La Quinta continues its economic recovery from the pandemic, anticipating nearly $70 million in revenue over the next fiscal year and just under $4 million after expenses.
But officials warn that inflation could alter that outlook.
Chief Financial Officer Claudia Martinez told city council during a study session Tuesday that the projections presented are conservative, based on the current economy and inflation. Preliminary figures may change before the budget is formally passed on June 21, she said.
The city plans $67.8 million general fund revenue in fiscal year 2022-23 – a 4% increase over this year – with a projected surplus of more than $3.76 million after expenses.
All of the surplus, except $411,676, will be placed in the Measure G reserve fund.
Two years ago, the city was laying off staff and cutting spending where possible to make up for a nearly $3 million shortfall due to the pandemic.
The city heads into the new fiscal year, which begins July 1, with a proposed budget that reflects a strong financial recovery, surpassing the nearly $59 million in revenue the city projected when the current budget was passed, said Martinez said.
“This budget anticipates the ever-changing economic conditions and challenges we face, as well as our fiscal responsibility to ensure the city remains financially secure while meeting the needs of the La Quinta community,” Martinez said.
Rising consumer spending in leisure and hospitality, including the return of Coachella and Stagecoach music festivals and other major events, has facilitated a strong economic recovery in 2021-22, she and the financial services analyst Rosemary Hallick.
The proposed budget takes into account the ongoing effects of the pandemic on consumer spending, health care and pension costs, inflation and market volatility, as well as the availability and cost of materials, equipment and fuel.
Hotel, sales, and property taxes remain La Quinta’s top three sources of revenue, accounting for 69% of the city’s revenue. Combined, they’re projected to bring about $48.9 million to city coffers in 2022-23 — 69%, Hallick said.
The expected income for each is:
- Sales tax: $24.5 million
- Transient Occupancy Taxes (TOT): just under $12.48 million
- Property taxes: just under $9.92 million
More than half of the projected sales tax revenue — about $13.5 million — is Measure G revenue. Measure G is the initiative approved by La Quinta voters in 2016 that raised the tax selling one percentage point to 8.75%.
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Measure G funds are used for policing – $5.1 million – and capital improvement projects – $5.05 million – and the remainder, $3.35 million, is disbursed to a special reserve fund.
The city’s Financial Advisory Board, made up of La Quinta citizens, oversees the allocation of Measure G funds.
Expenses are also increasing
While revenues are expected to increase, so are the costs of running the city.
Expenditures are estimated at just under $64.1 million for 2022-2023, an increase of approximately $6.6 million from 2021-2022.
“City staff and management have been careful with their spending to ensure budgets are in line to end the current fiscal year with savings,” Martinez said in his staff report.
City staff and management worked to cut expenses and stay within budget this year, but faced rising costs due to inflation and fuel prices, market volatility and issues. recession, as well as supply chain issues and the recruitment and retention of city employees. , Martinez said.
“That’s why we have to protect all sources of revenue…because that’s the other side of the coin,” council member Robert Radi said. the next 18 months.”
Almost every department is budgeting for higher expenses, including increases in salaries and benefits, as well as rising health care costs, Martinez said.
Contract service increases range from about 5% to 7%, she said.
Estimated police and fire department costs are over $27 million, or about 42% of city spending.
Enforcement alone would cost over $18.2 million, an increase of $320,800 from the 2021-22 cost of approximately $17.9 million. La Quinta contracts with the Riverside County Sheriff’s Department for law enforcement services.
Park maintenance costs are estimated at $3.05 million, an increase of $466,322 from this year, which includes the city’s two newest facilities, SilverRock Park and XPark. It also includes the replacement of playground structures, benches, shade and other park improvements across the city, much of which was rated a top priority by residents attending the workshop. community in March, Martinez said.
Mayor Linda Evans said she’s heard requests for concrete benches at the top of the creek from residents who can’t walk far but want to walk a short distance and then stop and rest and take photos.
The marketing department is requesting additional funding of $206,000 for 2022-23 to increase efforts to bring more recreation and hospitality dollars to the city.
The City Clerk’s Office is reviewing a projected budget of $1.26 million for 2022-23, up $622,326 from the current fiscal year, largely due to the office taking over the short-term vacation rental program and costs for the November election.
Martinez encouraged the public to participate in the budget process by attending other scheduled presentations that are listed on the city’s website, laquintaca.gov/business/finance/budget, and to contact the finance department with any questions.
Council members also encouraged residents to read the draft budget, saying it is presented in an easy-to-understand manner with a breakdown and brief explanation of each expense and income.
A second study session is scheduled for June 7 and the adoption of the budget is scheduled for June 21.
Desert Sun reporter Sherry Barkas covers the cities of La Quinta, Indian Wells, Rancho Mirage and Palm Desert. She can be contacted at [email protected] Follow her on Twitter @TDSsherryBarkas