Foster City is contemplating a variety of fiscal maneuvers to ease the burden of a $4 million budget shortfall by the end of this fiscal year as well as ongoing structural deficits anticipated over the next five years and beyond.
The budgetary concerns are not unique to Foster City, especially as municipalities throughout San Mateo County are faced with significantly lower projected revenue as a result of the state denying key funds, or in-lieu vehicle license fees. The funds are related to vehicle license fees paid by residents, which are directed to the state and then subsequently reimbursed to cities, typically by the following fiscal year.
Likely triggered by its own severe projected deficit — about $28 billion according to Gov. Gavin Newsom’s revised budget — the state plans to withhold what it owes to San Mateo County, and it’s one of only three counties being denied such funds.
Foster City is owed about $1 million this year in VLF reimbursements but, over the next five years, that number will balloon to almost $18 million.
“As of today, the numbers are not in [the state’s] appropriation for fiscal year 2024-25,” Assistant Finance Director Waqas Hassan said. “The probability of receiving those funds is pretty bleak.”
Cutting costs, whether via layoffs or reduced city services, is an unavoidable topic of discussion. The city comprises roughly 180 full-time employees, which City Manager Stefan Chatwin said is as lean as it can go. And slimming key operations, such as police services, is also hard to fathom.
Updating the business license tax structure, which was also discussed during the meeting Monday, May 20, will help move the needle in closing the budget gap but not nearly enough. Right now, the current flat rate for the city’s roughly 1,700 paying businesses is 75 cents per $1,000 of gross receipts, with a $28,000 cap. By upping the cap to $500,000, one of city staff’s recommendations, the city could see an additional $1 million per year.
“If we don’t find the additional revenues, and we don’t find the additional efficiencies, then what we’re faced with is a reduction in services, and that’s where the real hard decisions start to happen,” Chatwin said.
The state was also partially blamed for the city’s financial woes, even beyond the VLF dispute. To comply with the Department of Housing and Development’s complicated and bureaucratic housing plan requirements, the city had to spend a small fortune, Councilmember Art Kiesel said, adding that the state will also look to siphon away money from local governments to help pad its own deficit.
“They’re going to go after every nickel and dime they can from every municipality downstream,” Kiesel said. “If the money goes to Sacramento and then gets doled out by Sacramento, I would consider it being suspect that we’re going to get our share.”
The city will hold one more meeting before the 2024-25 budget’s anticipated adoption June 17.
(2) comments
If we don’t find the additional revenues, and we don’t find the additional efficiencies, then what we’re faced with is a reduction in services, and that’s where the real hard decisions start to happen,” Chatwin said.
This is incorrect and the wrong approach.
Simply divide the $4 million deficit by the overall budget and then reduce all salaries, and expenses by that percentage and no services will have to be reduced. Everyone feels an equal share of very small amount of pain.
I second Not So Common’s simple solution (which likely took Not So Common longer to type the solution than solve the problem). I’d also recommend creating a rainy day fund by cutting wasteful spending. If I recall correctly, didn’t Foster City sink at least $171,000 into trying to clean up their goose poop problem? What’s the latest? As far as I know, the geese are still winning the battle. It’s like the geese are Russia, Foster City taxpayers are the US funding Foster City, while Foster City is Ukraine. And, as on the other side of the world, the invasion appears almost complete.
Welcome to the discussion.
Log In
Keep the discussion civilized. Absolutely NO personal attacks or insults directed toward writers, nor others who make comments.
Keep it clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
Don't threaten. Threats of harming another person will not be tolerated.
Be truthful. Don't knowingly lie about anyone or anything.
Be proactive. Use the 'Report' link on each comment to let us know of abusive posts.
PLEASE TURN OFF YOUR CAPS LOCK.
Anyone violating these rules will be issued a warning. After the warning, comment privileges can be revoked.