San Bruno plans for ongoing deficit

The economic downturn is creating slight havoc on the city of San Bruno's budget this year when combined with a new structural deficit of $1 million including a loss of state funds.

That means the city may have to reorganize its departments to save $500,000 and bank on one-time funds for another $500,000. Those options are part of a large budget plan before the San Bruno City Council tonight. San Bruno estimates $34.27 million in bills and $33.24 million in cash flow for next year, creating a $1.03 million shortfall. Despite the deficit, the outlook is better than estimates earlier this year which forecasted the city at $1.5 million in the hole.

"In particular, the budget acknowledges and addresses the very real and difficult fiscal challenges that continue to face the city of San Bruno in an environment of a flat tax revenue base and growing demands for services important to our residents," City Manager Connie Jackson wrote in a staff report.

Reorganizing is a major part of the plan. Combining the library services and parks and recreation director position is one way to bridge the budget gap while eliminating a fire battalion chief and a public works secretary position that are both currently unfilled. Additionally, the city plans to re-title the vacant public works director position as the public services director with expanded responsibilities for facilities planning. The finance director position will be upgraded to administrative services director with expanded responsibilities for oversight of administration and operational assignments.

A savings of $469,400 is estimated from the reorganization changes.

The economic downturn is already beginning to show.

A $200,000 to $300,000 shortfall in sales tax is anticipated for the current fiscal year, Finance Director Jim O'Leary previously explained, who added next year should be similar. The closing of CompUSA earlier this year, one of the top 10 sales tax generators for the city, was a hit to that revenue. Tax revenue could turn out better than expected since Best Buy pulled building permits for the former CompUSA building last week, said Community Development Director Aaron Aknin.

The city managed a $500,000 annual deficit for the past few years. It made an unsuccessful attempt to create new revenue with Measure F - a half-cent sales tax increase in November. The measure, defeated by a mere 89 votes, was anticipated to raise $2.7 million for the city's annual general fund. The money was slated for capital improvements such as a new library, public safety facilities and sidewalk repairs. It was also a way to address the city's annual deficit.

The structural deficit remains. In recent years, the council approved a $500,000 deficit utilizing one-time funds and unused money to fill the holes by the end of the year. The city will most likely continue utilizing this method for $500,000.

Sales tax revenue remains as the highest revenue source for the city representing 20 percent - or $6.64 million - of the city's budget. Hotel tax revenue is expected to be 16 percent higher than budgeted generating $1.35 million. The increase, however, is still below the $1.55 million the city received prior to Sept. 11, 2001.

The council meets 7 p.m. Tuesday, June 24 at the Senior Center, 1555 Crystal Springs Road.