Belmont’s new budget shows the city has a healthy short-term financial outlook as it recovers from the pandemic but faces long-term challenges due to withheld property tax revenue at the state level.
Belmont city staff have said the long-term challenges to the general fund forecast are due to a need to replace revenue shortfalls caused by the state’s underfunding of property tax in lieu of vehicle license fees owed to Belmont for a fourth straight year. The funds are already owed to cities like Belmont and are instead being used to pay a separate state obligation. According to staff, the state has rejected a reimbursement claim to backfill the shortfall. If the state continues to take any VLF revenue, the projected loss is $11 million over the next few years or $34 million over the next decade. According to projections, the city will fall below the 33% reserve target in 2029 of $5 million. The loss of revenue worried councilmembers at the May 23 council meeting when the budget was first introduced and discussed.
“We’ve got other hands in our pockets, but the VLF is probably the biggest concern that I have. I echo all of my fellow colleagues that we need to find some revenue in short order that cannot be taken away that we have local control over,” Mayor Julia Mates said.
The city hopes to deal with the financial shortfalls by finding new locally controlled revenue sources through modernizing the business license tax structure, establishing a City Services Community Facilities District as a tool to ensure new developments pay for impacted services and new funding for storm drain infrastructure. The council noted there is now more urgency on getting locally controlled revenue due to the state’s recent decisions and lack of clarity on if the state will provide more revenue in the future.
“It seems like the state has really changed the game,” Councilmember Gina Latimerlo said.
The city’s total operating budget for the 2023 to 2024 year is $75.2 million and is up 10% from last year’s budget and reflects a return to pre-pandemic levels. The city used $700,000 in general fund reserve to balance the budget. Property tax is the largest revenue source at 40% of the budget. The Community Development Department has a $5.6 million total operating budget, while the Parks and Recreation Department has $9.6 million. The Belmont police budget is $15.9 million, while the public works budget is $11.9 million. The city’s capital improvement program budget is $20.5 million, with most going to streets, sewer and storm drain infrastructure.
The public hearing and adoption date for the budget is June 13. The budget will also be presented to the Measure I Advisory Committee on June 1 for review and to the Audit Committee Review before June 13.
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