CARLSBAD — The city of Carlsbad is fine-tuning its 2012-13 budget adoption for its June 26 presentation to City Council.
During two previous City Council meetings, the Capital Improvement Program Budget and Operating Budget were on hand for review and feedback.
Staff felt two meetings were necessary because there was detailed information to pour over. The Operating Budget covered the city’s daily expenses while the Capital Improvement Program Budget underscored future significant construction projects championed by the city.
The final budget will be adopted for its new fiscal year starting July 1.
“We have worked very hard to prepare a balanced budget that puts resources in the areas that are the highest priorities for our community,” said Chuck McBride, city finance director.
“The budget we presented to the City Council is near final, but when the budget is presented for adoption on June 26 the City Council will have an opportunity to make adjustments if they choose.”
During its previous presentations at City Council meetings, staff relayed how they believed Carlsbad tax revenues would be rising in the coming year.
McBride pointed out that 80 percent of its General Fund revenues come from taxes on property, retail sales and hotel stays.
“Regional economic trends have stimulated growth in revenues related to retail sales and hotel stays, since Carlsbad is home to numerous retail outlets, an auto mall, and numerous hotels and resorts,” McBride said. “Unfortunately, the single, largest source of General Fund revenues, property tax, continues to stagnate as Carlsbad, like the rest of California, continues to suffer the effects of a downturn in this sector.”
The most recent statistics reported by the California Association of Realtors showed that the average price of a median single-family home in California that was worth $600,000 in 2007 went for about $308,000 in April of this year.
Because property taxes remain sluggish, there will be a dip in numbers for the General Fund in this category. McBride said in the fiscal year of 2012-13, property taxes are expected to decrease slightly, providing approximately $47.8 million to the General Fund. In 2011-12, those numbers were at $48.1 million.
The sales tax forecast is expected to increase about 4.4 percent while a boost of 3.5 percent is expected for hotel taxes and transient occupancy taxes.
Overall, staff is projecting an improved local economy.
“We use a number of indicators to closely monitor the economy,” he said. “Sales tax and hotel tax, the tax visitors pay on hotel room stays in Carlsbad, tend to be good indicators of economic conditions, and both are on the rise.”
Part of this improved economy in the years ahead will also involve two new hotels opening in the near future as well as the new shopping centers, which include Palomar Commons and La Costa Town Square.
“We have a very positive outlook on the coming year,” he said.
McBride added, “The streamlining and cost cutting we’ve done through the recession allowed us to maintain our high-quality city services while reducing the size of the workforce and overall costs.”
While the economy in Carlsbad rebounds, the city is able to set its sights on city projects such as investing in parks and technology, and enhancing traffic flow.
McBride said what’s helped with the budget planning has been implementing a 10-year financial forecast.
“This allows us to see possible changes in revenues and spending far out into the future so we can be thoughtful about our planning and make adjustments as needed, before we face a crisis,” he said.
Staff also pointed out how the city has about $60 million in its reserve accounts. These monies, much like a savings account, are used in cases of emergencies.
“We were affected by the recession and state budget problems, like other cities. But we were able to plan ahead and reduce spending in areas with the least effect on the public,” he said.