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By Shawn Raymundo
The city of San Clemente ended Fiscal Year 2020 just as officials had predicted it would in early May, with a loss of more than $2 million in revenue as a direct result of the pandemic’s toll on sales taxes and transient occupancy taxes (TOT), according to the city’s latest financial report.
The report shows that the city’s actual revenues came in at about $2.1 million below the city’s adjusted FY 2020 Budget of $69.32 million. The biggest hit came from the city’s TOT, which had a shortfall of $487,400 because of less travel and tourism.
Sales-tax revenue, which accounted for roughly 15% of the city’s overall revenue, came in at slightly above $10.04 million, short by only $85,641 compared to the adjusted budget. Losses from the city’s service charges, fines and other revenue streams were offset, the city said, by cost-saving measures.
“We knew there would be sales tax implications and TOT implications and then obviously revenue generated from park rentals and swimming,” acting City Manager Erik Sund told the council on Tuesday, Oct. 20. “The short side of it is, we forecasted $2.5 million in reduced revenue for Fiscal Year 19-20, and I’m happy to say our forecast was under. We saw about a $2.1 million impact on revenues.”
This past spring, Sund and Financial Services Officer Jake Rahn had warned the council of the expected $2.5 million shortfall in revenue for FY 2020, which ended June 30. However, Sund and Rahn were optimistic that the fiscal year would close with minimal impact.
“So, generally, we’re in line with those early estimates,” Rahn said on Tuesday evening.
Sund noted that the city, like most others, began to forecast the potential impacts the pandemic would have on revenues, but “like most cities, we were doing it in the dark, not knowing what the true impacts might be.”
Sund went on to state that the city’s “proactive approach” in keeping staff vacancies empty, reducing expenditures and saving on some contractual services contributed to “buffer the impact” on revenues from the pandemic.
While the city reported losses in several revenue categories, revenue from property taxes exceeded projections, as roughly $35.96 million had been collected—about $3.2 million more than what had been budgeted, according to the report.
As for spending in FY 2020, the city reported total expenditures at nearly $71.54 million, about $7.82 million less than what had been initially budgeted. The report stated that actual expenditures typically fall below the city’s projections, and this year’s savings “helped offset revenue budget shortfalls.”
Nearly $1.4 million of those savings came from cuts to employee salaries and benefits, according to the report. Another $2.2 million came from cuts to contractual services. The report stated that $500,000 was realized in cost savings in its police services contract.
According to the city, the fiscal year ended with an available fund balance of $19.2 million, which comprises $13.4 million in emergency reserves and $5.8 million in unassigned fund balance.
Shawn Raymundo is the city editor for the San Clemente Times. He graduated from Arizona State University with a bachelor’s degree in Global Studies. Before joining Picket Fence Media, he worked as the government accountability reporter for the Pacific Daily News in the U.S. territory of Guam. Follow him on Twitter @ShawnzyTsunami and follow San Clemente Times @SCTimesNews.