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Home My WebLink AboutAgenda Report - May 20, 2020 H-03AGENDA ITEM t'l-ı Crrv on Loor CouNcrr, C ovTMUNICATIoN TM AGENDA TITLE: MEETING DATE: PREPARED BY: Receive Presentation of the Draft Fiscal Year 2020121 Budget and Fiscal Plan May 20,2020 Budget Manager RECOMMENDED ACTION:Receive presentation regarding the FiscalYear 2020121 Draft Budget and Fiscal Plan. BACKGROUND INFORMATION: Staff has prepared a presentation to provide the Council and public an opportunity to review and comment on basic assumptions within the Fiscal Year 2020121 budget. The presentation is designed to provide information on the general economic circumstances facing City staff and Council in allocating resources to most effectively deliver services. The forecast is a critical planning tool for staff and Council to use to anticipate future resources or service level adjustments. The forecast presented will include a baseline scenario as well as a discussion on the impact of COVID-19 on normal operations during these unprecedented times. Staff will provide an overview of both revenues and expenditures for all major funds. The draft budget document will be released and made available at www.lodi.qov for online viewing. The first opportunity for the City Council to adopt the Fiscal Year 2020121 Budget will be at its regular meeting on June 3,2020. FISCAL IMPACT There is no fiscal impactfrom this informational presentation. The draft Fiscal Year 2020121 budget for all city funds is projected at $214,006,340 in revenues and $207,892,320 in expenditures. FUNDING AVAILABLE: M- Andrew Keys, Deputy City Manager APPROVED: enS r, City Manager Fiscal Year 2020/21 Budget Presented by Andrew Keys, Deputy City Manager Overview •General Fund Assumptions/Revenues/Expenses Key Inputs Five Year Forecast •Enterprise Funds Electric Water Wastewater •Special Revenue Funds Transit Streets Community Development Parks, Recreation and Cultural Services Library 2 •Covid-19 impact uncertainties •Sales Tax estimates 11.5% less than mid-year •Business License Tax 20% less than mid-year •Transient Occupancy Tax 50% less than mid-year •Late fees projected pre-Covid at $1m may need to be adjusted. •Expenditures kept at FY 20 original budget levels •7 unfunded but authorized positions in Police (correction from draft document of 8 unfunded) •Temporary suspension of year end PARS contribution as required in fiscal policies General Fund Assumptions 3 FY 2020/21 General Fund Revenues $59,659,490 Tax Revenues Revenue from Others Operating … Charges for Services Investment & Property Revenues Fines & Forfeitures Other Revenues and Licenses & Permits Revenue Categories Budget 2020-21 Tax Revenues $41,304,850 Revenue from Others $6,465,880 Operating Transfers In $6,256,620 Charges For Services $1,984,650 Investment & Property Revenues $1,849,840 Fines & Forfeitures $1,275,100 Other Revenues and Licenses & Permits $522,550 Grand Total $59,659,4904 Police Department Fire Department Non-… Internal Services Department Public Works (General Fund) Department City Clerk City Attorney City Manager Economic Development Library (from Measure L) General Fund Expenditures $59,659,490 General Fund Expenses by Department Budget 2020-21 Police Department $24,921,930 Fire Department $14,461,600 Non-Departmental $9,633,300 Internal Services Department $5,336,350 Public Works (General Fund) Department $2,891,680 City Clerk $770,040 City Attorney $615,140 City Manager $547,650 Economic Development $371,860 Library (from Measure L)$109,940 Grand Total $59,659,4905 •7 unfunded positions in Police –6 officers and 1 dispatcher/jailer ($975,000) •No transfer for Capital Outlay projects ($435,000) •No transfer for Information Systems replacements ($65,000) •Reduced transfers to Police and Fire Vehicle Replacement Funds ($475,000) •Operating budgets at FY 20 levels •Rising costs and falling revenue shift more positions to Measure L •Eliminated 4th of July funding General Fund Key Inputs 6 •Revenues: $5,500,000 •Expenditures: $5,500,000 •Measure L Position Funding: Measure L Measure L Funded Positions FY 2019/20 Budget Moved from GF Total for FY 2020/21 Cost: Police Officers 10 8 18 2,536,080 Firefighters 8 0 8 1,007,610 Librarian 1 0 1 105,240 Total 19 8 27 3,648,930 7 Vehicle Replacement Fund Vehicle Fund PURCHASE PRICE 6/30/20 Est Fund Bal 2020/21 Est Rev 2020/21 Est Exp 6/30/21 Est Fund Bal Fund Target* Over/ (Under) Target Comm Dev $82,831 85,580 0 0 85,580 64,551 21,029 Fire $4,492,134 401,872 454,860 59,000 797,732 2,795,470 (1,997,738) Police $2,792,992 530,276 210,000 210,000 530,276 1,676,426 (1,146,150) PRCS $1,475,849 265,015 93,300 30,000 328,315 958,145 (629,830) PW - GF $297,727 100,638 0 0 100,638 167,250 (66,612) Grand Total $9,141,534 1,383,381 758,160 299,000 1,842,541 5,661,842 (3,819,301) *Fund Target is the straight line depreciation value of vehicle stock that should be set aside for future replacements using Fleet Services estimated useful life expectancies by vehicle type. Vehicle Replacement Funds FY 20/21 Straight Line Depreciation Requirement FY 2020/21 Recommended Funding Annual Funding Surplus/(Shortage) Comm. Dev $6,598 $0 ($6,598) Fire Dept.$299,842 $454,860 $155,018 Police Dept.$297,373 $210,000 ($87,373) PRCS $68,850 $93,300 $24,450 PW-GF $18,213 $0 ($18,213) Grand Total $690,876 $758,160 $67,284 8 •Unprecedented uncertainty in both the near term (0-6 months), mid and long term. •What will be allowed to be open? •What is the public’s willingness to utilize open businesses? •What is the public’s willingness to invest in both large personal and business expenditures, investments and improvements? •What impact will mandatory or suggested modifications have on business? •What will future unemployment and unemployment benefit levels be? •Base case operations are sustainable •Does not address labor negotiations •No new positions beyond what’s recommended in FY 20 •$1.7 Million in General Fund reserves are projected to be needed to balance the budget through 2023/24 •During this time, approximately $650,000 is added to the Measure L reserve balance during this time. 5 Year Forecast -Summary 9 •Forecast to be revisited quarterly at a minimum. •Authorized but not funded positions, General Fund, IT Capital and Measure L Capital do not return. •Based on full operations of currently furloughed departments receiving General Fund support (PRCS and Library). •Use of Pension Stabilization Reserves prioritized over use of local reserves. •Substantially reduced economic activity continues through the summer/fall with an increase in activity in late 2020 and early 2021. •Assessed valuations hold relatively stable in the current year. •Overall a 3.5% reduction in revenue from the Mid Year projections for FY 2020/21. 5 Year Forecast -Assumptions 10 5 Year Forecast -Assumptions 11 5 Year Forecast -Revenue 12 5 Year Forecast -Expenses 13 5 Year Forecast –Fund Balance 14 5 Year Forecast –PSF 15 Risks •Stay at Home Orders –duration, severity and COVID-19 resurgence (second wave) •Recession length and severity •Labor Negotiations •CalPERS UAL or other assumptions changes •Pace of Development Opportunities •Economic recovery •Revenue enhancement 5 Year Forecast – Risks/Opportunities 16 •With uncertainty, a quarterly revision of the forecast (and budget) is necessary. •Flexibility to act quickly, but caution is Staff’s recommended approach. •Authorize full operating budgets but only execute services in an financially sound manner. •Fund only mission critical vacancies as they arise. •Evaluate each recovery phase for its potential impact on both short and long term finances. 