Half Moon Bay plans for $3.9M budget deficit 

“Down 1% doesn’t look like a lot of cutting. I think if you’re going to sell the idea of a sales tax increase, we have to do more on our part to rein in costs,” Councilmember Debbie Ruddock said. “People sometimes need to feel the burn before they support funding measures.” 

But a majority of councilmembers disagreed, saying that residents will understand the larger economic context for the budget — like a projected upcoming state deficit of $28.4 billion, which will likely cut program funding across California — as well as the major increases, like non-discretionary public safety contracts. 

A proposed sales tax increase, which would be placed on the November ballot if it moves forward, would require a simple majority of voters to vote yes on increasing sales and use tax to 9.875%, a move that could generate $2 million in revenue for the city. 

“I’m very optimistic it’ll be a very easy sell to the public of why we want to increase a sales tax by half a penny,” Councilmember Robert Brownstone said. “We don’t want to reduce public safety and sheriff services. We have emergencies, we have floods, we have fires. People don’t want to reduce those services.” 

The city will likely utilize $1.6 million in unused funds from the past budget to partially make up the deficit, City Manager Matthew Chidester said, and is considering money from their economic uncertainty reserve as well, which currently holds around $4.4 million. 

“Our pants are not on fire. I don’t think we have to panic,” Vice Mayor Harvey Rarback said. “I think the economic uncertainty reserve is meant for economic uncertainty, and we’ve got economic uncertainty.” 

Chidester defended the draft budget, which he said already spreads staff members thin, intentionally freezes vacant positions and reduces capital improvement project funding. 

“When you start throwing in things like pension costs, which we don’t have control over, the contract costs for law enforcement and 911 dispatchers, we don’t have control over that,” he said. “That’s when it flips back to only a 1% decrease.” 

The city also reviewed its decreasing transient occupancy tax, which typically makes up 40% of its annual operating budget, and approved $40,000 in funding for the Business Improvement District to promote tourism and marketing and generate coastside visitors. For 2023, occupancy rates for hotels averaged around only 55%.

“Obviously one of the places cities always look is to raise taxes. We do believe that’s gonna be a necessary option for us moving forward but we also want to look at other ways to raise revenues and look at creative ways,” Chidester said. “We really agree, focusing on investing in tourism and marketing is really crucial.” 

Krystlyn Giedt, CEO and president of the Half Moon Bay Chamber of Commerce, said the organization, which manages the BID, was focusing on increasing mid-week stays, digital and print marketing and an in-depth visitor study to understand interest. 

A June 18 public meeting will also discuss the possibility of raising hotel’s nightly assessment fees to $2 — currently, patrons pay $1 a night when staying in coastside hotels to fund the BID’s coastside marketing and tourism promotion — to offer a larger budget. 

Ruddock pushed back on discussion around long-term investment, particularly regarding further funding or development for the Coastside Venture Studio or Opportunity Center, until the city was in better financial shape. 

“Speculative investment is off the table to me,” she said. 

holly@smdailyjournal.com

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