Last week, a special city council meeting was held to review the city’s proposed 2018-19 budget for the fiscal year beginning July 1. The city is bound by law to have a balanced budget, meaning it can’t spend more money than it takes in. The city’s income is estimated to be $46 million in 2018-19, with spending expected to be about that much. The budget presentation was given by Assistant City Manager Lisa Soghor.
Because City Council voted just last week to spend $42.5 million on new land acquisitions, parts of the 2018-19 budget proposal are now being revised and a new version will come out later this week with changes to the General Fund Reserve amounts.
Of the city’s total projected expenditures for 2018-19, 39 percent would go to operating and maintenance expenses; 23 percent to personnel; 20 percent to capital improvement projects; and 18 percent to the LA County Sheriff’s Department.
The percent going toward capital projects this year was 43 percent, due to the construction of the Civic Center Wastewater Treatment Facility, which is now 95 percent completed.
In 2018-19, the city proposes $9.4 million in capital improvement projects including street overlays, clean water projects, city facilities like solar power and electrical vehicle charging stations, and $1.2 million to complete phase I of the Civic Center Sewer.
New expenses for 2018-19 include $169,000 more for landscape maintenance “because of city council’s direction to eliminate the use of pesticides on city properties,” Soghor said. In addition, Malibu Bluffs Park will now pay about $35,000 per year in new sewer system fees and the public safety department will hire a specialist for homeless issues, with most of the cost covered by LA County.
The city will spend $7.7 million on the LA County Sheriff’s Department’s contract—a three percent increase over last year due to administrative expenses and the Liability Trust Fund (LA County fund for lawsuits). That comes out to $591 per person per year for law enforcement services in Malibu.
The current city staff includes 80 full-time employees, 13 part-time and four student interns. The Administrative & Finance Subcommittee asked the city to analyze the cost of paying part-timers a minimum of $15/hour instead of $13.25; and that increase would amount to another $97,000 per year.
Mayor Rick Mullen and Council Member Skylar Peak both said they’d gotten emails complaining Malibu has too many employees compared to other nearby similar-size cities. They and City Manager Reva Feldman pointed out that Malibu is physically larger, has 15 million visitors a year, deals with homelessness issues and has mandates on water quality that other cities don’t have.
The General Fund Grant Program, which provides funding to Malibu nonprofits, has a proposed 2018-19 budget of $150,000. Last year, the program gave $76,000 in funding to The People Concern for homelessness services, but this year, $200,000 has been included for that as a line item in the public safety budget.
The city’s biggest sources of revenue, which go into the General Fund, are expected to come 39 percent from property taxes, 12 percent from sales tax, 11 percent from transient occupancy taxes and 10 percent from licenses and permits.
The city’s General Fund began to see significant fiscal growth in 2012-13, according to Soghor, and has increased every year since then, rising from $21.6 million in 2012-13 to $30.6 million in 2017-18.
One of the reasons for the General Fund increase is that assessed property values, which are obtained from LA County, have increased 63 percent in 10 years. Malibu’s combined property value is now estimated at $15.8 billion.
“This amount would normally be for a much larger city with industrial and commercial centers, whereas Malibu is mostly residential,” Soghor pointed out. Malibu’s property tax revenues are about $9.9 million per year.
Sales tax revenues have also grown over the past decade, and are currently projected to be about $3.8 million—mostly from restaurants.
The transient occupancy tax from hotels and motels grows every year, and is expected to be $1.7 million in 2018-19, an increase now that Nobu Ryokan and Surfrider Beach Club are both up and running.
The transient occupancy tax collected from short-term rentals of private property has increased nearly ten-fold since the city first started collecting it in 2009. The number is now at $1.8 million, with 217 registered rental properties. Airbnb began collecting taxes on the city’s behalf in 2015.
The Administrative & Finance subcommittee will review the budget on May 3, a public hearing will be held on May 29, and the final budget will be adopted on June 11.