South San Francisco budget uses reserves to close shortfall

That’s because the main financial hit the city is taking is related to a revenue source tied to vehicle license fees, a complicated reimbursement that the state historically provides to Peninsula cities each year, however, most jurisdictions have failed to receive the full amounts over the last couple years. That has triggered a lawsuit between the county and state, and as a result, many cities, including South City, have had to lower their projected VLF revenue or remove it from their budget estimates altogether.

If the bill passes, the county could receive at least $77 million, about $3.4 million of which would likely go to South City.

“If that did come to fruition and assuming all other assumptions with the budget remain true, our shortfall for the general fund would go from $5.5 million to $2.1 million,” Lee said.

It’s not uncommon for the county to get at least a partial reimbursement from the state, but it’s often at the eleventh hour.

“If we get these funds, then it’s less that we use from our unassigned fund balance so it buys us more time, but the bottom line is we need a legislative fix,” Lee said. “Going back every year is politically exhausting.”

Without the reimbursement, the city projects $156.9 in revenue and $162.4 in expenses. According to a previous presentation at a council meeting, revenue from the city’s transient occupancy, or hotel, tax came in about $2 million higher than anticipated, and unsecured property tax — which covers business equipment rather than real estate — is close to $2 million, a major increase.

Other cities, including Redwood City and San Mateo, also plan to draw on reserves to shore up their projected deficits.

The council also supported a $19.3 million capital improvement budget — which funds infrastructure projects and is separate from the operating budget — and includes 150 projects across a number of categories, including parks, road repairs and storm drains. Some of those include the Linden Avenue Park, Centennial Trail improvements, Caltrain station enhancements and bike and pedestrian lane projects.