Half Moon Bay budget on track

Councilmember Robert Brownstone thanked staff for helping steer the city through troubled financial times during the pandemic and noted the city was recovering well.

“There have been some comments out in the public that we don’t have a balanced budget,” Brownstone said. “I hope this explains to those concerned that not only do we have a balanced budget, but we also have quite an enviable reserve, percentagewise, and dollarwise.”

The city foresees around $9.7 million in reserves, better than the $8.9 million in last year’s budget. The budget estimates tax revenue increases across the board at 8.9%. However, most came from the critical Transient Occupancy Tax generated through tourism. The TOT jumped 22% from $7.2 million in the 2021 budget to an estimated $8.7 million in 2022. TOT is typically 40% of the annual operating budget and is the highest revenue source. While hotels, motels, inns, RVs and short-term rentals pay the tax, around 95% comes from hotel revenue. Property tax revenue went up 3% to $3.4 million, while sales tax grew 3% to $3 million.

For general fund expenditures, operating costs are $19.4 million, with capital project costs at $4 million, for a total of $23.4 million. For expenditures subcategories, staffing and benefit costs increased to $6.6 million, a 17% increase. A portion is due to three more staffing positions added, including an Economic and Community Vitality manager, which will work with businesses and nonprofits and strengthen the economy. The manager is expected to be a long-term investment to help the city and reduce the workload of the City Manager’s Office to focus on other issues. Mayor Debbie Ruddock called for the new manager to focus on more downtown events in Carter Park and other revenue-generating areas.

Supply and contract services also rose 11% to $10.1 million, with rising costs from the existing San Mateo County Sheriff’s Office contract for policing services in Half Moon Bay costing an additional $404,000. Future challenges include rising inflation and the ending of American Rescue Plan Act funding. The 2021 legislation has been a key lifeline in stabilizing the budget over the last two years. The city will receive its final $1.5 million payment from the federal government in July. Ruddock called on staff to be vigilant and conservative with the city’s financial management.

“I do worry, though, that there are storm clouds on the horizon,” Ruddock said.

The council will vote on passing the budget at its June 21 meeting.

curtis@smdailyjournal.com

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