HomeMy WebLinkAbout2023-04-04; City Council; ; City Financial Status UpdateCA Review CKM
Meeting Date: April 6, 2023
To: Mayor and City Council
From: Scott Chadwick, City Manager
Staff Contact: Laura Rocha, Deputy City Manager – Administrative Services
laura.rocha@carlsbadca.gov, 442-339-2415
Zach Korach, Director of Finance
zach.korach@carlsbadca.gov, 442-339-2958
Subject: City Financial Status Update
District: All
Recommended Action
1. Receive a report on city finances, funding challenges and funding options.
2. Provide feedback and direction to staff.
Executive Summary
The City of Carlsbad has always prided itself on providing a high level of service to the
community, responsibly managing public resources and working in partnership with the
community to realize its vision for the future. As the city transitions from a time focused on
building a great city to maintaining what has been created, the needs, priorities and revenue
sources are changing.
Carlsbad has been able to maintain strong financial health by planning ahead and using the best
data available to make informed decisions. One tool used by the city’s Finance Department is a
10-year forecast of planned spending and expected revenues.
Identifying potential future funding gaps between revenue and expenditures serves as an early
indicator that spending needs to be modified, new revenues brought in, or both, to maintain
long term fiscal sustainability. For example, during the 2008 recession, staff identified a funding
gap, and the City Council adjusted the timing of certain projects and made other changes to the
city budget that successfully closed the gap. Staff’s forecasts have identified a potential similar
future funding gap that could occur in coming years.
City staff are preparing to present the proposed budget for the coming fiscal year to the City
Council next month. This report provides an overview of the city’s current financial status,
longer-term forecasts and potential new revenue sources the City Council may want to consider
to ensure the city’s ongoing fiscal health and its ability to continue to provide the high level of
service our community has come to expect.
April 4, 2023 Item #8 Page 1 of 13
Explanation & Analysis
Background
When Carlsbad was being developed, the city’s goal was to build an excellent community while
maintaining fiscal health to provide a high level of service. As cities approach a time when much
of the new development is complete, the focus traditionally shifts to maintaining what has
been created.
As infrastructure ages, so do the investments needed to maintain it. Carlsbad’s water, sewer
and storm drain system alone represents over $2 billion in assets that need to be maintained.
The city also has more people to serve than it did in the past.
This occurs at the very time that fees from building – the fees that originally paid for much of
this infrastructure – are less than they were in those previous years. In addition, limits on
certain taxes, such as property tax, mean that revenues may not keep pace with inflation, or
with the increases in service costs. This is how maturing cities can face a structural deficit. And
staff’s financial forecasts indicate that the city’s revenues will fall short of its spending in the
next five to ten years.
Cities have several options when determining how best to close a funding gap, including
postponing major new projects, finding more efficient ways to deliver services, eliminating
services that aren’t core to the city’s mission and expanding the revenue base. In 2021, the City
Council approved a project to study potential new sources of revenue to better understand
these options. A City Council Workshop was held on April 20, 2022, to discuss the results of the
study. Although no further action was taken at that time, uncertainty in the economy remains.
Current fiscal condition
Following the Great Recession of 2007-09, the city has thrived through the longest recovery and
expansionary period in United States history. Since 2012, proceeds from the city’s property,
sales and transient occupancy taxes, the top three sources of the city’s general fund money,
have increased approximately 53%, 80% and 120%, respectively. Below is a chart showing the
General Fund’s revenues and expenditures since fiscal year 2012-13.
Note: Transfers include financing district, storm water, golf course, workers’ compensation, risk, fleet, infrastructure replacement and general capital construction. Additional discretionary payments to CalPERS are not included.
$-
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
General Fund Revenues General Fund Expenditures Transfers
General Fund revenues, expenditures and transfers
April 4, 2023 Item #8 Page 2 of 13
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Since fiscal year 2012-13, revenues have grown approximately 5.3% on average each year.
Excluding transfers out, expenditures have outpaced the growth of revenues by increasing 6.9%
on average each year.
