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Del Mar Addresses $3 Million Revenue Shortfall

Tom McGreal | Stratford Court

On April 20th the City Council unanimously approved additional budget cuts to cover the revenue shortfall of $3 million projected for the fiscal year ended June 30, 2020 (FY20). The revenue shortfalls largely pertain to TOT (hotel tax), sales tax, parking revenue and facility rentals.

At the April 6th Council meeting, the Council approved budget cuts totaling $1.1 million and on April 20th after a more complete review, an additional $1.9 million were recommended. Below is a summary of the overall cuts for fiscal year 2020:

Operating costs: $424,140
Deferred Capital Improvement Projects (CIP): $842,498
Deferred Special Projects: $167,580
Reduced Pension Reserve Contribution: $536,250
Transfer of Measure Q Reserves to General Fund: $502,160
Reduction of Measure Q budget: $670,000
Total:
$3,142,678

These budget actions cover the expected $3 million revenue shortfall for FY20, provide funding for a COVID-19 Emergency fund and leave the Contingency Reserves in the amount of $2.2 million intact.

In effect, the City was able cover the projected revenue shortfall by deferring non-essential CIP, Special Projects and Measure Q projects, eliminating this year’s contribution to the Pension Reserve and transferring back some Measure Q reserves related to Downtown Streetscape costs that were funded last year using General Fund reserves. This enabled the City to limit the cuts to Operating Expenditures for FY20 while freezing all hiring, reducing part-time staffing and cancelling all travel and training.

As discussed at the Council meeting, the planning for fiscal year 2021 will be the subject of a Finance Committee meeting in early May and a budget workshop on May 16th.

Planning for fiscal year 2021 will be a much more difficult task. The challenge depends upon how long the shutdown continues and when a normal level of economic activity can resume. The budget planning will have to model different timeframes with budgets that maintain essential government services and keep costs in line with the reduced levels of revenues into the new fiscal year.
Hold onto your mask!

 

 

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