Where the Mayor Found Cash

There were lots of ponies to go around Monday.

Mayor Kevin Faulconer’s first proposed budget includes money for larger police academies, expanded library hours, a temporary fire station in Skyline and $1.9 million for various homeless programs. And that’s just a sampling.

Somehow, Faulconer managed to dig up excess cash just months after city budget wonks predicted a $19 million shortfall.

The secret is in the assumptions. They’ve changed significantly since then-interim mayor Todd Gloria bluntly said the city didn’t have enough cash to “accommodate all the wishes and desires” the City Council had already voted to support.

Faulconer, who presided over significant budget cuts as a City Councilman, declared Monday that the city’s fortunes were changing thanks to past sacrifices and course corrections following the its pension crisis.

“We’re seeing the results of the reforms and the issues that we had to tackle,” Faulconer said Monday when he unveiled a roughly $1.2 billion day-to-day budget. (The total budget is nearly $3 billion.)

Rosier economic predictions helped too.

New forecasts unveiled early this year added up to about $35 million in cash that Gloria wasn’t anticipating, and allowed Faulconer to direct significant resources toward the city’s long wish list.

Here’s a breakdown of the major elements behind that change.

Property Tax Hauls

The city expects county tax collectors to reap about $13.7 million more in property taxes than it penciled in the end of last year.

The new assumption is that the city will get about $437 million from property taxes, which adds up to about 37 percent of the city’s total day-to-day budget.

City CFO Mary Lewis pointed to rising home values across the county from early 2013 to early 2014 as one of a handful of reasons the city adjusted this projection.

Faulconer’s proposed budget also cites a reported 55 percent decline in county notice of defaults, which are filed after a homeowner falls behind on mortgage payments, between 2012 and 2013.

Sales-Tax Collections

The city’s also forecasting a roughly $13.2 million more in sales taxes.

The $257 million in cash the city’s now expecting makes up a cool 22 percent of its operating budget.

The city’s sales-tax consultant reported increased consumer spending it expects to continue at places like car lots and clothing stores. City budget folks also noted the that State Board of Equalization’s most recent forecast predicted 5.6 percent average growth, though the city is expecting a smaller 4.5 percent increase.

Property Transfer Tax

When you sell your house, the city gets some extra cash too.

Faulconer’s budget estimates $2.1 million more from this source than budget wonks projected last year.

His budget proposal offers a 15.1 percent increase in countywide median home prices between February 2013 and February and a 4.1 percent spike in sales during the same period as the rationale for this updated figure.

Hotel Taxes

The city’s expecting more visitors.

Faulconer’s budget proposal assumes another $5.2 million from additional taxes from hotel stays, known as transient occupancy taxes.

Faulconer’s team envisions funneling a total of $91.1 million from this source into the city’s day-to-day budget next year.

This assumption relies on the San Diego Tourism Authority’s projection of roughly 2 percent spikes in overnight visitors in 2014 and 2015, plus increased hotel occupancies.

Franchise Fees

Budget wonks also foresee a windfall from agreements with big companies with which the city does business.

Those corporations include San Diego Gas and Electric, Cox Communications, Time Warner Cable and AT&T. All rely on city systems – commonly known as the public right-of-way – to provide their services.

Faulconer staffers penciled in a roughly $1.1 million more than initially expected from this source following analyses of past year-over-year growth associated with these deals.