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1. What is the impact of COVID-19 on the Town’s budget and services?

In April of 2020, Town staff projected a budget shortfall of $730,000 for the upcoming, 2020-21 fiscal year beginning July 1, 2020.[1] The shortfall was due to COVID-caused reductions in sales tax revenue, along with planning, building and recreation fees. These projected reductions will be partially offset by continued property tax growth. The Town Council will review and update its budget after 6 months. To help mitigate the projected revenue shortfall, the Town identified one-time or on-going services and project-related cost reductions coupled with personnel cost reductions. The Town Council reduced staff costs by 1) partial hiring freeze; 2) up to 5% pay cuts for all full-time employees; 3) eliminating “cash outs” of sick leave. No currently filled staff positions were eliminated. The Town’s reserves provided about $27,000 to fill the remaining budget gap. Reserves were reduced to $3.6 million, achieving the Town’s goal of maintaining 20% of the annual General Fund set aside as reserve funding.  Town Hall is currently opening Monday and Wednesday from 8:30 am to noon. [1] Town of San Anselmo Staff Report for 2020-2021 Preliminary Proposed Budget and Work Plan, ITEM 10 for the meeting of June 9, 2020[1] .  Staff Report, June 13, 2020, 2020-2021 Budget and Work Plan, ITEM 9 for the meeting of June 23, 2020

 

2. Why can’t the Town afford to provide a higher level of service, considering the wealth of the community and high home prices?

Property taxes account for about 77% of General Fund revenues, so limited property tax also limits Town resources.[1] Despite high home sales prices, State Proposition 13[1] , approved in 1978, limits increases in property taxes to 2% maximum each year (until property is sold). Many homes are assessed and taxes at values much lower than market sales values, thus property tax revenues do not fully reflect high home values. The Town only receives 26 cents of each property tax dollar;[2] the remainder goes to the County, schools, and other agencies. The Town has few other sources of tax revenue since it does not have multiple shopping malls, big box stores, or other major commercial activities that typically generate revenues. However, the Town must still fund street maintenance, police, fire and other services, while performing essential upgrades to aging infrastructure and facilities. [1] Town of San Anselmo: Budget and Work Plan 2020-2021, pg. 36. [2] Ibid, Town Budget FY2020-2021, pg. 36.

 

3. How much of the Town’s budget goes towards pensions, and what are the potential future impacts on the budget and services from growing pension obligations?

The Town’s budget for the fiscal year beginning July 1, 2020, spends $2,828,459 for pension costs for past and present employees[1] (including the Town share of police and fire department pension costs), or about 17.17% of its General Fund expenditures. The Town’s existing pension liability is about 75% funded when compared to the value of its pension assets. (2018-19 audit for Misc employees). The remaining 25%, which is currently unfunded, totals approximately $26 million. In addition to general revenues, the Town applies pension taxes totaling over $2 million collected from property owners.[2] The Town also issued a Pension Obligation Bond in 2012 [1] that repaid a portion of its pension obligation; the bond will be paid off by the end of 2021, freeing up revenue to apply to pension costs or other Town priorities. Over the next ten years, pension costs are projected to double,[3]. Town revenues typically rise moderately each year. Unless additional revenues can be found to help address these additional pension costs more of the annual budget will be needed. Inevitably, this will affect operating expenses. In 2019, the Town established Section 115 Trusts for unfunded pension and retiree medical costs, and placed $500,000 into the pension trust fund $100,000 into the retiree medical (Other Post Employment Benefits or OPEB) trust. The Town will add to these trust funds each year. These funds can help in the future to soften the potential impact of pension costs on other services. The Town can augment the trust fund as part of the annual budget process. Further information can be found in a 2019 Ad Hoc Financial Advisory Committee presentation[4] and reports prepared by the Town’s Staff[5] and pension advisor.[6] [1] Staff report March 1, 2018 for the Meeting of March 13, 2018, ITEM 7 - Presentation by Bartel Associates (Bartel 2018).[2] [2] The Town’s pension tax is used to pay for the cost of the employee pension program. The rate is $0.059 per $100 of a property’s assessed value. [3] Town of San Anselmo: Budget and Work Plan 2020-2021, pg. 8. [4] Town of San Anselmo Financial Advisory Committee Report March 26, 2019.[3] [HY4] [5] Staff report March 1, 2018 for the Meeting of March 13, 2018, ITEM 7 - Presentation by Bartel Associates (Bartel 2018).[5] [6] Town of San Anselmo Misc. and Public Safety Plans, CalPERS Actuarial Issues, March 13, 2018.  [RB1] Reference Town’s budget forecast and/or detailed pension analysis.

