Belvedere City Council scrutinizes draft budget

The Belvedere City Council is questioning certain expenses in a proposed budget for the next fiscal year.

The draft budget shows a general fund deficit of more than $1 million by the end of the 2024-2025 fiscal year. City staff said it expects to make up the shortfall with excess funds from this year. The council reviewed the draft at its May 13 meeting.

“The general consensus is that for now, we still have room with the budget, but that our trends in terms of pensions and fire and infrastructure costs continue to get worse,” Councilmember Sally Wilkinson said.

Helga Cotter, director of administrative services, said staff expects to end the current fiscal year with $5.6 million in the general fund. However, after the operating expenses — and transfers to funds and trusts totaling $950,000 — the city will end next fiscal year with a $1.2 million deficit.

However, Cotter said excess reserves of $1.5 million from the current fiscal year that ends June 30 will help bring the city out of the deficit. The proposed budget will allow the city to meet its general fund reserve policy of at least $4.3 million for the fiscal year. The budget does not include any potential grant funds.

“The budget process reflects a fiscally conservative approach which allocates resources to maintain staffing levels and the operation needs of the city,” Cotter said.

Vice Mayor Jane Cooper asked why the city planned to contribute $660,000 to the infrastructure fund when there was a deficit. From the capital fund, costs include projects involving road maintenance, emergency preparedness work, fire fuel reduction and technology upgrades to the council chambers.

“I was curious why we would make the choice to put that amount in now where maybe if we put $300,000 in … then we would have a balanced budget there,” Cooper said.

Cotter said that because the end of this fiscal year should leave the city with excess reserves, staff felt it was “prudent” to put money into the reserve now in anticipation of the estimated $2.2 million Beach Road stabilization project.

“If we didn’t transfer it this year, then it may be the impression that we have excess funds to spend elsewhere and we don’t have excess funds to spend elsewhere,” Wilkinson said. “We already have a lot in the critical infrastructure fund today because of prudent fiscal planning, and now we’re adding more so that in the year that the project is implemented we’re not going to have to cut services.”

The total general fund operating revenue for next fiscal year is $10.3 million, an increase of 7.1% from the current fiscal year, according to Cotter. The increase is attributed to greater property tax revenues and a small increase in encroachment permits and road closure fees.

The majority of the city’s revenue, 71%, comes from property taxes. Cotter said the property tax forecast shows a potential 5% increase, equal to $358,000, for the budget year. Building permit and planning revenues have decreased since the COVID-19 pandemic, mainly due to smaller projects, according to Cotter.

The city anticipates $9.8 million in operating expenditures from the general fund. A 7.5% increase in its contract with the Tiburon Fire Protection District is one of the biggest changes. The service contract currently costs around $2.1 million, but is expected to increase to $2.4 million in the next budget cycle. The city also will make one of two payments of $92,500 its annual Section 115 contributions — a trust account needed to fund employee benefits.

Additionally, the city hopes to make a payment of around $250,000 in pension-related debt. Required pension contributions to CalPERS are expected to rise from $195,000 in the 2024-2025 fiscal year to $415,000 by the 2028-2029 fiscal year. City Manager Robert Zadnik said the total remaining pension debt at the end of this fiscal year will be $1.6 million.

Cooper also asked if an expected expense — $100,000 for a consultant-led study on the city’s fees for its services — could be minimized. Mayor Peter Mark said a fee study needs to happen to ensure costs are being correctly captured and attributed, but that there is a lot of work staff can do internally to minimize the overall expense.

“The return on that amount of money through a fee structure is very, very dubious and something that I think we need to look hard at,” Mark said.

Wilkinson said she is working with a group to format the budget in a more readable manner for residents.

A City Council public hearing is set for June 10. The new fiscal year begins on July 1.