Colma, one of the top money-making municipalities in California, is facing a rare deficit due to a downturn in the economy and a drop in car sales — its chief revenue stream.
The proposed budget for next year is $15.8 million, which includes a $1.8 million deficit that will have to be covered by money from the town’s reserve fund.
For its revenue, the tiny town of 1,600 residents relies heavily on sales tax from thecar dealerships lining Serramonte Boulevard and a card-room tax from Lucky Chances Casino. It makes almost no money from the 76 percent of its land occupied by cemeteries. While people appear to be gambling at the same rate as before, they are buying fewer cars, which is resulting in a 9 percent drop in sales tax, city officials said.
"We are concerned, but we are not afraid," City Manager Diane McGrath said. "Colma is doing OK, but we’re watching it. Having only two revenue sources makes us a little vulnerable because to depend on sales tax makes you dependent on what the buying market is."
Lou Corbin, general sales manager at Serramonte Nissan, said the dealership has seen a drop in interested customers caused by the economic downturn.
City officials are considering how to diversify the town’s revenue sources to avoid riding the waves of the economy. Several capital improvement projects, such as the renovation of the town hall, are now placed on hold. McGrath said if the town is ever in deeper financial trouble, perks including free cable, holiday parties and cheap event tickets enjoyed by Colma residents may also go by the wayside.
Even with the decrease in revenues, the town brings in one of top five sales tax revenues per capita in California and spends roughly $9,900 per person, something that locals say makes it good to be alive in Colma.
A look at Colma’s pending budget crisis
» Proposed budget: $15.8 million
» Deficit: $1.8 million
» General fund reserve after covering deficit: $16.6 million
» Cardroom taxes: $3.4 million
» Sales tax: $7.8 million
» Sales tax: 56 percent of revenue
» Card-room tax: 25 percent of revenue