The capital improvement budget in Beverly Hills will fund a variety of projects, including an initiative to improve the Ballona Creek Watershed. (photo courtesy of the Los Angeles Department of Water and Power)

The Beverly Hills City Council reviewed the city’s fiscal year 2023-24 operating and capital improvement budgets on June 12.

The city is projected to generate a total revenue of $624 million, while staff expect citywide expenditures to reach $626.1 million, according to a staff report. With a net negative balance of $2.1 million, staff recommend the city use its reserves to fund the full expenditure budget, according to a staff report.

Finance Director Jeff Muir said the city maintains “special revenue funds” that collect money that can be used the following the year.

“In some situations, we do plan to use reserves,” Muir said.

However, the city’s general fund is particularly well-positioned. As the city’s primary operating fund, the general fund is supported by a wide variety of revenue sources, and there are few restrictions on how the money can be allocated.

The general fund’s total operating revenue is projected to reach $307.9 million this fiscal year, an 8.2% ($23.3 million) increase over the last fiscal year, representing a full recovery from the pandemic as well as a record high operating revenue, according to the staff report.

Staff is projecting general fund expenditures to total $290.4 million, resulting in a general fund surplus of $5.7 million.

“The recovery has continued with most key city revenues back to pre-pandemic levels or beyond,” Muir said. “However, there are remaining challenges out on the horizon, including inflation and the resulting significant increases in the interest rates by the Fed. Staff will continue to monitor these and other factors and regularly check back in with the City Council.”

The largest portion of the general fund’s projected revenue comes from sales tax, which is expected to generate $100.2 million. Business taxes are expected to generate $58 million, while the business tax and transient occupancy tax are expected to generate $58 and $49.5 million, respectively. Staff projected $55.3 million in “other revenue.”

Of the general fund’s projected expenditures, personnel salaries are by far the most expensive, at $155.4 million. Internal service fund charges and other operating expenditures are forecast to cost $73.1 million and $61.9 million, respectively.

In total, the city’s projected capital improvement budget for fiscal year 2023-24 is $92.4 million, representing a net increase from last year’s budget of $16.8 million. That increase is driven largely by street and sidewalk improvement projects, expected to cost $9.9 million.

To keep costs from rising further, staff have deferred certain projects, including work on the Metro Rodeo Station North Portal and the Major Building System Maintenance and Replacement project, to fiscal year 2024-25.

Over the course of five years, the capital improvement plan would result in an additional $426.3 million investment in infrastructure, facilities and other capital projects over its term, according to a staff report.

The City Council unanimously approved both budgets and planned to adopt them at the June 27 regular meeting.

The Beverly Hills Unified School District held a public hearing on its budget on June 13. During the meeting, district officials projected a 2023-24 budget of approximately $17,425,039, down from last year’s budget of approximately 21,542,063, according to a staff report.

The district is forecasting a total revenue of 92,442,764, down from last year’s total revenue of 92,768,523. Expenditures, however, are expected to rise, from 93,908,505 last year to 95,207,603 this year.