Sausalito City Council Approves $31.6 Million Budget for New Fiscal Year

The Sausalito City Council has unanimously approved a $31.6 million budget for the upcoming fiscal year. The budget includes provisions for a deficit of nearly $1 million in 2024-25, primarily due to a change in the city’s insurance provider and increased pension-related debt payments.

Sausalito is expected to end the current fiscal year with a surplus of approximately $500,000. Mayor Ian Sobieski expressed optimism about the budget, acknowledging the city’s staff’s excellence in handling insurance and overall budget matters.

The city’s insurance premiums will increase by about $1 million after losing its previous provider due to a high loss record. Additionally, Sausalito carries over $35 million in pension-related debt, with unfunded accrued liability payments rising by $470,000 from the previous fiscal year.

For the fiscal year 2024-25, the city has allocated a $4 million capital improvement budget, primarily funded by tax measures such as sales and gas taxes. In the general fund, revenue is projected to reach $17.2 million, while expenditures are estimated at $20.7 million. Net transfers from other funds to the general fund will amount to $2.4 million.

To balance the budget, the city plans to utilize $1 million from its excess reserves, which are funds exceeding the city’s policy for rainy day or emergency funds. According to Chad Hess, the city’s director of finance, the general fund had $3.1 million in reserves (15% of the total) and $7.7 million in excess reserves as of the last audit in 2023.

The City Council voted 4-1 to approve a new budget reserve policy of 25%, with an additional 10% required for economic emergencies. This decision increases the city’s reserves to approximately $5.2 million, with $5.6 million in unassigned funds. Councilmember Jill Hoffman dissented, advocating for a reserve policy closer to 30%.

Sausalito has historically maintained a 25% general fund reserve, despite no formal resolution mandating it. The city also manages funds in other accounts, such as the parking and MLK campus fund, which have helped avoid the need to tap into budget reserves.

Chad Hess defends the 25% reserve policy, stating it is justifiable and sufficient based on the city’s current and historical needs. He suggests that further refinement of the number would require a detailed risk analysis and financial assessment of potential costs.

Councilmember Zapata emphasizes the importance of having a rainy day fund for cities but acknowledges that the amount and categorization of such funds vary across communities. He highlights the constant presence of financial challenges and unexpected risks, citing past events like the dot-com bust, the Great Recession, and the COVID-19 pandemic.

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