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HomeMy WebLinkAboutAgenda Report - November 19, 2008 K-03AGENDA ITEM K-03 CITY OF LODI COUNCIL COMMUNICATION TM AGENDA TITLE: Revise and Re-adoptthe Fiscal Year 2008-09 Budget MEETING DATE: November 19,2008 PREPARED BY: City Manager RECOMMENDED ACTION: Adopt Resolution of the Lodi City Council approving revised 2008-09 Operating and Capital Improvement Budget. BACKGROUND INFORMATION: On October 6, 2008, at a Special City Council meeting, the Council was advised that revenue assumptions upon which the Fiscal Year 2008-09 Budget was based were no longer valid. Major General Fund revenue sources, such as sales tax, property tax, and motor vehicle fees are trending downwards. Although the Council adopted a General Fund budget that was $2,734,595 less than the FY 2007-08 budget, the adopted budget still needs to be reduced by another $1,855,000 in order for projected expenditures to correspond to projected revenues at the end of the fiscal year. In order to prepare a revised budget, the Manager convened a working group of City staff to consider various alternatives. The Manager considered the recommendation and advice of the working group and presented a draft revised budget to the City's Budget and Finance Committee. On November 10th the Budget and Finance Committee considered the proposed revisions. Upon receiving staffs presentation the Budget and Finance Committee voted to recommend the following amendments to the Manager's plan: Delete FY 08-09 allocation for Arts Grants = <$50,000> (3-2 vote) Delete FY 08-09 allocation for Downtown Lodi Business Partnership = <$35,000> (3-2 vote) Reduce Funding for the Conference and Visitor's Bureau by 10% = <$9,300> (3-2 vote) (Note: Manager's proposal reduces funding by $2,652) Delete FY 08-09 allocation for San Joaquin Partnership = <$35,000> (4-1 vote) (Note: payment already made) Providefull funding for Vehicle Replacement Fund (or as much as possible) = $104,730 All other recommendations unanimous concurrence. APPROVED: Blair Ki i Manager The recommendations of the Budget and Finance Committee are forwarded to the Council without comment. The attached resolution does not reflect these recommendations, but can be modified at Council's direction. It should be noted that the readoption of the budget proposed is unprecedented. This is not the mid -year review. The mid -year review will occur as usual in January. This action is being taken due to the precipitous and unexpected decline in major revenue sources. Overview of General Fund Budget Modifications: 1) General Liability Reserve — It is recommended that Council take advantage of the large surplus in General Liability reserves by transferring $500,000 from Liability reserves to the General Fund and another $500,000 to Worker's Compensation reserve, but still maintaining three times the self-insured retention of $500,000 for a total reserve of $1,500,000. This still exceeds the actuarial projections by $846,843. Furthermore, eliminate the payment to the General Liability reserves by the General Fund departmentsfor this year. Total savings for General Fund = $739,702. 2) Reduce Transfers to Special Revenue Funds to avoid unanticipated windfalls —The General Fund Budget anticipated a vacancy savings factor of approximately $740,000. Currently, General Fund vacancies have resulted in a savings of $500,780. The Special Revenue Funds of Recreation, Community Center, Community Development, and the Library were not included in this vacancy factor. There is a fixed budgeted amount to be transferred to each Special Revenue Fund, for example, $1,305,616 for Community Center, $1,578,580 for Library, $742,674 for Recreation, etc. However, these Special Revenue Funds have experienced vacancies and if the transfers are not reduced, they will experience an unexpected windfall while other City programs are reduced. Therefore it is recommended that the transfers be reduced to reflect current and existing vacancies within the Recreation, Community Center, Community Development, and Library. Total savings to the General Fund = $216,870. 3) Reassign existing Engineering personnel to Transit Operations — With the loss of the Transit Manager, it is proposed to reassign existing personnel to Transit. Total savings to the General Fund = $127,000. 4) Eliminate General Fund paid parking lot maintenance— Street Funds can pick up the cost for Parking Lot Maintenance. Total savings to the General Fund = $25,000. 5) Eliminate General Fund Cost for solid waste —The new franchise agreement allows the General Fund to eliminate solid waste collection costs. Total savings to the General Fund _ $35,000. 6) Retain a Portion of the new solid waste revenue for the General Fund —Although the new increase in the Solid Waste Franchise fees are General Fund revenues (approximately $541,500 per year) it has been anticipated they would be directed to the Street Fund. The "base portion" of the franchise fee of $416,000 continues as General Fund revenue. The half year amount of the increase is approximately $270,750. It is recommended that $104,730 of the new Solid Waste Franchise fee be retained in the General Fund and not transferred to the Street Fund. Total savings to the General Fund = $104,730. 7) Reduce the transfer for Vehicle Replacement— $631,000 is to beset aside for General Fund vehicle replacement. This is to establish a vehicle replacementfund to allow for an orderly and disciplined replacement of vehicles. However, to address the reduced revenue for this Fiscal Year, it is proposed to reduce the transfer by $104,730. Total savings to the General Fund = $104,730. 8) Hold General Fund positions vacant in several departments — In addition to vacancy factor savings, staff anticipates that by holding other General Fund positions vacant or reducing hours an additional savings of $372,900 can be realized. Total savings to the General Fund = $372,900. 9) Miscellaneous General Fund reductions — It is proposed to take a variety of reductions to various General Fund departments including reducing Training and Travel, reducing by $2,652 contributions to Conference and Visitors Bureau and DLBP, office supplies, consumables, etc. Total savings to the General Fund = $129,068. Attached is a Resolution that will allow the Council to revise and readopt the FY 2008-09 budget. It should be noted that the Governor is asking the State Legislature to meet again to amend the State budget. This may have a negative affect upon Lodi's budget and our financial position. FISCAL IMPACT: The revised Budget will allow the City to maintain its fiscal foundation. Without amending the budget, the General Fund reserves will continue to be lower than the minimum amount needed for a city with the size and complexities of Lodi. Cash flow will be difficult to maintain and the City will become financially fragile and its financial feasibility questionable. Blair King, C -it Manager Attachment