Half Moon Bay’s finances are looking up 

“It’s cautiously optimistic, but it’s going in the right direction,” he said. “A deficit is highly likely, but not as bad as it could have been.” 

The lack of hotel tax rebound since the pandemic has been a major source of concern for the city and a factor in its ongoing structural deficit. This year, however, midyear projections show its ending hotel tax for fiscal year 2025-26 at $9.9 million, which is $1.2 million over projections. 

In total and accounting for increased revenue projections in the property tax and sales and use tax forecasts — both of which have gotten boosts from last year’s vehicle license fee money and a new half-cent sales tax, respectively — the city is looking at $1.5 million more than expected for the year, Stiles said. 

Because of the positive outlook, councilmembers approved a replenishment of Half Moon Bay’s economic uncertainty reserves, which had been depleted as the city navigated its deficit. That will put its reserves at $12.1 million and its unassigned funds at $1.68 million, City Manager Matthew Chidester said. 

During the meeting, he lauded the ability to refill Half Moon Bay’s reserves as a testament to staff’s work with a limited budget in the past several years and prior councils’ foresight in setting funding aside. 

“The foresight there was really incredible,” Chidester said. “We need to set aside more reserves than best practices tell us because we need to be able to navigate through challenging times, and do it in a way that hopefully reduces the impact on the community.” 

Both Chidester and other councilmembers said the city should remain prudent with its finances and not immediately spend the money it has remaining in its unassigned fund balance. 

“It’s also important for us to be cautious,” Chidester said. “I’d be cautious about thinking about spending much of that, that may help us in the next fiscal year to keep our budget balanced.” 

Given that the city lost around $5 million to $6 million in hotel revenue during the pandemic and in the years afterward, its financial rebound is impressive and naturally will take time, Councilmember Robert Brownstone said. 

“It’s quite an accomplishment, five years later, to be where we are,” he said.