The City of Dana Point closed out Fiscal Year 2023 this past June with an $11.94 million surplus in the General Fund, adding to its community-related and capital improvement budget, reserves, pension funding and more.
Administrative Services Director Sea Shelton gave a report on the city’s financial health at the close of FY23 during the City Council’s Sept. 19 meeting.
The city’s General Fund unaudited revenues totaled $51.4 million, Shelton said. Hospitality continues to be the city’s primary source of revenue, with Transient Occupancy Tax revenue totaling $16.7 million in the past fiscal year. Sales-tax revenue totaled $7.2 million and property taxes, the city’s second-largest revenue source, totaled $11.2 million.
The city ended the fiscal year with $48.9 million in expenditures and transfers out, $3 million less than the budget allotted. The city’s personnel costs came in at $11.4 million.
Shelton added that staff anticipates some slowing in revenue this fiscal year, which she noted was discussed when the council passed the 2024 and 2025 Fiscal Year budgets.
Staff made recommendations on how to allocate the $11.94 million in surplus funds, including funding the reserve balance with about $1.5 million, setting aside $3.7 million for the city’s unfunded pension liability, reserving additional revenue for the unassigned fund and putting additional funds toward the General Plan update process.
“We are also requesting to set aside an additional 3.5% of budgeted revenues,” Shelton said. “Policy right now sets unassigned fund balance between 4% and 7% of budgeted revenues. We want to add another 3.5% due to economic uncertainty.”
“As you know, the economy—everyone’s putting their fingers in the wind to see where the economy’s going to go,” Shelton continued. “Inflation has gone down a little, but it’s still really, really high, and interest rates are sky-high … so we want to be very cautious on how we allocate those funds.”
Staff also recommended transferring $1 million to the facilities improvement fund to maintain city facilities such as parks and the community center. The remaining surplus, about $2.5 million, will be sent to the city’s Community Investment Account.
That account last fiscal year totaled more than $14.36 million, roughly $4 million of which is budgeted for road and storm drain improvements this fiscal year and $2.68 million for road improvements and Doheny Village connectivity improvements in FY25.
The Community Investment balance is estimated to be around $10.14 million after accounting for FY24 and FY25 projects.
Councilmember Michael Villar thanked city staff, commenting that “when you look at this kind of surplus, almost $12 million in a surplus, those things happen because of our city staff and the work that you all do—things like REDO Market and our concerts in the park and everything that we do—not only to make this a great city to live in but also a great city to come visit.”