The increase in expenditures over the last ten years was partly the result of the city adding staff
to maintain its high level of service while meeting meet new and changing community
priorities, but it has also been driven by new requirements imposed by the state and federal
governments that cost the city money but are not eligible for reimbursement. For example, the
city is responsible for reducing greenhouse gas emissions by state deadlines, which requires a
multi-year comprehensive effort involving nearly every city department.
New/expanded city services 2017-2022
The city has also added several new or expanded city operations and services in recent years.
Here is a partial list, which includes new investments in public safety, community services,
sustainability and city administration.
Public safety
• Homeless Response Program
• Policy body worn cameras
• Beach lifeguard program
• Trail ranger program
• Lagoon patrol (on-water)
• Citizens Police Academy
• Expanded public health role (due to pandemic)
Community services
• New community special events
• New and expanded park amenities
• Intergenerational Parks & Recreation programs
• Expanded city arts and culture programs
• Mobile library program
• Age-friendly cities initiative
Sustainability
• Community Choice Energy electrical service
• New environmental initiatives
• Sustainable Mobility Program
Administration
• Internal audit program
• Innovation and data analytics
• Diversity, equity and inclusion program
• Enhanced cybersecurity program
• New citizens committees
• New City Council subcommittees: Legislative and Economic Development
April 4, 2023 Item #8 Page 3 of 13
Steps already taken to safeguard financial health
Consistent with the city’s well-established track record of prudent financial management, staff
and the City Council have taken the following steps in recent years to support the City of
Carlsbad’s ongoing fiscal sustainability:
1. Strong general fund reserve policy
The City of Carlsbad maintains a healthy general fund reserve, sometimes called a rainy-day
fund, to protect against unanticipated changes that could negatively affect city finances.
The General Fund Reserve Guidelines established in City Council Policy No. 74 requires the
city to hold in reserve an amount equivalent of 40% of the annual General Fund operating
budget.
Even with the expanded services approved by the City Council, the city has been able to
build up our general fund reserve to record levels. The chart below shows that the city has
been able to maintain a reserve account that is higher than the 40% required by City Council
policy.
Strategic use of reserves
On June 18, 2019, the City Council adopted revisions to the city’s General Fund Reserve Policy
(City Council Policy No. 74). These changes narrowed how General Fund reserves could be used
to three purposes:
1. To mitigate financial impacts resulting from a natural disaster or other catastrophic
events
2. To respond to the challenges of a changing economic environment
3. To continue demonstrating prudent fiscal management and creditworthiness
This new policy provided greater City Council control over how reserves are spent and opened
the door to using General Fund reserves to strategically put the city in a better long-term
financial position.
0%
10%
20%
30%
40%
50%
60%
70%
Healthy General Fund reserves
Reserve Percentage Reserve Policy
Amount of money required to be held in reserve for emergencies,
fiscal sustainability and to withstand economic downturns
Actual amount of money the city has in reserve
April 4, 2023 Item #8 Page 4 of 13
■ ■
• For example, in FY 2016-17 and FY 2020-21, approximately $30 million was used to fund
the City’s General Capital Construction Fund, Infrastructure Replacement Fund, and to
reduce the city’s CalPERS pension debt, its unfunded liability, which helps save the city
money in the long run.
• These investments mean that the city has money set aside to keep its major
infrastructure well-maintained, thus avoiding costly emergency repairs.
2. Putting money away for future needs
The city has consistently allocated the equivalent of 6% of estimated General Fund revenues
each year to an infrastructure replacement fund. This enables the city to keep up with
maintenance, to prolong the useful life of approximately $1.2 billion worth of city
infrastructure and to be in a position to replace infrastructure as needed.
On June 8, 2021, the City Council approved City Council Policy No. 91, the city’s Long Term
General Fund Capital Funding Policy, which formalizes not just setting funds aside funding
each year for infrastructure replacement but also for general construction needs and
investments in technology, which has become a costly yet critical part of efficient and
effective city operations.
3. Reducing pension debt
In recent years, unfunded liabilities, or pension debt, have caused cities in California to cut
back on public services. Three cities have declared bankruptcy. Pension debt is the
difference between how much money is available to pay for the pensions city employees
receive when they retire and the money needed to pay for the actual benefits. Pension debt
is an estimate because it’s not possible to know exactly how well the pension fund
investments will perform nor how many employees will retire, at what age they will retire
and how long they will live.
