During pandemic, Avalon had to spend down its reserves
The Avalon city budget process will need to start early, according to Finance Director Matthew Baker.
During last week’s mid-year budget review, Baker told the City Council that staff is looking at dates in the spring to begin the process.
At the time, he anticipated budget discussions would start in March or April.
Staff revenue projections are close to and might exceed budget estimates, according to Baker.
He said staff expected wharfage revenue to exceed the budget for this fiscal year—but he said that would still be less money than in prior years.
The reserves are another issue.
“We were spending the majority of our reserves this year just to operate,” he told the council. Baker said that put the city in a challenging position for this year’s budget.
“If all we do is meet the budget, the budget we adopted spends the vast majority of our reserves this year,” Baker said.
Baker warned the council that Avalon’s General Fund could be exhausted by year’s end.
Mayor Marshall said a disaster one way or the other and the city could be broke.
“Correct,” Baker said.
“At mid-year, expenditures are in-line with budgeted amounts and revenues are on track to at least meet if not exceed budget estimates,” Baker wrote in a recent email.
“However, unless visitor-driven tax revenues continue to exceed estimates, further reductions in future budgets will be required to operate as reserves will not be available to offset lost visitor-driven tax revenues and fees,” Baker wrote.
“The City is also exploring additional revenue sources, including increases to sales tax and TOT, to help restore reserves lost as a result of the pandemic,” Baker wrote.
The council discussed some of those options last week. The council will take a further look at whether to place a sales tax or transient occupancy (short term rental tax) on the ballot at a future date. (For details, see “Council considers income options,” at thecatalinaislander.com.)
