Del Mar tweaks budget as revenue gains seen

The Del Mar City Council approved a few changes to the 2022-23 budget on Monday based on the latest projections that show a continued but slow recovery from the COVID-19 pandemic.

The council had previously approved a two-year budget that covers 2021-22 and 2022-23 in June 2021. Some of the upticks included in the latest round of updates were transient occupancy tax, or hotel tax, which is now projected to be $3.3 million for the 2022-23 fiscal year. The previous projection was $2.6 million.

“Hotel occupancy averages are expected to be increased, and we also expect to see increased revenue due to the reopening of the Del Mar Hotel,” Monica Molina, the city’s finance manager, said during a presentation to council members.

Hotel tax was about $3 million in the two full fiscal years before COVID-19, then dipped to about $1.8 million in 202021 when public health restrictions were in full effect throughout the country.

Sales tax has been a little slower to rebound, but the city projects that it will return to its prepandemic level during the 2023-24 fiscal year. For 2022-23, the projected amount is $1.95 million, an increase of a little more than $300,000 compared to when the council adopted the budget last year.

The city is expecting a boost from the return of the San Diego County Fair, which has been on a two-year hiatus because of the pandemic. It was canceled in 2020, and in 2021 there was a scaled-down version of the fair called HomeGrownFun.

Del Mar City Councilmember Dave Druker also mentioned the possibility of a recession and how it could impact the city’s finances.

“We went through a sudden, big recession with COVID,” Molina said. “If we come across another situation that is similar, I think we would have to come back to the City Council and probably reduce our expenditures again. But I don’t anticipate that being necessary based on our reserves that we have.”

Del Mar also received a little more than $1 million from the federal government as part of the American Rescue Plan Act.