San Bruno budget OK, but future tenuous 

Taxes, parking fines and uncertainty around vehicle licensing fees from the state are continuing to plague revenue intake, which is $3.6 million lower than expected. In particular, tax revenue from a recently-opened dispensary, Embarc, is not meeting estimates of around $1.4 million in annual revenue. 

The city has had conversations with the dispensary around increasing signs and access but, for the most part, confusion remains as to why revenue is lower than expected, City Manager Alex McIntyre said. 

“There’s a lot of hemming and hawing about what has occurred and what has not occurred and one of the things I’ve made clear to them is we didn’t change any of the rules for the process,” he said. “We haven’t had any good understanding as to why the numbers are so much lower.” 

Also at issue is the parking fund, currently with an operating deficit of $20,000 and has already taken a $2 million loan from the general fund to begin paid parking operations. Revenue from parking citations has been lower than expected, according to a staff report. 

“Looking ahead, the fund requires significant attention if the desire is for the parking enterprise fund to operate as a self-supporting operation,” the staff report read. “Unlike other funds, the fund has not reimbursed costs incurred for direct staff time and general overhead that support the paid parking program.” 

The city’s operating finances for the 2024-35 fiscal year are in a stable place due in large part to expenditures coming in $4.2 million under budget thus far — staff vacancies have been higher than projected and certain planned work has been finished through “alternative means.”

“It is important to note that this represents missed productivity and potential budgetary savings,” the staff report said. 

While San Bruno’s revenue is projected to grow 2%-5% over time, expenditures are coming in more quickly, at a projected 3.5%-7% growth, Pegueros said. 

The long-term forecast shows the city in a growing structural deficit over the long-term, with a deficit of $1.1 million in fiscal year 2026 and a $4.2 million deficit in fiscal year 2030. Continued concerns around VLF funding, uncertainty around revenue from Walmart.com, staffing vacancies and unfunded infrastructure projects all contribute to that deficit projection, the staff report said. 

Funding from Measure Q — a recently passed bond measure that authorized funding for stormwater, streets and infrastructure — as well as Measure G, a municipal sales tax measure, can help alleviate but not entirely address that unfunded infrastructure, Pegueros said.

Councilmembers also discussed the best use of Measure Q and Measure G Funding at their March 11 meeting. A total of $12 million in bonds from Measure Q — $9 million for pavement management, $1 million for stormwater infrastructure and $2 million for Fire Station 52 — was proposed by staff and met with various concerns by the City Council. 

Discussion around the best use of those funds will continue as the upcoming 2025-26 fiscal year budget is formed, McIntrye said, and councilmembers emphasized how important it was to be financially responsible with money entrusted to them by the voters. 

“It’s difficult for the council to earn trust. … It is very easy to lose that trust,” Councilmember Michael Salazar said.