4. Measure M failed in November 2019, so what is next to finance some sort of renovation of Memorial Park? Is there any money available in our current budget?

2019’s Measure M, if approved, would have issued an $8.8 million dollar bond to be repaid by San Anselmo property owners over 30 years. The bond proceeds would have funded a major [HY1] renovation to Memorial Park as described in the framework for the Memorial Park Master Plan approved by the Town Council [1]. The Town budget for the fiscal year beginning July 1, 2020 [does not] list upgrades to Memorial Park.[2]   The Town receives a share of a Countywide Measure A sales tax (1/4 cent rate), or about $90,000 annually; the Council allocates 70% to Memorial Park restoration.[3] A total of about $439,000 has accumulated in the Measure A fund.[4] In addition, in 2021 the Town expects to collect $177,000 in Prop 68 Park Bond funds from the state that can be used for park improvements. The Town is developing plans for utilizing these funds to improve Memorial Park. COVID impacts have reduced the Town’s General Fund reserves to around $3,592,488 or about 21% of the Town’s budget. With this draw down, the reserve fund still [HY3] achieves the Town’s reserve policy goal of 20% of operational costs. Although fund reserves are typically used for emergency purposes, these funds could be drawn down to pay for Memorial Park improvements, and/or other services and capital expenditures. In addition, future revenues could improve and provide additional funds that could be programmed for Memorial Park improvements. [1] Staff Report – Town Council Meeting, Feb. 27, 2018 – ITEM 8 - Memorial Park Master Plan (2) Ibid, Town Budget FY2020-2021, Appendix A. [3] Ibid, Town Budget FY2020-2021, pg. 135. [4] Ibid, Town Budget FY2020-2021, Measure A Parks Tax Fund, pg. 136.

5. What services does the Town share with neighboring cities and agencies? Are there additional options for sharing which could save the Town money and improve its level of service?

The Town shares many functions with other municipalities in Marin County, including sharing police services with two other jurisdictions, forming the Central Marin Police Authority, and sharing fire services with three other jurisdictions to form the Ross Valley Fire Department. The Central Marin Police Authority was established in 2013, and reduces costs to the Town by about $1 million annually from administrative and service efficiencies[RB1] . Fire services to the Town are provided by the Ross Valley Fire Department JPA that includes Ross, Fairfax, and unincorporated Sleepy Hollow Fire Protection District. The Town collaborates with Marin’s other ten cities and towns and the County on a range of other programs and services through joint powers authorities and other agreements. More information is included in a summary presentation available on the Town’s website. Exploration and evaluation of additional shared services opportunities is ongoing. For example, the current draft Municipal Services Review proposes expansion of the Ross Valley Fire JPA to include additional cities.

 

6. How much is spent on maintaining roads every year, and who pays for it?

The Town follows a 7-year plan Capital Improvement Plan, which includes an annual program for road maintenance. Each year, roads are prioritized to maximize the benefit of routine maintenance, and also a portion of roads in the worst condition are brought up to standard. Over the past few years the overall average condition of roads has improved according to standard measures. The Town spends between $3 to 4 million every year on road-related maintenance and rehabilitation. Road maintenance is funded by a combination of General Fund revenues, gas taxes and other regional transportation revenues. Town voters approved Measure D in 2013 which increased local sales taxes by ½ cent per dollar of taxable sales; in the fiscal year beginning July 1, 2019 this tax generated about $900,000 in revenue. Measure D is a “general tax” and may be used for any purpose. Its stated intent is to increase maintenance of roads and other capital facilities. The Town’s Capital Program Monitoring Committee (CPMC) annually reviews and affirms the expenditure of Measure D funds for their intended purpose. A description of road funds and other capital maintenance can be found in the report from the Dept. of Public Works to the CPMC. Measure D expires in 2024. To extend the tax will require Council action and approval by a majority of voters.