City Council Ensures Capital Projects Funding

The City Council has taken the next step to what will likely result in public works projects becoming the routine for the foreseeable future.
Moving forward, the city will maintain a reserve fund balance of about 40% of General Fund revenues, with any exceeding amount to be transferred to either a Capital Projects Fund or a Capital Equipment Fund. The reserve fund balance will be used only for one-time expenditures in response to unanticipated needs or shortfalls in revenue, and if that happens, the city will plan to rebuild the balance back to the 40% benchmark as quickly as practical.
The changes came in the form of amending Section 1 of the city’s current financial policies, codifying a decision made last month to redistribute the city’s current fund reserves. Finance Director Josh Betta said that $12.5 million had been transferred to the Capital Projects Fund since that time.
“This is momentous for the city of San Marino,” Betta said at the meeting last Wednesday. “Whereas we had a one bucket general fund that dominated 90% of every financial decision in the past, as of this week we have two buckets. We have a $13 million Capital Projects Fund and we have at least $11 million in the General Fund [reserves].”
However, Betta’s recommended provisions weren’t accepted in totality. The City Council — sans the absent Vice Mayor Dr. Steven Huang and Ken Ude — eliminated one reserve-related provision that mandated transferring 1.25% of the year’s revenue to the General Fund reserves.
Mayor Steve Talt said although he understood the initial appeal of a “forced savings program,” he wasn’t comfortable obligating the city to commit a certain amount to reserves when it could either be a higher amount or might otherwise be necessary for an expense.
“I see this as both a restriction of our ability to best serve the community as well as restricting our way to increase the general fund through appropriate budget constraints,” he explained. “I know its intent, and it’s wonderful, but I just don’t think it works for us.”
Talt added that he felt the provision requiring the reserve balance to be around 40% of the General Fund revenues sufficiently tasked the City Council with having to add to the reserves already. He also observed that voters could take their dissatisfaction with how councilmembers approached fiscal policy to the ballot boxes.
Councilwomen Susan Jakubowski and Gretchen Shepherd Romey both largely agreed.
“This is a good goal to have, but I feel that making it a requirement every year is both limiting and perhaps a disservice to the taxpayers,” Shepherd Romey said.
Other changes to the financial policy included actively seeking outside funding sources for infrastructure projects and establishing that the city will pay no more than its minimum obligation for the CalPERS pension liability, nor will it finance any of its CalPERS payments with bonds.

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