TransNet at 23% and the gas tax at 19%.
Staff also highlighted completed projects, including the Bradley Park BMX pump track, which opened on June 24, the traffic management center, the Discovery Street pedestrian extension and the Conners Park turf project. Staff said the final phases of the San Marcos Creek project — creek infrastructure and Paseo de Arroyo Park — are also nearing completion.
San Marcos is also facing several unfunded infrastructure needs in the near future, such as the creation of Fire Station 5 to meet growing service needs, with the city’s Infrastructure Fund projected to be depleted by the 2026 fiscal year, staff said.
Other highlighted projects for this year include:
- The city’s annual streets program, with annual appropriations to be increased from $2 million to $4 million
- Fire Station 3 renovations, including the construction of an auxiliary storage building
- Repairs to Discovery Lake Bridge
- Pedestrian lighting along Mission Avenue
- Restoration of the historic Pink House
- San Marcos Senior Center HVAC project
- City floodplain analysis
- La Mirada and Rancho Santa Fe storm drains
- Creek Specific Plan amendments
