South San Francisco looks to spend after budget dinged by COVID

With travel restrictions battering the local tourism and hotel industry, officials are projecting a loss in annual income which will lead to a slight deficit of about $2.5 million.

The gap between the proposed $112 million in spending and almost $109.5 million in income can be filled with a portion of the city’s $6.1 million in federal pandemic relief money, or drawn from the city’s $56.8 million in reserves.

Regarding revenue, officials anticipate growth across the board in most key sources such as sales tax, which is expected to generate $19.4 million in the coming fiscal year, about $1 million more than the year prior.

Similarly, officials anticipate that the hotel tax will generate $7 million in the coming year, up $1.1 million from the year prior when travel bans nearly crushed the local tourism industry. While growth is projected, the sum anticipated for the coming year is about half of what was received in the 2019-2020 fiscal year, before the public health crisis occurred.

“It shows the staggering impact that COVID has had on our hotel and tourism industry,” said Finance Director Janet Salisbury.

South San Francisco is projecting to receive about $41 million in property taxes for the coming fiscal year, a slight dip from the $43 million received in the previous year.

Salisbury attributed the loss to the state’s vehicle license fee contribution, but noted that continued investment in the city’s biotech sector east of Highway 101 has been a critical source of property income in South San Francisco.

Regarding savings, $24 million is held in the general fund reserve, $20 million is kept to address capital projects, $5.5 million is for addressing pension obligations and $6.7 million is unassigned.

The financial flexibility motived some councilmembers to look for opportunities to make additional investments.

To that end, Vice Mayor Mark Nagales questioned the city’s timeline for hiring an equity officer, which is a proposal growing out of the racial and social justice subcommittee.

City Manager Mike Futrell said two candidates are being considered to be hired as consultants for the year, and a permanent hire could be made next year. But he said officials have been reticent to bring on new full-time employees until the local economy rebounds entirely from the pandemic.

For his part, Nagales expressed comfort with the proposal so long as there is a commitment to follow through with the equity officer hire.

“I think it is important to continue the work that the commission has started,” he said.

Additionally, Nagales questioned whether officials could find additional space in the budget to make a grant to the Chamber of Commerce.

Noting that chamber staff hours have been reduced because of financial hardship following the pandemic, Nagales built consensus with his colleagues to help the organization critical in assisting local businesses.

Officials concurred, and suggested that a grant worth around $10,000 to $15,000, similar to the amount given to local small businesses during the pandemic, would be appropriate.

“I think if they are asking for assistance and they have been part of our arm in helping small business in our community, I think it is our responsibility to help them out as much as we can,” he said.