City finances 101
April 19, 2012
By Chuck McBride, Finance Director, City of Carlsbad
As seen in Carlsbad Magazine
In recent columns, my city colleagues have talked about how they help contribute to the community’s vision for the future through the services they provide, like library and arts programs, maintaining a strong infrastructure and caring for the environment. Of course, all of these services take money, and that’s where I come in.
If I were to sum up my job as finance director for the City of Carlsbad in a nutshell, I would say it is to make sure the city doesn’t spend more money than it takes in and to make sure we have a healthy savings account in case of emergencies. Sounds simple enough, right?
Well, simple is not a word I typically hear associated with government budgets. That is because city finances involve a lot of different sources of revenues, all with different rules for how they can be spent.
The City of Carlsbad’s total budget this year is about $260 million. This money pays for all the services we provide, like libraries, police and fire protection, parks and recreation programs, sewer cleaning, water system maintenance, pothole repair, and on and on. It also pays for physical things, like asphalt and gravel to keep roads smooth, equipment needed to maintain our city, police cars, fire engines and utility trucks and the fuel they use, and even fertilizer to keep parks green.
Within this budget is the $112 million general fund, which pays for most of the day to day city services and operations. The main source of revenue for the City of Carlsbad’s general fund is property taxes. When property owners send their check to the county, the city ends up with about 18 percent of that money. Then next biggest source of revenue is sales tax. Like property tax, the city only gets a small percentage of sales tax generated in Carlsbad, in this case, 1 percent. Transient occupancy tax, the tax visitors pay when they stay in a Carlsbad hotel, rounds out the general fund’s top three sources of income.
We keep very close track of our revenues because that is how we know how much we have to spend each year. One of the tools we use is a 10-year financial forecast, which projects all of the general fund’s anticipated revenue and planned spending 10 years into the future. This allows us to spot any possible discrepancies well before we face a financial crisis.
Deciding what goes in our budget each year is a lengthy process that starts with the City Council identifying goals for the year, based on how we can help support the Carlsbad Community Vision. City staff then develop specific plans and budgets that will support those goals. Each year in May and June, we hold a number of public workshops and hearings to discuss the draft budget before the City Council adopts the final spending plan.