San Rafael is forecasting a $2.4 million surplus for fiscal year 2022-23, thanks to sales and property taxes.
The city council on Tuesday approved a $166.1 million citywide budget that includes approximately $95.2 million in general fund spending, $97.6 million in revenue and an emergency reserve of $9.5 million.
“For the general fund, the sources exceed utilization, which is what we like to see, because it means we have a surplus,” said administrative services director Nadine Attih Hede.
General sales tax is expected to increase by approximately $25.1 million, or 1.2%, and measure E tax to be up $14.7 million, an increase of 1.2%. Revenue from Measure R transactions and usage taxes is estimated to generate $4.9 million. Overall, sales and use taxes account for 47% of the city’s general fund, Headey said.
The estate tax, which is projected to rise to $24.4 million, or 8%, represents about 25% of the general fund’s.
Headey said overall revenue sources are expected to grow by an average of 3% to 4%.
The budget includes $23.7 million for internal services and capital replacement, including $3.1 million for sewer maintenance; $3.6 million in technology replacement and $3.6 million for retired health benefits.
The city has received $16 million in incentives from the American Rescue Planning Act. So far, $3.2 million of this has been used to pay for the San Quentin Pump Station replacement project. Another $600,000 has been used for housing and homelessness initiatives.
Director of Public Works Bill Guerin said the city has a three-year capital improvement program, with about $8 million in funding available each year.
This year, the city has budgeted about $4 million for the construction of San Rafael Fire Stations 54 and 55.
Hade said the city’s pension spending is projected to decrease by 3.9%. This is due to the city’s $27 million unfunded liability. This is down from last year’s $148 million, which represents a funded ratio of 95.8%.
Hade said the city plans to add staff to the Department of Community Development and Recreation, with a target of 422.76 staffing levels across the city.
Head said child care fees need to be increased to ensure sustainability of the city-run program, due to rising costs, especially staff salaries.
Employees anticipate spending $4.8 million and $3.3 million in entertainment and child care funds, respectively, which will lead to losses. He said the proposed 5% increase would help ensure the long-term viability of the city’s child care programs and still maintain fees at an affordable level compared to other operations in the area.
Another bottleneck is the city’s parking fund, which is generally self-sustaining, Headey said. The past two years of the pandemic, however, have seen a drop in revenue, and the city has tapped its reserves to keep it afloat. It is expected to cost $5 million.
Headey said employees are considering raising parking prices, but will report later with recommendations.
Council member Marybeth Busche said higher prices would not bode well with the city’s business community.
“We need to figure out a way to solve this because we can’t put more than a million dollars out of the general fund every year to equalize it,” she said.
Employees will also record metrics on four policy areas to track how the city is spending money to support those objectives. The focus is on economic recovery; housing and the homeless; racial equality; and sustainability, climate change and disasters.
The council said they like to be able to track progress this way.
“I think I’m really excited about the budget, the way it looks right now,” Vice Mayor Rachel Kurtz said. “It’s good to be able to be in a revenue-positive position.”
Mayor Kate Colin said that when the pandemic hit a few years ago, city officials were faced with uncertainties and were unsure where they would end up.
“I really feel like we’re on solid ground and we have a plan going forward,” Colin said. “I like where we ended up.”