When Highland became a city in 1987, the Local Agency Formation Commission concluded, “The proposed city of Highland does not appear financially feasible.”
An incorporation feasibility study by the firm Christiansen & Wallace concluded that with the current economic base “incorporation is at best marginal.”
Highland City Treasurer Chuck Dantuono has cited these findings several times in reports required within six months of the end of a fiscal year.
Despite those perilous predictions, Dantuono concludes in this year’s report, “Today, Highland is a fiscally healthy city.”
“This has been accomplished by being extremely conservative in expenditures over the last 29 years,” he said in the report presented to the City Council Tuesday night. “While many cities rely on sales tax as a primary revenue source, Highland has relied on the vehicle license fees and property tax as the major revenue sources.”
The report reviews the biennial budget passed in 2017.
Dantuono points out that the city of San Bernardino reduced the city’s potential sales tax revenue by annexing promising retail areas before incorporation, which explains the jigsaw borders between the two cities.
“Over the last several years, Highland has continued to see general fund revenues stabilize and even increase.”
Transient occupancy taxes decreased last year because of remodeling of the Hampton Inn, which has been reborn as the Bear Springs Hotel. However, the San Manuel Band of Mission Indians agreed to pay in-lieu taxes, which made up of most of the difference, Dantuono said.
“Highland has been able to maintain a balanced general fund budget without layoffs, pay reductions, furloughs or a reduction in services,” he said.
Property taxes remain the city’s primary source of revenue, but it is hoping to expand light industrial and manufacturing enterprises as the San Bernardino International Airport grows and sales tax in the Golden Triangle, long envisioned as a new retail, dining and housing center north of Highland Crossing, home of Lowe’s.
“The city continues to work with the land owner and developers for the north side of Greenspot Road,” Dantuono said.
The city has invested $13 million in Greenspot Road and recently committed $7 million to improve the Third and Fifth Street corridor, mostly federal and state funds.
“As part of the long-term financial planning process, Highland continues to work on developing marketing plans on Base Line, Greenspot Road and Fifth Street, the major thoroughfares in the city,” Dantuono said. “The development of these corridors is vital to the increase of a sales tax base in Highland.”
The retail base has expanded with the opening of the Round Table Clubhouse in 2017 and the Smart ‘N’ Final Extra last year. The new Jack in the Box and Panda Express are expected to open this month.
Since incorporation, the City Council has maintained a “pay-as-you-go” philosophy. The general fund has no bonded debt, he said.
“The city also has been very successful in obtaining grants at the state and federal levels for the capital projects as well, therefore enabling local tax dollars to go further,” Dantuono's report says.
For the 26th straight year, the city has been awarded the Distinguished Budget Presentation Award by the Government Finance Officers Association, he says. It also received an award for Excellence in Operational Budgeting from the California Society of Municipal Finance Officers.