Carlsbad City Economic Update

by The Editors on April 24, 2009

042109 56At City Council last Tuesday night April 21, 2009 we got so caught up in the Stallga Norte Park spectacle that we forgot about the State of the Carlsbad Economy presented by City Finance Director Lisa Irvine. Though we took notes, we never wrote anything up. Luckily, the City of Carlsbad did it for us in a release sent out yesterday.

The city has developed a number of strategies for managing its budget that allow the city to adapt to the changing economy while minimizing effects on city services. In January 2009, to maintain a balanced budget, the City Council reduced total general fund revenue by $4.6 million, and reduced general fund expenditures by $5.3 million. Based on projected revenues, the city will likely make additional reductions in the fiscal year 2009-2010 budget, which goes into effect July 1.

The most interesting bits were about how much our City depends on Car Country Carlsbad and how poorly they are doing. There was also mention of how poorly Plaza Camino Real is doing compared to The Forum and Carlsbad Premium Outlets, but we already knew that.

For the rest of the details (minus any snide comments from us) follow the jump.
City Provides Economic Update

CARLSBAD, Calif. – During a quarterly update to the Carlsbad City Council, city staff reported that even though general fund revenues are higher than predicted for the first nine months of the fiscal year, sales tax and transient occupancy tax are down, and economists disagree about how long the current recession will last.

“The City of Carlsbad continues to monitor the national and local economy and make needed adjustments to maintain a balanced budget,” said Lisa Irvine, city finance director. “Even though economists don’t agree on when the economy will reach bottom, most believe the recovery will be long and gradual. In the face of such uncertainty, the City of Carlsbad must stay the course of fiscal prudence.”

For the first nine months of fiscal year 2008-09, general fund revenues are $77.4 million, $1.6 million higher than the January revised city budget. Sales tax is projected to total $26.3 million for the current fiscal year, a 6 percent drop from last year. Transient occupancy taxes are expected to decline by 5.5 percent this fiscal year.

Carlsbad’s home foreclosure rate has been modest compared with other cities in the region, and the number of foreclosures dropped in the first quarter of 2009. Although median home prices have declined in Carlsbad, they remain well above the San Diego County average.

The city has developed a number of strategies for managing its budget that allow the city to adapt to the changing economy while minimizing effects on city services. In January 2009, to maintain a balanced budget, the City Council reduced total general fund revenue by $4.6 million, and reduced general fund expenditures by $5.3 million. Based on projected revenues, the city will likely make additional reductions in the fiscal year 2009-2010 budget, which goes into effect July 1.

All city departments have identified possible ways to increase efficiency, including using technology and streamlining operations. The city is reducing the size of its workforce, primarily by not filling open positions unless they are critically necessary to maintain core city functions. City staff also have identified options for cutting back on city services, if needed, focusing first on those with the smallest direct effect on the community.

Citing the City of Carlsbad’s strong financial management Standard & Poor’s recently upgraded the city’s credit rating from AA to AAA. The City of Carlsbad forecasts projected annual revenues and spending over a 10-year period so it can make adjustments as needed to maintain a balanced budget. The City of Carlsbad forecast assumes a three-year economic recession with a slow recovery beginning in fiscal year 2012. In the forecast, the opening of new facilities is proposed to be delayed or deferred to help balance projected budgets.

Regular updates on the city budget and financial forecasts are available on the city Web site at www.carlsbadca.gov/finance.

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