The City Manager has released Foster City’s Preliminary Budget for the fiscal year starting July 1, 2012.
Despite the continuing challenges of the economy and recent actions by the state of California to affect City funding sources by dissolving redevelopment agencies, the City is expecting to end its fiscal year on June 30, 2012 with a reserve balance in its General Fund of $17.3 million, which is 56% of annual budgeted operating expenses. Foster City and the Estero Municipal Improvement District are debt free; all special and enterprise funds are fully funded; and about $730,000 per year is set aside annually toward long-term capital improvement needs. These are just some of many indicators of Foster City’s sound financial condition as it starts FY 2012-2013.
Nevertheless, the City has a General Fund structural deficit that will deplete reserves in just a few years if not corrected. In FY 2010-2011 the ongoing deficit was projected to be $3.5 million. This deficit was reduced to a projected $2.5 million in FY 2011-2012 with reductions made in personnel and service levels in an effort to begin to cure the structural deficit. The deficit for Fiscal Year 2012-2013 is projected to be $1.3 million, and $1.6 million in Fiscal Year 2013-2014.
The structural deficit gap is being closed using a variety of tools. Expenditures have been cut through reduced service levels and elimination of staffing. Total staffing levels have been cut by approximately 21%, from a high of 237 in FY 2001-2002 to 187.5 in FY 2012-2013. However, essential services levels have been maintained. In November 2012, voters approved an increase from 8% to 9.5% in the Transient Occupancy Tax, which is charged to visitors to the City’s hotels. This increase brings in approximately $250,000 per year in additional revenues.
Some budgetary adjustments included in the Preliminary Fiscal Year 2012-2013 Budget include implementation of the Fire Department’s plan to share management and administration services with the City of San Mateo over the next two fiscal years, staffing reorganizations in the Parks and Recreation and Public Works divisions and the discontinuation of the Connections Shuttle service. The City will explore an update to the City’s Business License Tax which has not been changed since originally adopted in 1971. Any proposed changes would need to be approved by the voters in the November 2013 election. The expected sale of two pieces of City-owned property – the 15-Acre Site to The New Home Company LLC and the 11-Acre Site to the North Peninsula Jewish Campus – are not included in budget forecasts because escrow has not closed on these two sales.
Securing Foster City’s financial future is the highest priority of the City Council and its staff. The City has positioned itself well to weather the economic crisis, but will require prudent fiscal decisions over the coming year to resolve the ongoing structural deficit. City Manager Jim Hardy explained, “There are several budgetary adjustments underway and/or planned in this budget recommendation. However, those actions in and of themselves may not be sufficient to solve the budget deficit. An action plan will need to be developed to achieve the City Council’s goal of a balanced General Fund budget, without the use of reserves, by FY 2013-2014 and to maintain those reserves above the minimum level of 33.3% of the annual operating budget in the five year forecast.”
In Foster City, the City Manager makes budget recommendations to the City Council; however the City Council has the ultimate responsibility and authority to adopt a budget that it believes to be in the best interest of the Foster City community. The City Council will discuss the Preliminary Budget at a meeting on Monday, May 14, 2012 at 4 PM in the City Council Chambers; 620 Foster City Boulevard.
An informed and engaged public is critically important to the City’s ability to achieve its budget-balancing goals. All interested parties are invited to attend the meeting which is open to the public and will also be broadcast on FCTV Comcast Channel 27 and ATT Channel 99. The preliminary budget documents are available for public review at City Hall, the Foster City Library, the Foster City Recreation Center or online at www.fostercity.org.