Belmont more optimistic over budget

The city plans to narrow the shortfall with reserves but has grown increasingly optimistic over receiving a previously precarious revenue source. The unique yet complicated income stream is related to vehicle license fees paid by residents, which are directed to the state and then subsequently paid back to cities, typically by the following fiscal year. But the payback process is not straightforward, and given the state’s widening shortfall, uncertainty over whether it would reimburse cities remained.

The city is owed $1.7 million in such fees — known as property-tax-in-lieu-of-VLF — and other cities throughout the county have also faced uncertainty in their budgets over the issue. But in the state Senate’s recent budget, it allocates about $118 million to local jurisdictions for the VLF fee reimbursements.

“It’s been an up-and-down process, but … it is our understanding that at this point, the legislature’s version of the budget includes the reimbursement of the county’s share, which would trickle down to the cities,” City Manager Afshin Oskoui said.

But the payment is still not guaranteed, as Gov. Gavin Newsom still needs to approve the final version, but Finance Director Grace Castaneda said the city still has a plan to use reserves in case the state funds fall through.

While the city doesn’t plan for any service cuts or layoffs, it can make changes to certain vacant positions to reduce costs.

“We are proposing some position reallocation changes. For example, eliminating the vacant deputy finance director that's higher level and instead adding in an analyst that's more mid-level and reallocating other positions to better support operational and fiscal needs,” Castaneda said. “But the total headcount remains unchanged.”

Despite the relatively good news, Mayor Julia Mates said she hopes the state-level funding mechanism is more permanently baked into future budgets.

“We can't keep fighting this fight every year,” Mates said. “We have to have a long-term solution, so hopefully that will be in the works.”

The City Council adopted the budget unanimously.