New tax revenue estimates indicate an extra $7 million in budgetary breathing room for the city of San Mateo and while officials are expressing relief and optimism, there is also a strong measure of caution after years of belt-tightening and tough budget choices.
Still, members of the council are taking strides to determine the best way to use the money to meet a host of built-up needs like new hiring and employee raises along with future goals like removing the North Shoreview neighborhood from a flood map requiring hefty insurance costs and improving its streets and other infrastructure. The needs and goals are also tempered by the reality of a quarter-cent sales tax increase expiring in four years and future increases in pension liabilities.
The council held a budget and policy study session Monday to review forecast models and discuss council priorities as it moves toward finalizing the budget in June.
“It’s very gratifying. We were guided very well by our city Finance Director Dave Culver. He made some excellent recommendations and we were wise to accept them,” Councilman David Lim said. “The real credit goes to the residents of San Mateo who passed the Measure L sales tax and were understanding and patient with us. Second, a lot of credit goes to city employees who made huge sacrifices in not taking cost of living wage increases, taking pension and benefit cuts and being able to work in very difficult conditions and coming through it in shining color.”
The city took in about $59 million through this fiscal year, more than $24 million of which was accrued from secured property taxes for the 2013-14 fiscal year. There is also an estimated increase in property transfer taxes of about $2 million, according to a staff report. About 71 percent of city expenditures were spent on employee salaries and benefits, according to the report.
In 2010, the council set a $20.3 million reserve goal and this was the first year it’s achieved it, Culver said. It currently has $1.75 million in surplus for one-time expenses and revenue projected to be $5.9 million higher than its budget, Culver said.
But the city should remain fiscally responsible and prepare for the expiration of Measure L in mid-2018 and its approximate $5.3 million yearly loss to the city’s budget and the increased pension costs, Culver said.
The city has a menu of priority options, but adding a lot of items that require ongoing costs isn’t recommended, Culver said.
“We won’t be spending the money on whimsical things, but what we will look at is ways to increase services to our community,” Lim said.
The city has a long wish list and policy goals that include investing in Central Park, improving North B Street, pursuing rail corridor improvements, saving for city infrastructure repairs and maintenance, relocating City Hall to downtown, creating a downtown plaza and removing the North Shoreview neighborhood from the Federal Emergency Management Agency flood zone, according to a staff report.
The council unanimously agrees reinstating funding and taking care of city staff is a top priority. The recent audit of the Community Development Department illustrated the need to hire staff, Mayor Robert Ross said.
“We recently had an audit and CDD said it would be best to add capacity to process building and planning applications currently in the pipeline. And especially in key areas where we’re going to need to better serve the public,” Ross said. “It’s pretty imperative we get building and planning up to staff so we can focus on building the future of San Mateo.”
The council gave direction to staff Monday to look into potential funding options, including bonding, to help get the North Shoreview neighborhood out of the flood zone, Interim City Manager Larry Patterson said. The process will likely take the formation of an assessment district and contribution from residents currently in the flood zone, Patterson said.
The neighborhood’s residents spoke at the meeting about their taxing $6,000 flood insurance policies.
“I’m 100 percent in terms of trying to protect you. Paying $6,000 a year, more, … I’m very sympathetic and I’d like to see us move forward going through the study process to see what we can do,” Councilman Jack Matthews said.
Councilman Joe Goethals agrees the city needs to invest in and save for long-term upkeep of its infrastructures like streets and sewers.
“It’s one of the few times citizens actually get to see their city working for them,” Goethals said.
The city currently has 19 miles of failed streets that were estimated to cost $34 million to repair, according to the report. Lim suggests following in Belmont’s steps and investigating the efficacy of presenting voters with a bond measure to pay for repairs.
The city has considered relocating City Hall downtown to the old Kinko’s site for some time and the council agreed it needs to address time constraints it could be facing due to the dissolution of redevelopment agencies.
Matthews and Ross think freeing up the current 20th Avenue City Hall site and leasing it could be profitable. The current site has been appraised around $15 million while the Kinko’s site could be worth about $10 million, Ross said.
“If we had the potential to lease the current City Hall and reap a benefit of rent, that money could offset some of the bonding for a new City Hall,” Ross said. “We should look for creative ways to generate income while retaining city real estate assets and, much like any family, we add to the estate of San Mateo that are income producing in perpetuity for our citizens.”
The current City Hall is functioning and the city is facing more pressing issues, Lim said. Focusing on social justice policies like discouraging predatory payday lenders and sustainability policies would take minimal investment and have a significant effect on people’s lives, Lim said.
Staff will continue to compile recommendations in the coming months before the council solidifies the budget in June. Remaining fiscally responsible by preparing for the future while allocating money for necessities is a balance the council will work toward achieving, Ross said.
“It’s a sigh of relief to have a positive budget and not have to worry at least at this point,” Ross said. “As far as spending money, I think we do need to spend it more wisely.”
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