Foster City contemplates new revenue streams

Staff have also started to tweak budget projections and assumptions for more accuracy, such as not including an unpredictable, yet helpful, funding source in the calculation.

The funding source is 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. But the payback process is not straightforward. Instead of simply giving cities and counties back the amount of fee revenue collected in their respective jurisdictions, the state uses a complicated reimbursement formula associated with the types and amount of school districts in its area.

And with the state dealing with its one budgetary issues, the reimbursements from the state have become more uncertain.

“We’re a very stable organization,” Finance Director Nate Cruz said during a recent City Council meeting. “But we do have some headwinds against us. This loss of VLF shortfall reimbursement has put downward pressures on revenues and also the lower interest expectations.”

The anticipated revenue from the VLF reimbursement also decreases significantly over time, reinforcing its unreliability as a sustainable funding stream, Cruz said.

The city anticipates a $1.5 million deficit this fiscal year, which ends in June, and a $3.8 million deficit next fiscal year.

“When I look at this, I don’t see panic. I see that we have some challenges we need to face,” City Manager Stefan Chatwin said.

But the council has still had to contemplate near- and long-term ways to cut costs and increase funding streams, hoping to avoid service reductions or cuts.

“We really need to have a broader-based discussion about how we can increase our revenue because I don't think diminishing our services or losing our services is an option, and I’m concerned that our departments are understaffed,” Mayor Stacy Jimenez said, adding more development could help bridge the gap, bolstering both property and sales tax income.

She added she is concerned about adding a tax measure on the ballot, given potential measures going before voters from the county and the region. The county may try to re-authorize its half-cent sales tax Measure A, while it’s also contemplating joining a Bay Area sales tax measure for transit funding.

“I'm a little concerned about some of the tax measures that we could propose,” Jimenez said. “Whenever you have more than one tax measure on a ballot it makes it difficult, so I would like to have some of those conversations sooner than later.”

alyse@smdailyjournal.com

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