Report Finds City’s Cash Reserves Insufficient

If every city in San Mateo County lost its revenue stream, Millbrae would be the first city to run out of cash, according to a hypothetical scenario by a San Mateo County Grand Jury report that measured cities’ economic stability. 

Millbrae would function for 83 days without additional revenue coming in, compared to 179 for Burlingame and 158 for San Bruno. Millbrae is the only city in the county that is below the auditor-recommended 90-day cash reserve, which could be used in case of an emergency.

The June Grand Jury report, titled “Running on Empty”, also looked at cities’ funding of pensions and retiree’s health care costs. 

Millbrae, along with six other cities in the county, did not fully fund its pension obligations in the 2009-2010 fiscal year, thereby accruing costs that it will have to make up for in the future.

The state expects Millbrae to set aside about $1.3 million a year to pay for the city’s future retiree’s pensions, but Millbrae has only been contributing less than half that for the last two years, $312,000 in 2009 and $538,00 in 2010, according to the city’s Comprehensive Annual Financial Report.

In 2004, a bond was issued to prepay the unfunded pension liability. The city’s portion at the time was $11.5 million, but since, the city’s liability has jumped to over $14 million.

As the debt accumulates, the city will be forced to use more money from its general fund. If sufficient money is not set aside now, city services such as police, fire and parks will suffer, or residents may have to pay more taxes.

City Finance Director LaRae Brown did not respond to a Millbrae Patch request for comment.