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11.05 FY 2019-20 Budget 1 - Staff Report
�. -- City of rar�.�e _ �c�t,,.� a� �� (�alir��r ina � �� � „.aw^at: 4 �,' ��#��� � � � i:"": t.,,,_ � ''��� � �i � � � �"' �.�''�� � >�-: � � � � � � � � '���.-`,r� ,...��`.� - a��`��.m� Public Hearing � June 11, 2019 �City of ran�e Agenda • Overview of Overall Budget ■ General Fund Budget • Overview of Other Major Funds ■ Fiscal Year Highlights • Fee Update ■ A Look Beyond FY 20 � , � , � , � � : � , � � � � � � � � � � � � � � � � � � � � � � � i � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �City of ran�e Budget Timeline ■ Weekly (starting 9/26/2018) — Meetings with City Manager & Budget Te a m ■ 12/4/2018 — Budget Kickoff ■ 1/28/2019 — 2/1/2019 — Internal CIP Budget Meetings ■ 2/11/2019 — 2/22/2019 — Internal Operating Budget Meetings ■ 3/26/2019 — 1St City Council Budget Study Session ■ 4/23/2019 — 2nd City Council Budget Study Session ■ 6/11/2019 — Public Hearing � • �►: � � � : r , I � � � � � � � II � � � � � 1 � � C � � � � ; � � � C � � � � � I � � � I � i � � ll � � l111 � � � � 111 � � 1 � � � �� 1 � � � � � 11 � � ��City of ran�;e FY 20 Expend itu res ALL FUNDS ($219.6 MILLION) �-ucc����or Ez..�F��cy Successor Agency i'rojec�s iunci Debt Service Fund internal Service F��nds_, $1,023,0$5 $6,512,135 (9} 0.5% 3.0% $18,017,178 8.2°io � ��z',s;:�,�' � �..ri � �� Capital Project Funds (20} � ��''° � 511,350,310 . 5.2°1<� , : � p � �. ;��a�� S ecial Reven�:�� � , �, Funds(29� s�, -�,� ; $28,725,1�� w. � _� ��t_.. . ..�� ���. 13.1% r I ' � i � ��j � 0 �1j �� ��� � � � � � � � � � � � � � � � � ���� � � ■ � � � � � � � � ■ � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � ��� � � � � � � � � � � � �ity�of ��.��� �� �to �w�� ����c� ��a�� r�'ra� �� a�€ �����` ��,�ces �� ��sE�=�� FY 20 Genera I Fu nd Budget 1 � � 11 � 1 � 11 � � IIII � I � II � I � I � IIIII � I I � � � � 11 � � � � 11 � � 1 � � � � � � 111 � 1 � [ � � � � I � � I � I � [ 11 <�City of �'���1r;E-' Balancing the Budget • Sales tax and property tax are strong ■ Loss of Theo Lacy revenue ($600k) • Increases in costs � Budget saving measures — Reducing direct costs to Internal Service Funds — $2.0 million departmental budget reductions (started in FY 19) • Approx. $1.3M in Salaries & Benefits, $700k in maint. & ops. — $1.8 million anticipated salary savings • Budget is balanced for 8t" straight year �! � �4 � , � ; � � r , ; � � � � � � � � � � � � � � � � � � � � � � � � �t` � � � � � � � �.� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � ��City of r���;� FY 20 General Fund Budget FY 19 FY 19 FY 20 Budget Estimate Revenues Budget Estimate Budget % Change % Change Sales Tax $ 43,880,000 $ 45,587,000 $ 45,337,000 3.3% (0.5%) Property Tax 41,739,040 42,059,651 43,765,116 4.9% 4.1% Transient Occupancy Tax 5,100,500 5,400,500 5,420,500 6.3% 0.4% Licenses & Permits 4,679,600 5,020,455 4,620,137 (1.3%) (8.0%) Fees for Services 4,842,471 5,907,129 5,571,987 15.1% (5.7%) Fines & Forfeitures 1,658,000 2,024,000 2,012,000 21.4% (0.6%) Revenue from Other Agencies 1,532,808 2,037,900 1,039,783 (32.2%) (49.0%) Other Revenues 8,331,434 10,249,918 8,425,216 1.1% (23.7%) Total Revenues $ 111,763,853 $ 118,286,553 $ 116,191,739 4.0% (1.8%) _ __ _ � � • � , � : . � � : � � I��111 � � 11 � � � ��� � � � � � � � � � C � � � � � C � � � � I � I � II � � I � 1 � 11I � I � � � II � � 11 � � � � � 1 � � 11 � � 11 c�City of ran�;e FY 20 General Fund Revenue Charges to Other Revenue from Use ot Money� Fees far Services Franchises Funds Other Agencies Property $5,571,987 $2,591,495 52,460,903 $1,039,783 $2,019,020 Fines& Miscellaneous Forfeitures Revenues 52,012,040 $603,798 �, Transient Occupancy Tax $5,420,500 � ��� -��� � . � : ,A � � � �. � � '1 ' � i � � `i�� ��� ' : �1j ' : � � � � � � � � � � � � � � � � � ��� � � � � �:� � � � � � � ■ � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � ��� � � � � � � ��� �City of ����� FY 20 General Fund Sales Tax by Major Industry State&County „ Pool �*ati,nn 12.9% Restaurants& Hotels Building& 1L0' "en;t�ucr;on �='' ,� GeneF�a�, � � Cons��n��r < Good� 15.4":. Stations 19.7'0 �..�. . � . . . . . . . .�-nr,,�^'s"�:: � � � � � � � i � t � �. �.� �. � � � � �.� � � � � � � �� � � � � � � � �. � � ��� �.�.�.�.�. �.�...�..�.� � �.