Solana Beach budget updates show increased sales, transient occupancy tax projections

Solana Beach City Hall
(File photo)

Sales and transient occupancy tax projections are higher than anticipated in Solana Beach for the 2022-23 fiscal year, according to a budget update presented to City Council members at their March 22 meeting.

The updates to the budget, which are part of a routine series of revisions that take place throughout the year, were also to close a projected $1.05 million deficit in revenues and expenditures.

The council approved the 2022-23 fiscal year budget projecting a general fund surplus of about $800,000. In the eight months since the fiscal year started last July, revisions to the budget led to the deficit. The budget adjustments that council members unanimously approved created a projected operating surplus of about $162,000.

Cities all over the country have been waiting for sales tax to rebound after the Covid-19 pandemic limited consumer activity over the past few years. Public health restrictions have largely been lifted since the early days of the pandemic, when businesses closed and then were able to open with restricted indoor capacity.

In Solana Beach, the sales tax revenue is projected to be about $4.5 million, a $200,000 increase from the previous set of projects. Projected revenue from transient occupancy tax, which includes short-term rentals, has increased $100,000 to $750,000.

Property tax projections are also up about $200,000, from $9.42 million to $9.62 million.

“These are conservative projections,” said Rodney Greek, the city’s interim finance director. “We want to underestimate our revenues for the end of the year, but we want to be as close as we can at the same time.”

Another revenue stream from Measure S, a one-cent sales tax that Solana Beach voters approved in last November’s election, will begin in April. City staff currently estimates $750,000 revenue, to be used for maintaining local streets and repairing potholes, storm drains, infrastructure upgrades, and other priorities that residents identified in a community survey.

The city also has about $1.6 million of American Rescue Plan Act funding for the 2022-23 fiscal year. It received a first installment of $1.6 million in 2021-22.