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Show Me the Money!
- Tom McGreal | Finance Committee Chair

Note: The editors believe the city budget and other financial documents should be seen as the “drivetrain” of all of our city’s operations. This is part of a series by Tom McGreal to help readers understand the fundamentals of Del Mar’s financial system.

 
City of Del Mar General Fund Dashboard.
Click to enlarge.

The City of Del Mar’s Consolidated Annual Financial Report provides a complete picture of the financial condition of the City for each fiscal year. If you’ve ever picked up a copy of the 130 page Report, it can be quite daunting. The complexity of government accounting and the inclusion of the enterprise funds for Water and Wastewater make it challenging to isolate the information that tells us how the City government is doing financially. Of course, the Annual Financial Report is also historical data by the time the Report is issued.

As a result, the best place to find up to date financial information is the current year budget for the fiscal year ending June 30, 2018, which the Council approved in July and adjusted in October. Below is a review of the Revenues and Expenditures from this latest City Budget.

Revenues
The City’s General Fund revenues for fiscal year 2018 are budgeted to total $17 million. The largest source of revenues is Property Tax, which represents almost $6 million, Sales Tax including the new Measure Q 1% represents $4 million and TOT (the hotel tax) provides $2.7 million. Tax revenues will total over $13 million, which represents 76% of the total City General Fund Revenues. Parking and planning services make up $2.4 million and the remainder is spread across a number of smaller Revenue categories.

If we look at the year to year growth, Revenues for 2018 have grown 8.9% over 2017 when the new Measure Q sales tax are included, but Revenue growth is flat if we exclude the Measure Q revenues. Based upon the City’s strategy to use Measure Q for three specific projects (Undergrounding, Shores Park and Streetscape), the City will rely upon Revenues without Measure Q to fund City operations and a normal level of Capital Improvement Projects.

Although total Revenue growth has been limited in the past few years, Del Mar does have a solid recurring revenue base built on the Property taxes, Sales taxes and TOT, which have weathered past economic downturns very well.
It’s important to remember that Del Mar collects only 1% of the total sales tax of 7.75%, but we get to keep all of the new Measure Q 1% District Sales tax. Essentially Measure Q doubles the City’s sales tax revenues. The largest payer of sales taxes to Del Mar is the Fairgrounds (over 40%) are the largest category of payers is the restaurants (over 50%).

It is also interesting to note that the City receives 14.8% of all property tax paid by the residents with the majority going to the County and special districts (schools and water).

Expenditures
Next let’s look at the City spending. The City’s General Fund Expenditures are budgeted at $12.1 million this year and total spending before Capital Improvement Projects is projected to be $13.9 million. The cost of Public Safety including Law Enforcement, the Fire department and the Lifeguards totals $5.4 million representing 45% of the total Expenditure budget with the remaining $6.7 million or 55% attributed to General Government costs. In addition the City will transfer $.9 million to the Special Funds (most notably the Gas Tax fund and the Open Space fund) and the City will pay its first full year of debt service for the new City Hall in the amount of $.9 million. Finally the budget calls for the transfer of $4.1 million to the Capital Improvement Fund for Capital Improvement Projects (CIP).

These Expenditures levels are the result of several actions taken by City Council. In July the Council reacted to the forecast of softening revenues and increasing expenditures by reducing the 2018 Expenditure Budget by $912,000. In October the City reported better than expected Fiscal year 2017 results, which allowed the Council to increase the 2018 Expenditure Budget by $221,000 and increase the transfer to the Capital Improvement Fund to the $4.1 million shown in the chart.
The Council has pledged to continue to monitor the revenues and expenditures for 2018 to make sure that the actual results meet the 2018 budget. Any further adjustments to spending will have to be supported with actual results that represent improvements to the budget.

In the next issue we’ll review the City’s Reserve Funds.

 

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