HomeMy WebLinkAboutMinutes - May 9, 2023 SSFiscal Year 2023/24 BudgetGeneral FundPresented by Andrew Keys, Deputy City Manager
Budget Timeline•May 9 – General Fund•May 16 –Special Revenue/Enterprise Funds•May 23 – Capital Projects Overview•June 7 –Consider Adopting FY 2023‐24 budget, CIP and Fiscal Policies•June 21 (if needed)*Budget must be approved by June 30 to avoid risk to state and federal funds.
Overview•General FundOverview/Revenues/ExpensesKey InputsFive Year ForecastPension Stabilization Policy Update
•“Decent news” budget•Overall revenues are projected at a small increase•Expenditures are showing increases primarily in salaries, PERS cost, medical benefits, additional support to Library and PRCS operations and general goods and services cost increases•Increase of 2.0 positions•No new service capacityGeneral Fund Overview
General FundRevenues $80,565,740RevenueBudget FY 2023/24Tax Revenues 56,329,670$ 69.9%Revenue from Others 8,695,220$ 10.8%Operating Transfers In 7,725,810$ 9.6%Charges for Services 1,699,410$ 2.1%Property Revenue 4,585,430$ 5.7%Fines & Forfeitures 1,007,100$ 1.3%Other Revenue 460,890$ 0.6%Licenses & Permits 62,210$ 0.1%Total 80,565,740$ 100.0%
General FundExpenditures $80,565,740General Fund Expenditures by DepartmentBudget FY 2023/24 %Police Department 30,976,320$ 38.4%Fire Department 18,159,110$ 22.5%Non‐Departmental 15,573,940$ 19.3%Internal Services Department 7,890,950$ 9.8%Public Works (General Fund) Department 4,105,730$ 5.1%City Attorney 1,152,110$ 1.4%City Clerk 676,420$ 0.8%City Manager 833,910$ 1.0%Economic Development 587,530$ 0.7%Code Enforcement 491,770$ 0.6%Library (from Measure L) 117,950$ 0.1%Grand Total 80,565,740$ 100.0%
General FundExpenditures $80,565,740
General FundExpenditures $80,565,740General Fund Expenses by Type Budget 2023‐24 % of TotalSalaries & Benefits$44,904,180 55.7%Supplies & Services$13,597,950 16.9%Operating Transfers Out$10,608,590 13.2%UAL$8,668,600 10.8%Debt$1,646,000 2.0%Insurances$1,140,420 1.4%Grand Total$80,565,740 100.00%
General FundExpenditures $80,565,740
General FundTransfers Out $10,608,590Purpose AmountCapital$435,000IT Network Refresh$247,680Library Operations$1,760,040Computer Replacment$94,530PRCS Operations$5,903,780Streets Maintenance of Effort$755,600Equipment Replacement$737,000Vehicle Replacement$674,960Grand Total$10,608,590
•Net increase of 2.0 full‐time positionsGeneral Fund Key InputsJob Title Department + / ‐Animal Services Manager Police + 1Associate Civil Engineer* Public Works + 1Total 2.0* This position is for succession planning and is temporary
•Increased base operational support to Library and Parks, Recreation and Cultural Services by 2.86% based on the increase in repeatable general revenues•Library: $43,630 funded by Measure L•PRCS: $110,10 funded by Measure L•Continue transfer to Parks Capital Fund•$400,000 funded by Measure LGeneral Fund Key Inputs
•General Fund support for Parks, Recreation and Cultural Services:•Operational Support of $4,295,600•$3,377,390 General Fund base support•$756,160 Measure L base support•FY 22 base $342,370•FY 23 base $302,880•FY 24 base $110,910•$24,440 for vehicle replacement fundParks, Rec & Cultural Svs. Support$6,337,510
