Bret Schanzenbach
President & CEO
Carlsbad Chamber of Commerce
Friday August 21, 2020 the Carlsbad Chamber of Commerce hosted our annual State of the Community event with Mayor Matt Hall as our keynote speaker. This virtual event included panel discussions on the Medical Myths surrounding Covid-19, the status of our educational institutions in light of a global pandemic, and the state of business in the midst of the Coronavirus. These panel discussions and Mayor Hall’s presentation will be available shortly for general viewing on our website: www.Calrsbad.org.
So, what is the “state of our community” at this time? In short, business has adapted where and when allowed (more allowances are needed); education is adjusting to an online start to the school year; our healthcare providers are amply meeting the needs of the flattened curve; and our city keeps moving along in service of our community. The city operates on a fiscal year that runs July 1 to June 30. Final numbers for the Covid-19 affected 2019-20 are still coming in. But here is what we know so far.
City Revenue:
The city receives revenue from three primary sources: Property Tax, Sales Tax and Transient Occupancy Tax (also known as TOT or “hotel tax”). These three revenue items account for almost 80% of the City of Carlsbad’s $164M general fund.
Property Tax:
Property tax comprises over 45% of the city’s annual revenue. And with property values continuing to climb, property tax revenue is expected to increase in 2020-21 by over 2% to $74M. This is good news as this is the only category of income that is expected to experience any kind of increase in next fiscal year.
Sales Tax:
Sales Tax revenues, the second highest revenue category, were hit significantly in 2019-20 by the Coronavirus. Revenues were on pace to meet or exceed 2018-19 record highs of $40M before the “shelter-in-place” order was issued by Governor Newsom in March. Current predictions are that once all the dust has settled on our recently concluded 2019-20 fiscal year, Sales Tax will fall 9% short of the revenue achieved in 2018-19. Further, the city is predicting that Sales Tax will decrease again in 2020-21 another 2.2%.
Transient Occupancy Tax:
Carlsbad is blessed to have 50 hotels and resorts in our amazing community. In 2018-19, the TOT revenue from those hotels and resorts reached nearly $27M. Due to Covid-19, that revenue is expected to be about 30% less in the recently concluded fiscal year. And next year is expected to be flat at best in revenue levels when compared to last year. Two factors combine to create TOT revenue: average daily rate (how much a visitor pays for a room each night) and the occupancy rate (how many of the rooms are full). Both numbers are down significantly from a year ago and it is not easy guessing when they might return to 2018-19 levels. Some are predicting that it will take three years to get back to the levels of 2018-19.
Financial Reserves:
Mayor Matt Hall reported that that city has over $98M in reserve at this time. That represents almost 60% of city’s general fund budget. Decades of fiscal responsibility have put Carlsbad in a very solid position to withstand this global pandemic with almost no drop off in service levels to its citizens and community. While no one wants this virus to continue, I believe Carlsbad might be one of the best prepared cities in the state, if not the country, to weather such storms.
So, here’s to a therapeutic cure, a global vaccine, and a new year sans corona – unless it is in a long neck bottle!