The City of Escondido adopts its budget each June for the following fiscal year, which runs from July 1 to June 30. The budget, while a financial document, is also an important policy document, outlining the City Council’s priorities for the upcoming year and showing where the City's funds will be allocated. The Operating Budget
projects short-term revenue and expenditures related to providing day-to-day services. A separate Capital Improvement Project Budget
projects long-term revenue and expenditures for major projects such as roads, park improvements, and pipelines.
The budget process begins around December each year; the City Manager and Finance staff meet to develop the assumptions, guidelines, and schedules to be used in the preparation of the operating budget. The Finance Department provides a budget newsletter to each department, which includes information such as:
The City’s current fiscal situation: Current revenue constraints and economic or community conditions
Council priorities for the upcoming year
Changes affecting the cost of employee wages and benefits
Instructions and due dates for completing budget submissions
The City’s operating budget provides a plan for how the monies coming into the City (revenues) will be spent in order to operate and maintain City functions and services, such as police, fire, parks, and libraries. The General Fund is the chief operating fund of the City and accounts for all financial
resources except those required to be accounted for in another fund. The City spends 76% of its General Fund departmental budget on public safety, and the remaining on services such as parks, libraries, public works, and general government services. City services require people to provide them, and as a result 85% of the City’s costs are personnel costs.
Core City services funded through the General Fund’s budget are supported by a variety of revenue sources. The four major General Fund revenues are sales tax, property tax, and other taxes which includes transient occupancy tax, business license tax, and franchise fees. Combined these revenues account for 81% of the General Fund’s revenue.
Fiscal Year 2022/23 Budget Adoption
On May 11, 2022, City Council was presented with an update on the annual budget process, General Fund Multi-Year Financial Forecast, and the Preliminary Operating Budget for FY2022/23. To address the growing costs of providing municipal services and the projected structural deficit, the City has maintained a hardline on expenditures and staff are continuously seeking measures that ensure efficiency, while enhancing basic operations. Despite all of these measures, and the City’s efforts to fund projects with grants and other sources of one-time funds, it has not been enough to meet growing costs and demand for services, the General Fund operating budget projected a net operating deficit of $8.5 million. The City Council direction to Staff during the Preliminary Budget Workshop was to prepare a General Fund Operating Budget that closed the $8.5 million deficit, without impacting the Public Safety departments and services, including Police, Fire, and Public Works.
In order to address the $8.5 million General Fund deficit, Staff evaluated both projected operating revenue and the proposed operating expenses for FY2022/23. Due to updated information received subsequent to the May 11, 2022 budget workshop, Sales Tax revenue was increased by $1,000,000 and property tax revenue was increased by $430,000. General Fund operating expense reductions of $7,068,910 were recommended, detailed in the May 11, 2022 Staff Report. The proposed reductions and modifications to City services were sufficient to close the FY2022/23 budget gap.
After discussion and consideration of the recommended budget reductions, City Council directed Staff to modify the proposed Fiscal Year 2022/23 operating budget and offset some of the budgetary cuts recommended with the use of one-time funds. With the direction from City Council, Staff evaluated the list of operating budget cuts and recommended adding back some funding to Fleet Services, funding for critical repairs to City owned buildings, and the financial support provided to the CCAE, resulting in the use of one-time funds of $3,735,030 from the Revenue Loss category of the American Rescue Plan Act Funds.