5 Year Forecast –Conclusions 17 Electric Utility Overview Estimated 2017-18 2018-19 2019-20 2019-20 2020-21 Electric Utility Enterprise Fund Actuals Actuals Budget Actuals Budget Cash Balance Beginning Cash Balance 23,233,768 31,947,991 41,959,800 41,959,800 38,438,162 Revenues *74,937,150 74,499,971 75,563,780 75,563,780 74,567,680 Expenditures 66,222,927 64,488,162 78,899,725 79,085,418 75,492,570 Net Difference (Revenues Less Expenditures)8,714,223 10,011,809 (3,335,945) (3,521,638) (924,890) Cash Balance Ending Cash Balance 31,947,991 41,959,800 38,623,855 38,438,162 37,513,272 Fund Balance as a percentage of expenses:48%65%49%49%50% * Includes changes in GOR Estimated Changes in Fund Balance For the Fiscal Year Ended June 30, 2021 With Actuals for FY 2017-18 and FY 2018-19 and Comparative Budget FY 2019-20 18 •Revenues are $996,100 lower than FY 2019/20 budget Customer charges -$218,750 lower Work for others -$534,500 lower Greenhouse gas -$251,360 lower •Expenses are $3,407,160 lower than FY 2019/20 budget Salary & benefits -$1,192,480 higher Supplies, materials & services -$370,580 lower Debt service -$441,000 higher Capital projects & equipment -$4,624,000 lower Electric Utility 19 •12kV Overhead -$1,651,000 •12kV Underground -$1,050,000 •Streetlight Maintenance -$50,000 •Work for Others -$300,000 •Henning Feeder Extension -$310,000 •Substation Load Tap Charger –$104,050 •LED Streetlight Improvements -$150,000 •LEU Operations Video Wall -$50,000 •Replace bucket truck #09-46 -$225,000 •Replace Engineer vehicle #09-16 -$30,000 Electric Utility Capital Projects 20 Electric Utility Reserves Purpose Basis 2020/21 Operating Reserve 90 days cash 18,118,000 Capital Reserve Largest distribution system contingency 1,000,000 NCPA General Operating Reserve NCPA identified items 4,240,000 Total Target 23,358,000 Estimated FY 2020/21 Reserve 37,513,272 21 Water Utility Overview Estimated 2017-18 2018-19 2019-20 2019-20 2020-21 Water Utility Enterprise Fund Actuals Actuals Budget Actuals Budget Cash Balance Beginning Cash Balance 4,743,509 5,154,247 10,041,012 10,041,012 4,243,702 Revenues 14,461,228 15,509,164 15,620,803 15,440,260 13,871,580 Expenditures 14,050,490 10,622,400 21,879,125 21,237,570 13,290,500 Net Difference (Revenues Less Expenditures)410,738 4,886,765 (6,258,322) (5,797,310) 581,080 Cash Balance Ending Cash Balance 5,154,247 10,041,012 3,782,690 4,243,702 4,824,782 Fund Balance as a percentage of expenses:37%95%17%20%36% Estimated Changes in Fund Balance For the Fiscal Year Ended June 30, 2021 With Actuals for FY 2017-18 and FY 2018-19 and Comparative Budget FY 2019-20 22 •Revenues are $1,749,220 lower than FY 2019/20 Charges for services -$1,480,740 lower Build America Subsidy -$622,000 lower Developer Impact fees -$397,650 higher •Expenses are $8,588,630 lower than FY 2019/20 budget Salary & benefits -$17,510 higher Supplies, materials & services -$231,950 higher Debt service -$896,110 lower Capital projects & equipment -$7,925,780 lower Water Utility 23 •Granular Activated Carbon (GAC) -$300,000 •Wells #’s 14, 16, 21, 28 rehab/GAC systems - $1,486,000 •Water taps/main replacements -$125,000 •MSC office model rehab –$150,000 •PCE/TCE programs -$505,000 •Treatment facility generator -$500,000 •Purchase forklift -$40,000 Water Utility Capital Projects 24 •Target is 25% of operating expenses •Target for FY 2020/21 equals $2,556,125 •FY 2020/21 estimated reserve is $4,824,782 Water Utility Reserves 25 Wastewater Utility Overview Estimated 2017-18 2018-19 2019-20 2019-20 2020-21 Wastewater Utility Enterprise Fund Actuals Actuals Budget Actuals Budget Cash Balance Beginning Cash Balance 19,473,784 22,795,135 25,273,157 25,273,157 23,638,417 Revenues 16,479,477 20,292,057 18,599,860 18,599,860 18,612,980 Expenditures 13,158,126 17,814,035 20,349,559 20,234,600 17,355,460 Net Difference (Revenues Less Expenditures)3,321,351 2,478,022 (1,749,699) (1,634,740) 1,257,520 Cash Balance Ending Cash Balance 22,795,135 25,273,157 23,523,458 23,638,417 24,895,937 Fund Balance as a percentage of expenses:173%142%116%117%143% Estimated Changes in Fund Balance For the Fiscal Year Ended June 30, 2021 With Actuals for FY 2017-18 and FY 2018-19 and Comparative Budget FY 2019-20 26 •Revenues are $13,120 higher than FY 2019/20 budget Charges for services -$390,370 lower Development impact fees -$858,120 higher State grant -$520,000 lower •Expenses are $2,994,100 