Despite worldwide doom and gloom forecasts of fiscal disaster from economic experts last year due to the COVID-19 pandemic, the City of Lodi has remained financially stable, and the next five years look to be no different.
Deputy city manager Andrew Keys presented a preview of the 2021-22 budget and a five-year forecast to the Lodi City Council during a Tuesday morning shirtsleeve meeting.
“I’ve been putting these forecasts together for the city for five years,” Keys said. “In most cases they’ve not been so good, given the circumstances we’ve had with revenue growth, pre-Measure L with not having the resources, and primarily our issues with PERS and the unfunded liabilities. But as you’ll see through the presentation, even those numbers are looking good.”
Keys said the city’s revenue has largely recovered from COVID-19 impacts this year, thanks to sales tax, business license tax recovery and an increase in the transient occupancy tax.
Revenues, he said, will total nearly $67.1 million during the next fiscal year, with tax revenues making up more than $48.6 million.
Sales tax estimates are 9.1% higher than anticipated at the mid-year budget report in January, he said, and the transient occupancy tax is 32.2% higher than first predicted at that time.
In January, sales tax revenues were projected at more than $12.6 million, and the 9.1% increase puts those numbers at more than $13.7 million.
The city’s business licensing fee was also extremely higher than first thought at 55.7%, due for the most part to a third-party audit that was able to recover $400,000 in past-due bills from businesses, he said.
The transient occupancy tax increase was due, in part, to short-term rentals and the city’s efforts to increase tourism in recent months as San Joaquin County makes its way through the state’s Blueprint for a Safer Economy.
However, the TOT increase will not bring the city back to pre-COVID funding levels through that tax, Keys said, noting that the transient occupancy tax might falter in the coming years.
“There is still a segment of population that’s hesitant to travel at this time for whatever reason,” he said. “Fear of COVID, maybe they’re sensitive to COVID, maybe they’ve just gotten comfortable with not traveling and just staying home. I don’t anticipate that getting to pre-COVID levels for at least another two years.”
Another factor to the city’s ability to remain in the black has been Measure L, which will generate the anticipated $7.75 million next fiscal year.
Revenues from the measure will allow the city to reopen the Lodi Public Library at the cost of $113,920, as well as fund Parks, Recreation and Cultural Services to the amount of $342,370.
In addition, Measure L funds will allow the city to retain 20 police officers, eight firefighters and a librarian with more than $4.1 million.
The city expects to spend all of its Measure L revenues in the fiscal year, and overall general expenditures are expected to match revenues for the coming year, Keys said.
In Fiscal Year 2022/23, property and sales tax revenues are set to level off at 3.7% and 3.5% increases, respectively, for the next five years.
While the transient occupancy tax increased by 32.2%, it will drop to 15% in the next fiscal year, then to 10% in 2023-24, and then level off at 5% increases over the following three years.
The business licensing fee tax will only see a 10% increase in 2022-23, and then level off at 3.5% increases in 2024-25 and beyond, Keys said.
By 2026-27, revenues are anticipated to be nearly $77.4 million, with expenditures expected to be more than $75.9 million. The city’s total fund balance by that time is projected to be more than $28.4 million, an increase over the more than $25 million expected in 2021-22.
Mayor Alan Nakanishi said he was very pleased with the report, and that he was optimistic about the next five years.
“A year ago, Lodi was in a COVID-19 lockdown,” he said. “We were unsure and anxious about what was to come. We did not see a light at the end of the tunnel. Economists predicted very high unemployment, a depression and stock market crash. Private citizens and businesses were expected to go bankrupt. But today 50% of Americans are vaccinated, the economy is improving and COVID-19 has not devastated our city.”