NATIONAL CITY LAYS GROUNDWORK FOR NEXT BUDGET

For the first time in a decade, National City will bring in more money than it spends, but city officials said last week a deficit could occur again in the near future.

The South County city is projecting about $66.5 million in revenue and $65.1 million in expenditures, leaving a surplus of about $1.4 million, according to its proposed budget for the fiscal 2022-23 that begins July 1.

This time last year, National City was preparing for another unbalanced budget — with a deficit of nearly $4 million — but federal stimulus dollars are expected to place its new spending plan in a more favorable position.

“The reason we balanced the budget is through our fiscal efforts to utilize ARPA (American Rescue Plan Act) funds for the general fund,” City Manager Brad Raulston said Tuesday.

City Council members agreed last year to allocate $6 million in ARPA funds to offset general fund expenditures through fiscal 2024, or $2 million per year.

That decision, Raulston said, will help maintain a balanced budget through 2024, but “we then dip back into a deficit.”

“Obviously, if you look at the stock market (and) some of the issues with inf lation, we’re still in uncertain times,” said Raulston.

Without any new revenue sources, the city forecasts its expenditures to exceed revenues consistently from 2025 through 2030 after the ARPA general fund offset revenue ends, said Administrative Services Director Molly Brennan.

To close the gap as much as possible, Raulston said “it’s very important to remain focused on economic development and all the work we’re doing to increase revenues and to continue the recovery.”

National City will rely on revenue growth via several new sources, including its forthcoming cannabis market. The city is currently reviewing more than 10 applications it received earlier this month. It costs about $11,000 to apply for a license and 5 percent of those funds are earmarked for the general fund.

Other new sources of revenue include issuing another request for proposal for traffic signs, developing a parking authority and supporting downtown growth. The city also wants to complete plans to make National City home to South County’s first Carmax used-car dealership, which they anticipate will generate about $1 million a year in sales tax revenue. Council members approved a zone change last year that cleared the property for construction.

The general fund’s largest revenue sources are its sales and property taxes. They are projected at $39 million (or 59 percent) and $11 million (16 percent), respectively.

Both have steadily increased since 2014, with sales tax climbing an average of 5 percent per year and property taxes 7 percent, said Brennan.

Here’s a breakdown of where National City proposes to spend its estimated $65.1 million:

• 46 percent, or $30 million, goes to its Police Department;

• 19 percent, or $12.5 million, goes to its Fire Department;

• 11 percent, or $7 million, goes to administration;

• 11 percent, or $ 7 million, goes to its housing authority and non-departmental;

• 6 percent, or $4 million, goes to engineering and public works;

• 4 percent, or $2.6 million, goes to community development, and;

• 3 percent, or $2 million, goes to community services.

Also included in the proposed budget is $900,000, or 1.5 percent of its operating budget, for major maintenance projects.

Those include new backflow water prevention equipment for the Police Department and MLK Community Center, upgrades to Fire Station 34 on 16th Street, upgrades to windows and roofs at Casa de Salud youth center and design changes to the El Toyon multipurpose facility.

There are also several proposals the city wants to include in its operating budget, such as establishing passport services in the City Clerk’s Office. The city estimates it would cost about $24,000 to establish this service, which they project could make $55,000 annually. The list initially grew after council members added their own suggestions, such as more funding for the building department and a tree trimming crew. They eventually narrowed it with ideas for new city positions on homelessness and environmental justice. City staff is expected to return with cost estimates for each proposal.

The City Council will review an adjusted budget in May and adopt it in June.

Community development

Engineering and public works

Other

Administration

tammy.murga @sduniontribune.com