City Revenue: Down but not out

We touched on the fiscal effects of reduced travel and thus reduced hotel tax ("TOT") four months ago with the expectation that things could be serious.  The Daily Journal is reporting on the figures presented to the council and notes

The city gathered more than $29 million from the tax in 2018-19, nearly 35% of the city’s revenue that year. But last year that figure plummeted to $5.7 million, and the city this year is on track to collect $10 million as some travel returns.

While TOT revenue is projected to rebound to between $22.7 million and $26 million by 2026-27, as the city grows, its other revenue streams are expected to similarly increase. Property tax and sales tax are projected to account for 39% and 24% of the city’s revenue this year, respectively, and the TOT less than 15%.

Despite the ongoing hit to the TOT, councilmembers emphasized the city’s ability to maintain service for most with “not a single blip” thanks to a conservative budget structure and nearly $45 million in the city’s general fund prior to the pandemic.

Those reserves are the key to keeping away "the blips".  How fast we dip into them for how long and for what purpose is perhaps the most important decision a city council can make.  Here is the tentative plan

A tentative budget proposal indicated the city could dip into its reserves by $2.5 million this year and again by $4.8 million, $5.3 million and $5.6 million (Ed:  that's $18.2M or 40% for those keeping track at home) over the following three years until a surplus is again achieved in 2025-26. But as (City manager Lisa) Goldman pointed out, the projections include considerable planned infrastructure spending that could be pulled back if needed.

Projects include the Broadway grade separation, El Camino Real repaving and other road upgrades and park improvements. Councilmember Donna Colson expressed her support for proceeding with the projects as planned and seeking other ways to reduce the deficit.

“I just don’t think you can save your way to success, I really believe that you have to invest in your community … and if you want the high-quality services, and you want the good roads and … everything to be state of the art, we have to figure out a way,” she said. “Whether it’s through the business licensing fees or really just working on economic development, I want to figure out a way to close that gap.”

The "business license fee" increases that are being bandied about are raising concerns among the Mom & Pop operations in town.   Numbers are flying around, some substantiated, some less so.  I think there is general agreement that a business like Meta/Facebook on the bayfront should be paying more than an ice cream shop.  The devil is in the details in between.  I recall a funny story relayed to me by a reliable source.  When Virgin America was looking to locate its headquarters in B'game, they met with the mayor (Mary Janney at the time) and the city manager.  Virgin asked for a reduced business license fee and the two B'gamers looked at each other with a look somewhere between amusement, confusion and embarrassment at being such a small town operation and replied "It's a $100 flat fee".  Virgin moved in......

Comments

[Grace]

Not a big blip on the City Budget, but I am shaking my head as to why Burlingame grants $10,000 a year to the Leadership Council of San Mateo County for their "10-month intensive and experiential civics and leadership development programs for individuals from business, government, and nonprofits that will accelerate their organizational and community impact."

These are people that already have jobs. Shouldn't their employer be the one to fund training? Looking at their past "classes" it looks like a who's who of YIMBYs. I don't recognize one non-democrat and their use of pronouns in their bios is akin to a warning for conservatives to stay away. I also don't see a whole lot of people from Burlingame in the program. But some of our past and present council members do have rolls within the group which makes me think we are funding a democrat networking operative. Is that ethical or legal?

https://www.leadershipcouncilsmc.org/

[Phinancier]

At a minimum the County should be funding all of this, not Burlingame.

[Grace]

I respectfully disagree. This should be all privately funded. It has the appearance of just a Democrat networking op. I’ve brought this issue up to Brownrigg but he thinks it’s great that most of the people involved in the program are promoted soon after completion. This is antidotal since most people advance in their career trajectory. Plus there is no vetting of the people in the program. This year’s class includes a lady that is belligerent, threatens and doxxes people so I don’t think she has learned a thing. One of the people that she harassed just passed away in her sleep, and although I did not know her, have to wonder how the stress impacted her health.