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HomeMy WebLinkAboutAgenda Report - December 16, 2020 C-06AGENDA ITEM CITY OF LODI ,. COUNCIL COMMUNICATION TM AGENDA TITLE: Adopt Resolution Accepting the Fiscal Year 2019/20 Measure L Citizen's Oversight Committee Annual Accountability Report and Accepting the Committee's Recommendation to Create a One Page Flyer to Promote the Successes of Measure L MEETING DATE PREPARED BY December 16, 2020 Budget Manager RECOMMENDED ACTION: Adopt resolution approving accepting the Fiscal Year 2019-20 Measure L Citizen's Oversight Committee Annual Accountability Report and accepting the Committee's recommendation to create a one page flyer to promote the successes of Measure L BACKGROUND INFORMATION: Lodi Municipal Code Section 3.30.140 requires the City Council to cause preparation of an Annual Accountability report for expenditures of Measure L tax revenues received. The report is required to include the following: a. The amount of revenue collected; b. The amount and general purpose of expenditures made from this revenue by category LMC Section 3.30.150 (A) establishes the Measure L Citizens' Oversight Committee and charges the Committee to "have the duty and responsibility to review the annual accountability report and report its findings to the City Council and the citizens of the City." The initial draft of the attached report was presented to the Committee at its meeting on November 9, 2020. A revised draft was presented to the Committee at its meeting on December 7, 2020. At that meeting, the Committee recommended the report to the City Council for the Council's acceptance at a future meeting. Additionally, the Committee recommended the City Council approve creation of a one page bill insert to communicate to the citizens of Lodi the successes of the Measure L program in Fiscal Year 2019/20. FISCAL IMPACT: There is no fiscal impact from accepting the Annual Accountability Report or preparing the one page flyer. Total cost for printing the flyer for every utility account are anticipated to be less than $4,000. Mailing costs for one page inserts are included within the existing cost of mailing utility bills. FUNDING AVAILABLE: Funding for production of the one page flyer is included in the Fiscal Year 22020/21 budget. / l ilm , . X"r2" Andrew Keys, Deputy City Manager APPROVED (Dec 3, 202- Stephen Schwabauer, City Manager Attachments Measure L Annual Accountability Report; Measure L Citizen's Oversight Committee Resolution; Resolution Accepting Measure L Citizen's Oversight Committee Recommendation CIT Z CALIFORNIA Measure L FISCAL YEAR 2019/20 ANNUAL ACCOUNTABILITY REPORT Measure L Citizen's Oversight Committee Members District 1 -Gary Woehl District 2 - Terence Spring District 3 - Phil Pennino District 4 - Spencer Rhoads District 5 - Mikey Hothi Measure L was passed by the voter's in - Lodi in November of 2018. Collection for the general purpose retail transactions and use tax began on April 1, 2019. This report presents information for the Fiscal Year 2019/20. The Ordinance requires the City Council to cause the preparation of an Annual Accountability Report (the "Report") to be reviewed by the Measure L Citizen's Oversight Committee. The Committee is responsible to review the Report and present findings to the City Council. The text printed on the ballot for Measure L is as follows. The full text of the ordinance can be viewed online at Lodi Ordinance No. 1951Expenditures for the period include those for fire and police services and capital. To make neighborhoods safer, maintain/improve essential City of Lodi services including: reducing crime; maintaining neighborhood police patrols/gang violence intervention/prevention; fixing potholes/city streets; maintaining neighborhood fire stations; enhancing rapid police/fire response times by restoring firefighter and adding police positions; maintaining recreation facilities/programs; and other general fund purposes; shall the City of Lodi measure enacting on ongoing half cent local soles tax, providing $5,400,000 annually, with independent citizen oversight, and funds spent locally. CITY OF � CALIFORNIA F F R Fiscal Year 2019/20 Measure L Revenue COVID-19 and its impact to local revenues were unknown during the final quarter of Fiscal Year 2019/20. The community was encouraged to stay home and social distance. Businesses were ordered closed and those that remained opened were at reduced capacity. The City's sales tax consultants, HdL Companies, using all available indicators, predicted that the city's sales tax receipts in total would be 13.6% lower for FY 20 than those received in FY 19. Many economists pre- dicted drops in economic activity substantially greater than that. Not only did Measure L revenues meet original budget expectations, they far exceeded them. Initial estimates called for approximately $5.2 million in revenue for the Fiscal