The City of Carlsbad has long recognized the financial uncertainty caused by the state’s
pension system. That’s why Carlsbad was one of the first cities in the region to enact
pension reform, pre-dating state reforms in 2013. This and other strategies have reduced
the city’s pension debt considerably compared to most other cities in the state.
What is the problem?
In the early 2000s, CalPERS, the state agency that manages pensions for cities, anticipated
that investment returns would be higher than the investments actually performed. This
resulted in less money than expected in the overall pension fund, thus increasing the
pension debt for cities. Since this time, CalPERS has taken several steps to improve
transparency and the financial health of its fund:
• In December 2016, CalPERS reduced the assumed rate of return for investments,
from 7.5% to 7.0% over three years, from FY 2018-19 to FY 2020-21.
• In February 2018, CalPERS decreased the amortization period for new pension
liabilities from 30 years to 20 years effective July 1, 2019.
• In FY 2020-21, CalPERS reported an investment return of 21.2% which, under
CalPERS’s Funding Risk Mitigation Policy, triggered a reduction in the discount rate
used to calculate contributions from employers and those employees who joined
CalPERS since 2013, when the Public Employees’ Pension Reform Act was passed.
April 4, 2023 Item #8 Page 5 of 13
• This reduction from 7.0% to 6.8% will affect contributions starting in FY 2023-24.
While these changes will provide long-term benefits to the pension plan, they will
also increase the city’s required pension contributions.
One way to reduce the city’s long-term pension costs is by making early payments to reduce
the pension debt.
• In 2019, the City Council adopted a Pension Funding Policy (City Council Policy No.
86). This policy states that the city will strive to maintain an 80% funded status. Said
another way, the goal of this policy is to keep Carlsbad’s pension debt at no more
than 20% of the total liability.
• Since FY 2016-17, the city has contributed $56.4 million to CalPERS to reduce the
city’s unfunded liability and thereby achieve interest savings.
• These contributions were in addition to the annual required contributions set by
CalPERS.
• Even though CalPERS is continuing to take prudent measures to manage the pension
liability for its participants, the annual costs paid by participating members will
continue to increase. In fiscal year 2021-22, CalPERS experienced a 6.1% investment
loss, which largely offset the positive gain from the previous year and will have a
significant impact on the city’s future costs. Staff will continue researching and
developing a proposed funding plan for the establishment of a Section 115 Trust and
will present this item for the City Council’s consideration as part of the fiscal year
2023-24 preliminary budget. (A Section 115 Trust is a pension prefunding tool
whereby contributing city assets to the trust can provide benefits such as improving
local control, increasing investment diversity, potential increase in investment
return and mitigating risk and volatility.)
4. Strategic use of general fund surpluses
By taking a conservative approach to estimating revenues and by actively managing
spending, the City of Carlsbad often ends the year with a General Fund surplus. This means
the city has spent less General Fund money than the amount of General Fund revenues
coming in.
On Aug. 27, 2019, the City Council approved City Council Policy Statement No. 87, which
provides greater City Council oversight and a strategy for allocating surplus money each
year. Among the allowed uses of General Fund surplus money are ensuring the General
Fund’s reserve is at or above its target amount and reducing pension debt. Once those two
goals are met, surplus money may be carried forward to the next budget year to fund one-
time expenses associated with City Council goals and other needs, as approved by the City
Manager or City Council, depending on the amount.
5. New internal budget policies and practices
In addition to supporting the City Council in developing and enacting the new budget
policies described in this report, the City Manager immediately upon appointment put new
budget practices in place at the organizational level. These include:
• Eliminating the automatic cost of living increase to department budgets. Instead,
departments must demonstrate with objective data the need for any year-over-year
increase to their budgets.
April 4, 2023 Item #8 Page 6 of 13
• Eliminating the ability of departments to automatically carry forward up to 10% of
unspent budget to the following year.
