SOUTH LAKE TAHOE, Calif. – City of South Lake Tahoe staff reported at the March 12 council meeting, a positive outlook for the 2023-2024 fiscal year, but certain projections cause some to voice caution moving forward.

Mayor Pro Tem John Friedrich pointed out, “We should celebrate that we’re in this strong fiscal position at a time when California has a 68 billion dollar projected deficit,” and added, “when the federal government has 1.6 trillion.” The cause for celebration is an over $11 million surplus from the 2022-2023 fiscal year. After a carry-forward and other appropriations, that left about $7 million to spend, per City Council’s discretion.

Staff provided a recommended list of critical operating and capital needs to spend the surplus on including, positions for the new recreation center, temporary and seasonal staffing, police and fire department needs, public works needs, and parks equipment, to name a few. Council allocated about half of this $7 million surplus at the meeting but will be seeking public input in the future on where to spend the remainder.

Councilmembers, including Tamara Wallace and Scott Robbins, shared concerns about putting the surplus funds—having a one-time nature—towards ongoing expenses.

Despite the celebratory surplus, the five-year projections estimate revenues flatlining in the next several years, while expenses increase. Major City revenues, property tax, transient occupancy tax, and sales tax, are expected to flatline in the next several years, only growing between 1-3%.

That’s while a majority of personnel and operating expenditures are expected to increase between 2-3% annually, according to the staff report. When Wallace asked Director of Finance Olga Tikhomirova the overall increase in expenses due to the state of the economy, Tikhomirova estimated between 10-20%, at least.

In addition, Tikhomirova said funds from Measure P were down in the first three months of the fiscal year. If the decline continues and the City is not able to collect $3.4 million to pay the bond for the recreation center, the City may have to supplement it from the general fund. The Measure P funds come from a 2% TOT increase measure specifically earmarking funds for the recreation center.

For these reasons, Wallace said, “I think we need to be really really careful increasing any expenditures.”