Foster City’s most recent fiscal projections are better than originally anticipated, though a decline in hotel tax revenue, unfunded pension payments and transfers to capital improvement projects will give the city’s general fund few net gains.
The city is technically projecting a $5 million operating surplus, welcome news amid prior deficit projections. The improved financial state is a result of the city receiving the previously uncertain property-tax-in-lieu-of-vehicle-license-fees, as well as roughly $3 million in projected savings from unfilled staff positions.
“We are projecting that we will end the year in the black with a positive fund balance, or net revenue, of $4.9 [million], or almost $5 million,” Finance Director Nate Cruz said during the City Council meeting.
However, the city commits to annual transfers of about $5 million to its capital improvements budget, meaning the surplus “washes out,” Cruz said — though the figures still show “a much better result than what was baked into the budget originally.”
The city is also struggling to reverse the downward trend in revenue from transient occupancy tax, or hotel tax, which is running about 7% below last year's pace. The city plans to start auditing the revenue stream to help identify the reasons for the decline, given it’s different from the overall market trend.
Recommended for you
“We just brought on some audit capacity so we can do TOT audits which we have not done in the past,” Cruz said. "We're seeing something that's not explained by the whole hotel market. My suspicion is there's something going on specific to the Foster City hotels, and the results of these audits will help us identify what those are."
Councilmember Phoebe Venkat suggested tech sector volatility could be a contributing factor.
“In this area, because we have so many tech companies that are in a volatile mode with layoffs … business travel has been cut or eliminated in many tech companies," she said.
The council also decided to move forward with a $15 million lump-sum payment to CalPERS, the state’s pension agency, to lower the city’s unfunded pension liability. The payment would target investment losses the agency faced in 2022 and would save Foster City about $2 million annually for 16 years, Cruz said.
Councilmembers agreed to lower the amount to $15 million from an originally higher suggestion to ensure funds were available for other needs, including upgrades to the police station.
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.
Please purchase a Premium Subscription to continue reading.
To continue, please log in, or sign up for a new account.
We offer one free story view per month. If you register for an account, you will get two additional story views. After those three total views, we ask that you support us with a subscription.
A subscription to our digital content is so much more than just access to our valuable content. It means you’re helping to support a local community institution that has, from its very start, supported the betterment of our society. Thank you very much!
(0) comments
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.