Solana Beach budgets show post-pandemic projections

Later this month, the Solana Beach City Council will approve a two-year budget for the 2021-22 and 2022-23 fiscal years, with projections that map out a gradual return to normal after a year of cutbacks caused by the COVID-19 pandemic.

“We’re kind of in the same place we were last year at this time, just on the opposite end,” Ryan Smith, city treasurer, said during the May 26 City Council meeting, when council members began reviewing some of the projections.

“There is a little bit of uncertainty on where revenues are going to go,” Smith continued. “There are certain aspects of the economy that appear to be pushing revenues higher, and there are also some aspects that are suggesting to hold back a little bit.”

Solana Beach lost approximately $900,000 in revenue during the 2019-20 fiscal year, based on a comparison to revenue generated from the previous fiscal year. There were declines in revenue from hotel taxes, sales tax and other categories that were impacted by the pandemic. Those revenue sources are expected to climb over the coming years, according to city staff.

Solana Beach City Councilman David Zito noted the projections for a steady increase in transient occupancy tax, or hotel tax, which are marked at about $1.54 million for the 2022-23 fiscal year. That figure was $1.2 million in the 2020-21 midyear budget.

Smith said those numbers are “really to bring us in line with where we were prior to COVID.”

“It’s the expectation that travel and tourism return over the next couple of years,” Smith added.

The council also discussed how to use the approximately $2.5 million in funding it will receive from the American Rescue Plan.

“We have a lot to thank the rescue plan for,” said Solana Beach City Councilwoman Kelly Harless, who also credited city staff for the adjustments made to the budget over the year.

Possible uses include assistance for small businesses, food assistance for local residents, capital improvement projects and improving ventilation in council chambers before in-person meetings resume on a to-be-determined date.

“My top two priorities would definitely be assistance for our small businesses, especially restaurants that have been so hard hit, and food assistance because we still have hungry people, as we’ve seen in the last couple weeks,” Solana Beach City Councilwoman Jewel Edson said.

Some of the city’s increasing general fund expenditures over the next couple years include salaries and benefits, which are projected to go from $8.9 million in the midyear 2020-21 budget to $10 million in the 2022-23 draft budget; and law enforcement, which is expected to increase from $4.5 million in the midyear 2020-21 budget to $4.88 million in 2022-23, based on a 4.5% increase that will take effect for 2021-22 and an anticipated increase about about 4% in the following year. A $150,000 Community Oriented Policing grant is also added to the city’s annual law enforcement spending.