•General Fund support (cont.)•Cost of Services of $1,205,230•Debt Service of $436,680 (Hutchins Street Square)•Ongoing Capital Support of $400,000 funded by Measure L•FY 24 Operating Deficit ($527,260)Parks, Rec & Cultural Svs. Support$6,337,510
•General Fund support for the Library:•Operational Support of $1,566,390•$1,289,700 General Fund base support•$276,690 Measure L base support•FY 23 base $233,060•FY 24 base $43,630•Cost of Services of $193,650•Librarian position funded in Measure L $113,370 •FY 24 Operating Deficit ($32,000)Library Support$1,873,410
•Revenues: $9,322,220•Expenditures: $9,322,220Measure LMeasure L Funded PositionsFY 2022/23 BudgetFY 2023/24 Budget Cost:Police Officers 26 25 4,322,710$ Firefighters 8 8 1,368,870$ Librarian 1 1 113,370$ Street Maintenance Worker 0.2 0.2 32,880$ Total Full‐Time 35.2 34.2 $ 5,837,830 1,628,820$ 66,600$ 356,120$ 276,690$ 756,160$ 400,000$ Measure L Total $ 9,322,220 Parks CapitalPublic Safety OvertimePart‐Time Community Service Officers (2)Supplies, Materials, TrainingLibrary OperationsParks, Recreation & Cultural Services Operations
Vehicle Replacement Fund
DRAFT Strategic Initiatives•City Council will be asked on May 17 to consider approval Strategic Initiatives recently developed in a public meeting•Downtown•Economic Development•Fiscal Health•Housing•Infrastructure•Parks•Public Safety•Public Well‐Being•Staff will continue aligning workplan to these initiatives and the milestones within.•Update will be provided to Council prior to June 7thbudget hearing
5 Year Forecast ‐Assumptions•FY 2024 budget as recommended is projected forward•Includes continued contributions to PRCS capital, network infrastructure, vehicle replacement and continued increases to PRCS and Library operating support•Labor contracts expire June 30, 2025 or December 31, 2025•No fiscal impact from future negotiations is factored into this forecast•Assumes 100% full employment (no vacancies)•Slow growth is anticipated through he forecast term
5 Year Forecast ‐AssumptionsRevenue Category FY 23/24 B FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29Property Taxes - Secured 3.2% 2.5% 2.5% 2.5% 2.5% 2.5%Sales & Use Taxes -0.7% 1.0% 3.0% 3.0% 3.0% 3.0%Transient Occupancy Tax [1] 14.1% 5.0% 3.0% 3.0% 3.0% 3.0%Business License Tax [1] 15.5% 5.0% 3.5% 3.5% 3.5% 3.5%Other Taxes 8.0% 5.0% 5.0% 5.0% 5.0% 5.0%EU Pilot 1.0% 0.5% 0.5% 0.5% 0.5% 0.5%Property Tax in Lieu VLF 4.0% 3.7% 3.7% 3.7% 3.7% 3.7%Transfers In 8.6% 5.0% 4.0% 4.0% 4.0% 4.0%Property Taxes - CFD [2] 36.6% 10.0% 5.0% 5.0% 5.0% 5.0%Measure L 1.5% 1.0% 3.0% 3.0% 3.0% 3.0%Other Revenues -1.5% 2.0% 2.0% 2.0% 2.0% 2.0%Expense Category FY 23/24 FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29Salaries [1] 100% Staffed 3.0% 3.0% 2.5% 2.5% 2.5%PERS Normal Cost 100% Staffed 3.0% 3.0% 2.5% 2.5% 2.5%PERS UAL Aug 2022 Repo3.5% 3.5% 3.0% 3.0% 3.0%Other Benefits 100% Staffed 2.0% 2.0% 2.0% 2.0% 2.0%Operations Work Plan 5.0% 5.0% 5.0% 5.0% 5.0%Debt [2] Actual Actual Actual Actual Actual ActualTransfers Actual 0.5% 0.5% 0.5% 0.5% 0.5%[1] Includes current contracts only with known contracts considered.[2] Based on actual debt service including the new animal shelter financing.
