“Budget. For most of us, that single word can strike fear into our hearts – especially when it’s paired with the word ‘government.’” 
We in California think we are alone with a State in budget crisis and local governments on the brink of that very crisis, but we’re not. The preceding quote came from a blog of a Mayor in the midwest.
Whether you are working on your household budget, the budget for a small or large business, or the budget for a governmental entity, the process is likely complicated, challenging, and full of decision-making priorities. Priorities mean that some things get funded and others, do not. Worse, at the end of the day, some budgets are well-funded and others face a deficit.
But no panicking here, the City of Belvedere is not facing a deficit. In fact, we can’t. The City is not legally permitted to run on a deficit – unlike the State. The State Constitution prohibits local governments from operating in terms of operational deficit financing. We can issue bonds for large capital projects, but we cannot operate in debt for general operating expenses. We can maintain a reserve. In an agency that is primarily dependent on local revenue sources, a reserve is extremely important.
Each year, the City collects funds through various mechanisms to cover operational expenses as well as capital expenses. Typically, our total revenue amounts to approximately $5.0 to $6.0 million, depending on specific grants or special revenues. Our local revenue sources include:
- Property Taxes
- Sales Taxes
- Franchise Fees (PG&E, Comcast, Mill Valley Refuse)
- Business Licenses
- Permit Fees (Planning, Building, Public Works)
- Fines (Vehicle, Planning/Building Penalties)
- Service Charges
- Fire Tax
- Rental Income
- Project Grants
The City tries not to be dependent upon any outside agency (i.e. State or Federal) as a regular funding source. But we do have a few:
- Supplemental Law Enforcement Fund ($100,000 per year)
- Gas Tax Fund ($45,000-$50,000 per year)
- Marin County Transportation Sales Tax ($26,000 per year)
The only debt the City holds is for a brief period of time as Underground Utility Districts are formed and operated. Once established, bonds are sold and that debt is transferred to the Assessment District and the member property owners. We have a balanced budget that is adopted every year – with little fanfare. That budget covers the City’s operational expenses and capital expenses. It’s not a complicated document and not that long – in fact, it’s available for download on the City website. Check it out – it includes a Budget Guidelines section discussing the City’s various funds and fund types.
On Monday, March 8 at 6 pm staff will present the Council with a mid-year budget presentation. That’s sort of a “what’s over and what’s under” presentation as well as a “what did we do” slide show. Once complete, the City’s 2010/2011 Budget Cycle begins.
The City operates a pretty bare-boned operation. We have a base team of expertise that know the details and run the different departmental areas, but we tend to use a lot of consultants that bring further expertise and result in a more scaleable operational structure. A small agency, such as Belvedere, cannot afford to hire permanent extra staff – particularly when operational demands go up and down each year. We do more with less on a regular basis. Staff wear many hats both in and outside of their primary areas of responsibility. The ability to multi-task, prioritize, facilitate, and educate while still meeting jurisdictional, legal, and governmental timelines across a plethora of projects is a must.
From a future budget perspective, the expectation is that property taxes will decline slightly over the next couple of years and then level off. That’s the City’s primary revenue source. When such a significant and primary revenue source declines, even slightly, the City faces tougher choices when programming out maintenance and capital projects in order to maintain a healthy reserve.
Through the budget process, we assess needs and set priorities. You have opportunities to give input as the adoption of the budget is a public process for the City Council. As you look at the budget, note that projected out over the next 5-7 years, the balance of the general fund at year-end (i.e. the amount in reserve) declines and other funds, such as the Capital Improvement Fund, increase. This is due to the slow, but steady increase in general operating expenses, scheduled capital project priorities, single-year special project expenditures, and the addition of major unanticipated capital projects without alternative funding sources. To meet future needs, funds are transferred from the general fund to these special purpose funds. As budget years come into focus, projects without funding sources are either eliminated or funds are allocated from particular sources (General Fund, Grants, etc.).
The good news is that basic revenues generally outpace budget projections at year-end. From current year to current year, the amount in the general fund at the end of the year is typically higher than projected. This is due to the City’s conservative budget process. For expenses, we nail down costs as concrete as possible for the budget. For revenues, we nail down those as well, but project them conservatively.
The City Council reviews and prioritizes the City’s Annual Operating Budget. Like a household budget, the City budget is always tight. Our goal is to spend money wisely to meet the needs of the community, whether those needs are roads, sidewalks, tree trimming, public education and information, safety inspections, design review, long-term planning, park maintenance, pathway improvement, code enforcement, engineering, land-use, infrastructure projects, building permits, building inspection, public safety, deer, flood zones, noise, street sweeping, traffic, storm preparation, committee support, or more.
Challenging choices with challenging priorities in a changing environment. But in Belvedere, we know we can make things happen to meet the needs of this community – it’s all a matter of finding the right solution.
Imagination Stirs Innovation to Realization.
