Whether to boost San Mateo’s hotel and business license taxes and allow billboards along State Route 92 and Highway 101 were among the questions city officials pegged for polling and further study Monday in an effort to scope strategies to deal with an expected budget deficit next year.
Though city finance staff predicted the city’s approved expenditures in the 2018-19 fiscal year would exceed revenue estimates, updated estimates showing the city would incur operating savings indicated the city would avoid a deficit this year. But with known increases to pension costs, annual salary increases estimated at 2 percent, some $2 million to $4 million in additional annual pension contributions above what the California Public Employees’ Retirement System, or CalPERS, requires and contributions for capital projects and the city’s housing set-aside, the city could face a $4.5 million deficit in the 2019-20 fiscal year, explained Grace Castaneda, the city’s budget manager.
“All of these cost assumptions are not going to be financially sustainable in the long term,” she said, according to a video of the meeting.
In reviewing a set of strategies for increasing the city’s revenue, councilmembers voiced support for further study on allowing billboards in the city and an increase of the city’s hotel tax, which would require approval by a majority of residents on the 2020 ballot. They also agreed to poll residents on whether they would be amenable to weighing in on a business license tax increase.
Out of concerns about how it would be received by residents, officials agreed that they preferred to wait until more about the city’s future economic position is known before exploring a jump in the city’s property transfer tax, paid by those who sell properties in the city and garnered $12 million — or 10 percent of the city’s General Fund revenue — in the 2017-18 fiscal year.
Finance Director Rich Lee explained the city’s transient occupancy tax, or hotel tax, generated $7.3 million in the 2017-18 fiscal year and could generate some $0.7 million more annually for every 1 percent increase. Currently set at 12 percent, San Mateo’s hotel tax is one of the lowest in San Mateo County after six cities approved transient occupancy tax increases during the 2018 election, explained Lee. Because those who would be paying the hotel tax are largely out-of-town guests, councilmembers agreed a ballot measure to increase it would likely pass.
A proposal to change the city’s code to allow electronic billboards in certain areas was largely met with support from officials, though Lee noted no city-owned properties were identified as a good location for a billboard and the city would have to work with a billboard company to lease land from a private property owner on behalf of the city. For Councilman Joe Goethals, the city’s position in the heart of the Highway 101 corridor and at a crossroads with State Route 92 made it a good candidate for benefiting from advertising revenue. City Manager Drew Corbett said San Carlos has estimated an electronic billboard constructed along Highway 101 and south of Brittan Avenue would generate $300,000 annually, with some $100,000 paid toward the lease of the land.
Though Councilwoman Maureen Freschet supported the city’s exploration of an electronic billboard, she said she hoped the city would consider specific parameters around how electronic billboards are introduced in the city.
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“I don’t want it to be a Pandora’s box where we don’t go in with some real specifics about how we do that,” she said. “But I definitely think it’s an opportunity for some untapped revenues at this point in time.”
Freschet also suggested officials work with the San Mateo Area Chamber of Commerce to scope an increase in the business license tax, which Lee said generated $5.8 million in the 2017-18 fiscal year from the some 10,000 businesses paying taxes in the city. Lee explained a modest increase in the business license tax could generate an additional $300,000 to $600,000 in annual revenue, with the annual impact on businesses generating gross receipts of $30,000 or under estimated to be $4 to $5.
For Councilman Eric Rodriguez, whether the city could focus on paying down its unfunded pension obligations weighed heavily. With a $1 million annual increase expected to accompany the city’s required pension obligations and a 7 percent interest rate on the city’s unfunded pension obligations, Rodriguez compared the cost to the city’s return on its housing reserve fund, which Corbett said receives 2 percent interest.
“We have an effective interest rate of 5 percent that we are paying just to hold those funds [and] we don’t know when we’re going to be able to use them,” he said.
Though councilmembers considered reducing one or a combination of the city’s discretionary expenditures — which include maintenance of capital projects, contributions above what’s required by CalPERS and contributions to the city’s housing reserve — they opted to wait until the end of 2019 to see where revenue and expenditures stand and consider any possible reductions in those areas when the council reviews the mid-year budget update in January.
