With Goleta’s sales tax and transient occupancy tax revenue collected by hotels returning closer to pre-pandemic levels, the city is projecting total revenue growth in coming years.
Goleta’s preliminary budget revenue growth is also attributed to an increase in cannabis tax revenues, according to city staff.
The Goleta City Council on Tuesday met virtually during a special meeting to discuss the city’s two-year budget proposal.
The budget workshop provided council members the opportunity to review the preliminary operating budget for fiscal year 2021-22 beginning July 1 and fiscal year 2022-23, as well as the preliminary five-year operating budget forecast for the general fund.
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Tuesday’s agenda item didn’t require the council members to vote at the virtual meeting, and the operating budget for the next two years will be taken up at a future meeting. Council members are expected to adopt a two-year financial plan in mid-June, which will authorize an operating and capital budget for the next two fiscal years.
Goleta’s total revenues are forecast at about $31.5 million for fiscal year 2021-22 and $33.1 million for fiscal year 2022-23. Revenues of about $28 million are projected for the fiscal year ending June 30, city staff said.
Sales tax collections are Goleta’s third-largest revenue source and account for nearly 25% of the city’s general fund revenues. Overall sales tax revenues are projected at $7.3 million in the 2021-22 fiscal year and $7.6 million for fiscal year 2022-23.
TOT revenue is the most volatile, and Goleta’s TOT has experienced significant losses since the beginning of the COVID-19 pandemic in March last year, according to city staff.
Overall, TOT revenues are assumed to be $10 million for fiscal year 2021-22 and $11.1 million for fiscal year 2022-23. Goleta’s TOT revenues peaked in fiscal year 2018-19 at $11.6 million and dropped significantly in fiscal year 2020-21 at $6.1 million.
City Manager Michelle Greene worked with the department directors to develop a budget that restores existing levels of service that were temporarily reduced because of the financial impacts and economic uncertainty of the pandemic, including projects and programs that were deferred, according to city officials.
The draft budget addresses policy direction as provided in Goleta’s strategic plan and each department’s annual work program.
With COVID-19 cases dwindling and vaccination rates increasing, it’s anticipated that the pandemic-related effects on the economy will be “significantly tempered” sometime in 2021, according to city staff.
But there’s a level of uncertainty in regards to the lasting impacts during the course of several years, with inflation and coronavirus-related recession impacts, Greene said.
“We do still have significant challenges on the horizon,” Greene said, adding that the preliminary budget for fiscal year 2021-22 and fiscal year 2022-23 is balanced.
Mayor Paula Perotte told city staff that she likes “the fact you are being conservative and you are being cautious.”
Cannabis business tax is a new revenue source for Goleta after California voters in 2018 supported legalizing recreational marijuana for people age 21 or older. Goleta has issued 10 cannabis licenses as of Tuesday, Finance Director Luke Rioux said.
City staff has made conservative budget estimates for cannabis business tax, with $2.6 million for fiscal year 2021-22 and $2.7 million for fiscal year 2022-23.
“I support the cautionary approach here,” Mayor Pro Tempore James Kyriaco said.
In total, the preliminary budget assumes expenditures are projected at $31.7 million in fiscal year 2021-22 and $32.1 million in fiscal year 2022-23, with both numbers including one-time expenditures.
The general fund’s most stable revenue source — property tax — is projected to be $8 million for fiscal year 2021-22 and $8.2 million for fiscal year 2022-23.
Salaries and benefits for city employees account for $11.6 million, or nearly 37%, of the total budget in fiscal year 2021-22 and about $12.3 million, or 38%, in fiscal year 2022-23. That is an increase of nearly $2 million, or more than 20%, over fiscal year 2020-21.
The uptick is attributed to restoring more than 10% of Goleta’s workforce that were subject to hiring freezes aimed at helping reduce costs in fiscal year 2020-21 amid the pandemic, as well as new positions in various city departments.
Proposed Budgets by Goleta Departments
Goleta’s proposed budget allocates $8.6 million for police services in fiscal year 2021-22 and about $8.5 million in fiscal year 2022-23. The proposal for fiscal year 2021-22 is roughly a 5.5% increase from last year’s $7.7 million in police services, according to Goleta staff.
General government expenditures account for about $6.6 million for fiscal year 2021-22 and $6.67 million for fiscal year 2022-23.
The city’s overall library budget is estimated at about $1.9 million for fiscal year 2021-22 and fiscal year 2022-23. The budget includes truing up the salary and benefit positions at full staffing levels and recommends two new positions to address workload capacity issues, Rioux said.
The proposed budget for Goleta’s finance department includes $1.2 million for fiscal year 2021-22 and $1.3 million for fiscal year 2202-23.
For divisions within Goleta’s planning and environmental review department, the overall budget for fiscal year 2021-22 is proposed at $3.7 million and $3.9 million in fiscal year 2022-23.
About $7.6 million will go to Goleta’s Public Works Department in fiscal year 2021-22, while about $7.7 million is proposed for fiscal year 2022-23.
The preliminary operating budget calls for adjusting Public Works’ facilities maintenance budget to centralize maintenance budget for city-owned facilities, such as the City Hall building, Goleta’s train depot, library and Goleta Valley Community Center on Hollister Avenue.
Neighborhood Services includes $1.5 million proposed in fiscal year 2021-22 and $1.6 million in fiscal year 2022-23.
Councilman Roger Aceves applauded city staff for their presentation and efforts.
“We have got true experts working on this who are looking out for our constituents,” Aceves said. “We are in a great position right now as we are moving out of this recession and trying to analyze what tools we need to take to get us forward, and make sure that our city is taken care of.”
Goleta’s capital improvement program will be discussed at the next budget workshop scheduled for June 3.
— Noozhawk staff writer Brooke Holland can be reached at bholland@noozhawk.com. Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.
