How the City of South Lake Tahoe plans to spend $73 million

City Manager Nancy Kerry and Mark Carlson, the City's Administrative Services Director presented the 2015-16 Fiscal year budget to the South Lake Tahoe City Council during a workshop Tuesday.

"There is a lot we can be proud of," Kerry said.

The budget process has been ongoing since May, involving staff in making the decision on where to cut back, and where to spend.

The City was conservative but made bold decisions for investing in the future of South Lake Tahoe, according to Kerry, yet there were able to create a balanced budget for the third straight year by using only the General Fund and with no dipping into reserves.

The projected revenue for 2015-16 is $71.9 million while the projected expenses total $75.2 million.

Kerry painted a bright picture for the future of South Lake Tahoe. "The City wants the public to be as informed as they are," she said. "We need to be transparent to do this."

They looked at the past and at global trends when forecasting revenues. The City evaluated what the economists are saying. They know what expenses will be but can only use an educated forecast when determining what revenues might be.

59% of the General Fund revenues are expected to come from Transient Occupancy Tax (TOT)7%, Property Tax and Sales Tax. The remaining funds will come from Vehicle License Fees (5%), Public Services (5%), Business License Fees (4%), Franchise Fees (4%), Recreation (3%), Public Safety (4%), Measure Q (7%) and all other revenues (15%). These are expected to total $34.2 million which is a 5% increase over last year.

Extra revenue will come into the City this year from the selling of parcels they own, including two lots in between IHOP and PostMarc Hotel, Blue Lake parking lot, three parcels on Riverside and a lot next to 7-11.

They will need this extra revenue to balance out an expected drop in property tax.

Property Taxes, Timeshares and TOT

While property taxes overall have been rising annually there was a $700,000 hit in property tax collected, mainly due to the current situation at the Marriott timeshares in the Heavenly Village. There has been a 43% drop is assessed value in he redevelopment area, mainly due to Proposition 8 (qualifying properties are given a temporary reduction in their taxable assessed value when the market value of those properties decline).

Marriott Resorts bought back many of their timeshares when the recession hit and converted them into points. There are no taxes collected on points redeemed and there are no TOT collected.

The City has asked the County Assessor to look into the fact that the Marriott Grand Residence condos have dropped from an assessed value of $723,707 each in 2010 to $183,776 today. These figures show the values have decreased $107,446,363.
The Marriott Timber Lodge has also dropped in assessed value, though not as much. Each condo there has dropped in value from $867,849 to $502,836. This 44% drop in peak values is costing the city. The County has assigned someone to look into this according to Kerry as they were unaware of this situation until the City informed them.

The TOT collected in the city limits is fairly balanced year round which is unusual for many resort communities who see either strong summers or strong winters, South Lake Tahoe has both.

With over half of the budget relying on the TOT derived from hotels, motels and vacation homes, the City is looking into ways to bring more people into town.

CalPERS

CalPERS (California Public Employees' Retirement System) changed their methodology in how they figure out benefits because of their loss of revenues with position cuts and other revenues hits they took across the state. The General Fund contribution to CalPERS has increased from 63.4% to 66.9%.

Reducing the City's liabilities by 72% over the past few years they are able to absorb the increase in Cal Pers payments.

"We were proactive in getting these expenses under control," said Carlson.

Because of the job South Lake Tahoe did with reducing their unfunded liabilities, many cities are looking to the City as an example.

Projects and Community Input

The City has been investing in things in the city that will give them a return on that investment.

Kerry highlighted all of the money being invested in the community including the Regan Beach redesign; the Bijou Streetscape, Trail and Erosion Control Project; and the progress at the Chateau and the Zalanta Resort.

The City has held several public meetings on all projects as well as subcommittees created for the Senior Center, Master Planning, Economic Development, VHRs, Parks and Trails Master Plan, as well as new partnerships with agencies, LTUSD and LTCC.

Reorganization of Public Works and City Services

While continuing to concentrate on core services and daily operation of the City, the Public Works and City Services staff were able to reconfigure their departments to be more efficient.

The Maintenance Department is reorganizing and consolidating operations with no funds used from the General Fund with their new positions. A new position has been created in the City Clerk's office due to future retirement. Administrative Services/Finance Department is also reorganizing with no extra net cost. There are two new positions being added to the Development Services due to an increase in expected planning needs. More employees are being added for VHRs through a special revenue fund. Two building inspectors and one investigator are being added.

The detailed budget presentation can be found on Tuesday's agenda. A complete breakdown of each type of revenue and expense can be found there.