The Carlsbad City Council on Tuesday approved a $315 million budget for the fiscal year starting July 1. The spending plan will enable the city to maintain high service levels for residents and continue investments in parks, public safety, the environment, streets and other community priorities. The plan also includes a number of initiatives to support six goals identified earlier this year by the City Council to help achieve the Carlsbad Community Vision.
The budget is broken down into a $250 million “operating budget,” covering day-to-day city services, and a $64.4 million “Capital Improvement Program” budget that pays for major city construction projects.
On the revenue side, city businesses are generating more tax revenue than projected, especially hotels, which generated nearly $20 million in transient occupancy tax this year. This tax is paid by tourists staying in Carlsbad hotels. The majority of the city’s budget for its core services comes from just three sources, sales tax, hotel tax and property tax.
“The connection between land use decisions 15 or 25 years ago and the strong tax base we enjoy today is no accident,” said Chuck McBride, the city’s administrative services director. “City leaders have been very strategic over the years to create a balanced community, where development pays its own way and our diverse economy helps ensure we have a steady stream of revenue to fund Carlsbad’s excellent quality of life.”
The latest resident satisfaction survey, conducted in fall 2015, shows that nearly all residents, 97 percent, rate the city’s quality of life as good or excellent. When it comes to city services, nine out of 10 residents give a positive rating.
In approving the budget, the City Council decided to make two moves that will help ensure the city’s future financial stability. One was to dedicate $10 million to a special account to cover future pension costs. CalPERS, the state agency that manages the city’s pension fund, anticipates that the money cities will be required to pay to cover this benefit for retired employees will begin to fluctuate more because of a change in how it sets rates each year. According to McBride, setting aside money to cover years when the rates are higher means pension costs will not have as great of an effect on the city’s year-to-year budget planning.
The City Council also decided to allocate $14.8 million to pay off revenue bonds used to finance the construction of the city golf course. This will help the city avoid about $8.4 million in future interest charges. The Crossings at Carlsbad golf course, which opened just prior to the recession in 2007, has been routinely criticized over the years for its high construction price tag and ongoing costs. According to McBride, without counting the debt payment on the bonds, the course is now breaking even, meaning money from rounds of golf, special events and the food and beverage sales cover the course’s expenses.
This golf course bond pay off and the money set aside for future pension costs will come from the city’s “general fund balance,” which is like the city’s savings account. The balance is currently about $90 million. The City Council’s policy is to keep the equivalent of at least 30 percent of its general fund operating budget available for emergencies and unforeseen expenses, with a goal of 40 to 50 percent. This policy exceeds the industry recommendation, which calls for keeping an amount equal to at least 5 to 15 percent of a city’s general fund on hand, or the equivalent of two months of operating expenses.
Included in the operating budget is the $142 million “general fund operating budget,” which covers most of the day-to-day city services, like police, fire, libraries and parks. New spending focuses on six policy goals set by the City Council in February and support for the Carlsbad Community Vision, a set of nine core values community members said are important for the future of their city. Highlights include:
Five new electric vehicle charging stations
Carlsbad Student Leadership Academy, a new program to help develop tomorrow’s emerging leaders
A study of alternative coastal transportation options
Ongoing enhancements to the Village and Barrio
A new “Book Bike” providing access to library books on the go
Technical experts to help explore the feasibility of lowering the railroad tracks below street level through the Village
An increase in funding for the city’s Community Arts Grants program and the popular TGIF Concerts in the Parks
Body cameras and increased training for the police
Increased resources for fire inspections and new rescue equipment for the Fire Department
Expansion of Parks & Recreation youth programs
Almost $10 million is being set aside for future infrastructure replacement, which helps ensure things like roads, water pipes and city buildings can be maintained or replaced as needed without having to borrow money and pay interest or defer maintenance until a later time.
Among the new programs in next year’s proposed budget is the Climate Action Plan, totaling about $1 million. All cities in California are now required to have a Climate Action Plan with measureable goals for reducing greenhouse gas emissions.