• Recommending additional staff positions only under three conditions:
1. Needed to comply with new legal and regulatory requirements
2. To support a City Council priority
3. To address a critical public safety need
• In 2022, challenging all departments to reduce their annual maintenance and
operations budgets by 2%.
• In 2023, challenging all departments to reduce their annual budgets by 3%.
Fiscal forecast
Even though these combined actions have greatly improved the city’s financial sustainability,
the long-term financial forecast shows a future gap in funding if the city continues to maintain
and build the public safety, infrastructure, parks, recreation and other services that contribute
to the quality of life expected by Carlsbad residents.
A financial forecast is a planning tool that helps identify trends and anticipate the long-term
consequences of budget decisions. The forecast is instrumental in modeling the effects of
retirement costs, employee compensation, on-going maintenance and operations, as well as
revenues for the city’s budget.
The forecast is not a budget nor a plan but rather a model based on cost and revenue
assumptions updated regularly as new information becomes available. Of these components,
cost projections which are based on known costs are relatively reliable. However, revenue
forecasts are based on assumptions related to future economic conditions, which are inherently
more uncertain. Economic forecasts change frequently and demonstrate the difficulties of
committing to a particular prediction of the future. For this reason, the city’s forecast is
updated regularly.
Changing conditions
Looking ahead five years, several conditions point to the need to identify new ongoing sources
of revenue:
• Economic conditions, inflation, housing, and the impacts to the city’s primary revenue
sources (sales, property and transient occupancy tax).
• More demand for city services due to increases in population, including residents,
employees and visitors. New state housing laws in particular are expected to result in
increases to the city’s population greater than current service models anticipated.
• As the city approaches a time when most of the major new development has occurred,
revenue from development fees will decrease significantly. City infrastructure, originally
funded by those fees, is now aging and needs maintenance or replacement.
o The FY 2022-23 Adopted Capital Improvement Program Budget included $42.6
million in new appropriations, with $695 million in projected projects over the
next 15 years.
o Many of the city’s capital projects will require annual operating expenditures
upon their completion. Notable projects with anticipated significant operating
April 4, 2023 Item #8 Page 7 of 13
impacts include, but are not limited to, Veteran’s Memorial Park, Fire Station No.
7, Orion Center, City Hall and Monroe Street Pool.
• Expenditures increasing at a faster rate than the city’s revenues
o Although we predict revenues will exceed expenditures on an annual basis for
the next few years, we are expecting this excess to diminish which results in an
ever-increasing budget deficit.
The forecast presented above represents the city’s baseline forecast and applies consistent
methodology as forecasts presented in the past. Revenues, particularly sales, property and
transient occupancy tax, are forecasted relatively conservatively given their sensitivity to
economic changes. Expenditures are generally easier to predict because their increases are
driven by contracts or inflationary indices. Over the next 10 years, revenues are expected to
increase on average by 2% annually while expenditures are expected to increase on average by
3.7% annually. Expenditure growth continuing to outpace revenue growth results in a projected
annual operating deficit beginning in fiscal year 2026-27.
Because financial forecasts are built upon assumptions at a point in time with inherent
uncertainty, it is important to understand the assumptions driving the revenues and
expenditures, as well as the budget line items that are included and those that are not. The city
has historically budgeted and forecasted revenues relatively conservatively. This increases the
likelihood of realizing a budget surplus at the end of the year and also allows for sufficient
funding for unanticipated one-time or ongoing budget items. It is important to note that the
city’s standard forecast does not include any one-time or ongoing costs associated with capital
improvement program projects that are expected to be started and/or completed in the future.
$-
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
$300,000,000
General Fund five-year forecast
Revenues Expenses
April 4, 2023 Item #8 Page 8 of 13
-
Applying more moderate or optimistic revenue assumptions improves the General Fund’s
projected fiscal outlook. In other words, the timing for which expenditures are projected to
exceed revenues is pushed out further into the future.
For example, assuming the city’s sales tax, property tax, and transient occupancy tax revenues
increase at an annual rate of one percentage point higher than in the model presented above,
expenditures would not be projected to exceed revenues until fiscal year 2027-28, a
postponement of two fiscal years.