5 Year Forecast ‐RevenueRevenue FY 22/23 EFY 23/24 BFY 24/25FY 25/26FY 26/27FY 27/28FY 28/29Property Taxes 13,070,000 13,486,880 13,825,000 14,171,000 14,526,000 14,890,000 15,263,000Sales & Use Taxes 16,891,970 16,779,430 16,948,000 17,457,000 17,981,000 18,521,000 19,077,000Transient Occupancy Tax 1,490,000 1,700,000 1,785,000 1,839,000 1,895,000 1,952,000 2,011,000Business License Tax 1,900,000 2,193,720 2,304,000 2,385,000 2,469,000 2,556,000 2,646,000Other Taxes 4,016,220 4,337,070 4,554,000 4,782,000 5,022,000 5,274,000 5,538,000EU Pilot 7,564,240 7,636,350 7,675,000 7,714,000 7,753,000 7,792,000 7,831,000Property Tax in Lieu VLF 6,820,000 7,090,000 7,353,000 7,626,000 7,909,000 8,202,000 8,506,000Transfer In 7,115,470 7,725,810 8,113,000 8,438,000 8,776,000 9,128,000 9,494,000Property Taxes - CFD 640,000 874,000 962,000 1,011,000 1,062,000 1,116,000 1,172,000Measure L 9,183,800 9,322,220 9,416,000 9,699,000 9,990,000 10,290,000 10,599,000Other Revenues 6,723,590 6,620,260 6,753,000 6,889,000 7,027,000 7,168,000 7,312,000Total Revenue [1] 75,415,290 77,765,740 79,688,000 82,011,000 84,410,000 86,889,000 89,449,000Revenue Growth Staff Estimate 3.1% 2.5% 2.9% 2.9% 2.9% 2.9%
5 Year Forecast ‐ExpensesExpense Category FY 22/23 EFY 23/24 BFY 24/25FY 25/26FY 26/27FY 27/28FY 28/29Salaries 32,190,510 33,160,610 34,155,000 35,180,000 36,060,000 36,962,000 37,886,000PERS Normal Cost 2,358,740 3,218,590 3,315,000 3,414,000 3,499,000 3,586,000 3,676,000PERS UAL 8,640,220 8,668,600 8,972,000 9,286,000 9,565,000 9,852,000 10,148,000Other Benefits 9,108,750 10,153,160 10,356,000 10,563,000 10,774,000 10,989,000 11,209,000Operations [1] 16,480,040 16,636,358 17,468,000 18,341,000 19,258,000 20,221,000 21,232,000Debt 1,207,210 1,209,326 1,209,030 1,207,390 1,208,120 1,208,120 1,208,120Transfers 5,194,040 4,719,096 4,743,000 4,767,000 4,791,000 4,815,000 4,839,000Total Expenditure [2] 75,179,510 77,765,740 80,218,030 82,758,390 85,155,120 87,633,120 90,198,120Expenditure Growth N/A 3.4% 3.2% 3.2% 2.9% 2.9% 2.9%Revenue - Expenditure 235,780 0 (530,030) (747,390) (745,120) (744,120) (749,120)Total Fund Balance [3] 27,060,234 27,060,234 26,530,204 25,782,814 25,037,694 24,293,574 23,544,454
5 Year Forecast – Fund BalanceCategory FY 22/23FY 23/24FY 24/25FY 25/26FY 26/27FY 27/28FY 28/29Catastrophic Reserve [4] 5,298,519 5,475,482 5,621,760 5,784,960 5,953,600 6,127,920 6,308,000Economic Reserve [4] 5,298,519 5,475,482 5,621,760 5,784,960 5,953,600 6,127,920 6,308,000Measure L Catastrophic Re734,704 745,778 753,280 775,920 799,200 823,200 847,920Measure L Economic Rese734,704 745,778 753,280 775,920 799,200 823,200 847,920 Pension Stabilization Fund 14,993,788 14,617,716 13,780,124 12,661,054 11,532,094 10,391,334 9,232,614Available Resources [3] 27,060,234 27,060,234 26,530,204 25,782,814 25,037,694 24,293,574 23,544,454Fund Balance % 16.0% 16.0% 16.0% 16.0% 16.0% 16.0% 16.0%[1] All pandemic related activity is netted out of operations.[2] Does not include $2.8 million in expenditures related to the new Peaker power plant revenue. Of that $2.24 million is programmed as restricted fund balance to purchase the plant in 5 years and $560,000 is programmed as additional Parks Capital transfer out.