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City Council Meeting Minutes March 16, 2021 <br />For: 7 - Mayor Pro Tem Derrick, Mayor Hughson, Council Member Baker, Council Member <br />Gonzales, Deputy Mayor Pro Tem Scott, Council Member Garza and Council <br />Member Gleason <br />Against: 0 <br />13. Receive a Staff presentation and hold a Public Hearing to receive comments for or <br />against Resolution 2021-56R, approving a Budget Policy Statement for preparation of <br />the 2021-2022 Fiscal Year budget; and declaring an effective date; and consider <br />approval of Resolution 2021-56R. <br />Mr. Lumbreras introduced and welcomed Anna Miranda, Assistant Director of <br />Finance, to the City of San Marcos. <br />Marie Kalka, Finance Director provided information regarding the General <br />Fund Trend Analysis. She stated the FY21 Budget was adopted using $2.8M in <br />Fund Balance, FY22 and beyond budgets are based on numerous assumptions <br />and creates a net deficit based on expenditures exceeding revenues each year <br />and creating an unsustainable structural imbalance if we stay on the current <br />trend. Based on these assumptions and projected trends, by FY22 City fund <br />balance could be out of compliance with City finance policy requiring 25% of <br />recurring operating expenses and by FY25 City fund balance will be depleted. <br />We will need to increase revenues or decrease expenses. <br />Ms. Kalka stated the FY22 Budget is starting with a $7.5M deficit based on <br />these assumptions: <br />— Ad Valorem Taxes: capped at 3.5% and may increase operating deficit with <br />budget policy to keep rate flat <br />— Assessed values: slight increase for 2022 and 8% increase for 2023-2025 <br />— Capital outlay: flat <br />— Sales tax revenue: flat and removal of Best Buy Call Center for 2022 and <br />increase of 3% for 2023-2025 <br />Ms. Kalka stated it is important to look at the budget from a multi-year <br />perspective: <br />— Long-term planning to help avoid financial crisis <br />— Understand impact of current decisions on out years <br />— Allows time to address out year potential structural imbalance <br />— Avoid spending down fund balance <br />Mayor Hughson opened the Public Hearing at 7:33 p.m. <br />Lisa Marie Coppoletta, spoke about the message board and she would like to <br />see this go public. She expressed concern with the depletion of the budget by <br />City of San Marcos Page 9 <br />