Editor’s Note: This story has been updated to include comments from city officials during Tuesday night’s council meeting.
By Shawn Raymundo
A preliminary financial report the city released last week shows that revenue collections for the previous fiscal year, which ended on June 30, are short by about $4.34 million—more than the initial $2.5 million the city had anticipated losing in tax revenue because of the public health crisis.
According to the report, which was presented to the council during its meeting on Tuesday, Aug. 18, the city’s general fund revenues for Fiscal Year 2020 have, so far, amounted to roughly $63.6 million, falling below the $67.96 million the city has projected to collect.
In early May, nearly two months into the economic lockdown, city officials told the council that they anticipated losing about $2.5 million in general fund revenue, though maintaining optimism that the city would end the fiscal year “with very little impact.”
“I think it’s safe to say—and we can say with confidence—that we’ll be able to close out the current fiscal year with very little impact,” acting City Manager Erik Sund had told the council on May 5.
As of press time, Sund had not responded to San Clemente Times’ request for comment.
The latest report notes that the $63.6 million total isn’t inclusive of the last bit of accruals for the month of June and that the city expects to receive the final property- and sales-tax receipts for FY 2020 by the end of this month.
“Generally, Finance doesn’t see major concerns at this point that would cause us to revise the ending fund balance for the fiscal year,” Financial Services Manager Jake Rahn told the council on Tuesday, noting that the city is projecting a fund balance of $18.1 million for the end of FY 2020.
Rahn told councilors that after the final accruals have been received, the city will put together the final year-end report that will be presented to the council.
In San Clemente, property taxes make up the lion’s share of the city’s overall tax revenue, which was projected to reach nearly $35.9 million this past fiscal year. Based on the preliminary data, the city had collected about $35.54 million.
The report stated that the accrual for property taxes had previously been around $300,000 to $400,000. Should the city receive a similar accrual this year, the total sales-tax revenue would slightly exceed the city’s projection.
The city’s report also stated that “based on currently available information,” the receipts from sales taxes are estimated to put those revenues over the $9.5 million mark, exceeding the city’s current recorded collection of $8.18 million, yet still falling short of the $10.05 million projected.
That receipt, the report stated, is expected to be received by Aug. 25 and “will be key to providing this information, as the State has changed its allocation process.”
The report also noted that while the city accrues receivables from other revenue sources, including transient occupancy taxes, they’re likely to “generally” stay in line with the city’s projections.
As for expenditures, the city spent a total of nearly $71.12 million—about $7.25 million less than what the city had projected to spend during the fiscal year.
The report goes on to state that the city was able to save $1.4 million in salary and benefit costs, as well as $500,000 in the police contract with the Orange County Sheriff’s Department.
“These costs savings . . . can offset any unanticipated revenue loss,” the city concluded at the end of its report.
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.