San Bruno plans for budget growth

But with the additional revenue arrived requests for more spending from city administrators — raising concerns from councilmembers regarding the city’s capacity to afford the new resources.

Central to the new budget proposal is an expectation that key income streams such as property, sales and hotel taxes will all grow in the coming year and drive the general fund up by about $800,000 annually to $50.5 million.

To that end, property taxes are expected to tick upward by 3% to $12.2 million; sales taxes are projected to increase by 11% to $10.5 million; and hotel tax revenue should leap by 72% to $1.6 million as travel restrictions relent and visitors gradually return to the Peninsula through San Francisco International Airport.

As well, Measure G, the city’s half-cent sales tax approved in 2019, is expected to generate $3.5 million in the 2021-22 fiscal year, up about $600,000 from the year prior. And the city is planning to receive almost $8 million in pandemic relief money from the federal government.

The influx of revenue will allow San Bruno officials to keep about $12 million in general fund reserves, which is consistent with the adopted policy for saving between 15% and 25% of spending levels from the principal fund.

The relatively solid fiscal footing is a far cry from the fears that swirled last June, when officials expected an $8.2 million deficit to form in the next fiscal year with about $45.2 million in revenue to be outpaced by the $53.4 million spending.

As it stands, the new budget calls for $51.1 million in spending — which would outpace expected income incrementally and require officials to draw from supplementary revenue streams to balance the budget.

Proposed new hires in the city manager’s office as well as police, fire, planning and public works departments drove most of the spending levels up, along with a variety of support services.

In all, there is $3.5 million proposed in additional spending for the coming budget — a majority of which is comprised of personnel positions that were cut or frozen in previous lean years.

The general fund would pay about $1.3 million of the new cost, with federal pandemic relief money and revenue raised by Measure G splitting the rest of the sum, according to the proposal.

Councilmembers questioned the plan, however, raising concerns that spending revenue from Measure G may flummox residents who supported the tax with hopes of addressing capital improvement projects.

What’s more, they suggested it would be more appropriate to spend from the pandemic relief funds than the tax revenue because many infrastructure projects planned last year were postponed amid the pandemic.

“I think we should be leveraging the [American Rescue Plan Act] funds rather than the Measure G funds whenever possible,” Councilman Tom Hamilton said, referring to the relief payments.

Councilman Michael Salazar concurred, suggesting that putting the Measure G money into paying personnel is “less in the spirit of what is promised to voters.”

Additionally, he raised fears over using one-time money paid by the federal government to hire new employees, who will be an annual budget obligation of the city for many years down the road.

Salazar also noted that some of the economic projections in the budget presentation were ambitious coming out of a stifled economy, and suggested future cuts may be required if the expected returns are not realized.

Though Mayor Rico Medina noted technically officials would be allowed to spend the tax income on personnel, a majority of his colleagues critiqued the plan to the extent that City Manager Jovan Grogan committed to amending the proposal.

No final decision was made at the meeting, and officials agreed to table discussions regarding the capital improvement plan until a later date. Budget hearings are planned next week, and officials are expected to adopt the fiscal plan this month.

austin@smdailyjournal.com