By Mike Allen
Photo by Mike Allen: Left to Right: Councilman Rob McNelis, Councilman Stephen Houlahan, and Councilman Ronn Hall.
March 2, 2020 (Santee) -- As some East County cities grapple with dwindling revenue and even contemplate disincorporation, Santee appears to be improving its bottom line, thanks to better than expected revenue from property and sales taxes.
At its Feb. 26 meeting, the Santee City Council got an update on the city’s financial situation and discussed how it might best use a projected $1.5 million in surplus funds at the end of the current fiscal year in June.
The city usually adds most of any net profits from its operations to its reserves, but because the reserve balance now exceeds the prescribed target of 20 percent of the city’s operating budget by about $1.5 million, the council can allocate this money to other uses, said Tim McDermott, Santee’s finance director.
McDermott said Santee did much better in collecting both property and sales taxes this year, and is looking at solid growth from both sources for the upcoming 2021 fiscal year. He provided a number of possible uses to the Council, and the body gave him ideas on how to spend it.
Property taxes, which make up 42 percent of Santee’s General Fund revenues, increased nearly 8 percent over the year, the second highest of all 18 county cities. It is projected to hit just under $20 million, up by $1.3 million over the prior fiscal year, McDermott said.
Sales taxes, making up 31 percent of General Fund revenues, are projected to come in at $14.4 million, up by about $321,000 over the prior fiscal year.
The next highest source of funds, franchise fees paid by utilities, was estimated to come in at $3 million, but that was down from an earlier estimate by $35,000. The amended 2019-20 budget will come in at $46.4 million, a gain of nearly $900,000.
Mayor John Minto led off the Council discussion about what to do with the surplus by proposing that $1 million of the amount should go into the Highway 52 Coalition fund as a way to capture higher grant funds. The coalition was established a couple of years ago as a way to expedite improvements to the nearly always congested freeway.
“I think if we put some skin the game and show them (federal and state agencies the city has made grant applications to), we’re willing to put up some money, we have a better opportunity to get those grants…. and I think that’s a very good investment,” Minto said.
Yet even Councilman Ronn Hall, Minto’s most dependable supporter, said the $1 million figure might be too much, and suggested $500,000. He agreed with Minto on spending some $50,000 on celebrating the city’s 40th anniversary, and allocating additional funds to improving the city’s roads, particularly those that are the gateways into the city.
Councilman Stephen Houlahan suggested the gateway of Cuyamaca Street off the Highway 52 exit would be the best place to make street improvements. But he said an unspecified chunk of the funds should go towards outreach and planning to deal with the coronavirus that has an increased likelihood of infecting local residents, many of whom are seniors and more vulnerable to the deadly virus.
Councilman Rob McNelis said investing money into improving Cuyamaca Street would make no sense because it’s still being developed, and any road fixes would likely have to be torn up again.
The discussion ended with City Manager Marlene Best saying her staff would bring back a number of options for the council to consider at the next meeting on March 11.
In other actions, the council approved spending some $41,000 from federal Community Development Block Grant funds on seven local nonprofit organizations. The recipients and their allocations are Crisis House, $6,852; ElderHelp of San Diego, $3,000; Caring Neighbors, $3,500; Meals on Wheels, $4,500; Santee Food Bank, $14,000; Santee Santas, $5,500; and Voices for Children, $4,000.
Although the Cameron Family YMCA sought $5,000, the group also disclosed it obtained $274,000 in subsidies and $160,000 in private donations last year. McNelis noted that nobody from Cameron came to the public hearing before the council made its allocations, a sign that they really didn’t need the funds, and proposed they be left off the list. He also noted the YMCA pays the city $1 a year in rent on the property it occupies.
As the funding numbers for the remaining organizations shrank, three other councilmembers agreed with McNelis, and left Cameron without any CDBG funds this year.
Santee’s plans to acquire a parcel at the Trolley Square mall and sell it for a hotel developer were threatened this month when the parcel’s owner, Santee Trolley Square 991 LLP, filed a civil lawsuit against the city and the Santee City Council. There was no comment on the agenda item concerning the transaction, which was earlier disclosed to cost $1.4 million.
Following a closed session meeting, the Council voted unanimously to file a cross complaint against the plaintiffs, according to City Clerk Annette Ortiz.