Among various topics discussed during the San Clemente City Council’s first special meeting on Nov. 9, concerning a City Council Retreat, finances were near the top of the list.
Chiefly, the council and staff engaged in “high level” conversations, according to Mayor Chris Duncan and City Manager Andy Hall, regarding how the city could increase its revenue generation efforts and the prospects of adjusting the fiscal budget to last two years.
Options for raising revenue included bringing back the Clean Ocean Fee, which expired in 2020, and raising the city’s Transient Occupancy Tax rate, which allocates 10% of funds that visitors spend on lodging in town to the city.
Both Duncan and Hall emphasized that the council did not make any decisions at the meeting, with Hall mentioning the need to begin evaluating how to best approach the city’s “financial future.”
“That’s why we have those workshops,” Hall said. “They’re not intended to make any final decisions, but (to) just have conversations with the council about philosophical issues so that, hopefully, we can bring to them the kinds of projects they want to see, including financial projects.”
Items potentially on the city’s horizon that would require more funds include paying the city’s share for the ongoing San Clemente Shoreline Project, addressing the city’s unfunded pension liability, and paying for more sheriff’s deputies or other public safety needs.
“If we want to do some of those things, there’s going to have to be both better spending and more effective use of our existing resources, and we may have to look at some other funding to address some of the needs in the community,” Hall said.
Staff’s main reasoning for broaching the subject was to inform the council of the options at its disposal, according to Hall.
Duncan said his priority was to avoid raising taxes, and that he wanted to see the city’s revenue generation coincide with increased economic activity, whether through attracting more businesses or capturing funds from sporting events that come to the area, such as the World Surf League Finals or Major League Pickleball events.
Duncan declined to establish himself as an advocate for restoring the Clean Ocean Fee or increasing collections from the Transient Occupancy Tax, adding that he hadn’t had the opportunity to hear the fully articulated arguments for either.
“Again, as a baseline, whatever we do, I don’t want it to be any kind of increase on taxes for our residents, and I want to make sure that we get revenue from other outside sources,” said Duncan. “That’ll play into how I evaluate those issues.”
Regarding the topic of a two-year budget process, Hall said he believed “most cities” follow that model, which gives a better outlook for capital projects, because most government-authorized projects aren’t completed within one year.
Under the current process, if only half of a project is completed within one year, there’s a “really awkward game” in the process of reallocating the rest of the money for the project, according to Hall.
“It puts you in a really weird position (where), what if you get new councilmembers and they don’t want to reallocate the million, and you have a project half-done?” Hall said. “A two-year horizon in a municipality is just more effective in managing your fiscal resources.”
Duncan pointed to future Long Term Financial Planning and budget workshops as instances in which he would more readily opine on whether to transition the budget process.