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March 2010 home page

 

The Bucks Stop Here
Teresa McBroome, Accounting Manager/City Treasurer

 

This year’s Operating and Capital Budget featured Del Mar’s 50th Anniversary Poster with Mac McMillan’s painting of the Powerhouse.

Like many of the cities in California, the City of Del Mar is going through unprecedented challenges with the pressures felt from the economy and the ongoing State budget deficit. Early on, the City anticipated the State budget crisis and economic challenges and took action to mitigate against the types of cuts and financial crises we see happening around us with other public agencies. Rising to these challenges, the City Council in June 2009 passed its first true two-year Operating and Capital Budget for Fiscal Years 2009-2010 and 2010-2011, which is balanced. Here is a look at the City’s most recent financial results and projections based on actual revenues collected for the first six months of the fiscal year – July to December 2009.

The City’s primary revenues – property taxes, transient occupancy tax, and sales tax – make up 68 percent of the City’s revenues. Property taxes continue to be the City’s strongest and most stable revenue source. Del Mar has the highest rate of property appreciation in the County this fiscal year for a second year in a row. The projection for this revenue category was adjusted by approximately $127,000 to bring the adjusted projection to $3.578 million. This is 2.8 percent higher than the previous fiscal year’s collection of $3.452 million.

The second primary revenue is Transient Occupancy Tax (TOT). Even though the City increased the TOT rate from 10.5 percent to 11.5 percent effective July 1, 2009, the current economic conditions have not allowed the increased rate to result in increased revenues. During the summer months, the average occupancy rate was 68 percent, which is a decrease of 14 percent from the past five fiscal years’ occupancy rate of 82 percent. While recent months have shown a marked increase, year to date TOT collections are running lower by $30,000 compared to the previous fiscal year.

The third primary revenue is Sales and Use Tax. Collections from this revenue category have been declining since Fiscal Year 2005-2006. Sales tax collections for the four quarters ended September 2009 are 10.3 percent lower than the previous year. While food products are up by 1.5 percent, notably from our restaurants including our sidewalk cafes, all other economic categories including retail, construction, transportation, and equipment are down by 30 percent.

Other revenue projections that were decreased were the parimutuel or handling fees received from the Fairgrounds, building fees, and sales tax received from the County for the Public Safety Augmentation Fund. Even with the decline in these revenues and two out of the three of our primary revenues, the City is holding its own and living within its means. The City grappled with what was to come by significantly reducing its revenue estimates and drastically cutting its expenditures without affecting service. Even though the City appears to be better poised financially as compared to other public entities, the City is still not out of the woods.

 
 

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