Capital investments drag on Burlingame budget

“We have our gross revenue that comes in, we have our operating expenses — we’re in the black on that, and we continue to be,” she said. “Where I get really concerned is if our revenue did not meet our operating, and we had no reserves.” 

A planned $9.9 million transfer to the capital improvement fund — which will focus on the city’s potable water system and sanitary sewers this year — plus more than $3 million for debt services, will leave Burlingame at a $2.7 million net operating deficit. 

Colson emphasized that the city’s financial straits were still not dire — if need be, like during the pandemic, capital needs could be forgone to fund basic operational needs. 

“Where we go into the red is when we start allocating money into [capital improvement projects] which is something that, if you really have to put off, you’re going to put off,” Colson said. “It’s what we put off during COVID, it’s what we put off in 2008.” 

Burlingame maintains fairly robust reserve funding of nearly $25 million total and has $1.4 million in unassigned funding. Five-year projections show that unassigned fund balance continually dropping, lurching into the red by the 2026-27 fiscal year. 

Vice Mayor Michael Brownrigg pointed out that downward trend with concern and said that not addressing the issue could lead to large-scale capital improvement projects going unaddressed. 

“Any given year, we can manage to zero, no problem,” he said. “Over time, if you’re constantly running at a deficit, you’re constantly using Band-Aids and Scotch tape to fix it, that’s when you wake up with a massive capital improvement project demand.” 

Yu-Scott acknowledged that, in the long term, Burlingame would need to think either about finding ways to increase its revenue or minimize its expenses. 

“The city will continue to dip into the unassigned fund balance. Eventually, we will need to use the reserves or other funding services to fund operating and capital need,” she said. “It’s concerning — we need to think about how we’re resolving this long-term deficit structure.” 

The city might consider raising its transient occupancy tax from 12% to 14% in coming years, City Manager Lisa Goldman said. Many neighboring cities already receive a 14% tax from local hotels and are able to bolster budgets with the additional funding. 

“We will be talking at a future date about [transient occupancy tax] and bumping that up, because we’re below everyone else in the county,” she said. 

Currently, Burlingame’s transient occupancy tax is its second-highest revenue source and will bring in a projected $22.8 million for the upcoming fiscal year. Its most fiscally beneficial revenue source is projected to be property taxes, at $35.8 million. 

While the city might see some savings from upcoming job vacancies or, as Yu-Scott suggested, utilize technology to make government processes more efficient and therefore more cost-effective, Goldman said the city simply isn’t able to save as much as it was in prior years pre-COVID. 

“We were having a great time. That’s how we were able to save all that money towards the grade separation … towards undergrounding on El Camino Real,” she said. “We don’t have unlimited resources, unfortunately.” 

Burlingame is also likely to accrue additional expenses in upcoming years for large-scale, one-time projects like the $35 million purchase of a new City Hall building.