The Carlsbad City Council approved a balanced budget Tuesday and will begin the new fiscal year July 1 with healthy revenues, increased cash reserves and among the lowest pension debts in the region. The fiscal year 2024-25 city budget also sets aside money for future infrastructure investments, including maintaining city roads, water, sewer and drainage.
Progress on 5 goals
The budget prioritizes the goals in the City Council’s 5-Year Strategic Plan, now entering its third year of implementation. The plan was created to prioritize programs, projects and services based on the Carlsbad Community Vision, a set of nine core values important to residents. By setting five-year goals, the city is making progress on longer term initiatives, instead of the previous practice of setting annual goals that could change from year to year. This has greatly increased the efficiency of city operations.
The city budget also serves as the annual work plan for the city. Included in the adopted budget are the following projects and services that support the five goals of the strategic plan:
Maintain Carlsbad’s unique community character and connectedness
Continue work on an updated growth management plan
Invest in projects that make the Village and Barrio more walkable
Complete a new community garden at Stagecoach Community Park, the first in south Carlsbad
Pursue grant funding with SANDAG and NCTD to further the design of a project to lower the railroad tracks between Agua Hedionda and Buena Vista lagoons
Complete design work for Monroe Street Pool renovations
Complete the conceptual design for Robertson Ranch Park
Upgrade the audio-visual technology of the Schulman Auditorium at Dove Library, which hosts free concerts, author events and films
Prioritize the safety and well-being of the community
Continue traffic safety improvements citywide
Implement the city’s Homelessness Action Plan
Identify and acquire property for permanent Fire Station 7
Continue to foster strong relationships between community members and the Police Department through the community-police engagement commission
Protect the environment and natural resources
Complete an update to the city’s Climate Action Plan
Build additional EV charging stations in the Village
Manage the city’s 6,200 acres of habitat preserves
Foster a healthy local economy
Continue a cybersecurity awareness program for businesses
Continue the Life in Action recruiter to help streamline the connection between employers and qualified candidates
Support workforce development by collaborating with the San Diego North Economic Development Council and California State University San Marcos to expand an intern housing program.
Be a model for effective and efficient local government
Streamline operations by consolidating the city’s core IT systems to reduce inefficiency associated with operating many different systems with different vendors.
Expand the software platform for managing affordable housing, handling records, automating business processes and conducting data analytics
Continue modernization of IT infrastructure to improve cybersecurity and data analytics
Economic forecast
The city’s Finance Director said economic uncertainty will likely remain as the city transitions from a time focused on building and development to a stage of life focused on maintaining what has been created. This shift coincides with new economic pressures and state regulations greatly reducing local control over future development. That’s why over the past two years, the city has reduced ongoing annual savings by $5 million and eliminated 24 positions from the budget.
City finances: What’s changed
Carlsbad has long been known for its prudent fiscal management and healthy finances. As part of the city’s transition out of its period of major development, development fees will not provide the same level of revenue as they have in the past. These fees funded much of the infrastructure and amenities Carlsbad enjoys today.
At the same time, as the population has increased, projects protecting Carlsbad’s community character and quality of life have become more important. Over the past several years, the city has added new areas of ongoing spending:
A new beach lifeguard program and more pool lifeguards
A 7th fire station and crew
New police ranger program
A new Housing & Homeless Services Department and Homeless Outreach Team in the Police Department
Additional school crossing guards
Two additional ambulances and crews
A new park to serve the city’s older northwest neighborhoods
New environmental sustainability programs
Increased spending on the arts
The new spending coupled with the COVID-19 pandemic, high inflation, less development and other economic pressures resulted in a projected budget deficit as early as fiscal year 2025-26. After considering options to close the gap, the City Council asked staff to find new efficiencies and other ways to reduce spending that would have the least effect on the community.
Closing the gap
Some of the ways the city has reduced ongoing spending and improved the city’s overall fiscal health include:
Department budget reductions: Instead of increasing department budgets year over year based on the rate of inflation, which had been the practice, departments have either held the line on spending or reduced their operating budgets. Over the last three years, this has resulted in about $5 million of new ongoing savings.
Reducing staffing costs: The city reduced the size of its workforce by 12 full time equivalent positions in fiscal year 2023-24, and an additional 12 are eliminated in the 2024-25 budget. The city also waits longer to fill vacant positions to ensure they are really needed and explores other ways to provide services that could be less expensive. Reducing staffing saves money today and in the future because it reduces pension costs. In next year’s budget, pension costs represent the single largest percentage increase in spending.
Lowering pension debt: Pension costs vary based on stock market performance, and the state decides how funds are invested. When state investment returns are down, cities have to make up the difference. The City Council has passed two policies to manage pension costs: one sets a goal of keeping the city’s pension 80% funded; the other established a separate pension trust account where the city can manage how funds are invested. The city is currently on track to reach the 80% goal by FY 2028-29 and has among the lowest pension debts in the region.
Eliminating contingency funds: When departments have money left over at the end of the year, that money is now returned to its original source instead of automatically rolling over for the department’s use in the next budget year. This way, the City Council can decide how to allocate that funding based on overall city priorities, spelled out in a new surplus management policy.
New grant funding: The city has increased efforts to pursue grant funding for projects, saving local taxpayer resources. The city has secured more than $16 million in grant funding in 2022 and 2023.
Internal audits: The City Council approved an internal audit program in 2019. Through this program, an auditor conducts a thorough review of services, processes and other aspects of city operations each year and reports the findings to the City Council. Department leaders then use the findings to fine tune operations.
Budget at a glance
The budget is available to review online. Here are some highlights.
Proposed General Fund Operating Budget
$238.5 million
Projected General Fund revenues
$239.1 million
Proposed changes in total full-time equivalent staffing
-12.05
Projected General Fund reserve as of June 30, 2025
$131.5 million
Projected General Fund reserve % as of June 30, 2025 (goal is 40%)
55%
Reduction in General Fund ongoing base budget
$1.1 million
