Community Corner

City Budget Shows Deficits, $900,000 Unexpected Expense

The city conducted their mid-year budget review last month and while projected expenses were less than expected due to a delayed street project, a $900,000 amount caught the city off guard.

The San Marino City Council held their mid-year budget review Feb. 25 to discuss the projected city revenues and budgets for the next five fiscal years, which show mostly deficits for the city.

Personnel is the biggest expense for the city, which estimates $13,168,197 in personnel expenses from unrestricted funds during the 2010-11 fiscal year ending June 30.

“The big thing that we have to ensure is that the public safety tax gets passed [in November] because that is worth $2.6 million a year,” said San Marino Finance Director Lisa Bailey. “If that does not pass then we’re going to have to cut public safety by that amount.”

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The city of San Marino currently has public safety tax funds through the 2011-12 fiscal year.

The city budget report states that full-time salaries and PERS (Public Employees' Retirement System) costs for the San Marino police and fire departments will be over budget for the 2010-11 fiscal year because the amount budgeted did not include holiday and unused sick leave payouts. In the past those costs were balanced by savings from personnel vacancies in the police and fire departments.

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Projections for net changes in the city’s unrestricted fund balance for the next five fiscal years, according to the city's budget, are below:

2010-11 2011-12 2012-13 2013-14 2014-15 -$175,505 -$193,836 -$171,189 -$103,479 $154,080

Retirement costs are estimated by Cal PERS through 2014, when the PERS rate will plateau. This helps explain the significant increase in funds for the 2014-15 fiscal year.

While the original budget for the 2010-11 fiscal year had a $700,000 increase to the unrestricted fund balance due to the final donation from the San Marino Library Foundation and Crowell family, an unexpected $900,000 appropriation to the California Joint Powers Insurance Authority puts the balance at a projected $175,000 decrease by June 30.

The $900,000 payment was for a liability created when the funding model was changed from retrospective to prospective, according to the budget.

In layman’s terms, San Marino is part of an insurance pool of over 100 agencies, each of which contribute different amounts based on previous losses, according to San Marino City Manager Matt Ballantyne.

“In the last three years the pool experienced some significant losses,” said Ballantyne.

Since there was a cap on how much premiums could be increased, many agencies, including the city of San Marino, were paying less than what they owed and the pool essentially became a crediting agency.

Ballantyne said the financial directors from all the agencies decided that instead of agencies paying for loss after it’s incurred, that instead agencies would pay in advance and the pool would draw on those funds when necessary.

Projected costs for the city, including the past amount owed, totaled $900,000, which will be paid in addition to the $400,000 the city pays annually for full coverage.  

If agencies contribute more than they incur in losses, they will be reimbursed the unused funds.

“We already paid $300,000 and owe a balance of just under $600,000,” said Ballantyne. “Next year around this time we’ll know whether we get a credit or not.”

The budget report states unrestricted revenues are expected to be about $64,000 less than budgeted and unrestricted expenditures are projected to be about $1,160,000 less than budgeted, mostly due to a street lighting project not being completed in the current fiscal year.

The completion of the lighting project has been put on hold due to other city expenses such as the long-term lease of Stoneman school and proposed City Hall renovations, said Ballantyne.

The city is paying $5 million for a , which was finalized at the March 9 City Council meeting. City Hall renovations were proposed at the same meeting and have an estimated cost of $800,000.

At the Feb. 25 meeting, San Marino Vice Mayor (then Councilman) Richard Sun proposed possibly increasing city revenue through the .

“From now until 2014 we’ll have a deficit so I’d like staff to conduct a study to see how much tax we have received from the Huntington Library the last three to five years, either from property tax or utility tax,” said Sun. “Each household in San Marino pays property tax including telephone bills, gas, water and the (business) owners are paying sales tax.”

Sun said the city’s largest revenue is generated from property taxes.

Indeed, the 2010 budget shows $9,593,726 from secured and unsecured property taxes in the unrestricted revenues from the city’s general fund. That amounted to almost 57 percent of the nearly $17 million in 2010 general fund revenues.

Sun said that to his knowledge the Huntington is a non-profit so they may or may not be paying property tax, but he feels a study is important.

After May meetings between city departments, the San Marino city council is scheduled to approve the 2011-12 fiscal year budget on June 8.


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