Sausalito projects lower than expected deficit

Sausalito is expected to cut its $3 million deficit to $1 million thanks to belt tightening and a boost in revenue.

The fiscal year has resulted in higher-than-expected property and sales tax revenues and less spending on staff, City Manager Chris Zapata told the City Council during a mid-year budget review session Feb. 28.

“We are still out of balance,” Zapata said. “But to say we’re working hard is an understatement.”

Originally, the city’s $35.7 million budget projected a deficit of $3.2 million. The city is now looking at $984,308 in revenue and $1,061,614 saved in expenditures, Zapata said.

Vice Mayor Ian Sobieski said the outlook was positive, but noted there was “lots of more work to do.”

“By no means are we out of the woods,” he said.

The city has used reserve funds to balance the budget in the last two fiscal years.

Last year, the city balanced the budget with $4.3 million in one-time funds from the American Rescue Plan Act, fund transfers and Measure O. The city identified mounting pension payments and unexpected funding on homelessness as detrimental to its budget in that year.

In the 2022-23 budget, the council also drew from reserve funds, but saved on staffing.

One aspect bolstering this year’s budget is the increase in the city’s sales tax rate. The passage of Measure L, which will replace the sales tax Measure O, will increase the tax rate in Sausalito to 9.25% on April 1, up from 8.75%.

The city receives 2% of the 9.25% total, Zapata said. Year to date, the city has received $1,721,802 from sales tax, a city staff report said.

The city has also benefited from an increase is property taxes, Zapata said. Year to date, the city has received $3,675,106 in property tax revenue. Property tax increases have been on a steady uptick over the last 10 years, a staff report said.

Staffing cuts include the elimination of the parks and recreation director, the assistant to the city manager and administrative services director positions; the freezing of two police officer positions, a management analyst in the city manager’s office, and an HR Technician; and the reliance on consultants.

In the 2021-22 fiscal year, the city originally projected a deficit of about $4 million. The deficit at fiscal year end was $2.4 million.

The city is still facing payments toward its pension obligations and debt service in the next decade or more. The city will likely anticipate a deficit in fiscal year 2023-24 unless it identifies more cost savings and sources of new revenue.

City officials said they were committed to balancing the budget in the coming year.

“I think our task as a council is how to remain focused on finances above all, above all else,” said Councilmember Janelle Kellman.

Further presentations were expected in the coming weeks that will zero in on expenditures in specific city departments, Zapata said. Budget transfers and other adjustments would likely be made by resolution at a council meeting later this month.