In response to the rapid spread of novel coronavirus (COVID-19), the Town of Colma held a special City Council meeting on March 18, 2020 to declare a local emergency, offer 160 hours of pandemic paid-time off to Town employees, and adopt the FY 2020-21 budget. The actions taken on March 18, 2020 was in coordination with other agencies within San Mateo County.

The adopted FY 2020-21 budget consisted of rolling over the operating budget from FY 2019-20 and ratifying the capital budget as planned for FY 2020-21 in the 2019-2024 Five-Year Capital Improvement Plan. This action allowed staff to shift focus from creating a budget and all the annual projections to looking at the financial condition and present a quarterly projection as a result of COVID-19 and Shelter-in-Place (SIP) orders.

EXECUTIVE SUMMARY

Adopted Budget – All Funds

In the Adopted Budget, total revenues in all funds are projected to be $19.8 million. Total expenditures for all funds are projected at $21.0 million, comprised of approximately $18.4 million in Operating Expenditures, $0.3 million in Debt Service payments and approximately $2.3 million in Capital Improvement Projects (CIP).

Revenues – All Funds

Total budgeted revenues are $19.8 million, with $17.8 million in General Fund, $1.09 million in Enterprise Funds, and 0.86 million for all other funds.

These revenue budgets are the projection for FY 2019-20 before the COVID-19 pandemic. On May 13, 2020, the City Council reviewed the first revenue projection since the shelter-in-place (SIP) order in March. For full disclosure, the projection and analysis from the May 13, 2020 City Council meeting can be found below, under Economic Overview.

As shown above, a majority of the Town’s operation is supported by sales tax and cardroom tax revenues, at $15,650,000; sales tax and cardroom tax revenues represent 79 percent of total revenues. The next largest category is the Enterprise Funds at $1,087,700. Most of these funds are from the pass-through sewer chargers. Capital Fund revenues of $353,192 are primarily from grant reimbursements from a project completed in early FY 2019-20. As the FY 2019-20 budget was rolled over without adjustment, the Town will amend the FY 2020-21 budget in late-Fall or early-Winter to reflect projected grant funding in FY 2020 21.

Expenditures – All Funds

Total budgeted expenditures are $21,027,627 with $18,398,738 in Operating Expenditures, $297,369 in Debt Service and $2,331,520 in Capital Improvement Projects (CIP).

The operating budget ($18,398,738) includes staffing and services based on the FY 2019-20 operating plan. As part of the annual budget process, department’s will assess their operating plans for the new year and provide new budget projections. As a result of COVID-19 and the SIP order, departments will be providing their operating plans as part of the quarterly projection, and a budget amendment will be made in late-Fall or early-Winter to reflect the FY 2020-21 operating plan.

The annual debt service payment is the same each year with different distributions between interest and principal payments.

The capital improvement projects ($2,331,520) includes the following projects per the 2019-2024 Five Year Capital Improvement Plan adopted by the City Council on March 13, 2019.

FY 2020-21 Revenues and Expenditures Budget (Pie-Charts)

In the 2008 Housing Crisis and the prior recessions, the drop in the financial market was more gradual and the impact was isolated. Likely, the growth in unemployment was gradual, in comparison to the COVID-19 crisis.

As shown on the charts below, the financial market fell immediately when COVID-19 spread into the United States and, similarly, unemployment rates spiked higher than the peak of the housing crisis. These are indicators that we are still experiencing the recession and not out of the woods yet. Since this recession is driven by the spread of COVID-19, we cannot predict how long the recovery period will be and what will life be like on the other side of the curve.

Some topics of concern include:

• How long will the current COVID-19 wave last?
• Can businesses reopen without a proven vaccine and keep the spread of COVID-19 down?
• Can schools and daycare facilities reopen safely so workers can return to a safe work environment?
• How many businesses can survive the prolonged shutdown, or limited services?
• How will consumer behavior change once the SIP orders are lifted?
  • Will they continue to buy supplies and order food online?
• Will there be a second wave of COVID-19?

Future Impacts on Town’s Financial Health

As of right now, the Town expects COVID-19 will continue to adversely impact the Town’s operations. Additionally, the Town is expecting the unfunded pension liability to increase due to the bearish market. The impact of the increases in unfunded pension liability will be budgeted beginning in FY 2022-23.

The Town is also staying connected with major businesses in Town to understand the economic condition. This will help the Town better prepare and assist the community as COVID-19 progresses.