While more moderate or optimistic revenue assumptions improve the fiscal outlook, we must
also consider the potential risks and challenges that may be associated:
• First, we must consider the revenue growth in recent years and understand that much
of it resulted from inflationary increases. For example, the price of goods increased
substantially and, because demand was not as adversely impacted, the city’s sales taxes
benefitted. This is particularly important when determining whether the same level of
growth and inflationary increase will persist for the next 5-10 years.
• Secondly, we must think about future operating costs associated with the completion of
capital projects and maintaining again infrastructure and equipment. These costs are
difficult to estimate and are not included in the city’s forecast.
With the current recessionary risk and economic uncertainty, aging infrastructure, and
anticipated additional operating costs coming online in the future, applying more conservative
estimates and assumptions helps to mitigate possible revenue shortfalls. It also enables the city
to make fiscally responsible and informed decisions, ultimately positioning itself with its best
fiscal foot forward.
Budget savings strategies
As discussed above, the city has taken many prudent steps to continue pushing the “crossing of
the lines” out into the future. This has included eliminating department contingency budgets
and reducing department budgets based on historical savings and implementing more efficient
and cost-effective ways of providing services. Through these efforts, the city has achieved
better alignment between budget and actual expenditures and staff will continue to explore
innovative ways to reduce budgeted costs. However, it is becoming increasingly difficult to
absorb costs associated with new budget items, unanticipated needs and operational impacts
from completed capital projects. To ensure sufficient funding exists, staff may have to
recommend further budget reductions that could have significant service level impacts.
Revenue enhancement
Cities have several options to consider in determining how best to close an anticipated funding
gap, including postponing major new projects, finding more efficient ways to deliver services,
eliminating services that aren’t core to the city’s mission and expanding the revenue base. In
2021, the City Council approved a project to study potential new sources of revenue so they
could better understand these options.
City staff hired a firm specializing in municipal revenue studies and strategy to identify and
assess revenue enhancement options for the City of Carlsbad, Terris Barnes Walters Boigon
April 4, 2023 Item #8 Page 9 of 13
Heath Lester Inc., or TBWBH Props & Measures. The firm’s findings and recommendations were
presented to the City Council on April 20, 2022.
The report’s key findings, observations and recommendations are:
• The majority of Carlsbad voters support a 1 cent-on-the-dollar sales tax measure.
• Reducing the tax rate to less than 1 cent does not significantly improve a measure’s
chance for passage.
• Voters’ priorities include maintaining parks, open spaces and recreation facilities,
maintaining streets and roads, keeping trash and pollution out of waterways and off
beaches, keeping public areas and facilities clean and graffiti free, 911 emergency
response, and fire protection and prevention.
• If the City Council wants to pursue a sales tax measure, the next step would be to
expand the conversation with the community to build awareness and understanding of
the city’s needs and consensus on a proposal.
• An effort totally independent from the city, would be needed to campaign for the
measure’s approval.
Tax measures
Cities considering options to enhance General Fund revenue often look to the criteria below:
• Adequacy and certainty – Does the option sustainably generate annual needed
revenue? Is the option subject to significant variation?
• Equity and fairness – Is the fiscal burden appropriately spread and proportionate to
surrounding communities? Does the option avoid highly skewed economic incentives?
• Transparency – Is information on revenue and the tax system and how it operates easy
to find and understand
• Simplicity – Does the option require multiple ballot measures (potentially causing voter
confusion and fatigue)? Would the option be highly burdensome, costly, or complicated
to administer (by the city of payors)?
The city’s General Fund receives approximately $52 million (as of FY 2021-22) in sales tax
annually which represents approximately 24% of the total revenues in the General Fund each
year. A general sales tax measure requires a simple majority vote. If approved, the city would
begin receiving the new revenues approximately six months after the election.
April 4, 2023 Item #8 Page 10 of 13
Carlsbad current 7.5% tax rate is one of the lowest among those assessed by cities in San Diego
County.
