The half-cent Transactions and Use Tax (TUT) passed by voters is expected to add $2 million to the budget
Back on April 26, the Malibu City Council took its first look at the Proposed Budget for the 2023/24 Fiscal Year, which was prepared by staff for its consideration. It was the first of four planned public sessions at the council and council subcommittee levels to review the budget. The most recent session was the Strategic Planning Workshop held last Wednesday, May 24, in order to provide feedback and direction to city staff as they all work towards finalizing the budget.
According to the staff report, “The FY 2023-24 Proposed Budget is a structurally balanced budget that is mainly status quo over the prior year. Revenues are continuing to grow, but the budget remains conservative.”
Ongoing operating revenues of $54.8 million will more than cover ongoing city operating expenses of $52.3 million.
In addition to that, there’s a General Fund Undesignated Reserve of $65.8 million, which is 119 percent of the annual operating budget. This exceeds the city’s goal of keeping at least 50 percent of the operating budget in reserve, and also exceeds the amount the city needs to retain the highest credit rating. Some council members have questioned whether that surplus couldn’t be put to better use by the city.
The Proposed Budget for FY 2023-24 includes a Capital Improvement Project plan that is described as “ambitious as always” in order to spend Measure R and M dollars before they expire. The Capital Improvement Projects budget totals $39.5 million, with most of the money coming from outside funding sources and grants.
On Dec. 19, 2019, the city received a $13.6 million settlement for the Woolsey Fire from Southern California Edison (SCE), and $6.6 million of that money still remains. Of that, $4.2 million is restricted and $2.4 million is available to cover one-time rebuilding efforts of the Planning, Building Safety and Public Works departments.
The Proposed Budget is conservative in its estimates of revenue growth. The City of Malibu’s major General Fund revenues come from property taxes, Transient Occupancy Tax (TOT), and Sales and Use Taxes.
Property Tax revenues are estimated at $17.9 million for FY 2023-24, assuming a modest growth of 2.5 percent over last year.
Transient Occupancy Tax (TOT) from short-term rentals is expected to remain flat for FY 2023-24 at $6 million. TOT from Malibu’s six motel/hotel properties and one RV Park is also expected to remain flat at $3.5 million. The City’s TOT rate is 15 percent.
Sales and Use Taxes are expected to be nearly $2 million more than the last FY, for a total of $8.4 million, due to the half-cent Transactions and Use Tax (TUT) increase approved by voters last November. However, the city projects flat Sales Tax growth from restaurants, gas stations and grocery stores due to the possibility of a recession.
The American Rescue Plan, a federal plan to help cities in the U.S. deal with shortfalls due to COVID, gave Malibu $2.8 million over two fiscal years, which it is now allowed to claim as a revenue loss.
Special Revenue Funds are expected to total $35.6 million and come from the following sources: Gas Tax $311,000 (a decrease of $60,000 from the prior year due to decreased fuel prices), Traffic Safety revenue $202,000, Proposition A revenue $312,000 and Proposition C revenue $258,000. The city is also projected to receive $392,000 from Measure W — the LA County Safe Clean Water Act — which can be used for stormwater related projects and maintenance.
Revenue from Malibu’s three Landslide Maintenance Districts, the Carbon Beach Undergrounding Community Facilities District, and the Broad Beach Undergrounding Assessment District, are also included in Special Revenue funds. These districts also have expenses — the Landslide Maintenance Districts require operations and maintenance; and the other special districts have debt service and administrative costs.
The Special Revenue Fund also includes an estimated $16.5 million for Phase Two of the Civic Center Water Treatment Facility, which will be extended to residential neighborhoods in the Civic Center area. Staff has been exploring and lobbying for grants and other state and federal infrastructure funds.
The Legacy Park Project Fund reflects income and expenditures from the city’s three commercial properties, Legacy Park, and clean water projects. The Proposed Budget includes $1.6 million in rental income from three commercial properties, which is used to pay off the cost of the Legacy Park acquisition, operations and maintenance, and the Civic Center Water Treatment Facility (CCWTF), although Assessment Districts also provide reimbursements.
All city departments have salary and benefit increases of 5.1 percent for cost of living. The internal cost allocation of overhead for Information Systems increased from a fixed amount of $5,000 per user to $11,200. There are currently 102 full-time and 13 part-time employees.
The Public Safety budget is increasing by $2.35 million over last year due to the Sheriff’scontract increasing 7.63 percent for higher administrative costs and the Liability Trust Fund. The Malibu Substation is scheduled to open on July 1 at current patrol levels, but may need to add support staff for the public counter as well as operational enhancements. Staff writes that the contract with the Sheriff’s Department could increase significantly depending on the staff and services eventually approved for the substation.
Community Services expenses are going up $121K due to the department taking on additional programs for the community.
The proposed budget for Environmental Sustainability is increasing by $2.2 million, mainly due to the increased need for Professional Services for building approvals.
The Planning Department’s budget is increasing by $630K in order to add three full-time employees.
Public Works has a net increase of $200K due to increased costs of street maintenance, yard rental, and fleet operations.