The city budget has three main parts, all of which are reviewed and approved by the City Council annually, prior to the July 1 start of a new fiscal year.

Operating Budget

The operating budget covers the day to day services provided by the city, in addition to the cost to operate and maintain city infrastructure and other assets, like parks and buildings.

Capital Improvement Program

Capital projects have to do with infrastructure (pipes, roads, pump stations) and other physical structures around the city (parks, playgrounds libraries, fire stations). They are described in the Capital Improvement Program part of the budget, along with what projects are scheduled in the coming fiscal year and how much money total the city has available for projects like these.

Digital Transformation Program

Just like physical infrastructure, the city relies on digital infrastructure to provide services. Given its important role and the significant investment required to maintain efficient and secure digital systems, the city has a dedicated program, similar to the Capital Improvement Program, that is included in each year's budget.

Most of the money that funds day to day city services comes from three primary sources: property tax, sales tax and transient occupancy tax (the tax visitors pay when they stay in a local hotel or vacation rental). Other sources of general fund money include building permit fees, business license tax, recreation fees and interest earnings.

All of the transient occupancy tax goes to the city, but only a small portion of sales and property taxes ends up here.

Read our latest financial reports to see how these three sources are revenue are doing.

Some of the city’s funding can only be used for specific purposes, such as water, sewer and trash fees, gas taxes and development impact fees.

Enterprise funds

The fees you pay for water, sewer and trash service must be used to pay for the cost of delivering those services, and we cannot charge you more than the actual cost of providing those services. They're called enterprise funds because they operate like their own distinct business. For example, the city could not use revenue from water rates to pay for police services. 

Special revenue funds

Special revenue funds are similar to enterprise funds in that they can only be used for a specific purpose. An example is gas tax funds we get from the state, which can only be used for road improvements. 

Grants

The city actively seeks state and federal grants to help pay for local city services. Grants typically have a specific purpose and are for a specific time period. One example is a state grant that funded a project to study ways to protect Carlsbad Boulevard from sea level rise.

The city's General Fund covers most day to day city services (except those with their own revenue, like water rates). Public safety is typically the largest area of spending for cities, given its critical importance and the 24/7 nature of the work. Community services, which includes parks, recreation, libraries, planning and building, is the second largest area of spending in Carlsbad.

The city's annual budget includes detailed charts showing how much money is allocated to each department and breaks out spending by specific areas of service within a department. The budget also shows how the current year's spending plan compares to previous years and explains any major changes.