Sales tax rates in North
County cities
Sales tax rates outside of
North County
Carlsbad 7.75% Coronado 7.75%
Encinitas 7.75% Lemon Grove 7.75%
Escondido 7.75% San Diego 7.75%
Poway 7.75% Santee 7.75%
San Marcos 7.75% El Cajon 8.25%
Oceanside 8.25% La Mesa 8.50%
Vista 8.25% Chula Vista 8.75%
Del Mar 8.75% Imperial Beach 8.75%
Solana Beach 8.75% National City 8.75%
Average 8.08% Average 8.22%
The table below shows incremental estimates of additional sales tax revenues across sales tax
categories. An increase of one cent on the dollar, if approved, would generate approximately
$40 million in additional revenue for the city annually.
Incremental tax rate percent*
Category 1/4 1/2 3/4 1
General retail $ 2,239,811 $ 4,479,622 $ 6,719,433 $ 8,959,245
Food products $ 1,835,560 $ 3,671,121 $ 5,506,681 $ 7,342,241
Transportation $ 1,815,146 $ 3,630,292 $ 5,445,437 $ 7,260,583
Construction $ 125,893 $ 251,787 $ 377,680 $ 503,573
Business-to-business $ 166,725 $ 333,450 $ 500,175 $ 666,900
Miscellaneous $ 28,284 $ 56,568 $ 84,852 $ 113,136
subtotal $ 6,211,419 $ 12,422,840 $ 18,634,258 $ 24,845,678
County pool† + growth $ 4,231,002 $ 8,462,003 $ 12,693,006 $ 16,924,007
total $ 10,442,421 $ 20,884,843 $ 31,327,264 $ 41,769,685
* All amounts are estimates based on calendar year 2021 actual sales tax and standard industry forecasting
methods.
† A substantial portion of local use tax collections are allocated through a countywide pool to the local jurisdictions
in the county
Additional revenue enhancements could also be considered by the city, including but not
limited to increasing the transient occupancy tax and the parcel tax as well as the establishing
of financing districts. These options are explained below.
Transient occupancy tax
Transient occupancy taxes are assessed on occupants of hotels and short-term rentals within
the city. These revenues comprise approximately 15% of the city’s General Fund revenues. The
transient occupancy tax has been called a “painless” tax in that is generally paid by non-
residents, but it can impact future hotel growth if it is disproportionate.
April 4, 2023 Item #8 Page 11 of 13
The current transient occupancy tax rate in the City of Carlsbad is 10%. A 2% Carlsbad Tourism
Business Improvement District assessment also applies to hotel businesses within the city,
including short-term vacation rental businesses. If a 2% increase was placed on the ballot and
approved by a majority vote, the city could generate an additional $5 million to $6 million in
General Fund revenue annually. Below is a look at comparative rates assessed throughout the
county.
Transient occupancy tax
rates in North County
cities
Transient occupancy tax
rates outside North
County
Carlsbad 10.00% Lemon Grove 6.00%
Encinitas 10.00% Coronado 10.00%
Escondido 10.00% Imperial Beach 10.00%
Poway 10.00% National City 10.00%
Vista 10.00% El Cajon 10.00%
Oceanside 10.00% La Mesa 10.00%
San Marcos 11.00% Chula Vista 10.00%
Del Mar 12.50% San Diego 10.50%
Solana Beach 13.00% Santee 10.50%
Average 10.72% Average 9.67%
Parcel tax
A parcel tax is a non-ad valorem or non-value based tax on parcels of property; either a flat rate
per parcel or a variable rate depending on the size, use, or number of units on the parcel may
be applied. This allows for different rate schedules for residential and commercial property so
long as the methodology is the same. Parcel taxes may also include inflationary increases to
ensure the revenue stream keeps pace with rising costs. A parcel tax, unlike a sales tax or
transient occupancy tax measure, requires a two-thirds vote of the public and the funds are
restricted to specific purposes. The amount of additional revenue generated from a parcel tax is
largely dependent on the methodology of a flat versus a variable rate and the amount of tax
assessed per parcel type. For context, the city has approximately 40,000 parcels of property
(excluding timeshares). If a $100 parcel tax were assessed, approximately $4 million in
additional revenue would be generated in the General Fund. If the City Council’s direction was
to pursue a parcel tax measure, staff would present multiple methodologies to be considered.
