PREPARED BY: HEATHER ROWDEN DATE OF MEETING: 05/20/2024
SUBJECT:
TITLE
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN PABLO ADOPTING THE FY 2024-25 AND FY 2025-26 BIENNIAL OPERATING BUDGET AND CAPITAL IMPROVEMENT PROGRAM (CIP) BUDGET
CEQA: This proposed action is not a project as defined by CEQA.
Label
CITY MANAGER RECOMMENDATION
Recommendation
Adopt Resolution
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
As required by Municipal Code §§ 3.04.240 and 3.04.250, the City Manager presented the Preliminary Draft FY 2024-25 and FY 2025-26 Biennial Operating Budget and Capital Improvement Program (CIP) Budget to City Council at a duly noticed Public Hearing on May 1, 2024. The Preliminary Draft Budgets were also presented to the Budget, Fiscal and Legislative Standing Committee on April 29, 2024.
Fiscal Year 2024-25 and Fiscal Year 2025-26 Biennial Budget
The Biennial Operating Budget and the Capital Improvement Program serve as a guide to the community and staff for the City Council’s financial priorities and goals for the upcoming fiscal years. These financial documents are updated with the most current economic, revenue and expenditure information and projections available to City staff.
In December, the Council received a Long-Term Financial Forecast prepared by PFM Asset Management. This report showed a 10 year cumulative General Fund deficit of $44.1M beginning with a $2.1M deficit in FY2024-25. The long-term forecast used the FY2023-24 budget as a starting point and assumed historical/economic trends known at the time. As presented to Council previously, staff worked diligently to reduce the projected deficit, however certain costs out of staff control increased faster than projected (i.e., general liability insurance and the CalPERS annual payment).
Since the May 1, 2024 Public Hearing there have been slight changes to the proposed budget for both FYs 2024-25 and 2025-26. Adjustments were made for formula errors found on review, as well as assuring that the proposed budget for the Lighting and Landscaping District reflected the Engineer’s Report estimates. In all, this resulted in a decrease in General Fund expenditures, reducing the appropriation needed from available fund balances.
General Fund Overview
The General Fund is the main operating fund for the City. It accounts for sources and uses of resources that (primarily) are discretionary to the City Council in the provision of activities, programs and services deemed necessary and desirable by the community. It accounts for all general revenues of the City not specifically levied or collected for other City funds, and the related expenditures. The major revenue sources for this fund are casino revenue, sales taxes, property taxes, franchise fees and utility users’ taxes. Expenditures are made for community development, parks and recreation, police services, public works, and other services.
The General Fund proposed a balanced biennial budget of $54.37M and $56.32M for fiscal years 2024-25 and 2025-26, respectively. The proposed budget is balanced using General Fund Designated Reserves of $1,961,291 in FY2024-25, and $3,038,709 in FY2025-26. In addition, the proposed budget utilizes $376,626 of the Budget Stabilization Fund (Fund 170) in FY2025-26. Per the Fiscal Resiliency Reserve Policy, Budget Stabilization funds must be repaid before June 30, 2027.
Other Funds Overview
Special revenue fund type is the most common of all the governmental fund type. Special revenue funds are intended to be used to report specific revenue sources that are restricted by law to being used for a particular purpose. These funds are established to collect money that must be used for a specific purpose. Special revenue funds provide an extra level of accountability and transparency to taxpayers that their tax dollars will go toward an intended purpose.
Capital project funds are financial accounts that are used to track the building, renovating, or purchase of equipment, property, facilities, parks, and other infrastructure or information technology systems which are to be used as a public asset or to benefit the public.
Debt service funds account for the repayment of debt. If a government is accumulating resources for the purpose of making debt service payments, it should report them in a debt service fund. In reality, some resources intended to finance debt service payments can be found in other government funds. These resources are reflected as transfers out in the other funds.
The proposed budget for Other Funds is $11.31M and $11.53M for fiscal years 2024-25 and 2025-26, respectively.
Capital Improvement Program Overview
The Capital Improvement Program (CIP) includes $1,000,000 in project appropriations for FY 2024-25 and 2025-26. Although the budget shows annual CIP budgets slightly above that, the excess amounts will be used for project overages and unforeseen expenses. Project funding in the CIP is derived from different funding sources including the General Fund Designated Reserve (GFDR), federal, state and regional grants. The CIP includes new projects including various paving and streetlight upgrades, and the Leroy Heights Storm Drain Project.
City Manager Budget Message - Final Adopted Budget
The City Manager has prepared a Final Adopted Budget Message to meet Municipal Code requirements in Sections 3.04.080 through 3.04.110. The attached Message summarizes all final budget adjustments, financial concerns, fiscal condition, and policies regarding the City’s Fiscal Years 2024-25 and 2025-26 Two-Year Biennial General Fund Operating and CIP Budgets.
Upon City Council approval of the attached enabling Resolution, the Final Adopted Budget becomes effective July 1, 2024.
FISCAL IMPACT
Upon approval of the attached resolution, the City’s Operating and Capital Improvement Project Budgets for Fiscal Year 2024-25 and Fiscal Year 2025-26 will be established. All budget figures will be appropriated for expenditure by the City Departments effective July 1, 2024. Specific contracts over the City Manager’s contracting authority of $50,000 will still require separate Council approval even if amounts are budgeted.
ATTACHMENTS:
Att A - Resolution
Att A Exhibit 1 - FY 24-25 Proposed Biennial Budget
Att A Exhibit 2 - FY 25-26 Proposed Biennial Budget
Att A Exhibit 3 - CIP Biennial Budget
Att B - City Manager Budget Message