Mill Valley gets final report on last fiscal year

Mill Valley closed out its budget year with revenues above projections and a balance of $9 million in the general fund, the finance director said.

The City Council received a final report on revenue and expenses for fiscal year 2023-24 at its meeting Monday night. The city adopts its operating budget in two-year cycles.

The city closed out the fiscal year on June 30 with about $37.2 million in revenue — around $2 million, or 6%, over expectations. Operating expenses totaled about $33.3 million, which was around $159,000, or 0.48%, more than projected. It started fiscal year 2023-24 with $7.7 million in the general fund.

“If we can be within half a percent of our operating budget, I consider that a huge win,” said Eric Erickson, the city’s director of finance and employment.

The fiscal period was the first in which the city fire department was consolidated with the Southern Marin Fire Protection District. Erickson said the city “relinquished” $6.6 million in property tax revenue to implement the transfer.

“Although going forward, and for 2024, we don’t have a fire department per se, we will have ongoing fire department expenses in house,” Erickson said. “Our lease agreement for Station 6 and Station 7 calls for us to provide major maintenance and to cover utilities.”

In general, Erickson said, the city had favorable revenues “across the board,” but for the first time property tax revenue wasn’t “a pleasant surprise.” Typically, the revenue is a few hundred thousand dollars over the estimate, but this past fiscal year it was on budget and totaled $18.4 million, he said.

He also said that for the first time, revenues from the golf course, managed by Touchstone Golf under a contract, were $88,380, about the same as expenses.

“We’re hoping to see them actually become a profit center,” Erickson said.

Recreation expenses, budgeted at $6.2 million, overspent by about $355,000 because of underbudgeted operating costs and increased staffing costs. City Manager Todd Cusimano pointed out that the recreation office subsidizes a lot of fees and programs, amounting to more than $200,000 in subsidies last year. However, the Parks and Recreation Commission has recommended a policy to limit subsidies.

Erickson said the recreation office has a city mandate to recover all costs through revenue.

“It makes me think that maybe we should be reevaluating the mandate itself in the near future,” Councilmember Kat Jones said.

The city maintained its policy of keeping a 15% restricted contingency reserve in the general fund for financial emergencies, plus another 10% unrestricted in operating expenses as a cushion.

Councilmember Caroline Joachim asked if more should be budgeted. Erickson said 35% would be a benchmark for Mill Valley’s size.