Year 2019/20. Actual receipts were $6,762,083. Four factors are responsible for this. First, initial FY 2019/20 budget estimates were far below the pre -pandemic pace of economic activity from July 2019 through February 2020. At the time of the pandemic, the City was set to far exceed initial Measure L budget expectations. Second, AB 147, California's legislation to respond to the South Dakota vs. Wayfair Supreme Court decision had a much bigger impact on revenues than anticipated. AB147 required all online retailers sell- ing in excess of $500,000 of goods annually to register and pay sales tax. This included provision to force larger market- place facilitators selling goods for third parties to collect and remit tax on behalf of the smaller sellers. The new legislation took effect April 1, 2019, and there was not sufficient time or data pre -pandemic to revise Measure L revenue estimates. As a Transaction and Use tax, all goods ordered online and delivered to Lodi are subject to the half -cent Measure L tax with 100% of that tax revenue going to the City of Lodi. This is not the case with a traditional sales tax. Goods delivered to Lodi also pay general sales tax, but all San Joaquin County revenue goes to a County wide pool that is then distributed to agencies within the County based on each agency's share of traditional bricks and mortar retail sales. Third, Lodi's top sales tax producing businesses are large, essential retail outlets that were open and even thriving during the pandemic. The City relies less than some other agencies on auto sales and does not have a large mall, minimizing the pandemics in- fluence on revenue. Fourth, Lodi residents asked to stay home were more likely to shop locally during the pandemic. This kept more dollars local as citizens followed stay at home guidelines and traveled less during the pandemic. AM ITV OF �0 CALIFORNIA 1 T 0.04' Table 1. FY 2019/20 Measure L Expenditures by Category Beginning Fund Balance at July 1, 2019 803,143 * Revenue 6,762,083 Salary and Benefits 5,043,940 PERS Unfunded Liability* - Equipment 984,594 Parks Support 183,402 Supplies and Services 48,856 Vehicles 115,089 Total Expenditures 6,375,881 Revenue Less Expenditures 386,202 Funds Encumbered but Not Yet Spent Police Vehicles 56,921 Safety Equipment 42,024 Parks 2,918 Total Encumbrances 101,864 Fund Balance at June 30, 2020 1,087,481 16% Reserve 1,081,933 Unreserved fund balance June 30, 2020 5,548 * Beginning fund balance includes $509,164 in encumbrances for vehicle purchases and radio infrastructure carried forward into Fiscal Year 2019/20. FY 19/20 Measure L Expenditures by Category 7 RR% Irk -17-V-1.81% *A&ousreL funds are not wd to pay pension costs occruedfrom prior yess'se -_e. I Salary and Senefi=s PE RS U nfu nded Liability Equipment Parks Support • Supplies and Services • Vehicles UITV OF Q.• •,t O Z CALIFORNIA a -AI r! w f +e (71 - #` Ar Table 2. FY 2019/20 Measure L Expenditures by Category Police 3,152,380 Fire 3,040,099 Parks 183,402 Total 6,375,881 FY 19/20 Expenditures by Service Type 2.89% 49 . PofLe Fire Parks Table 1 on the previous page shows revenues and expenditures and summarizes the Measure L fund balance as of June 30, 2020. Included in the summary are expenditures by Category. The chart shows that nearly 80% of the Measure L re- sources were spent on salary and benefits. Table 2 represents the expenditures by Service Type. Police expenditures to- taled 49.4%; Fire 47.7% and Parks 2.9%. In the FY 20 budget, Council authorized the funding of a Librarian. The position was recruited and a candidate selected, however with the uncertainty of the COVID-19 impact to revenue, the offer of employment was delayed. The position is once again funded for FY 21. Measure L funds have been used to upgrade and replace the Police and Fire radio infrastructure. This project provided a more reliable and flexible technology to adapt to future enhancements. In addition to what was expended in the prior year, Council authorized an additional $398,000 of Measure L fund balance to complete the project in FY 20. CITU , •! �+ 0Z s CALIFORNIA Fiscal Year 2019/20 Measure L Expenditure Highlights • 20 Peace Officers • 2 Part Time Community Services Officers • 9 Firefighters • Fire Overtime to full staff Engine 2013 • 3 vehicle purchases • Safety equipment and training to support Police and Fire operations As a result of better than anticipated performance, 10 additional Police Officers and 3 additional Firefighters were moved from the General Fund to Measure L. Measure L also supported capital projects including improvements to the police and fire radio infrastructure, computers for police vehicles, and replacing fire house internal alerting systems. Measure L funding was instra- mental in the refurbishment of Candy Cane Park and to perform much needed tree trimming in our parks. Fiscal Year 2019/20 Fund Balance With the