Del Mar third quarter revenue projections exceed expectations with federal aid

Del Mar’s General Fund revenue for the third quarter of the 2020-21 fiscal year is $1.12 million above projections, bolstered in part by about $800,000 that the city received from the latest federal aid package.

Del Mar Mayor Terry Gaasterland said during the first day of a two-day budget workshop on May 22 and May 24 that “it’s great to have some good news” about the city’s financial situation. The workshop focused on the city’s current finances and preliminary discussions about the 2021-22 and 2022-23 budgets.

But Del Mar, like many other cities, faces a longer road to a full financial recovery after the COVID-19 pandemic forced the need for several budget cuts.

According to city staff, those cuts included more than $1 million for capital and special projects, $2.2 million for Measure Q projects, $550,450 for operating expenditures, more than $1 million in layoffs and other staff reductions, and pausing a $536,250 transfer to the Pension Fund.

Replenishing reserves will be a point of emphasis for the city moving forward.

“While the city’s revenues are not anticipated to recover to pre-COVID levels during the upcoming two-year budget cycle, the proposed budget includes a plan to partially restore annual transfers to the city’s reserves,” interim City Manager Ashley Jones said during the first day of the workshop.

She continued, “We know that during this period that we’ve been dealing with our financial crisis, we have not been able to fund over $1.28 million in reserve payments. So it’s really critical that we continue to use those revenues to try to get our reserves built back up to pre-COVID levels.”

The city is also waiting for the Del Mar Fairgrounds to resume its normally full schedule of large events, which generate tax revenue in addition to more hotel stays, local shopping and other economic activity that generates local revenue. The state-owned fairgrounds has been slowly returning to normal. Next month, it will host Homegrown Fun, a scaled-down version of the annual county fair. The summer racing season will be held July 16-Sept. 6 this year, and the fairgrounds will also host the Breeders’ Cup in the fall.

“The COVID pandemic is anticipated to result in a $7.3 million revenue loss for the city,” Jones said. “It’s going to take time for the city to financially recover from such a catastrophic loss, and the current lack of economic activity at the fairgrounds continues to be a factor in the city’s overall recovery.”