Burlingame Officials Discuss Conservative Financial Outlook

In an attempt to avoid the financial peaks and valleys of the past decade, Burlingame City Council members adopted a conservative outlook for city funds over the next six years in a study session Wednesday night that emphasized saving over spending.

Finance Director Jesus Nava said he estimated a $41.5 million budget for next year, but councilmembers focused on the budget’s predicted growth over the next six years, as well.

Jim Nantell, Burlingame city manager, suggested using a 3 percent growth rate for revenue, as in his previous 10 years in Burlingame, but Vice Mayor Jerry Deal said he would rather predict a 2 percent growth rate and put away any additional revenue is reserves, an opinion echoed by other officials.

“I think we’re still in a very tenuous economy, so my inkling is to play it safe and be…more conservative,” said councilmember Ann Keighran.

Councilmember Michael Brownrigg agreed.

“What we think we might get…it should not mean we have to spend it all,” he said. “How you spend it ought to be a separate conversation.”

Balancing and maintaining the budget with only a 2 percent growth rate hangs mostly on the ability to stabilize employee costs. Currently, employee costs—including salaries, pensions and health premiums—account for 76 percent of the general fund.

In keeping with new estimates, employee cost growth must not exceed 2 percent per year, although it’s already estimated to grow 7.5 percent for the 2012 fiscal year.

Keeping these costs down will most likely be the largest hurdle in balancing the budget.

Additional considerations for the budget included capital projects. The total need for the projects, which include park improvements, street and sidewalk repairs, hotel signage, building maintenance, transportation projects and the Broadway Interchange Project is $2.77 million. An anticipated $2 million is available from the transient occupancy tax, or hotel tax, said Public Works Director Syed Murtuza.

The council members discussed what improvements to fund and which to hold off on with the money available. Councilmember Cathy Baylock suggested funding the Broadway project at the lowest level possible. The project needs $8 million from Burlingame to come in the 2014-15 fiscal year.

Councilmember Michael Brownrigg said it seemed wrong to use the hotel tax for these projects without paying for their signage.

Murtuza will come back to the council with a final capital projects budget in the coming months.

In order to balance the budget for next year, Nava said 2.7 percent revenue growth is needed. He predicts growth of closer to 5 percent, additional revenue councilmembers urged put away to balance the budget in future years when growth might be below 2 percent.

The council also discussed ways to increase revenue. For example, Brownrigg said that about 10 percent of the annual budget is in debt services. He said that as these debt services are retired, that 10 percent portion should be kept aside but invested in capital assets. Mayor Terry Nagel agreed, and said it could go towards wish list items, such as a recreation center. Councilmembers also agreed that unfunded needs would be deferred until current debt services have been retired.

Although the council reached a number of budget decisions, such as making 2 percent the new normal growth rate, members will continue to discuss the coming year's budget until its approval in late June.