adoption of the Fiscal Year 2019/20 budget, City Council approved a policy requiring a 16% fund balance requirement for Measure L, similar to the requirement in the City's General Fund. Given Measure L was a new revenue source, the require- ment was that the fund balance be obtained over the first 3 full years of Measure L collections at approximately 5.3% of fund balance each year. The first year of budgeted fund balance contributions was Fiscal Year 2019/20. Performance substantially above expectations allowed the City to fully fund Measure L contributions by the end of Fiscal Year 2019/20 as shown in Table 1. The Fiscal Year 2020/21 budget was set prior to the close of Fiscal Year 2019/20 and $220,620 was budgeted as contribution towards fund balance in Fiscal Year 2020/21 per the policy. This additional amount will be available for reprogramming at the City Council's discretion or as a COVID-19 pandemic insurance should continuing stay at home orders or directives modifying business operations reduce revenues during Fiscal Year 2020/21 below expectations. CITU OF Q.• •,t O Z CALIFORNIA t Fiscal Year 2020/21 Budget 0 The FY 2020/21 Measure L Annual Accountability Report is focused on expenditures that have already occurred. Lodi Municipal Code Section 3.30 (the "Ordinance") specifically limits the Citizens' Oversight Committee's role to review of expenditures at the close of each fiscal year. The Committee has no role in budgeting or planning. However, it is important for the public to have knowledge of the direction City leaders have planned for the use of Measure L funds. The City Council adopted the FY 2020/21 budget at its June 3, 2020 meeting. Tables 3 to 5 below provide detailed information on the proposed uses for Measure L funds in Fiscal Year 2020/21. FY 2020/21 Measure L Funding Table 3. FY 2020/21 Measure L Expenditures by Type Category FY 2020/21 Salary and Benefits 4,919,670 Equipment 94,800 Supplies and Services 184,910 Capital -Tree Trimming 80,000 Fund Balance Contribution 220,620 Total 5,500,000 Table 4. FY 2020/21 Measure L Expenditures by Category Type FY 2020/21 Police 2,825,330 Fire 2,264,110 Library 109,940 Parks 80,000 Fund Balance Contribution 220,620 Tota 1 5,500,000 Table 5. FY 2020/21 Measure L Funded Positions Positions FY 2020/21 Police Officers 18 Firefighters* 8 Librarian 1 Total 27 * $1.2 Million in overtime is included to fully staff all stations. RESOLUTION NO. 2020-299 A RESOLUTION OF THE LODI CITY COUNCIL ACCEPTING THE RECOMMENDATION OF THE MEASURE L CITIZENS' OVERSIGHT COMMITTEE TO APPROVE THE FISCAL YEAR 2019/20 MEASURE L ANNUAL ACCOUNTABILITY REPORT AND CREATE A ONE-PAGE BILL INSERT FLYER TO PROMOTE THE SUCCESSES OF MEASURE L ------------------------------------------------------------------------ ------------------------------------------------------------------------ WHEREAS, Lodi Municipal Code Section 3.30.140 requires the City to prepare an Annual Accountability Report (the "Report") for expenditures of Measure L tax revenues received; and WHEREAS, the Report needs to show the amount of revenue collected and the amount and general purpose of expenditures made; and WHEREAS, Lodi Municipal Code Section 3.30.150 (A) establishes the Measure L Citizens' Oversight Committee (the "Committee") and charges the Committee to review the report and present its findings to the City and the City Council; and WHEREAS, the first draft of the Report was presented to the Committee on November 9, 2020; and WHEREAS, the Committee reviewed, discussed, and provided direction to staff on modifications to the Report; and WHEREAS, the second draft of the Report was presented to the Committee on December 7, 2020; and WHEREAS, the Committee found the revised report to be sufficient to meet the obligations outlined in Lodi Municipal Code Section 3.30.140 and recommended its presentation to the City Council for approval; and WHEREAS, the Committee recommended that the City Council consider a one-page flyer and bill insert to promote the successes of Measure L to Lodi Citizens. NOW, THEREFORE, BE IT RESOLVED by the Lodi City Council that: 1.) The Fiscal Year 2019/20 Measure L Annual Accountability Report is hereby adopted; and 2.) The City Manager is directed to cause preparation of a one-page flyer and bill insert to communicate to the citizens of Lodi the successes of Measure L outlined in this report. Dated: December 16, 2020 ------------------------------------------------------------------------ ------------------------------------------------------------------------ I hereby certify that Resolution No. 2020-299 was passed and adopted by the Lodi City Council in a regular meeting held December 16, 2020 by the following vote: AYES: COMMITTEE MEMBERS — Chandler, Nakanishi, and Mayor Kuehne NOES: COMMITTEE MEMBERS — None ABSENT: COMMITTEE MEMBERS — Mounce ABSTAIN: COMMITTEE MEMBERS — None f �J ENNIFCUSMIR City Cle 2020-299