Corbett said staff would get started on polling residents about increases to the city’s hotel and business license tax so officials could consider placing them on the 2020 ballot.
It's a shame that no one wants to move to San Mateo, because if they did, the city could permit more housing to be built, which would allow it to collect sales tax from new (rich) residents and 2019-assessed property taxes.
Can you imagine highway 101 and 92 in the City looking like some F1 racing event with pension liabilities paid for by advertisers like watchmaker Rolex, Heineken and the Emirates airline? And why stop there, we’ve got high tech….. there is Google, Facebook, Apple, Qualcomm etc. How about ‘badging’ city employees? Or even displaying logos on city vehicles? What about a multi-platform campaign targeting those “largely out-of-town (hotel) guests”? The possibilities are endless….
With astronomical pensions and pension obligations, subsidized workforce housing, and great salaries, the city and government employees are living very well... paid for by the taxpayers (many of whom have much lower standard of living than those we support). There must be a way to get a handle on these generous give-aways and expenses, as they cannot continue forever. Try cutting your budgets 10%/year.
Yep, the public employee Ponzi scheme rears its ugly head once again. The holes this scheme is blowing in budgets is only going to get worse. The key phrase in this article is “But with known increases to pension costs, annual salary increases estimated at 2 percent, some $2 million to $4 million in additional annual pension contributions above what the California Public Employees’ Retirement System”. San Mateans need to be prepared for higher taxes based on unrealistic promises made to public union employees. Next time any public union employee is out picketing for better pay or shutting down government, remember this story and the travesty of defined benefit programs that are going to bankrupt our local and state governments.
Pension obligations. The never ending pension obligation. Soon, 90% of the budget will go to supporting pensions. Outrageous. With all the massive commercial development in this city, why aren't developers paying more? Don't tax the citizens and small businesses in San Mateo to make up for this bottomless pit of pensions.
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(8) comments
It's a shame that no one wants to move to San Mateo, because if they did, the city could permit more housing to be built, which would allow it to collect sales tax from new (rich) residents and 2019-assessed property taxes.
And we still have people on the city council calling for rent control and "tenant protections" that will only slow down property tax growth. Amazing.
https://www.youtube.com/watch?v=v_08i4FnBvY
Can you imagine highway 101 and 92 in the City looking like some F1 racing event with pension liabilities paid for by advertisers like watchmaker Rolex, Heineken and the Emirates airline? And why stop there, we’ve got high tech….. there is Google, Facebook, Apple, Qualcomm etc.
How about ‘badging’ city employees? Or even displaying logos on city vehicles?
What about a multi-platform campaign targeting those “largely out-of-town (hotel) guests”?
The possibilities are endless….
Our city leaders need to first look in house, Operations. Some of our politician are in the pockets of the San Mateo County Labor Counsel.
With astronomical pensions and pension obligations, subsidized workforce housing, and great salaries, the city and government employees are living very well... paid for by the taxpayers (many of whom have much lower standard of living than those we support). There must be a way to get a handle on these generous give-aways and expenses, as they cannot continue forever. Try cutting your budgets 10%/year.
Yep, the public employee Ponzi scheme rears its ugly head once again. The holes this scheme is blowing in budgets is only going to get worse. The key phrase in this article is “But with known increases to pension costs, annual salary increases estimated at 2 percent, some $2 million to $4 million in additional annual pension contributions above what the California Public Employees’ Retirement System”. San Mateans need to be prepared for higher taxes based on unrealistic promises made to public union employees. Next time any public union employee is out picketing for better pay or shutting down government, remember this story and the travesty of defined benefit programs that are going to bankrupt our local and state governments.
Pension obligations. The never ending pension obligation. Soon, 90% of the budget will go to supporting pensions. Outrageous. With all the massive commercial development in this city, why aren't developers paying more? Don't tax the citizens and small businesses in San Mateo to make up for this bottomless pit of pensions.
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Keep it clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
Don't threaten. Threats of harming another person will not be tolerated.
Be truthful. Don't knowingly lie about anyone or anything.
Be proactive. Use the 'Report' link on each comment to let us know of abusive posts.
PLEASE TURN OFF YOUR CAPS LOCK.
Anyone violating these rules will be issued a warning. After the warning, comment privileges can be revoked.