CARLSBAD
–
In what may be the biggest economic shock of the fiscal year, the city of Carlsbad projects a rise in property tax revenue at a time when other municipalities are suffering record foreclosures that have shredded their budgets.
So while other cities are opening their umbrellas to weather the current economic storm, the sun continues to shine on Carlsbad.
The city has even lucked into a $2.3 million windfall from a new tax on airplanes with shared ownership.
The Carlsbad City Council will tinker with its annual budget when it meets Tuesday, but the changes consist chiefly of shifting money among internal funds to close a projected $550,000 shortfall.
The city's general-fund budget, which pays for most of the everyday operations such as police and fire services, is $120.7 million for the fiscal year that began July 1.
Its operating budget, which includes the general, enterprise and other funds, is $199.2 million. Those figures aren't scheduled to change.
The reason the city is dodging the foreclosure bullet is twofold.
First, much of the city's housing stock hasn't been buffeted by the recent spike and ensuing crash in the housing market, said Jim Elliott, Carlsbad's director of administrative services.
Many of the homes in the city remained in the same hands for many years, meaning their assessed values were relatively constant, Elliott said.
“So when they sell, they sell for a price higher than what they were bought for,” despite the recent decline in values overall, he said.
That raises their assessed value when they're sold, which increases the property tax.
Second, the city is receiving an unexpected bonanza from property taxes assessed on fractionally owned aircraft.
Taxing fractional ownership of aircraft is recent. In such an arrangement, owners buy a “share” of a plane through a company, rather than the whole aircraft, like owning a time-share in a corporate jet.
Until recently, the state didn't tax the various owners of the planes, said Garry Sobeck, chief of the business division for the San Diego County Assessor's Office. It passed a law last year to do so, so the money is just coming in.
Carlsbad's McClellan-Palomar Airport is a center for corporate aviation, and the tax is calculated based on the number of takeoffs and landings a plane makes at each airport, so Carlsbad gets a share of those taxes, Sobeck said.
Dawn Ortega, a budget analyst for the city, said it has received $2.3 million this year, the first time it has obtained revenue from that source.
Other tax-income streams are lower than they were last year – especially sales taxes, which are down 4 percent for the first few months of the city's fiscal year compared with last year.
That drop is largely attributed to slower sales along Car Country Carlsbad.
Similarly, income from property and investments is down, but only by $100,000 when compared with last year.
On the bright side – and there always seems to be one in Carlsbad – hotel-room taxes have risen 5 percent compared with last year. That's attributed to the addition of three hotels.
The state also is taking $300,000 from the city's redevelopment agency to help close its budget gap.
Michael Burge: (760) 476-8230; michael.burge@uniontrib.com
