Budget for Foster City looks good

The city’s overall unfunded pension liability comes to $78 million. This year, councilmembers want to pay the California Public Employees’ Retirement System $2 million in addition to its required payment, and the move could save the city as much as $500,000 in interest. Without the additional discretionary payment, the city is on the hook for about $7.6 million this fiscal year in mandatory payments to CalPERS, said Finance Director Edmund Suen.

Councilmembers are also interested in establishing an employee pension committee to maintain transparency and to explore cost sharing and other methods of addressing pension debt.

Staff is projecting a $300,000 general fund surplus for the current fiscal year because a hotel tax hike was approved in the November election and the city’s hotels are doing better than expected, Suen said, and because of continued growth of property tax revenue.

“We’re looking to perform well for the year,” Suen said, according to a video of the meeting, adding that projected revenue is $47.9 million for the fiscal year and projected expenditures total $47.6 million.

Hotel tax revenue will likely only grow considering the tax rate, which was raised from 9.5 percent to 11 percent in January of this year, is scheduled to reach 12 percent in July. Staff estimates hotel tax revenue this year will total $4.1 million.

Suen said sales tax revenue is flat and has been for years, as is revenue from franchise fees. Building permit fees are cyclical and staff is expecting a decline in revenue from them this fiscal year, he added.

The general fund reserve was $51 million at the beginning of the fiscal year and staff is expecting that number to drop to $43.7 million by the end of the fiscal year. That’s because $7.6 million in surplus money is being spent on “critical projects” identified by the city, Suen said, including paying down pension liabilities and contributing to the city’s building maintenance fund.

Future challenges include expiring bargaining agreements, work on the wastewater treatment plant and the levee project, for which construction is expected to commence in the first quarter of 2020, Suen said.

The city currently employs 196 full-time employees and the council has agreed to maintain that number next year. By contrast, the city employed 237 full-time workers around 2001.

“We’ve decreased by about 40 employees [since then] while maintaining the level of service that residents expect,” City Manager Jeff Moneda said. “In the future, we may need to add staffing based on the expectations and state requirements.”

Staff comprises 78 percent of the general fund with the remaining 22 percent dedicated to services and supplies to support the city’s operations, Moneda said.

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