Burlingame eyes bulging budget

Central to the discussion was a decision on ways to manage an influx of tax revenue, which bolstered the city’s coffers and offered an opportunity to address unfunded liabilities as well as central capital improvement projects.

Through a projected uptick in property and hotel tax collection, officials expect general fund revenue for the 2019-202 fiscal year to reach $78 million, which is about the same amount as the previous adopted budget.

The projected income outpaced expected spending levels by $3.7 million, granting councilmembers the chance to examine other issues which would benefit from additional funding.

The two competing priority needs identified were unfunded retirement payments, as officials expect payments to the CalPERS system to rise significantly over the coming years, and saving for the increased costs associated with the proposed new Community Center.

Acknowledging officials have already established a trust fund designed to offset heightened pension obligations, officials ultimately agreed it would be wise to preserve a majority of the surplus for the center. The new center is slated to be built over the footprint of the existing facility, 850 Burlingame Ave. Its 37,000 square feet will be occupied by an active lounge, community room, classroom, music studio, tech shop, ceramics and fine arts workshops, teen center, fitness studio and more. In November, the council discussed a price escalation to $50 million from earlier in 2018 when it was expected to cost between $38 million and $41 million.

“What I’m concerned about is that the community center costs are ratcheting up so high,” said Mayor Donna Colson, according to video of the meeting.

Some of her colleagues though said they preferred to save the money for paying down unfunded liabilities, so as a compromise the two sides agreed to split up the excess revenue. About $3 million will be paid toward capital projects with an eye on addressing community center costs, while the remainder will be paid toward the pension fund.

No final decision was made at the meeting, and the issue will return for more discussion in advance of a final budget decision later this summer. Officials are also expected to return in the coming weeks with more information about the community center budget. Projections last year were that the project would cost about $40 million, but more recent expectations are that costs now exceed $50 million, according to a city report.

Beyond the pending Community Center project, City Manager Lisa Goldman identified potential amendments to City Hall as well helping finance construction of grade separation along Broadway as other capital improvements needing additional financing.

Outside of the additional spending for capital improvements and pensions, the city built $43 million in reserves, about $11 million of which are unrestricted. Finance Director Carol Augustine characterized the reserved fund as “very healthy.”

The main source of revenue for the city in the proposed budget is hotel tax, which is expected to draw in about $28 million this year, or roughly the same amount as last year. Property tax is expected to generate about $23 million, or roughly $1 million more than the previous year. While sales tax is projected to generate about $14 million, about $710,000 less than the previous year.

While celebrating the city’s stable financial footing, Augustine noted much of the main revenue streams are dependent on a healthy economy and that a downturn could harm the budget’s health.

Beyond the threat of an economic slowing, Councilwoman Ann Keighran noted that changes to the state’s legislative landscape could affect the city’s budget as well, most specifically in the additional costs generated by bills proposed to facilitate residential development.

For example, should state Sen. Scott Wiener’s Senate Bill 50 pass, Keighran suggested the city may need to hire more planners to manage the influx of expected development proposals passing through City Hall.

“We should keep that in the back of our minds because that could definitely happen,” she said.

austin@smdailyjournal.com

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