After a 3-2 vote from the San Clemente City Council on Tuesday night, Feb. 28, 33% of tax revenue from overnight lodging stays will be committed to paying down the city’s unfunded pension liability.
Mayor Chris Duncan and Councilmember Mark Enmeier were the dissenting votes, which came during the council’s Long Term Financial Plan meeting as the elected officials discussed a previous council recommendation to amend fiscal policy.
This past November, the council directed staff to modify the policy that prevented general revenue categories, such as from Transient Occupancy Tax collections, from being allocated to specific expenditure line items. Duncan voted against that motion then, in addition to former Councilmember Kathy Ward.
Tuesday’s vote officially removed the restrictive revenue policy and adds a line committing to “allocate one-third of Transient Occupancy Tax dollars toward the unfunded pension liability.” City officials have previously estimated the liability to be about $50 million.
The city’s TOT revenue comes from a rate of 10% levied on all overnight lodging stays within San Clemente.
Back in 2022, Councilmember Steve Knoblock, now the mayor pro tem, wanted to use all $3 million of the budgeted revenue from TOT collections in Fiscal Year 2022-2023 to aggressively work toward paying off the city’s pension liability. Councilmember Gene James amended Knoblock’s motion by proposing instead to use one out of every $3 of the TOT funds.
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