Belmont projects $500K deficit: Unstable revenue source leaves city in uncertain fiscal situation

The deficit is part of a troubling long-term trend, especially due to the lack of a substantial revenue source tied to vehicle license fees, a complicated reimbursement that the state historically provides to Peninsula cities annually, however, most jurisdictions have failed to receive the full amounts over the last couple years. That has triggered a lawsuit between the county and state, and as a result, many cities are either lowering their projected VLF revenue or removing it from their budget estimates altogether.

The state has only partially reimbursed cities like Belmont in the recent past, and for the upcoming fiscal year, it’s likely it won’t receive any reimbursement, resulting in a $1.8 million revenue loss.

“It is a reimbursement the state committed to make when it reduced fees years ago. This is not a footnote. It’s a serious fiscal challenge of the coming years,” City Manager Afshin Oskoui said during a recent City Council meeting. “Belmont will continue to press our county partners and state delegation for full restoration of those funds by the governor and the state.”

The average annual general fund revenue growth is projected at less than 2% annually.

“It is not sustainable when costs continue to rise faster than revenues,” Finance Director Grace Castaneda said during the meeting, also noting that the city is conducting a study to determine whether fees for new developments should be adjusted.

Staff and council also discussed the capital improvement budget, which is separate from the general fund and finances infrastructure projects. The city is directing $12 million for the upcoming fiscal year and $53.1 million over five years which will largely go toward sewer and stormwater upgrades — including the Island Parkway pump station rehabilitation — as well as streets and pavement projects.

The council will formally adopt the budget in June, which will go into effect in July.