PREPARED BY: MATT RODRIGUEZ DATE OF MEETING: 05/01/2024
SUBJECT:
TITLE
SCHEDULED PUBLIC HEARING FOR PRESENTATION OF THE CITY OF SAN PABLO PRELIMINARY DRAFT FISCAL YEAR 2024-25 AND FISCAL YEAR 2025-26 BIENNIAL (TWO-YEAR) OPERATING BUDGET AND CAPITAL IMPROVEMENT PROGRAM BUDGET PER SAN PABLO MUNICIPAL CODE SECTIONS 3.04.220, 3.04.240 AND 3.04.250
CEQA: The proposed item is not a project as defined by CEQA.
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CITY MANAGER RECOMMENDATION
Recommendation
(1) Receive presentation; and
(2) Hold Scheduled Public Hearing; and
(3) Direct the City Manager via minute order to prepare and finalize Resolutions for adoption of the FY 2024-25 and FY 2025-26 Biennial (Two-Year) Operating Budget and Capital Improvement Program Budget at the May 20, 2024 City Council meeting for Consent Calendar approval action; and
(4) Authorize the City Manager via minute order to pursue additional fiscal and revenue sources and operational efficiencies during FY 2024-25 and FY 2025-26 periods.
BODY
Compliance statements
Continue Fiscal Resilience, Fiscal Excellence and Fiscal Transparency and New Strategic Budget Initiatives to Address New Structural Deficits Forecasted to FY 2025-2027 are adopted City Council Priorities contained in the adopted Fiscal Year 2023-2025 City Council Priority Workplan, effective May 1, 2023.
BACKGROUND
Pursuant to San Pablo Municipal Code Sections 3.04.240 and 3.04.250 requirements, the City Council previously adopted Resolution No. 2024-050 on April 15, 2024 to set a public hearing on the formal presentation of the Preliminary Draft FY 2024-25 & FY 2025-26 Biennial (Two-Year) Operating Budget and Capital Improvement Program (CIP) Budget at a Special City Council meeting scheduled for Wednesday, May 1, 2024 at 5:00p.m., which was duly noticed and posted.
Biennial v. Triennial Budgets
Previously, in December 2023, the City Manager had aspired to develop and prepare a Proposed Three-Year (3-year) Triennial Operating Budget and CIP Budget for period FY 2025 - 2027 periods. However, due to the City’s current financial condition and fiscal challenges ahead, a third-year budget to cover the FY 2026-27 period will not be operationally feasible, with insufficient budgetary resources identified to present a balanced, third-year budget of City expenditures meeting projected revenues at this time.
Budget, Fiscal & Legislative Standing Committee Review
The City Manager and City's Budget Team met with the Budget, Fiscal and Legislative Standing Committee (BFLSC) on April 29, 2024 to review the Preliminary Draft Biennial FY 2024-25 & FY 2025-26 Operating and CIP Budgets. Following BFLSC review, the BFLSC members recommended the City Manager to proceed with formal presentation and review to the City Council of the Preliminary Draft Biennial FY 2024-25 & FY 2025-26 Operating and CIP Budgets at the scheduled public hearing on May 1, 20204.
Budget Presentation and Conduct Public Hearing
Following formal presentation of the Preliminary Draft Biennial FY 2024-25 & FY 2025-26 Operating and CIP Budgets, and after conducting said scheduled public hearing, the City Council may deliberate and then will formally direct the City Manager by majority vote (via minute action) to proceed with the following recommendations:
• Direct the City Manager by majority vote (via minute action) to prepare and finalize Resolutions of Adoption for the FY 2024-25 & FY 2025-26 Biennial (Two-Year) Operating Budget and Capital Improvement Budget for the May 20, 2024 City Council regular meeting for Consent Calendar approval action; and
• Authorize City Manager to pursue additional fiscal and revenue sources during FY 2024-25 and FY 2025-26 periods.
Financial Guidelines to Manage Fiscal Challenges Ahead
There are many FISCAL CHALLENGES ahead for the City during FY 2024-25 and FY 2025-26. Any future fluctuations in General Fund (GF) revenues resulting from changes to Casino contract revenue will result in a DIRECT IMPACT to City’s projected revenues during the FY 2025 - 2026 period. There needs to be a critical focus on pursuing additional fiscal and revenues sources, and identifying new operating efficiencies over the next two (2) fiscal year periods to meet these future fiscal challenges.
Additionally, there needs to be constant monitoring of GF spending due to the FISCAL RISK WARNINGS outlined by the City Manager. Therefore, the City Manager recommends the following ten (10) financial guidelines to the City Council to be followed during FY 2025 - 2026 period:
CITY MANAGER FINANCIAL GUIDELINES FOR FY 2024-25 & FY 2025-26:
Guideline #1: Maintain STATUS-QUO on all City program and service delivery until new revenue sources can be identified; and
Guideline #2: Explore new efficiencies using new emerging technologies to minimize annual GF operating costs; and
Guideline #3: Promote capital, economic, housing and technology infrastructure, and continued public safety investments to encourage future private investment in the City; and
Guideline #4: Exercise fiscal discipline and spend WITHIN appropriated GF revenue levels; and
Guideline #5: Managed restraint on any use of the City’s Unassigned Reserves for covering annual operating expenses; and
Guideline #6: Always strive for long-term employee labor MOU agreements to sustain multi-year budget planning goals; and
Guideline #7: Eliminate or substantially reduce all GF operating subsidies; and promote full-cost recovery efforts.
Guideline #8: AVOID creating GF structural deficits/shortfalls; and
Guideline #9: Be prudent and strategic in managing new FTE staffing investments
Guideline #10: **CRITICAL POINT** The City must create NEW opportunities over the next 2-year period to generate new fiscal and revenue capacity to meet all City annual operating requirements, all City financial capabilities, and all annual City debt obligations.
FISCAL IMPACT
There is no direct fiscal impact associated with this report.
ATTACHMENT
Att A - City Manager Budget Message (FY 2024-25 & FY 2025-26)
Att B - Summary of On-Line Budget Survey Responses Received (April 4-21, 2024)
Att C - Presentation for FY 2024-25 & FY 2025-26 Preliminary DRAFT Biennial GF Operational Budget
Att D - Presentation for FY 2024-25 & FY 2025-26 Preliminary DRAFT Biennial CIP Budget