PREPARED BY: J. KELLY SESSIONS DATE OF MEETING: 06/19/17
SUBJECT:
TITLE
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN PABLO ADOPTING THE FY 2018-21 QUADRENNIAL OPERATING BUDGET AND THE FY 2018-21 CAPITAL IMPROVEMENT PROGRAM (CIP) PROJECTS BUDGET
Label
CITY MANAGER RECOMMENDATION
Recommendation
Adopt Resolution
Body
COUNCIL PRIORITY WORKPLAN COMPLIANCE STATEMENT:
Budget Spending Controls (All), General Fund Reserves Protection-Fund Balance (City Council, City Manager), and Increase Financial Transparency (Finance) are adopted policy items under the FY 2015-17 Council Priority Workplan, effective October 1, 2016.
CEQA Compliance Statement
This is not a project as defined by CEQA pursuant to California Public Resources Code section 21080 and 14 California Code of Regulations section 15378(b).
BACKGROUND
City Manager Recommended FY 2018-21 Quadrennial Operating Budget
As required by Municipal Code Sections 3.04.240 and 3.04.250, the City Manager presented the Preliminary Draft FY 2018-21 Quadrennial Operating Budget and the FY 2018-21 CIP Budget to City Council at a duly-noticed Public Hearing on June 5, 2017. The Preliminary Draft Budgets were also presented to the Budget, Fiscal and Legislative Standing Committee on May 24, 2017 for their review.
The FY 2018-21 Quadrennial Budget
This budget represents the first time that the City has proposed a four-year budget. The budget cycle coincides with the four-year labor agreements that staff has been negotiating with labor groups to facilitate greater financial stability and long-term planning. The City follows conservative budgetary practices on both the revenue side and the expenditure side. With a few major exceptions, revenues are budgeted at projected values for Year 1, with no increase in Year 2; Years 3 and 4 increase by 1.0%. The most notable exception to this is Casino Business License, which is budgeted at a 3.0% annual increase. Labor budgets are budgeted at one step down from top step and are fully loaded, including medical and dental insurances, pension expense, and all other benefits. Service and supplies expense budgets are set as requested by individual departments in the first two years of the budget cycle; the last two years of the cycle are set at Year 2 levels to prevent budget creep, except in cases where large changes are anticipated. At mid-cycle (the end of Year 2), the City will undertake a major update to make needed adjustments to refresh Years 3 and 4 of the budget.
Budget Balancing
As proposed, the Draft Operating Budget is balanced with revenues and expenditures in each year of the four-year cycle. In Year 1 of the budget (FY 2017/18), normal operating revenues and expenditures total $39.3 million. Expenditures include $36.0 million in labor, supplies and services, a payment of $1.8 million for unfunded accrued pension liability (UAL) to CalPERS, a $1.2 million transfer to the CIP budget, and $300,000 to be set aside as savings in the General Fund Designated Reserve (GFDR) for expenditure in the following fiscal year.
In Year 2 of the budget (FY 2018/19), revenues and expenditures balance at $40.9 million, with $300,000 in one-time revenue coming from the sale of the City parking lot estimated at $2.5 million, and another $300,000 coming from the GFDR savings set aside in the previous fiscal year. On the expenditure side, UAL costs increase to $2.2 million, and the CIP transfer decreases to $1.0 million in addition to the $37.7 million in labor, supplies and services:
In FY 2019/20 (Year 3), revenues increase to $41.2 million, including another $900,000 from the estimated $2.5 million sale of the City parking lot. On the expenditure side, UAL costs increase to $2.8 million while the transfer to CIP remains at $1.0 million. With labor expense of $21.1 million and services and supplies at $17.2 million, the budget balances at $42.1 million.
In the last year of the Quadrennial Budget (FY 2020/21), revenues increase to $43.3 million, including the $1.3 million balance of one-time proceeds from the sale of the City parking lot. Expenditures balance at $43.3 million, including $39.0 million in labor, supplies and services, increased UAL costs of $3.3 million and a CIP transfer of $1.0 million.
Full-Time Employee (FTE) Count
The Quadrennial Budget anticipates no employee layoffs or planned FTE reductions, and includes just a modest increase of 0.5 FTE. As presented at the June 5, 2017 Public Hearing, the reported count stood at 181.0. However, corrections have been made to the total count, raising it to 182.5. This includes the 0.5 FTE increase to Youth Services as discussed at the Public Hearing, and represents the only actual FTE increase in the new budget (delete 0.5 Program Assistant and add 1.0 Administrative Clerk I). Another 1.0 FTE was added for a vacant Planning Aide position in Development Services that was overlooked in the count, but included in the current year budget.
City Council Training and Travel Budget
As discussed at the Public Hearing, the City Council Travel and Training budget is an important part of maintaining a well-run City. The Quadrennial Budget includes restoring Council training and travel budget to 2010/11 levels, spending which had been cut due to the recession. This represents an additional $500 in training and travel for each Council Member. The City Manager also offered an additional $2,500-or $500 per Council Member-from the City Manager’s Contingency Account if any Council Member’s allotment proves insufficient during the fiscal year.
CIP Budget Proposal
The Proposed FY 2018-21 CIP Budget includes receipt of $1.2 million in Year 1 and $1.0 million in Years 2 through 4 from the City’s General Fund. Proposed CIP project costs over the four years total $87,374,679. Funding will come from a variety of sources, including General Fund sources, grants, and debt financing. It is not anticipated that all projects will be able to be funded or completed. Individual project amounts are listed in the attached CIP budget.
FISCAL IMPACT
Upon approval of the attached resolution, the FY 2018-21 Quadrennial Operating Budget and FY 2018-21 CIP Budget will be established and all budget figures will be appropriated for expenditure by City Departments, effective July 1, 2017. Specific contracts over the City Manager’s contracting authority of $50,000 will still require separate Council approval even if amounts are budgeted.
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Attachments:
FY 2018-21 City Manager’s Budget Message
FY 2018-21 Budget Presentation (June 5 Public Hearing)
FY 2018-21 Budgetary Assumptions
Proposed Citywide Budget Revenue Detail
Proposed Departmental Summary Budget and Line-Item Detail
Proposed FY 2018-21 Organizational Chart
FY 2018-21 CIP Budget Presentation (June 5 Public Hearing)
Proposed FY 2018-21 CIP Budget