Feature Commentary

January 15th, 2009

Guest Editorial Mayor Jim Desmond San Marcos, Ca.

Uncertain Economic Times Ahead: Proceed with Caution

How the weak economy is affecting San Marcos and what City Hall is doing about it

In June 2008, with an already weakening economy, the San Marcos City Council approved a 2008/2009 fiscal year budget that cut nearly $2 million in costs and reduced estimated income projections by 5 percent.

Sales tax, to a much greater extent than property tax, is the largest source of income to San Marcos. For the second quarter of the calendar year 2008, sales tax revenue was down 9 percent from the previous year's second quarter. When annualized, this is a $1.4 million loss this fiscal year to our already reduced operations budget. The operations budget pays for such things as public safety and maintenance of our streets and parks. With a continued downslide in the housing market and an increased number of foreclosures, we have yet to fully feel the brunt of property tax income loss.

Sacramento is no help. The state of California bravely faced up to its woes by redirecting redevelopment monies from cities. This year the state is taking $4.2 million of San Marcos' monies. Unlike sales and property tax losses, this taking by the state does not affect our day-to-day operations budget; however, it will delay capital improvement projects such as new streets, sidewalks, trails and parks.

Our overall fiscal philosophy is to protect our fiscal reserves and maintain essential services: public safety. We will cut costs to the bone before spending reserves and will start spending reserves before cutting essential services.

Since we have already made cuts, what do we do now? City Hall is further reducing personnel expenditures by implementing a hiring freeze and minimizing cost-of-living raises from the top down. We are reducing or eliminating non-essential programs and delaying purchases of new or replacement equipment. We have opened discussions with our union groups: they and city staff - both class acts -have agreed to help. Everything is on the table and no rock goes unturned.

What's the good news? San Marcos has healthy but not unlimited reserves to keep the vital and essential services funded - for a while. With a potential $4 million annual loss and just over $50 million in reserves, we will weather a short downturn. Reserves of $50 million sounds like a lot of money but, put into perspective, is less than one year's operating budget. If the state continues to raid city coffers and the economy's downward spiral increases rapidly, our reserves will go quickly.

How can you help? Keep your money local. If you can find it in San Marcos, then buy it in San Marcos. In the meantime, we will do all we can to maintain the same level of quality service our residents have come to expect.

Jim Desmond
Mayor, San Marcos