The Grover Beach City Council recently received the City’s Mid-Year Financial Review for the current fiscal year (2021-22), which highlighted Grover Beach’s strong financial position heading into the next year’s budget. The City’s favorable mid-year budget projections and five-year financial forecast will allow for substantial progress towards addressing community needs.
While COVID-19 has had significant impacts on the health and well-being of Grover Beach residents and businesses, the City’s financial position has fortunately remained stable in part due to the City’s diverse mix of revenue sources. General Fund revenues, which comprise tax revenues for most City services, are anticipated to be an estimated $1.5 million higher than originally projected. Sales tax revenue alone will contribute an estimated $982,000 increase or a 7.7% increase from the prior fiscal year, driven largely by cannabis sales and the passage of the Measure F-20 sales tax by Grover Beach voters. Additionally, cannabis tax revenue is expected to be $800,000 higher than budgeted and property tax revenue (the City’s largest revenue source) is projected to be 5% higher than last year.
“Our residents have continually stepped up to invest in our community including passing Measure K-14 to fix local streets and passing Measure F-20 to support City infrastructure and other services,” said Mayor Jeff Lee. “Now it’s our responsibility to use these funds to help our residents and businesses to achieve high priority goals while remaining prudent and cost-effective with our budget.”
The higher than expected revenues for this year will allow for additional funding to cover unforeseen one-time needs identified by City departments. These additional appropriations will help support community needs including restriping West Grand Avenue, replacing outdated street signs, funding for a new playground at 16th Street Park, and upgraded technology systems at City Hall to allow for faster and more efficient services for Grover Beach residents.
These revenues have also enabled the City to support local businesses through distribution of over $700,000 in local business assistance microgrants and launching a “buy local” program to encourage customer spending at Grover Beach businesses. The pandemic has disproportionately affected some individuals or businesses more than others, and there will be lingering economic hardship to some after the pandemic is over. The greatest losses have been in the leisure and hospitality, retail and education sectors. Fortunately, Grover Beach has seen few permanent closures of businesses and the City’s microgrant program has proven successful.
In addition to reviewing the Mid-Year Budget Report, the Council received an update on the City’s five-year General Fund financial forecast. This forecast serves as a valuable tool to help Council and staff make prudent financial decisions and inform the development of future City budgets. The forecast is updated annually to reflect unforeseen current and future conditions, including recent economic assessments that point to a rebound in economic activity over this new year, a surge in services consumption and continued strength in housing markets.
Overall, the forecast indicates the City’s General Fund is in a positive position over the five-year period given projected revenue increases from continued growth in the cannabis industry and related sales tax revenue increases as well as passage of Measure F-20. The forecast shows a projected annual surplus of more than $2.5 million with a strong level of reserves in each of the five years included in the forecast. This information will inform the Council in its upcoming FY 2021-23 goal-setting workshop on February 26 and subsequent review and adoption of a budget that reflects these goals.
While this forecast is a positive outlook, the City still faces significant community needs that require sizeable resources including repairing major streets and adding streetscape improvements to West Grand Avenue, adding sidewalks in areas throughout the city, funding additional staffing in public safety and other areas, and continuing to support local businesses and plan for economic growth. However, Grover Beach is in a strong position to address these needs and help make demonstrable improvements to community quality of life.