The Half Moon Bay City Council is expanding the role of local government in the next budget year by creating a rainy-day fund, adding staff and increasing capital projects.
The city was near bankruptcy a decade ago but is much better positioned today. With that past in mind, city leaders are proposing to contribute $2.6 million this fiscal year to an economic uncertainty fund.
“The purpose of this reserve is to have a savings account that we hold all the time,” said City Manager Bob Nisbet. “There could be a natural disaster or a financial disaster where we do not get the tax revenue we need that year. The reserve we are proposing is looking ahead to what we think will be the next recession.”
If the money is ultimately not needed, the city will have access to additional funds to be used to provide more services, according to Nisbet.
“The city is really taking responsibility for its citizens and planning ahead,” said Councilman Robert Brownstone. “Other cities have not planned and are facing budget crises.”
The proposal involves transferring money from the Main Street Bridge reserve, which holds about $1.5 million. Staff stated there is enough money already in the Capital Improvement Program fund for the bridge restoration project.
“This is specifically to hedge our bets,” Nisbet said.
The city already has an operational reserve fund, which is at 30 percent or two months of operation costs. Nisbet explained the economic uncertainty fund would continue to grow until it reaches $3.2 million, or 20 percent of the budget.
This year the city is eyeing several projects on the capital improvement program, with a proposed transfer of $3 million from the general fund into the program.
Nisbet stated this is a one-time commitment but would not be something sustainable in future years.
“There are a lot of projects coming together and so this was the year to put more into the capital improvement program,” Nisbet said. “Three million dollars might be the largest general fund commitment to capital for a long time, maybe ever.”
There are 18 capital projects to be completed in fiscal year 2019-2020, including updating the Local Coastal Program, finishing the Poplar Beach Gateways plan, improving facilities, such as the San Mateo County Sheriff’s substation, and replacing the Ocean Colony pump station.
City staff is also increasing its work force by adding three new full-time positions, a sustainability manager, an additional maintenance worker and a recreation leader. The budget also proposes a communications department, with staff requesting $48,000 to go toward redefining a more central department and purchasing new equipment and to cover training.
This year the city is also up to renew its contract with the San Mateo County Sheriff’s Office. Nisbet stated he was pleased with the work of the Sheriff’s Office and hopes to continue the relationship. A five-year extension is currently being negotiated with an additional cost of $326,000 for the next fiscal year.
The biggest funding source for the city remains the transient occupancy tax, which in Half Moon Bay is 12 percent onto each hotel bill. Estimates for the next fiscal year show the city is expected to bring in $6.4 million from the transient occupancy tax, up 3 percent from last fiscal year. And while this upcoming fiscal year will continue to generate a surplus for the city, it is significantly less than previous years. In fiscal year 2018-2019 the city generated a significant surplus of $720,000. This year estimates are it will be about $250,000.
The city is also on schedule to settle its debt on the Beachwood settlement, however it will begin to pay off a loan owed for the new Half Moon Bay Library. The loan will be paid off in 10 years with an annual payment of about $600,000.
The final budget is set for approval at the Tuesday, June 18, Half Moon Bay City Council meeting, which is scheduled for the Ted Adcock Community Center.