Foster City’s financial position from last fiscal year, which ended in June, exceeded expectations — though concerns remain about future structural deficits.
The updated figures were a result of higher-than-expected property and sales tax revenue, as well as the state reimbursing the city for its vehicle license fee revenue — which is money owed back to local jurisdictions but was in limbo given the state’s large budget deficit. The city also didn’t fill several job vacancies, which would have cost a total of $4.5 million. Assistant Finance Director Waqas Hassan also noted how the interest rate environment over the past year and a half has been both a blessing and a curse.
“Another significant item which impacted general fund surplus is the interest income. Interest rates have stayed high. We averaged 4.7%, which is significantly higher than some of the previous years,” Hassan said. “Our projection was based on the Fed reducing the rates some time in the year, but it stayed at a higher level, and of course we reaped the benefit of that on the revenue side. On the expenditure side, the story is different because we paid for all the supplies and services at a higher rate also.”
General fund revenue totaled about $63.5 million, vehicle expenditures were about $53 million, according to a staff report.
“The city’s coffers are healthy and full. Our spending is in line,” City Manager Stefan Chatwin said. “We do project deficits in the coming years. We have a pretty good feel for how to handle those deficits … so we’re not in a situation right now where we’re looking at being underwater in the next year or two. We do think there are things we can continue to do to pull back some of that potential future deficit.”
Some councilmembers, including Art Kiesel and Sam Hindi, also cautioned against getting too comfortable with the welcome fiscal news, especially as the job vacancies are not necessarily savings, but rather unspent funds that still have a cost attributed to them. Hassan had noted that the city could not complete certain projects and services because of the unfilled positions.
“Clearly the results are pleasantly surprising and comforting compared to where we were two months ago,” Hindi said, however, he added that the city still needs to be vigilant with improving its finances long term. “If we are not deliberate and focused on having a plan to move forward, we are not going to be addressing the structural deficit.”
(1) comment
Watch closely to see what Foster City will spend/waste their surplus on. Meanwhile, this is more reason to not vote for any taxes or assessments to add to the coffers of Foster City, or any other city. These cities will only squander your money on raises or paying ever increasing pensions and benefits. BTW, does anyone know if Foster City has taken care of their geese poop problem? Or is it no longer a problem?
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