On the heels of its announcement of a AA+ bond rating from Standard and Poor’s, the City of Malibu last week declared a balanced budget projection for the next fiscal year, which begins July 1.
While certain elements, such as hotel tax, are projected to increase funds of over a half million dollars per year to the City, the ongoing proposed Civic Center Wastewater Treatment Project is expected to cost Malibu a grand total of $39 million, which will likely be paid over many years through a state revolving fund loan or the issuance of bonds.
Assistant City Manager Reva Feldman, the staffer in charge of finances for the City, stated that the City’s reserve fund, which now totals $18.6 million, or 73% of the total funds in the 2015-16 budget, is what made Malibu earn such a strong credit rating from the bond rating firm.
“The fact that we have consistently maintained such strong reserves is something that’s really paid off in our bond rating,” Feldman told Council.
Councilmembers, including Joan House, applauded Feldman’s efforts.
“I think it serves us well to be conservative, because money is easy to spend but hard to get, so I thank you very much,” House said.
Notable elements of the City’s budget include a projected increase in revenue through transient occupancy taxes (TOT), also known as hotel taxes, which Malibu recently began collecting through Airbnb in addition to the several hotels located within the City.
Feldman said the increased revenue collected from hotels and vacation rentals made her “very happy,” and pointed to a 10-year graph that showed an increase in taxes collected over the past decade.
“[TOT tax revenue] certainly has increased over the past 10 years, and currently exceeds $1.2 million,” Feldman said.
As for vacation rentals, Feldman separated their revenue to show a projected increase of $440,000 in the fiscal year running from July 1, 2014 to June 30, 2015. Feldman expects that number to increase in the next year.
“We’ve been fairly conservative for our estimate for next year at $550,000,” Feldman said.
As for the Civic Center Wastewater Treatment Facility, Feldman presented an estimated total number of $39 million, though she stated that the budget shown to council did not include that cost, pending Coastal Commission approval of the proposed project later this month.
“That amount has not been put into the budget yet,” Feldman said. “Assuming everything goes smoothly at that meeting … it goes to Council May 26.”
“I think it’s probably prudent to add it to the budget when we know the exact amount and when it will start.”
In total, the City of Malibu expects to end the fiscal year 2015-16 the way it started, with a total fund of $25.4 million.
Council, who heard this budget presentation at an April 29 special meeting of the City Council, made only one official request in addition to the budget: that staff work out how to fit an additional Volunteers on Patrol (VOP) vehicle into the upcoming budget.
“The cars are inexpensive and the people are free,” Councilmember Lou La Monte reasoned.
Councilmember Peak proposed an additional consideration for the VOP vehicle, requesting staff look into an electric or hybrid car.
“These are used police vehicles we’re using, but if we can get a used one for that price range, I think we should do it,” La Monte agreed.
“I do think there are other options out there, even a Prius, anything,” Peak said.
The budget now goes to the Administration and Finance Subcommittee, which will recommend how to distribute the City’s allocated $125,000 grant money to the 28 nonprofits who requested money, a total of $356,670 in requests.
Council will ratify the new budget during its June 8 regular meeting.
