On the strength of climbing property tax revenues and flat-lined employee salaries, Solana Beach is looking to continue its run of surplus budgets, a run that could make room to expand the city’s construction endeavors.
City staff outlined the draft budget package for the Solana Beach City Council on May 10, showing surpluses each of the next two years — $306,500 in the year that starts July 1, followed by $208,900 for the 2018-19 fiscal year.
The 2017-18 fiscal year begins July 1. The proposed budget is set to return to the city’s budget and finance commission later this month for further tweaking, then will head back to the council for final approval in June.
This round of budget work marks the city’s return to a two-year planning cycle for the first time in more than a decade, a signal that Solana Beach has steadied itself after the tumult of the 2008 financial crisis.
The city has achieved surplus budgets four years running.
“They’re not huge, but we’re sharpening our pencils,” City Manager Greg Wade told the Solana Beach Civic and Historical Society on Friday night, May 12.
Expenditures in 2017-18 would total $33.9 million, followed by $27.7 million the year after — the difference being mostly for $5.2 million in work on the Solana Beach pump station.
The biggest increase in operating costs from previous budgets will be for the sheriff’s contract, which will jump 6 percent each of the next two years. Overall, public safety contracts make up more than 40 percent of the city’s operating budget.
Property taxes — by far the city’s largest revenue stream at 42 percent — are expected to continue the climb they’ve seen over the past three years. The city’s $6.3 million in property tax revenue in fiscal 2014-15 grew to $6.68 million a year later. Those revenues are set to surpass expectations for the fiscal year that ends next month, reaching more than $7 million. And as the real estate market continues its recovery, city officials are planning for property tax revenues to grow across the next two fiscal years, from $7.33 million in fiscal 2017-18 to $7.54 million the year after.
The draft budget maintains financial reserves at $10.45 million in 2017-18 and $10.66 million in 2018-19.
On the capital improvement side of the budget, Solana Beach is looking to take on 22 projects in the next two years, five of which are new. Because of the pump station project, capital expenditures in 2017-18 will top $8 million, then drop to slightly less than $2.2 million in 2018-19.
Other large projects include the skate park at La Colonia ($450,000 in 2017-18), work on storm drains ($200,000 then $250,000) and $500,000 in both years to repair sewer lines.
One of the budget’s largest question marks will be the Marine Safety Center at Fletcher Cove. Design and repair work has not been included in the budget package, but staff earmarked $125,000 next year and $450,000 the year after in case the city council decides to tackle the project right away.
“That’s going to cost some money at some point,” Mayor Mike Nichols said at the May 10 meeting. “This might be a good opportunity to start to build a reserve fund for asset replacement.”
The council was scheduled to hear a full presentation on the project later that night but had to postpone it to next week.
More than 70 years old, the building has long since run afoul of ADA requirements. The city commissioned an analysis of three options — to house the operation in a temporary modular structure, to renovate the existing facility or to rebuild it from scratch — but none are contained in the draft budget.
If approved, the options to renovate and rebuild would cost roughly the same, according to Wade.
“It’s got a lot of history, there’s a lot of emotion attached to that building,” he said in his May 12 presentation. “Unfortunately, if emotion were literally attached to that building, it would fall down. Essentially, it’s an economically functioning, obsolete building.”