Your Man Around Town 08/23/17
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Your Man Around Town 08/23/17
“I read the news today – Oh boy!”…
– Beatles

 

Foster City is a planned community. What does that truly mean?

Planned communities typically develop around a predetermined threshold population level. This threshold serves as the basis for determining the number of homes, shops and industries to be built on the land and allows coordinated development of these elements. The planned nature of population growth allows neighborhoods to develop intact and purposefully avoids the commercial thoroughfares that commonly divide neighborhoods in other cities. Industrial and commercial development is kept away from the neighborhoods, resulting in a quality of life that is difficult to achieve in unplanned communities.

As one of five elected Council members, one of our most important tasks is to approve the annual budget. The budget process takes many months of staff and City Council time to be sure we have complete transparency and a sound budget that provides the essentials to keep our City safe and vibrant. I thought about a recent opinion piece that ran in the San Mateo Daily Journal on August 2, 2017. I will always respect opinions expressed of individuals and groups, with this one caveat – take the time to fully research the issue, have all the details in place, and then do what you wish. With that being said, I recently sat down with our City Manager, Kevin Miller, who has served this City with the most professional approach, and share with you the following Q & A:

Gary: Can you reiterate how Foster City handles our budget and any deficits we could face in the outer years?

Kevin: A structural deficit is a condition whereby annual ongoing expenditures exceed ongoing revenues. In other words, there are insufficient revenues to pay for services provided to the community. Bear in mind that these include such services as public safety, parks and recreation amenities, public works, etc. that the City Council desires to provide to the Foster City community. The General Fund does have a structural deficit for the current fiscal year as well as the next 4 years (if we exclude one-time development fees in year 5). As elaborated in the Budget Message, the budget for fiscal year 2017-2018 anticipates a structural deficit is $646,800. After adding a one-time transfer of $2.06 million to an employee home loan and rental assistance program, the total deficit expands to $2.707 million. The Budget Message was explicit in stating that the structural deficit is $646,800. There was no “engineering” to inflate the structural deficit to a higher number. A study session(s) has in fact been planned for October to discuss revenue options to address the City’s General Fund structural deficit.

Gary: Line items in the budget are just that – Line Items or Placeholders. So, have you received any policy direction on the employee loan assistance program?

Kevin: Based on direction from the City Council, the fiscal year 2017-2018 adopted budget includes a $2.06 million allocation for an employee home loan and rental assistance program. The purpose of this program is to assist City employees with securing affordable housing either in the City or within a short radius of the City (e.g. 15 miles). Similar programs are already in place or under consideration in our neighboring cities including Brisbane, South San Francisco, San Bruno, and San Mateo. This proposal is being finalized by staff and will be presented to City Council for policy direction on September 18.

Gary: A city that has healthy reserves should have some plan for how to use the funds. Has Foster City been a good steward of the city and its future?

Kevin: The City Council has an adopted reserve policy of 33 1/3% to 50% of budgeted operating expenditures. As indicated in the Budget Message, after setting aside $20.65 million at the 50% Reserve level, there is an estimated $17.65 million left in Unassigned Fund Balance (excess Reserves). These funds may be used at the discretion and direction of the City Council. However, it is important to note that there are many unmet needs including unfunded pension and new capital improvement projects (e.g. Parks infrastructure and facilities) that can be potential candidates for these funds. As for the possibility of using the $17.65 million for the $90 million Levee Project, the City Council has already considered the merits of a City contribution option and decided against it, as the reduction in the amount of the tax levy would be marginal (e.g. a home with an average assessed value of $650,000 would only see a reduction of $53, from $273 to $220, if the City uses its entire $17.65 million on the Levee Project). 

Gary: Running a city requires income, such as taxes and fees. Do we need new development to survive?

Kevin: Staff has not attempted to imply that the City’s financial health is dependent on continuing increases in development and its associated fees. The fact is, in terms of the budget, one-time development fees are not counted as ongoing revenues as they do not provide a reliable source of funds to pay for ongoing expenditures. The City has been and continues to be transparent in stating that its largest source of revenue is property taxes. However, property taxes alone are insufficient to pay all City expenditures. A diversified revenue stream is also an important element of fiscal sustainability. As a result, City staff will discuss transient occupancy tax and sales tax increases as possible options to address the structural deficit issue at the October study session with the City Council. Staff will also have a broad based discussion with the City Council on expenditure reduction and land use.

Gary: Thank you Kevin, for taking time to address a few points to help residents grasp the complexity of our budget. Foster City is very fortunate that the employees of our City’s past and current and the Council members, past and present have always looked to the future while protecting the past!

If you wish to comment or share your thoughts, please contact me at gpollard@fostercity.org or (650)286-3505.

Gary

 

Council Corner

August 23, 2017
Your Man Around Town!

City Hall - 610 Foster City Blvd.
Foster City, CA 94404
(650) 286-3200