lower than FY 2019/20 budget Salary & benefits -$250,850 higher Adding (1) Electrician position -$136,350 Supplies, materials & services -$156,060 higher Capital projects & equipment -$3,360,950 lower Wastewater Utility 2727 •WSWPCF Fan Press Replacement -$1,000,000 •Aeration Diffuser Replacement -$1,000,000 •Storm Drain Trash Handling -$750,000 •WSWPCF Digester #3 –$500,000 •MSC Admin Office Remodel -$150,000 •Taps/Relocations -$75,000 •Electrical Room Re-roof -$92,000 •Purchase dump truck -$75,000 •Replace existing processing equipment -$110,000 •Purchase commercial mower -$175,000 Wastewater Utility Capital Projects 2828 •Target is 25% of operating expenses •Target for FY 2020/21 equals $3,247,120 •FY 2020/21 estimated reserve is $24,895,937 Wastewater Utility Reserves 2929 Transit Overview Estimated 2017-18 2018-19 2019-20 2019-20 2020-21 Transit Fund Actuals Actuals Budget Actuals Budget Fund Balance (Net Assets) Beginning Fund Balance (Net Assets) Unreserved 3,792,695 4,326,294 3,082,159 3,082,159 2,208,549 Revenues 5,353,595 4,073,406 4,952,760 5,024,460 5,369,290 Expenditures 4,819,996 5,317,541 5,943,939 5,898,070 4,501,850 Net Difference (Revenues Less Expenditures)533,599 (1,244,135) (991,179) (873,610) 867,440 Fund Balance (Net Assets) Ending Fund Balance (Net Assets) Unreserved 4,326,294 3,082,159 2,090,980 2,208,549 3,075,989 Fund Balance as a percentage of revenue:81%76%42%44%57% Estimated Changes in Fund Balance For the Fiscal Year Ended June 30, 2021 With Actuals for FY 2017-18 and FY 2018-19 and Comparative Budget FY 2019-20 30 Transit Overview Estimated 2017-18 2018-19 2019-20 2019-20 2020-21 Transit Fund Actuals Actuals Budget Actuals Budget Fund Balance (Net Assets) Beginning Fund Balance (Net Assets) Unreserved 3,792,695 4,326,294 3,082,159 3,082,159 2,208,549 Revenues 5,353,595 4,073,406 4,952,760 5,024,460 5,369,290 Expenditures 4,819,996 5,317,541 5,943,939 5,898,070 4,501,850 Net Difference (Revenues Less Expenditures)533,599 (1,244,135) (991,179) (873,610) 867,440 Fund Balance (Net Assets) Ending Fund Balance (Net Assets) Unreserved 4,326,294 3,082,159 2,090,980 2,208,549 3,075,989 Fund Balance as a percentage of revenue:81%76%42%44%57% Estimated Changes in Fund Balance For the Fiscal Year Ended June 30, 2021 With Actuals for FY 2017-18 and FY 2018-19 and Comparative Budget FY 2019-20 31 •Revenues are $416,530 higher than FY 2019/20 budget Transportation Dev Act -$687,050 lower Federal grants -$1,177,180 higher Charges for services -$95,000 lower Prop 1B -$74,490 higher •Expenses are $1,442,090 lower than FY 2019/20 budget Salary & benefits -$92,700 higher Adding (1) Senior Transit Planner –$119,960 Capital projects & equipment -$1,609,980 lower Transit Revenue 32 •Blower assembly for bus wash -$40,000 •Transit station repairs -$250,000 •Transit facility upgrades –$200,000 Transit Capital Expenditures 33 Streets Overview Estimated 2017-18 2018-19 2019-20 2019-20 2020-21 Street Fund Actuals Actuals Budget Actuals Budget Fund Balance Beginning Fund Balance 5,375,119 6,460,848 9,629,385 9,629,385 7,203,855 Revenues 9,365,209 8,471,106 9,951,200 8,558,710 6,231,660 Expenditures 8,279,480 5,302,569 11,212,880 10,984,240 6,021,030 Net Difference (Revenues Less Expenditures)1,085,729 3,168,537 (1,261,680) (2,425,530) 210,630 Fund Balance Ending Fund Balance 6,460,848 9,629,385 8,367,705 7,203,855 7,414,485 Fund Balance as a percentage of revenue:69%114%84%84%119% Estimated Changes in Fund Balance For the Fiscal Year Ended June 30, 2021 With Actuals for FY 2017-18 and FY 2018-19 and Comparative Budget FY 2019-20 34 •Revenues are $3,719,540 lower than FY 2019/20 budget Gas taxes -$59,830 higher State grants -$447,000 lower Federal Grants -$2,984,290 lower TDA -$210,000 higher Developer impact fees -$277,880 higher •Expenses are $5,191,850 lower than FY 2019/20 budget Salaries/benefits -$43,330 higher Supplies, materials & services -$123,970 higher Capital projects & equipment -$5.3m lower Streets Revenue 35 •Lodi Ave and Mills Ave resurfacing $1,870,000 •Turner/Ca signal -$100,000 •Signal preventative maintenance -$150,000 •Sidewalk repair -$70,000 •Pavement crack seal -$50,000 •Annual street striping -$80,000 •Miscellaneous maintenance projects -$145,000 Streets Capital Projects 36 Community Development Overview Estimated 2017-18 2018-19 2019-20 2019-20 2020-21 Community Development Fund Actuals Actuals Budget Actuals Budget Fund Balance Beginning Fund Balance Unreserved 3,824,752 2,975,494 3,612,425 3,612,425 3,944,265 Revenues 2,886,196 2,999,934 2,599,586 3,097,090 2,606,260 Expenditures 3,735,454 2,363,003 2,866,025 2,765,250 2,494,320 Net Difference (Revenues Less Expenditures)(849,258) 636,931 (266,439) 331,840 111,940 Fund Balance Ending Fund Balance Unreserved 2,975,494 3,612,425 3,345,986 3,944,265 4,056,205 80%153%117%143%163% Estimated Changes in Fund Balance For the Fiscal Year Ended June 30, 2021 With Actuals for FY 2017-18 and FY 2018-19 and Comparative Budget FY 2019-20 Fund Balance as a percentage of expense 37 •Revenues are $6,670 higher than FY 2019/20 budget •Expenses are $30,420 lower than FY 2019/20 budget Salary & benefits -$24,650 higher Supplies, materials & services -$60,440 lower Community Development Revenue 38 Parks, Recreation and Cultural Services Overview Estimated 2017-18 2018-19 2019-20 2019-20 2020-21 Parks, Recreation & Cultural Svcs Fund Actuals Actuals Budget Actuals Budget Fund Balance Beginning Fund Balance Unreserved 694,672 774,063 796,310 796,310 788,360 Revenues 6,364,694 6,397,079 7,697,990 7,716,760 7,643,330 Expenditures 6,285,303 6,374,832 7,674,540 7,724,710 7,771,830 Net Difference (Revenues Less Expenditures)79,391 22,247 23,450 (7,950) (128,500) Fund Balance Ending Fund Balance Unreserved 774,063 796,310 819,760 788,360 659,860 12%12%11%10%9% Estimated Changes in Fund Balance For the Fiscal Year Ended June 30, 2021 With Actuals for FY 2017-18 and FY 2018-19 and Comparative Budget FY 2019-20 Fund Balance as a percentage of revenue 39 •Many programs and facilities remained closed by public health orders and corresponding staff is furloughed. •Budget is built on Pre-COVID -19 assumptions to allow for flexibility and rapid return to operations as PHO’s permit. •Staff will monitor and the City Manager will only authorize expenditures or hires for programs permitted under public health guidelines. •Revenues are $54,660 lower than FY 2019/20 budget •Operating transfer in -$45,100 lower •Charges for services –$2,860 lower •Expenses are $97,290 higher than FY 2019/20 budget •Salaries & benefits -$202,100 higher •Supplies & services -$75,710 lower Parks, Recreation and Cultural Services Revenue 40 Library Overview Estimated 2017-18 2018-19 2019-20 2019-20 2020-21 Library Fund Actuals Actuals Budget Actuals Budget Fund Balance Beginning Fund Balance Unreserved 457,902 23,161 241,313 241,313 248,433 Revenues 2,411,977 1,585,711 1,547,750 1,552,750 1,638,250 Expenditures 2,846,718 1,367,559 1,535,480 1,545,630 1,724,830 Net Difference (Revenues Less Expenditures)(434,741) 218,152 12,270 7,120 (86,580) Fund Balance Ending Fund Balance Unreserved 23,161 241,313 253,583 248,433 161,853 1%15%16%16%10%Fund Balance as a percentage of revenue Estimated Changes in Fund Balance For the Fiscal Year Ended June 30, 2021 With Actuals for FY 2017-18 and FY 2018-19 and Comparative Budget FY 2019-20 41 •The Library remains closed at this time per PHO and many staff remain furloughed. •The budget is built on pre-COVID -19 assumptions to allow for maximum flexibility and rapid response in re-opening as PHO’s permit. •Staff will monitor and the City Manager will only authorize expenditures or hires for programs permitted under public health guidelines. •Revenues are $90,500 higher than FY 2019/20 budget •Operating Transfer In -$114,950 higher •Donations -$20,000 lower •Expenses are $189,350 higher than FY 2019/20 budget •Operating transfers -$94,950 higher •Salaries & benefits -$3,500 lower •Supplies & services -$38,000 higher •Capital projects -$60,000 higher Library 42 43 Questions? 43