San Carlos approves budget: Half-cent sales tax up for voter consideration in November

The city’s deficit is similar to what it expects in the coming years, which is a major factor as to why the city also approved to pursue a sales tax measure on November ballots. Looking ahead, the city is projecting operating deficits between $1 million and $2 million annually.

For fiscal year 2026-27, the budget was only changed slightly from what was previously planned as part of the city’s two-year budget process, with an increase of $103,600 in operating adjustments for part-time intern positions, funding for a Diwali event, funding for vegetation management and the continued programming for downtown activation.

Multiple councilmembers shared their appreciation for the downtown activation efforts that have already been made and agreed with the increase in funding. A viewing party for a FIFA World Cup game was held at Wheeler Plaza downtown that kept Laurel Street packed for hours, councilmembers said.

“If people come, they’ll stay, they’ll shop, they’ll go for drinks after programming,” Councilmember Sara McDowell said.

Not all requests for increased funding for departments were approved, though.

There were four new positions requested from city departments that staff said could not be funded due to uncertainty with future in-lieu vehicle license fee funding — which remains a strained budget line item for San Mateo County and its cities despite a recent deal made for a portion of the money owed to be dispersed.

These request positions included an associate traffic engineer, a senior engineer and two senior maintenance workers for downtown and parks maintenance. Should the revenue pass in November, these positions could be reconsidered at a later date, Mendenhall said.

That anticipated recovery of VLF funds from the state would cover the city’s anticipated operating deficit for the upcoming fiscal year, however, staff still remains hesitant to include it in fiscal plans going forward.

The city budgeted for 104 full-time employees and while more help would be great, conservative fiscal planning means city staff is particularly diligent when it comes to hiring, Mendenhall said.

“We do need additional hands, but we make do without,” Mendenhall said. “We do budget very conservatively and I’d like to say we function really well with a lean team.”

The city also approved transferring $5 million from the assigned facilities and infrastructure reserve to the general capital fund to offset ongoing projects. The money comes from savings realized in the most recent fiscal year, Mendenhall said.

While funds were moved around within the capital improvement fund bucket, some identified projects, like the remodel of the second floor of City Hall and the Wheeler Plaza Garage Parking Management System expansion, were placed on the back burner to prioritize others.

Budgeted focuses within capital improvements include both midterm and long-term improvements to the Holly Street/Highway 101 interchange, the East Side Integrated Transportation and Streetscape Master Plan and the renovation of Centennial Plaza downtown.

The city’s capital improvement program plans for improvements over the course of five years, though budget appropriations are largely focused on the current and upcoming fiscal years. Over the fiscal years 2025-30 five-year period, expenditures are budgeted to be over $274 million.

The City Council approved its budget unanimously at its meeting Monday.