[3] Does not include $7.6 million in one time funds from reserves over 16% available at close of FY 2021/22.[4] Per policy, this is set at 8% of revenue, catastrophic reserves are prioritize, then economic reserves, then unassigned.[5] Earnings accumulate at 6.25%. Per the Pension Stabilization Policy, all reserves in excess of 16% in the General Fund are deposited at the close of the year. Investments from budget savings from annual UAL payments are not factored in this analysis. Draws of stabilization reserves are projected every year beyond FY 2023/24 through the forecast term.
Risks•Local Recession•Labor Contracts•General Fund labor contracts expire June 30, 2025, or December 31, 2025 •Pace of Development•Inflation•CalPERS – Assumption changes and investment risk•Additional service needs/demands from the publicOpportunities•Recent revenue trend line is above the forecast base case•Economic development•Loan program•Substantial new municipal capital spending (nearly $25 million for a new animal shelter and variety of projects using one‐time surplus dollars) •Revenue enhancement•Vacancies and Workforce Demographics5 Year Forecast –Risks/Opportunities
Pension Stabilization Policy Update•The PSP was adopted in its current form in 2017. •Favorable economic conditions led to the City accumulating significant balance since 2017 in the PSP and to annual excess fund balances far exceeding staff expectations or the City’s history experience.•The Policy Update is designed to maintain the PSF balance to provide insurance against increasing pension costs, put downward pressure on future pension bills and to address outsized fund balance excess should it occur in the future.
Pension Stabilization Policy ProgressMVA Liability Funded RatioSafety 156,554,968$ 233,987,791$ 66.9%Miscellaneous 177,481,645$ 224,689,925$ 79.0%All Plans 334,036,613$ 458,677,716$ 72.8%PARS Balance 3.31.22 20,902,055$ N/A 4.6%Total Pension Funding at 12.31.18 354,938,668$ 458,677,716$ 77.4%6.30.21 PERS Actuarial ‐ as of 12.31.22•Does not include ‐6.1% nominal earnings for Fiscal Year ending June 30, 2022, which is similar to a ‐12.9% real loss for the fund.
Pension Stabilization Policy Progress•Does not include ‐6.1% nominal earnings for Fiscal Year ending June 30, 2022, which is similar to a ‐12.9% real loss for the fund.MVA of an 80% Funded Plan 366,942,172.80$ Investments/Earnings Needed to reach 80% 12,003,505$ % of Progress Towards 80% Funded Since PARS Implementation 63.5%Investments/Earnings Needed to reach 100% 103,739,048$ % of Progress Towards 100% Funded Since PARS Implementation 20.1%
Pension Stabilization Policy Proposed Changes•Maintain 80% target funding when combining PERS and PARS assets.•Cap annual PSF contributions from the General Fund at 5% of revenue with excess brought to Council for appropriation (one time funds).•This provision is in effect until the PSF is equal to 5% of the total Liability for Safety and Misc Combined (currently $22.9 million)•Subsequently, annual excess fund balance in the General Fund continues to be used for pensions but is made as Additional Discretionary Payments (ADP) to CalPERS.•Formally recognizes the practice of making the Library and PRCS contributions to PSF or ADP a General Fund responsibility.
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