Thanks to healthy revenues, reduced spending, and new budget policies and practices over the past several years, the City of Carlsbad is projecting a balanced budget through fiscal year 2030, increased cash reserves and among the lowest pension debts in the region. The city released its preliminary fiscal year 24-25 budget Thursday, which the City Council will review at its May 21 meeting.

Economic uncertainty remains 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 the proposed budget for fiscal year 2024-25 continues to focus on finding new cost savings and holding the line on spending.

The preliminary budget will be presented to the City Council at its May 21 meeting. The city will hold a community budget workshop on Thursday, May 23. The budget is scheduled for final adoption at the June 18 City Council meeting, in time for the July 1 start of the new fiscal year.

Community Budget Workshop

Thursday, May 23
5:30 to 7:30 p.m.
Faraday Administration Center
1635 Faraday Ave.

Unlike the City Council meeting, the budget workshop will not include the City Council. City staff will be on hand to answer questions and listen to feedback, all of which will be provided to the City Council to consider before adopting the final budget in June.

Community members may also provide comments on the proposed budget by emailing clerk@carlsbadca.gov.

The city is currently in year two of implementing the City Council’s 5-Year Strategic Plan. The plan was created to prioritize programs, projects and services based on the Carlsbad Community Vision, a set of nine core values important to local 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.

5 goals

Maintain Carlsbad’s unique community character and connectedness

Prioritize the safety and well-being of the community

Protect the environment and natural resources

Foster a healthy local economy

Be a model for effective and efficient local government

The strategic plan also emphasizes being “brilliant at the basics,” which includes keeping critical infrastructure well-maintained and providing day to day city services at a consistently high level of quality. The vast majority of the city budget goes toward these basics.

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 7^th 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 proposed for elimination in the draft 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 new 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 preliminary budget is available to review online or in the City Clerk’s Office, 1200 Carlsbad Village Drive.

Related topics

Budget webpage