Sharing a grim global outlook but also promising signs in the local economy, City Manager Ken Striplin kicked off the city’s monthslong budget process in earnest Tuesday, with the first study session at City Hall.
Gathering City Council, commission members, stakeholders and staff leaders, there were several items to be discussed, Striplin said.
“As an overview, the purpose of today’s meeting is to: one, provide an update on the state of the city budgets as we enter 2023; review some of the early economic indicators for the year; review some of the key issues or challenges facing the city for the next election cycle; briefly go over estimated general fund revenue and expenditure for the next fiscal year; and finally, review the budget philosophy and calendar, so you are kept aware of significant bits that make up the city’s budget,” Striplin said.
The city ranks in the top 5% by the state’s auditor, maintains a AAA credit rating from Standard & Poors, expects to keep a 20% operating reserve and owns perfect scores for those reserves and its ability to meet pension fund obligations, Striplin noted, but that local success exists during a time of great uncertainty that exists outside city limits.
“The budget team spends a significant amount of time tracking data and economic forecasts,” Striplin added, referring to how international situations, such as the Russian-Ukrainian war, the lingering effects of COVID recovery on the global marketplace and inflationary concerns can impact local markets. “Although economic uncertainty seems to be the theme of 2023, consensus points to an economic slowdown.”
The city expects to have approximately $139 million in revenue for its general fund, against $135 million in expenditures, according to data presented in Tuesday’s study session, with the biggest revenue sources listed as sales tax (34%) and property tax (34%), making up more than two-thirds of the city’s revenue for its general fund.
This represents a slight adjustment from 2022-23, when sales tax made up 35% of the revenue and property tax was 33%.
The biggest expenditures are listed as “Transfers Out,” which account for an estimated 26% of expenditures, with “Public Safety” listed as No. 2, at 22% of the budget.
The public safety portion, which includes the Sheriff’s and Fire departments’ contracts, actually represents a 1% decrease over the 2022-23 budget, when the city spent 23% of its budget on public safety.
Fluctuations in the budget could still occur as the figures shared in the city’s charts on Tuesday were preliminary, according to an email from Tyler Pledger, senior management analyst for the city of Santa Clarita.
Transfers Out dollars are defined by the city as money transferred out of the general fund to special funds, which include expenditures in the Facilities Fund, Pledger said. This funding pays for projects in the city’s Santa Clarita 2025 strategic plan like the Santa Clarita Sports Complex Buildout and the design and construction of Via Princessa Park, as well as parks and urban forestry operations and pension obligations.
The Transfers Out in 2022-23 represented 16% of the budget, according to the city’s website, with the difference attributed to changes that could still occur over the next six months that could impact the percentage of the budget used by the transfers.