City Finances Performing Better Than Anticipated

Foster City is facing a $3 million deficit at the end of the fiscal year, but is in better financial footing than what was initially anticipated, according to city Finance Director Steve Toler.

Toler gave a presentation forecasting the city's financial future based on the budget performance through the third quarter of the fiscal year, which ended in March. 

According to Toler, the anticipated $3 million deficit is $500,000 less than what was initially projected and some the city's main revenue sources are healthier than they were this time last year.

"We are beginning to see a slow recovery," said Toler, of the economy's health.

The city will bring in $13.6 million in property tax revenue, which is $518,000 better than what was projected halfway through the fiscal year. And transit occupancy tax or hotel tax, is up $200,000, according to Toler's report.

Toler did express concern about the negative impact of some of the businesses that generate the most sales tax revenue potentially leaving Foster City. He pointed to Solar City relocating to San Mateo as one of those points of concern.

Sales tax is especially unstable, since only 20 businesses were responsible for generating nearly 80% of the city's revenues.

"That's a fairly high concentration, so we need to keep our finger on the pulse of where these businesses are going," said Toler.

Additionally, in an effort to correct an error made by the State Controller's office, the state will refund Foster City $600,000 for owed sales tax revenue. Sales tax revenue to the city is down from what was projected, but the payment of money owed from the state will close that gap.

But all financial factors considered, the city's revenue sources are projected to finish $156,000 less than what was initially anticipated. The city is also expecting to spend $620,000 less than projected, according to Toler.

The city requested relief in pension payment from CalPERS due to financial hardship, which was denied this year, causing the city to pay its full obligation toward its pension fund. But same request by the city was granted next year, which will help offset some of the pension cost, said Toler.

The city's pension cost has increased 4% from last year, said Toler.

The city has $22.4 million in reserves currently, and anticipates to have $19.4 at the end of the year after $3 million is spent to close the projected budget gap.

"This council has worked very hard over the past months to address the structural deficit," said Mayor Linda Koelling.

Toler also said that he anticipates the city may lose an additional $100,000 in funding from the state as it appears unlikely that Gov. Jerry Brown will get the support necessary from lawmakers in the state capital to pass his budget proposal.

Gov. Brown is expected to release an "all cuts" budget which will feature up to $13 billion is spending reductions in an effort to close the remaining budget gap, which he had initially hoped would be paid for by approved tax extensions.

Gov. Brown has already approved $12 billion in cuts, but the additional $13 would be necessary to balance the state's budget, which faced a $25 billion deficit at the beginning of the balancing process.

In other business, the council unanimously approved a proposed fine increase fines to residents whose home alarm system sounds off repeated false alarms.

As recommended by the police department, beginning July 1, a $50 fine would be imposed for a second false alarm, $100 for a third and fourth time, $175 for up through seven times, and $250 for each subsequent false alarm afterwards.

False robbery and panic alarms would cost residents $100 for a second time, $200 for a third and fourth false alarm, $350 for the fifth through seventh false alarm and $500 for each false alarm afterwards.

According to Police Captain Jon Froomin, the increased fine for robbery and panic false alarms is because that response demands a more significant reaction from the police department.

Froomin said increasing fines for false alarms is necessary to make an incentive for residents to fix home alarm systems that sound false alarms, and waste police time in responding.