Belmont budget balanced, but worries remain

“I am definitely concerned and really worried about how we repad our reserves and then also our general fund in light of all that’s happened to the city,” Hurt said.

Acting Financial Director Grace Castaneda said the general fund operating 2022 budget was $25.8 million, with $25.7 million in revenue available, leading to only a $100,000 draw from fund reserves, which Councilmember Warren Lieberman was encouraged to see.

“When you noted that we are only about $100,000 off with what we required from the revenues, that was actually much less than I anticipated,” Lieberman said. “I thought we were going to need to dip down into our reserves even more than we are, so kudos to all the departments for their efforts.”

City staff presented the preliminary 2022 budget update and highlighted expenditures and revenue that would affect budgets in the future. Castaneda said over half of general fund requirements are going to personnel salaries and benefits.

“We are a service organization, and so our personnel delivers on city services, and it makes sense that the majority of our expenditures go towards personnel,” Castaneda said.

Property tax accounted for 35% of general fund resources, with local sales tax accounting for 15%, transient occupancy tax 7% and business license tax 4%. COVID-19 federal funding relief accounts for 10%. Castaneda noted a few revenue sources that are making up the majority of the city’s total general fund resources.

“When we are facing financial challenges that are impacting one of the major revenue sources, that could have a significant impact to the overall total general fund resources. That’s exactly what we have been experiencing, especially with the impacts from COVID-19 and the impacts of Sacramento’s actions,” Castaneda said.

The city estimates a $2.4 million drop in hotel room tax due to COVID-19 impacts, with the city expecting a slow revenue recovery through 2025. Long-term general fund projections show a reduction in general fund balance estimated at $7.4 million over the next five years. Fund balance reserves are being used for shortfalls and to maintain services. Castaneda said Belmont faces a yearly general fund revenue loss of $2.2 million based on several revenue actions by the state that would reduce revenue for the city.

The total city operating budget is $64.7 million, similar to the adopted budget from last year. The total citywide budget is $87.6 million. The city’s 2022 Capital Improvement Program budgets $22.9 million toward streets, storm drain infrastructure and recreational facility improvements. The five-year Capital Improvement Plan totals $61.5 million.

Belmont plans to maintain fiscal prudence as it comes out of the pandemic. It includes some departments extending certain COVID-19 strategies and it implemented a hiring freeze. The city expects to receive a $5 million one-time allocation in federal aid from the American Rescue Plan.

The 2022 budget will focus on infrastructure and capital improvements and working on community and City Council priorities. City priorities include maintaining existing sources of revenue, securing ongoing funding to address deferred maintenance and support of critical public services. The city noted controlling local revenue sources would ensure long-term fiscal sustainability and allow it to be self-reliant into the future. The city scheduled a June 8 public hearing for budget adoption.

Hurt thanked the staff for the update and advocated for ensuring city staff got enough resources to add personnel to meet budgeting challenges.

“We are a lean city, but we are going to have some really big challenges ahead,” Hurt said.

curtis@smdailyjournal.com

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