MAJOR ACHIEVEMENTS IN FY 2019-20

Prior to COVID-19, the Town had the following achievements:

• Completed the 2020-2022 Strategic Plan. The Plan intended to move the organization forward towards a more transparent and inclusive organization, with an emphasis on technology and community involvement;
• Completed the Serramonte Boulevard/Collins Avenue Master Plan;
• Opening of Veteran’s Village Housing and assisted in furnishing each unit – through coordination with local businesses and non-profit organizations;
• Selected Police Officers and Dispatchers celebrated Christmas with a veteran who was on his own during Christmas 2020. They also donated food and a TV to the said veteran;
• Closed out the 2010 ADA transition plan and incorporated ADA compliance as part of normal operating and capital procedures;
• Trained and certified 10 residents and volunteers as the Town’s CERT team;
• Hosted successful Town Picnic and Holiday Event
• Held the second year of Cinema at the Cemetery; and
• Held our second annual Business recognition luncheon.

• Birthday Parades for all Town residents by the Colma Police Department and Colma Fire District;
• Delivered food and other essentials to high-risk residents;
• Regular communications to community providing resources and assistance;
• Hosted two Town-Hall meetings with the public;
• Continued support for diversity and inclusiveness in Colma through flag raising ceremonies;
• Transitioned public meetings to Zoom successfully;
• Colma Police department coordinated with business community lending support during civil unrest;
• Coordinated with business community regularly communicating with them during SIP; and,
• Donated $15,000 to SMC Strong Business Relief.

DEBT SERVICE

In 2015, the Town of Colma issued a $5.3 million Certificates of Participation (COPs) to fund the Town Hall Campus Renovation. As shown in the chart below, this is within the California Code debt limit as stipulated by Government Code 43605 (15%). The FY 2020-21 Adopted Budget includes debt service payments and administrative cost of $297,369. Additionally, the Town has no intention in pursuing additional debt in the foreseeable future.

FUTURE CHALLENGES

Like many agencies in the State of California, the Town will need to keep unfunded liabilities and aging public infrastructure in our forefront. In addition, the Town’s reliance on sales tax revenues makes it vital for the Town to diversify its revenue sources, and to promote local businesses by attracting more visitors.

Unfunded Capital Needs

The FY 2020-21 Adopted Budget shows a total unfunded CIP project budget of $14.8 million. Based on the recent Serramonte Boulevard/Collins Avenue Master Plan study session, the cost to complete all the suggested improvements to this major corridor will cost the Town an additional $11.8 million to $17.9 million. Improvements to this corridor will improve safety, aesthetics, and can improve the Long-Term Economic Benefits to the Town. Staff will continue to look for ways to prioritize and phase in the unfunded projects. Searching for other funding sources, including grants, will also be critical.

Unfunded Liabilities

Due to COVID-19, and its economic impact, it is unclear what the Town’s unfunded liabilities will be in the future. The unfunded liabilities will be updated and assessed after the CalPERS Actuarial Reports are available.

Revenue Diversification

The Town has made progress in recent years in diversifying its revenue sources, including voter-approved 12 percent TOT Tax, newly adopted planning, building, and engineering permit review fees and charges, and changing the Town’s investment strategy to include Bank Certificate of Deposits. With 64.5 percent of the Town’s General Fund revenues from Sales Tax, it is essential that the Town continue to explore new revenue sources. This project is a priority program in the Strategic Plan and staff will continue to explore ways to diversify revenues.

ORGANIZATION OF THE BUDGET DOCUMENT

The FY 2020-21 Adopted Budget is an abbreviated budget, as it is a repeat of the prior years budget. The following sections were removed because these are currently a duplicate of last year’s budget.

• Colma Profile
• Revenue Detail
• Department Budget
• Financial Section

The following sections are modified:

• Budget Overview was expanded to include more information on the department level
• Capital Improvement Program section was condensed as part of the COVID-19 financial strategy, and is to suspend capital purchases and continue improvements through grant funded projects. Since the information presented in this adopted budget was already modified in May, the section is condensed to just a list of the capital projects and funding summary.

APPRECIATION

In closing, I’d like to thank the City Council for its policy leadership in a year full of changes. This document demonstrates how the difficult choices you made throughout the past several years are continuing to benefit the Town. It is a pleasure working with you to implement your vision for the Town of Colma and to provide a government our residents can be proud of.

Documents like this cannot be completed without teamwork from all involved. To that end, I would like to thank the Department Directors for their dedication to the overall effectiveness of the Town’s government and to the residents themselves. It is also important to acknowledge Administrative Services Director, Pak Lin, and Department Heads for collaborating and putting together a budget document that is precise, attractive, informative and award-winning!

Reasonable Accommodation

Upon request, this publication will be made available in appropriate alternative formats to persons with disabilities, as required by the Americans with Disabilities Act of 1990. Any person with a disability, who requires a modification or accommodation to view the document, should direct such a request to Pak Lin, Administrative Services Director, at 650-997-8300 or pak.lin@colma.ca.gov Please allow two business days for your request to be processed.