Revenue bonds
Lease revenue bonds are issued by local governments and paid from the lease payments of the
public facilities or assets that were financed by the bonds. They can be used to finance various
public projects. Assuming $50 million of bonds are issued with a city credit rating of AA+, an
interest rate of 4.75% and a 20-year term, the city’s average annual debt service would be
approximately $4 million.
While this would provide an immediate funding source for a number of the city’s significant
capital projects, the General Fund would be responsible for funding the annual debt service
payments. As a potential option for funding debt service, the city could consider amending City
Council Policy Statement No. 91 to reduce the amount of estimated General Fund revenues
April 4, 2023 Item #8 Page 12 of 13
that are transferred to fund future capital projects. For example, reducing the annual transfer
from 6% to 4% would result in approximately $4 million in annual savings.
Fiscal Analysis
There is no fiscal impact at this time.
Options
Staff are requesting that the City Council consider the city’s financial outlook and consultants’
findings, observations and recommendations and provide feedback and direction on next steps,
either at this meeting or at a future meeting. Options for City Council direction include:
1. Take no further action at this time.
2. Direct staff to gather additional information.
Next Steps
Staff’s next steps will be determined by City Council direction.
Environmental Evaluation
In keeping with California Public Resources Code Section 21065, this action does not constitute
a project within the meaning of the California Environmental Quality Act in that it has no
potential to cause either a direct physical change in the environment, or a reasonably
foreseeable indirect physical change in the environment.
Exhibits
None
April 4, 2023 Item #8 Page 13 of 13
Tammy Cloud-McMinn
From:
Sent:
. To:
Subject:
-----Original Message-----
Council Internet Email
Tuesday, April 4, 2023 10:11 AM
City Clerk
FW: Sales tax increase meeting comment
From : Max Moegling <max@moegling.com>
Sent : Monday, April 3, 2023 7:36 PM
To : Council Internet Email <CityCouncil@carlsbadca.gov>
Subject: Sales tax increase meeting comment
Dear Council members,
All Receive -Agenda Item # 2:S
For the Information of the:
:9:)',SOUNCIL
Date ~CA V ee V --CM __L ACM ::::_ DCM (3) v
I read on the Carlsbad citizen Facebook page t hat you plan to increase the sales tax. I oppose such matter and will not
support any council member in support.
Instead, levy fees or taxes from high density housing developers.
Sincerely,
Max Moegling
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1
Tammy Cloud -McMinn
From:
Sent:
To:
Subject:
Council Internet Email
Tuesday, April 4, 2023 10:11 AM
City Clerk
FW: Sales Tax Increase
From: Dee Forsberg, Global Hire <dee@globalhire.org>
Sent: Monday, April 3, 2023 9:24 PM
To: Council Internet Email <CityCouncil@carlsbadca.gov>
Subject: Sales Tax Increase
Hello,
My name is Dee Forsberg and I am writing to oppose the sales tax increase of 1 %. Things are bad
enough right now and everyone is having to tighten their belts and so should the city.
Thank you for your service.
A i11,.1;J~c-ycfo e,vi.;;si~uuve se2rt.;fi. .-.: .. J,,i1 ,\n:1•.•;;h1g , ,n , 1~, 1 ui'ifr,,g mid~feve! ti ;::;;,e,,.,r ., ,f H
fti'o:t-1:c,_'f,'1'?!nTH;-rd f,)b ·1r;{f""S--to nr ft.'
Dee@GlobalHire.org -(760) 214-7458
Licensed and Insured
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safe.
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Tammy Cloud-McMinn
From: Council Internet Email
Sent:
To:
Tuesday, April 4, 2023 10:17 AM
City Clerk
Subject: FW: Item $8 City financial status
From: Kris Wright <kriswrt222@gmail.com>
Sent: Tuesday, April 4, 2023 9:59 AM
To: Council Internet Email <CityCouncil@carlsbadca.gov>
Subject: Item $8 City financial status
Dear Council,
I read the agenda packet and saw for Item #8 that the issue of a sales tax increase was mentioned. I looked
up the survey that stated that "most of Carlsbad voters would pass an increase in the sales tax" and was
appalled at the consultant who only interviewed 894 people.
