During the November 23 city council meeting, representatives from the mayor's office and the office of the Independent Budget Analyst presented the city's fiscal year 2010 First Quarter Budget Monitoring Report to city councilmembers. The report, according to the city's financial manager Angela Colton, marked the first time the city strayed from using prior year budgets to appropriate funds for existing city contracts and it's the first time the city is including prior year commitments into the current fiscal year budget. Despite the new procedure, the report once again showed San Diego's financial forecast to be dominated by stormy financial conditions.
The first quarter report revealed that because of the new process, city expenditures have exceeded current year fiscal budget expectations by more than $39 million; $31.5 million of that will be paid from prior year funds. The remaining $7.5 million gets tacked on to the current budget deficit.
"Revenues are projected to be $50.4 million, 4 percent under budget," Colton said. "This is due to the continued slowdown in the economy. It is almost entirely due to sales tax and transit occupancy tax, and it's an additional $28.4 million decline from what was included in the five-year outlook."
The breakdown in city revenues showed a $25.8 million decrease in sales tax revenues, much more than the mayor's office expected when comprising the current year budget. On top of that, there's also been a $9.1 million decrease in transit occupancy tax earnings and a $4.1 million decrease in franchise tax.
In fact, revenue shortfalls are showing up citywide, explained Colton. They are showing up "from the suspension of business tax and rental unit business tax processing fees, from a decline in Mission Bay lease revenues, and a reduction in revenues associated with traffic violations, and parking citations."
There's also a $17.7 million decrease in departmental revenues as well. Park and Recreation shows the most significant reduction, a $7 million decrease. To add to that, the city treasurer's office shows a $3.6 million deficit, general services shortfall amounts to $3.1 million, Real Estate Assets department reveals a $2.5 million deficit, and the police department shows a $2 million shortfall.
There was a sliver of silver lining to the dark fiscal forecast: "Expenditures are predicted at being $11.4 million, or 1 percent under budget. This is due to various cost-containment measures, including the hiring freeze." And, according to Colton, property tax revenues are expected to be $10.1 million dollars over the amount first predicted.