Conservative South Lake Tahoe budget focuses on recreation, growth
SOUTH LAKE TAHOE — A surge in tourism and hotel stays spurred a successful 2015 fiscal year for the City of South Lake Tahoe, a momentum it hopes to continue in the next year.
“We’re pleased to present a balanced budget for the third time in a row,” City Manager Nancy Kerry said.
The city passed a $75.2 million budget for the 2015-2016 fiscal year, which begins Oct. 1 and ends on Sept. 30, 2016. This includes a $34.3 million general fund spending plan and $34.3 million in expected revenue.
The city’s transient occupancy taxes, or hotel bed tax, hit $7.4 million in June, or $2 million more than anticipated for the 2015 fiscal year. Totals for July and August have not posted yet.
Even so, the city adopted a conservative budget for the next 12 months, anticipating only $6.5 million in hotel taxes. It also budgeted $4.86 million in sales tax revenue and $6.3 million in property tax revenue for the 2016 fiscal year.
“Rather than hoping your revenues will be great and budgeting your expenses for what you hope, we bring our revenue projections down and budget conservatively,” Kerry said.
Adjustments to the budget will be made in springtime after the city receives more information on incoming revenue.
The city also reorganized its public works department and eliminated the need for seasonal crews. The change will add six permanent job positions that will be cross-trained to perform duties as needed by season. New positions were added to the police department as well to help enforce new vacation-home ordinances.
A bright spot in the city’s budget is a $1 million decrease in employee healthcare costs after the city and employees agreed to modifications.
Recreation a continued focus
In 2016, the city plans to continue investment in recreation as a whole; South Lake Tahoe continues to grow as an outdoor recreation destination, from skiing in the winter to paddle boarding in the summer.
South Lake Tahoe already invested $200,000 for construction of the Bijou Bike Park on Al Tahoe Road, set to open on Saturday, Sept. 19. Redesigns of the South Lake Tahoe Recreation and Swim Complex and Regan Beach are also on the table, though funding sources have not been identified yet.
Another upcoming investment includes $1.2 million for constructing new community fields next to Lake Tahoe Community College on Al Tahoe Boulevard, something Kerry said will bring in more tournaments and organized events.
“You have to plan for the future,” Kerry said.
Investing in recreation means the city will leverage revenue for other projects.
“If we continue to invest in recreation, that will generate a cash cow that can be reinvested in streets,” and it may draw in future investors, Kerry said.
Mayor Hal Cole agrees.
“What we need is a more predictable, reliable source of funding for our streets,” he said.
Challenges & Bright spots
Kerry said she was pleased with a solid, balanced budget, but she foresees some challenges, especially with increased pension costs. The city uses California Public Employees’ Retirement System for its pension system, and recent adjustments to the system will cost the city an additional $1.2 million.
The city also owes $180 million in bond debt, which it will continue paying through 2038 from property and hotel tax revenues.
Property values present another challenge for the city in terms of two Marriott properties.
The value for the 199-condo Marriott Grand Residence fell by $107 million since 2010, while the 264-condo Timber Lodge fell by $96 million since 2010. The assessed value for the Grand Residence was $36.1 million in 2015 and the Timber Lodge had a $132.7 million assessment.
Kerry said part of the reason for the value drop has to do with the number of foreclosures at the Grand Residence.