A pedestrian passes the seawall lining Beach Road in Belvedere on March 21, 2022. (Alan Dep/Marin Independent Journal)
Belvedere’s growing fire service expenses in the proposed draft budget for next fiscal year have raised concerns among the city’s finance committee.
The committee reviewed the $9 million draft budget on Tuesday. The 2024-2025 budget proposal shows a $1.2 million general fund deficit by the end of June 2025.
City staff said there may be some small growth in revenues and a slight increase in spending, particularly with the city’s fire services contract.
General fund revenues are projected to be $9.1 million, but the city’s expenses and outgoing transfers add up to $10.3 million — a 5.8% increase over the current year budget. Transfers to various funds include $300,000 to pension trusts and $650,000 to critical infrastructure.
Helga Cotter, director of administrative services, said they expect to close out the current fiscal year with an excess of $1.4 million, which would cover the deficit.
“It is also important to note that some of these transfers out are not associated with current year expenses,” Cotter said. “Specifically the critical infrastructure reserve and the 115 pension trust fund transfers are being made to fund anticipated future expenses, allowing budget smoothing.”
Most of the city’s income is earmarked for costs relating to fire protection, police services and the department of public works, according to the draft budget. Around $1.1 million is planned for capital projects, which includes the seawall and retaining wall projects.
Robert Zadnik, the city manager, said the retaining walls along Beach Road are particularly concerning and a No. 1 priority; $175,500 is set aside for the project in the draft budget. However, Zadnik said the current solution proposed by engineering experts does not address seismic concerns.
“This isn’t something new that was a surprise to us,” Zadnik said. “We’ve known through the committee to protect Belvedere seawalls, levees and utilities that this was a vulnerability, a threat.”
The majority of the city’s revenue, 71%, comes from property taxes. Cotter said the property tax forecast shows a potential 5% increase, equal to $358,000, for the budget year, and that revenues in the general fund could increase 2%, or about $177,000. No grant funding is included in the draft budget, but Cotter said the city will continue to look for grant opportunities.
A significant change in costs is a 7.5% increase in Tiburon Fire Protection District’s contract. The fire service deferred some of its annual Section 115 contributions — a trust account needed to fund employee benefits — to keep a fairly consistent cost to the city. Without this, the increase to the budget would have been approximately 14%. Still, the city anticipates a payment to the district of over $92,500, and will make an additional payment in the future.
Currently the fire service contract is around $2.1 million, but is expected to increase to $2.4 million in the next budget cycle.
Sally Wilkinson, a nonvoting City Council member on the committee, said fire expenses have been growing about 6% annually for the past 20 years, while the city’s expenditures have grown at 4.4%. She suggested closely analyzing the long-term trends in cost over the past years — and the projected increases in the future.
“I think it would be useful just to distribute some numbers and some charts just to give a clearer impression of where that has gone and, as you say, project it out 20 years just to see when that crunch really hits,” Wilkinson said.
Other expenses include a one-time payment for the Martha property of $125,000, adjusting city staff salaries for cost of living by 3% for the budget year, and housing element legal costs.
Capital improvement expenditures include projects throughout Belvedere, such as road maintenance including pavement repairs, crack sealing, and traffic marking; emergency preparedness work like vegetation and fire fuel reduction throughout the city; and technology upgrades.
Cotter said the city plans to make a payment of about $250,000 in pension related debt, but unfunded accrued liability payments to CalPERS are expected to increase over the next five years. While the city plans to continue the around $300,000 per year in debt payment, the budget expects the required pension contributions to rise from $195,000 in in fiscal year 2025 to $415,000 in budget year 2029.
Zadnik said the total remaining pension debt at the end of this fiscal year will be $1.6 million.
The budget forecast meets the city’s reserve goals. Belvedere’s policy is to have equal to half of the general fund expenses, plus the pension debt and fire services cost. Reserves are meant to cover around six months of operating costs in the event of a catastrophic event. The draft budget leaves Belvedere $150,0911 over the amount required by policy.
“What worries me is this budget is in deficit,” said John Wilton, a member of the committee. “This is one of the only years we’re running a pretty significant deficit.”
Wilton said he would like more explanation behind how the five-year projections do not show a continued or increased deficit, and asked staff to show how they were going to “turn it around.”
The City Council is scheduled to review the draft budget at its May 13 meeting. A public hearing is set for June 10. The new fiscal year begins on July 1.
