Corte Madera's "Fiscal Renaissance"
We've seen our Town change a lot over the past two decades, and one of the most remarkable turnarounds in that time has been Corte Madera's journey from near-bankruptcy in the mid-2000's to model of financial responsibility today—what I like to call Corte Madera's "fiscal renaissance."
Today, Corte Madera has a balanced budget, strong reserves, and is on track to fully fund our pension debt—but we came by our current standing through a series of lessons learned the hard way, spawned by a perfect storm of missteps and disaster.
Challenges of the past
In 2006, the Town of Corte Madera purchased the Park Madera Shopping Center on Tamalpais Drive, with dreams of building a new civic center on the land. The price tag was $10.6 million, and the Town exhausted its reserves and borrowed heavily to close the deal; the Center immediately became a money suck, with the Town spending more on maintenance and debt service than the Center's commercial leases brought in.
Just two years later came the financial crisis of 2008, which plunged the country into recession. Corte Madera's sales tax revenue dropped by $600,000 virtually overnight, and over the next five years of recession and painstaking recovery, the Town saw another $5 million in revenue evaporate. By the depths of the recession, the Town was borrowing money just to cover operations—nearly bankrupt, and taking on new debt in its scramble to continue functioning.
This was a backwards era; from 2002-2012, the Town ran consistent deficits, there was no plan for addressing its ballooning pension debt, no capital funding plan, and no budget reserve policy. A scathing 2011 report by the Marin County Civil Grand Jury put it lightly: "The Town's financial management seems to be ad hoc rather than long-range; mostly reactive, not proactive; and hopeful instead of strategic." Financial administration was conducted with pencil and slide rule; there were no computers in the Finance Department.
Glimmers of change
It wasn't until 2013 that the picture started changing substantively. That year, a hard-won merger of the Corte Madera, Larkspur, and San Anselmo police departments was finalized, forming the Central Marin Police Authority. Corte Madera's Police expenses dropped by about $750,000 annually, thanks to greater operational efficiencies.
The Town also took its first steps toward addressing the looming pension crisis, establishing a trust fund to save money for retiree benefit costs. Further reform was achieved through negotiation with the Town's employees, who graciously acknowledged that the Town had promised them more post-retirement benefits than it could realistically afford; they agreed to a reduction, and their sacrifice helped keep the Town solvent.
In 2016, a refinance of the debt on the Park Madera Center saved taxpayers another $110,000 annually, and the following year, the Town took the critical steps of establishing a Pension Stabilization Trust Fund and adopting its first-ever Debt Management Policy; these steps would prove harbingers of larger changes to come.
Road to fiscal resilience
2018 was a major turning point for Corte Madera. That year, voters approved a 1/4 cent increase in the Town's sales tax, while extending the term of the tax indefinitely. The message was clear: it was time to get the Town's fiscal house in order, and if the voters provided the Council with a solid funding source for infrastructure and public safety, it was up to us to deliver.
Two other major changes occurred in 2018, the year I was elected to the Town Council. On public safety, the Town consolidated fire services with Larkspur to form the Central Marin Fire Department, saving Corte Madera residents more than $500,000 annually while reducing response times. That was also the year we adopted new financial management, analysis, and budgeting software for our newly-computerized finance department.
With a clearer picture of the Town's finances, additional reforms began to roll out rapidly. In 2019, our firefighters selflessly agreed to further cost-saving pension reforms, pushing their own retirement back five years—a sacrifice for which we should all be incredibly grateful.
In 2020, the Council moved to shore up our financial planning by adopting a Town Investment Policy, along with new software for pension management and forecasting. We also developed a 15-year revenue forecasting model that has proved a critical tool in making sure infrastructure projects have reliable funding sources.
In 2021, we implemented a suite of new reserve policies, requiring rainy day funds be set aside in our general fund, sales tax, and sanitary district accounts (many of you will recall this as a central part of my campaign for Council in 2018, and I was incredibly proud to deliver on it as Mayor).
But of all the steps we've taken to shore up Corte Madera's financial position, perhaps the most impactful was our move to bond our pension obligations, placing us on a path to fully funding our pension debt while saving taxpayers more than $800,000 per year—money that we can now reinvest into paying down other debts and obligations, further consolidating our gains.
Where things stand today
Today, Corte Madera's financial picture is starkly different than even five years ago. Our newly-created emergency reserves are full, we've run a continuous budget surplus thanks to astute fiscal management, and our retiree healthcare debt is down to less than $2 million (from nearly $12 million in 2012). Even the Park Madera Center—long an albatross for the Town—is finally in the black, a strong symbol of our new standing.
Unlike in the past, we have an array of new financial planning tools and protocols in place that are allowing us to deliver a robust program of services and projects for residents, all while maintaining our sound fiscal footing. Two different citizens' oversight committees help make sure the public always has visibility into the Town's finances and spending plans, keeping us accountable to the residents we serve.
Better still, the hard work we've done to right this ship has now been validated twice: first by COVID, from which we emerged as the only town I know of to balance its budget, avoid staff layoffs, and keep delivering services to residents uninterrupted; and second, by Standard and Poor's, which recently upgraded the Town's credit rating to AAA—the highest possible, and a ringing endorsement of Corte Madera's newfound fiscal stability.
While every resident should feel proud of all we've accomplished together, we know our work is not done—financial resilience takes just as much work to maintain as it does to establish. I hope the coming years will see us continue to strengthen and consolidate the Town's position, setting us up for the long and successful future our community needs and deserves.