I am against any sales tax increase. The worrisome issue is the increased hiring of more city employees
making over $100,000 (not including benefits). Yesterday I compiled a comparison of employee salaries from
2017 and from 2021 , I found over 46 new employees that either were rewarded a huge salary increase and a
very large increase in the number of new employees making over $100k. I counted+/-46 employees making
over $1 00k since 2017. I used the
site: https://transparentcalifornia.com/agencies/salaries/?fbclid=lwAR06VU93Gzl0GpMar8RSqMgqgc22EMyn
mUZ4tbyiSxQELLQ8SROKJJdxLRQ#cities-c to compare salaries.
I attended the April 20, 2022 Special Council meeting last year. As we all know, the City is liable for a portion
of the variable CalPERS state pension system. As you may know the Council adopted a pension funding
policy in 2019. So having such a large number of employees and the strain on the City's General fund over the
next coming decades can certainly create a problem with our expenditures.
I would suggest instead, as there are other obvious issues to cut back on spending, to reexamine the .cost of
projects within the City and to consider the increased salaries of long time employees. As this is a public letter,
I won't mention names but I found several employees getting an increase of ~%50k per year with a job
reclassification. This is clearly wrong, IMO.
Meople are just making ends meet in our City. With the high cost of rent as well as our inflation of ~8% per
year, and some still struggling with the economics of the pandemic, I ask you to decline the increased sales tax
as an alternative to the increased expenditures. We need to tighten our belts so to speak and consider the
people who live in Carlsbad.
Thank you,
Kris
Kris Wright
kriswrt222@gmail.com
en attachments or click on links unless ou recognize the sender and know the content i
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Tammy Cloud-McMinn
From:
Sent:
To:
kelly.leberthon 12@gmail.com
Tuesday, April 4, 2023 1 :06 PM
City Clerk
Subject: Agenda Item 8
During times of abundance, it is difficult to successfully argue against virtue signal spending.
For example:
The council had no problem virtue signaling on ending the use of styrofoam products -putting the financial
burden on the local small businesses who would lose money on inventory already paid for and new money to
have to spend on new products.
The council had no problem virtue signaling on Equity -which is NOT equality of opportunity but the inherently
unfair dictation of equal outcomes -creating a new and totally unnecessary department within the city and
spending tens of thousands of dollars on that staff.
The council had no problem spending tens of thousands of dollars on a tree stump that maybe could be art.
How many hundreds of thousands of dollars spent on the Tamarack Valley intersection design debacle?
And how many hundreds of thousands of dollars have been spent on a new Homeless Department staff,
homeless programs, homeless housing -and to what end? Has the homeless problem been solved? Has the
money even made a dent in the problem? Of course not. It's not meant to be solved -it's meant to be
endlessly invested in so that it can be a political issue which politicians to justify spending more money -OUR
money-the People's money -to virtue signal for the unhoused. So, millions of dollars are spent to ignore those
who don't want help -the ones who are drug addicted, alcohol addicted and mentally ill. No, instead we the
people finance their addictions and pathologies, so politicians can falsely say they are helping the unhoused.
But all these programs plus council's gift to self-aka pay raise -and so many more -were put forth during
times of abundance.
Now is not a time of abundance.
Now is a time of belt tightening.
Now is a time to cut back on spending.
NOW is a time to CUT OUT wasteful spending, wasteful programs.
Do not be hypocrites and say you want to protect our citizens -when you are increasing the financial burden
on us by increasing taxes.
Do not be hypocrites and pretend that Carlsbad citizens are plenty wealthy and can afford to absorb your
rapacious spending.
Stop passing the buck to the hardworking middle class and start taking some responsibility for your decision
making on spending and make some CUTS.
Start by cutting the Equity Department.
Start by cutting the massive increase of staff positions in the city ove~ the last 3 years.
Start by acknowledging the money you voraciously crave is not Monopoly money, but the people's money.
You work for the people. Stop crushing Carlsbad citizens with your spending proclivities and show some
restraint and respect.
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