Replenishing reserve: Officials hope parking meters will regrow fund
Del Mar’s reserve contingency fund, which represents 36.5 days of operating budget, has fallen below 10 percent of the projected operations and maintenance expenditures for the current fiscal year.
The reserve contingency is projected to be $880,980, or 9.84 percent of the operations and maintenance expenditures of $8.957 million.
This is against the Finnell plan, a financial policy instituted roughly four years ago that requires this fund to be maintained between 10 percent and 20 percent. The plan, developed by the late Councilman Jerry Finnell, also requires expenditures be capped at 1.4 percent below revenue growth and the remainder be used for capital improvement projects.
Assistant City Manager Mark Delin, responding to questions about the future of the contingency fund, said in an e-mail, “The key here is that we will not bring to council a budget for next year which doesn’t project to meet our minimum 10 percent contingency reserve by the end of next year. The next budget year will somehow need to grow the reserve back to at least this minimum by additional cuts to expenditures, and by any increases to revenues that we can successfully implement.”
Along those lines, the city is hopeful that its investment in parking meters will help fill the gap.
Meanwhile Councilman Carl Hilliard said, “This is not something that I’m particularly alarmed about because you expect to have your reserves there to buffer you in down times, and these are down times. We’re going to have a slow but even recovery.”
City leaders were updated on Del Mar’s economic situation at their May 3 meeting as part of staff’s third quarter financial report. Staff did not recommend dipping into the city’s revenue loss reserve fund, which is currently at $500,000.
Delin said he did not have the historical data regarding if or when the reserve contingency was last projected to be lower than 10 percent, but said he did not believe it had happened in recent memory.
Deputy Mayor Donald Mosier, elected during the economy’s decline in 2008, said it is the first time he has seen the reserve contingency projected to be this low since he started on the council.
The council learned of a $57,000 decrease in the general fund, forecast to have a balance of $2.234 million by June 30, the end of the fiscal year. The adopted general fund budget for fiscal year 2009-2010 was $9.1 million. The city has so far taken in $9.7 million in revenue and spent roughly $9.2 million on operations and maintenance, but has had to take more than $1 million out of the general fund to supplement other governmental funds, such as the gas tax for road improvements. The general fund had a balance of nearly $2.6 million in June 2009.
Under the budget adopted for the current fiscal year, which began July 2009, the contingency reserve was projected to work out at 10.44 percent. Hilliard said it is now less because some financial estimates turned out lower than anticipated. The transient occupancy tax, for example, is about $200,000 less than projected in the adopted budget. However, a city staff report says general fund expenditures are 9 percent lower than anticipated three quarters through the fiscal year.
Del Mar will now invest $47,000 in an effort to increase revenues, about $35,000 of which will fund the purchase or installation of 57 credit card-accepting parking meters. The city recently completed a three-month pilot program with this type of meter that generated between $12,000 and $15,000 per month, according to City Manager Karen Brust.
Head lifeguard Pat Vergne said the program netted a 10 to 12 percent increase over the former “pay-and-display” system, since the city could not charge if its one automated payment box went down.
There are currently 36 of these meters on Coast Boulevard remaining from the pilot program, according to Vergne. The other 21 will be installed in the Poseidon lot.
Beachside parking will also increase from $2 to $3 per hour in June.
Brust said a staff member will zero out the meters once a car leaves to eliminate any leftover time for a new visitor. Currently, revenue from parking meters is $60,000 higher than in the previous fiscal year, according to city staff.
About $8,000 of the $47,000 expense will fund costs associated with the June election, which includes a proposed extension of the 11.5 percent TOT to short-term vacation rentals. If passed, the tax is projected to gross roughly $180,000 annually.
By the numbers
As of the 2009-2010 fiscal year’s third quarter, Del Mar’s general fund balance is projected to finish at $2,233,949. The city’s reserve contingency fund, which represents enough budget to operate 10 percent of the year, breaks down as follows:
- The contingency’s beginning balance, as of July 1, 2009, was $988,941.
- The city projects to add $9,719,926 in general fund revenues this fiscal year, while spending $8,957,263 on operations and maintenance. That leaves $762,663 to the contingency, for a total of $1,751,604.
- Del Mar is projected to take out $1,019,019 to support other governmental funds, such as supplementing the gas tax for street improvements. The contingency would then drop to $732,585.
- At the same time, the city will add $148,395 to its contingency, for a total of $880,980.
- Therefore, the contingency reserve fund is projected to finish at $880,980 by the June 30 end of the fiscal year. That $880,980 is 9.84 percent of the city’s $8,957,263 expenditures on operations and maintenance.
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