Fountain Valley projects increased revenue of $3.1 million in midyear budget update
Fountain Valley expects to finish the current fiscal year with above-anticipated revenue, city officials said in a midyear budget update presented to the City Council.
At the panel’s March 7 meeting, Finance Director Ryan Smith told the council the city projects it will see a $3.1-million increase in expected general fund revenue. The growth is spearheaded by sales tax and Measure HH outperforming estimates by a combined $2 million.
Measure HH was approved by the voters in 2016, assessing a 1% tax on transactions that will sunset in 2037. The funds from the tax can be used for essential city services such as public safety, as well as senior and youth programs. Smith said the transaction tax is expected to bring in about $17 million this year.
“Really, what the transaction tax did was it allowed the city to be able to … make big decisions on what they want to provide to the community, instead of having to try to figure out what services, what programs are going to get cut to balance the budget,” Smith said in a phone interview Friday. “Right now, the city is, I think, in a really good place moving forward. We have a strong reserve balance, and we’ve got a good plan throughout the next 20 years to make sure that we kind of stay in that strong financial spot.”
Fountain Valley now shows $76.5 million in general fund revenue and a $6.3-million operating budget surplus. Capital improvement project expenditures and a $3-million pension pay-down have the city on pace for a $4.8-million budget deficit.
“During the onset of COVID, a lot of cities kind of tightened up what they were doing because there was so much uncertainty in what our revenue streams would be,” Smith added. “Nobody really knew, was sales tax going to take a huge hit?
“So a lot of cities really tightened up what they were doing with capital improvements and deferred those, so a lot of that $10.2 million are projects that were deferred from prior years. In the last fiscal year, the city had about a $12-million surplus, and part of that is because the CIP projects were really cut back.”
Some of the capital improvement projects include a police station remodel and a universally accessible playground being installed at Fountain Valley Sports Park.
The budget review included $881,390 in additional general fund expenditures, a significant portion of which Smith said came from the city’s public works and fire departments. Among the budget adjustments, the City Council approved requests for $150,000 for contracted engineering and inspection services, as well as another $200,000 for surge ambulance services.
“That’s good news,” Councilman Patrick Harper said after confirming the city’s added revenue came out ahead of its new expenses. “I don’t like increasing the expenses, but I’m happy that the revenues have sort of more than offset it. Inflation hits our revenues, but it also hits our expenses.”
City staffers will present the proposed budget for the upcoming fiscal year to the City Council on June 6.
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