by Andrew Alonzo | aalonzo@claremont-courier.com
Some good financial news was delivered during Tuesday’s Claremont City Council meeting in that the city netted some $4.9 million in surplus cash from revenues that made up the projected 2023-2024 general fund.
After a report from Claremont Finance Director Jeremy Starkey, the council voted unanimously to allocate $1,250,000 of the surplus funds to CalPERS to pay down the city’s unfunded pension liabilities; $1,775,341 to its operating and environmental emergency reserve, which provides funding in the event of a natural or fiscal emergency, such as the 2022 windstorm, bringing that fund to $11,113,060; $819,190 to the equipment and facility revolving reserve; $50,000 to fund a pilot program where local businesses can apply for up to $2,000 in grants to cover the cost of installing shatter-proof glass coatings to help curb damage from commercial burglaries; and $1 million to fund the city’s Section 115 Pension Trust.
Regarding its operating and environmental emergency reserve, the city has aimed to have at least 30% of the reserve be equivalent to a fiscal year’s projected general fund operating expenditures. Prior to the recent influx, it was at $9.34 million, equivalent to about 27.5% of 2023-24 general fund expenditures. With the additional funds it will hit that 30% minimum
Starkey explained the history of the city’s funding predictions.
“When drafting the 2022-24 biannual budget, the city took a conservative approach and used caution with concerns over a possible recession in the wake of the COVID-19 pandemic,” Starkey said. “Revenue assumptions were tempered to reduce risks of overestimating them, which could lead to city services being negatively impacted and expenditures were budgeted with expected cost increases also to lessen the city’s risk.”
The city budgeted 2023-24 general fund revenue funds to come in at $31,630,963, and expenditures at $28,913,404. On Tuesday Starkey said at the close of the 2023-24 fiscal year the general fund had garnered $38.9 million in revenue while expenditures totaled just over $34 million, resulting in the surplus of $4,894,531.
(L-R) Tim Dunfee was recognized by Claremont City Council member Jed Leano and Mayor Sal Medina as the newest member of the police commission at Tuesday’s meeting. Courier photo/Andrew Alonzo
Starkey explained the sources of the surplus in his presentation.
The city exceeded projected property tax revenues by just over $1 million, and sales tax by $1.3 million. The latter was due to strong automotive and restaurant sales and an increased share of county pool online sales, Starkey said. Due to recent increases in electric and gas utility bills, utility user taxes exceed expectations by $538,625. Franchise fees saw a boost of $134,992. Increased hotel attendance translated into a $196,940 bump for transient occupancy tax. License and permit fees came in at $1,290,850 over projections. And service charges such as fees for city programs and classes exceeded predictions by $275,215.
Additionally, in the “use of money and property” revenue stream, which is usually dictated by the rental of city facilities and parks, and interest earnings on investments, the city exceeded that budgeted number by $898,848.
Starkey noted other revenues such as business license taxes, fines and forfeitures, miscellaneous revenues and other taxes, exceeded their budgets by a combined total of $759,213.
Finally, grants came in under budget by $178,509.
The surpluses above add up to approximately $6.6 million range. Starkey explained the discrepancy:
“Within the staff report for this item, you will see that revenues of $38.9 million were recorded, and the budgeted revenues totaled $32.3 million for a difference of 6.6 million. The difference between this excess revenue and the surplus is due to the use of fund balance, or reserves, totaling $1.7 million for the repurchase of the pension obligation bond that was done this last year, and to fund capital projects,” adding, “$6.6 million minus the $1.7 [million] would be the $4.9 million surplus that’s being reported tonight.”
Claremont resident Lydia Hernandez, of Claremont Tenants United, urged the council to put some money toward the creation of a rental registry.
Resident Elizabeth Tulac expressed concern about putting the money toward CalPERS payments and the city’s Section 115 Pension Trust.
“I can see why we do the [operating and environmental emergency reserve], bringing that up to 30%, but the rest looks like we’re just putting a cushion into the city employees fund. Just saying how it can be misinterpreted,” Tulac said during public comment. “If someone came up to me and said the city’s got an extra $4 million, what do you want to do with it? I don’t know if that would be a top priority. I don’t understand the workings of all of it, but I’m just saying my initial reaction is like, well, is this our highest priority?”
Claremont resident Lydia Hernandez asked the council to put some of the city’s surplus money toward the creation of a rental registry at Tuesday’s meeting. Courier photo/Andrew Alonzo
Regarding Claremont’s unfunded liability on its CalPERS employee pension plans:
“Our current unfunded liability, and that is as of the most recent evaluation from CalPERS which has an evaluation date of June 30 of 2023 is $65.35 million,” City Manager Adam Pirrie said. “As Jeremy mentioned, we’ve made additional discretionary payments since 2010 of just over $7 million. You know, estimating … how those contributions would have grown with CalPERS investment returns, the impacts to the unfunded liability is somewhere between $10.5 and $11 million. So, had we not made those payments, we would be looking at an unfunded liability of somewhere between $76 and $77 million instead of the $65 [million] that we see now.”
The next Claremont City Council meeting is set for Tuesday, November 12 at 6:30 p.m. in the council chambers, 225 W. Second St.