What it Takes to Run a City – Part III of the Vista Leadership Academy – The Finances of a City

By TR Robertson

The third meeting for the Vista Leadership Academy was called “Understanding the Numbers”, a look at how a city’s financial system works. This session featured presentations by the Director of Finance and City Treasurer Mike Sylvia, Finance Manager Sara Taylor and Assistant Finance Director Matt McDonald. All three presenters did a tremendous job in laying out the complicated and intricate ways a city’s financial system functions. Mike Sylvia spoke first. He said the presentations for today would cover Finance Operations, Budget and Analysis Division and Comptroller Division (Financial Reporting and Compliance). Mike began with a Public Funds Investment Overview. He said their job in dealing with Public Funds is to ensure that the City Council and the city residents are aware of the safety of their principal, that there is liquidity to meet the objectives of running the city and that there is yield to the maximize interest from the earnings. The city primarily invests in U.S. Treasury Bonds to accomplish this. Speaking about investments Mike said there are numerous overnight investments taking place as well as investments in the U.S. Bonds, Municipal Bonds, Corporate Notes, Asset-Backed Securities, Money Market Funds and CD’s, to name a few of the investments. These investments come out to around $363.5 million. He then showed those in the meeting an intricate pie chart that broke down the investments by their fund category. Fun quizzes with clever city prizes were passed out for correct responses. Next Mike went over the General Fund Reserve Policy saying this is divided into two components – General Emergency Reserve and Section 115 Pension Trust. The General Emergency Reserve is about 30-35% of the General Fund Operating Budget totaling $36.7 million. The Section 115 Pension Trust is set at a current level of 32.5% of the budget and has a current level of 1.67 yeas of coverage, around $196 million. Both General Fund Reserve Policies are set by the City Council Resolution 2024-154 on 9/24/2024. The city does have long term debt that is paid out including the 2015 Refunding Lease Reserve Bonds – $77.7 million; the Sewer State Fund Loans of $22 million; and various bonds issued at $64,8 million. This brings the total long-term City of Vista debt to $164.5 million. City Council is kept informed by the Annual Continuing Disclosure Reports and Quarterly U.S. Department of Commerce Census Bureau Prop C reports. Another quiz for the group and this finished Mike’s portion of the presentation.

Speaking next was Sara Taylor who discussed the finances and expenditures a city has to bring in for money to run everything needed to make a city function and what additional expenditures a city has. The 2024/25 Operating Budget for the City of Vista is $199,142,922 million. Some of the different funds the city must pay for include City Services, the Fire Department, Parks, Law Enforcement, Recreation Programs, Street Improvements, Sidewalks, Traffic Improvement, Street Lights, Sewer, just to name a few. The General Fund Revenue equals around $121.2 million. This is made up of property taxes, sales tax, hotel tax and other taxes. The city also brings in around $20 million for charges for services. There is an 8.25% sales tax in the City of Vista. Numerous cities around the county have different sales taxes on items purchased in that city. Purchasing items in the city you live in helps to support the various services that the city provides. The Vista sales tax is from Prop L passed in November of 2006. It is a 30-year ½ cent sales tax and will expire on March 20, 2037 Sara went over the various aspects of property taxes and how they support the city, reminding the group that the property tax on homes is 1% of the accessed value of the home. Several bonds have been passed in the city over the years to support projects like the addition of fire stations for the city, additions to Moonlight Amphitheatre and the Vista Sports Park. Other Revenue income for the city comes from the Cannabis tax from the dispensaries in the city. Sara also said there is Gas Tax Revenue that totals around $2.9 million on gas tax and $2.5 million on SD1 gases. This income assists with road maintenance and repairs. Prop A sales tax also goes to street repairs in the city. Park Developer fees are for multi-family averaging $9,605 per dwelling unit and for single family $9,665. The Capital Project Budget for 2024/25 is $28.8 for new appropriations.

All of this goes to help cover the $120.5 million in expenses the city has. Percentage wise this breaks down to 15% Transferred Out, 10% General Government, 8% Public Works, 7% Community Services, 5% Community Development, and 15% Public Safety.

The final presentation was by Matt McDonald who went over the duties of the Comptroller and checks and balances their department uses to ensure everything they and the city council does, as well as the other departments, is done accurately, legally and following all of the guidelines set up for the financial safety of the city. Matt said not only are they responsible for paying the bills the city has but they are also responsible for making sure all financial reports they issue are accurate. He said the components of internal control they follow are making sure there is a Control Environment in place, always using a Risk Assessment when evaluating money issues, using a Control Activity to segregate their duties, always providing Information and Communication to all departments and city officials and Monitoring everything they do by using a Process of Review. He said David Farr is the Certified Public Accountant they use to audit and check everything all of their procedures. Using an Annual Comprehensive Financial Report process consisting of an Audit Report, Management Discussion and Analysis, Government Wide Financial Statements, Found Statements and Statistics is the process their department uses to provide accurate, honest and informative financial information to the city. Matt also provided some interesting information about some financial personnel around the nation that have been caught involved in illegal financial activities in their city.

The most famous is Rita Crundwell, former Comptroller and Treasurer for Dixon, Illinois. Rita served in this position from 1983-2012 until she was arrested in April of 2012 by FBI agents for embezzling $53.7 million over a 22-year period. During this period, she purchased a Quarter horse operation, purchased several cars and a second home, purchased a $2-million-dollar 45 ft. luxury motor home and lived the high life until caught. Authorities were able to recover between $40-50 million dollars but there was over $10 million in lawyer fees and numerous people in Dixon lost their jobs due to lack of funds that were occurring over the years. A documentary was made in 2017 about Rita called “All the Queens Horses” and several news specials were shown on TV. Rita was given a 20-year sentence but only served 8 ½ yeas and was released in mid-2021 to home confinement and the sentence was commuted by President Biden in December of 2024.

Another interesting story dealt with three gentlemen in Palencia, California, who gave themselves, illegally, $1.5 million-dollar yearly salaries for city jobs they held. Palencia is a town of around 35,000 people and their individual salaries were more than the governor of California makes.

The last part of the presentation on Finance was dividing the Leadership Academy group into four teams, each with an easel, and given the assignment of taking a $100,000 budget and allocating what percentage, out of 100, we would give to Public Safety, Sewer CIP Projects, Other CIP Projects, Community Development, Recreation & Community Services, Sewer Operations, General Government. After about a 15-minute discussion, each group made their presentation. Every group allocated the highest percentage, for the most part, to Public Safety. One group allocated 20% to Recreation and Community Services.
There is no doubt, every department in the city is important to the operation of the city and the environment created for the public, but the one department that makes sure the funds are available, the bills are paid, and everyone is legally and totally in step with city, state and federal guidelines is the Finance Department. Most people have no idea who these people are, but Vista should be very happy with the three individuals Vista has monitoring city finances. The next Leadership Academy presentation will be on Creating a Livable Community – looking at Community Development, Capital Improvement Projects, Traffic Engineering and the Climate Action Plan.