� �� �. � `�.� �' . ,' ��� — City of ��.r►�e Calendar Year 2015 Top 25 Sales Tax Producers ■ Best Buy � Kia of Orange • Stadium Nissan ■ Chevron • L&W Supply ■ Target • Claflin Medical Equip. ' Mazda of Orange • Thompson Building ■ DMG Corporation ■ MS International Material ■ Enterprise Rent a Car ■ Nike Factory Store • Toyota Lease Trust • Nordstrom's Rack ■ Toyota of Orange • Foundation Building Material • Ralph's ■ Verco Decking • Ford of Orange ■ SC Fuels ■ Villa Ford • Home Depot • Selman Chevrolet • Walmart � • � � � : � � : � , � I�� II � II � III � � � � � � � � � � � � ��� � � � � � � � � III� I ��� � � III � I � II � � IIII � f � l � 11 � 11 �� 1 � � ���1 � 1111 ��City of r;an�;e FY 2Q Genera ) Fund Projections Expenditures FY 19 Adopted Budget $111.6 million CaIPERS Contribution Increase $2.6 million Negotiated Labor Increases $2.6 million Overtime Allocation Decrease ($132,000) Special Election $470,000 Contractual Obligations $301,000 Internal Service Fund Allocations $460,000 FY 20 Estimated Expenditures $117.9 million Anticipated Vacancies ($1.8 million) FY 20 Proposed Budget $116.1 million NOTE: Operating reductions of $2.0 million continue with FY 20 Budget � . � � � � ; � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �_� � � � � � � � � � � � � � ' � � � � � � � � � � � � � � � � � � � � � �City of ratZ�e FY 20 General Fund Expenditures by Department .; .x �1;Ob� 732 >',c3E5 _ f�nance;CityTre�>�ire� � � 3 �.� ,r' $3,239,268 ,r., _ � ! Human Resources Non-Departmental ��'� ,� � A ; > s'�r;,ob�/. � $2,130,022 � " ( � 51,528,507 1 -�" Community Deveiopment � $4,602,442 : � � Community Services �°�""�� $9,628,063 �; ���� �,� `' �s��.-��'�,� ��„ Library ' � $5,198,315 Police 549,487,891 Fire $30,070,448 �, � • � ► � � � : � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �.� � � w � � � �� � � ��City of ran�e FY 20 General Fund Projections Transfers Out Business Investment Fund (115) $ 2,250,000 Vehicle Replacement Fund (720) 200,000 General Liability Fund (740) 400,000 Computer Replacement Fund (790) 900,000 Total Transfers Out $ 4,400,000 � R • � � � � �:' � : � F � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � ��City of ra�ge FY 20 General Fund Projections Estimated Unreserved Fund Balance at 7/1/2019 $ 9,516,448 FY 2019-20 Estimated Revenues $ 116,191,739 FY 2019-20 Proposed Expenditures (117,930,314) FY 2019-20 Anticipated Vacancies 1,800,000 Net Revenues over Expenditures 61,425 Proposed Transfers Out (4,400,000) Estimated Unreserved Fund Balance at 6/30/2020 5,177,873 General Fund Catastrophic Reserve at 6/30/2020 20,067,960 Estimated Total General Fund Balance at 6/30/2020 $ 25,245,833 �; �. � • � ► � � �� : � , � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � ' � � � � �.� � � �� � �� � <�City of rd�'l�.;E' FY 20 Reserve Balance Forecast Estimated Reserves at 6/30/2020 General Fund Catastrophic Reserve $ 20,067,960 General Fund Unreserved Fund Balance 5,177,873 Business Investment Fund Balance (115) 1,551,894 Capital Projects Fund Balance (500) 8,846,234 PERS Set-Aside Fund (760) 6,243,000 Other Internal Services Funds (various) 10,877,887 Total Estimated Reserves at 6/30/2020 $ 52,764,848 � �! � � � . � : , � � � � � � � � � � � � � � � � � � � � � � � C � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � Cit��t�f ����� `�� Q« �w�� �}a�r�c� ��a�� 1'�;PlE �F '`!t� �3?��aT ¢3�,�CE�; l�d �;�h?tR`"C" Other � a ' or Fu nds 1 II � I � � � � � II � II � II � � I � � I � � II � III � I � ll � lll � l � lllllll � � � ll � � ll � � l � � lf � �1 � � 11 � 1 � �City of r�.r��;� Other Major Funds , , aa�v � w � � � w +\ ��{f4��G�4�t�`t�J4$4 �;`�!��e it.I�..` �ltrg i�.a. - �... �� c, . m`'� . ,�.��:oVa 3. �.5� aa .�� `x� ��,...�a<. �' s�: F.� a. . —�.^ ...,..�_ »�a. :� �s�, „�. � , 'N .; ;s.{,,s,..�,> vq�,�;,�� i� rI4�S,s:b r���s"C r�`;.:�,: , '?,�, ,� �,.,,,� . ��...�. ��,�.�.x..�.x...;t�.,��. , ..,..'� �:�itm, �� ,.a . .... � �_ .+.�.:.�€s,�.,,t,,.K� k4"�� ;:� iYi� p7 t � I �y if ' o-+�ft»u�,f o yu;r�.�e,p � ���t�1 t pt x,�� �� � r �` s�d tt i : .� , ; , .� x�$ � . .� 2�. , . .. �.<,�.�. � � <��.. � �_ �. . _ .,_ m�a .� ., ,. g i �� r > . > .�.�-:,_�.,.,_.:-' ,.�.. .�.. : `�. ._. ,�"..-�,z-. _ .:.�. ..,. � ��F. Water (600) $ 5,077,926 $ 35,946,353 $ (34,153,388) $ (3,725,000) $ 3,145,891 Sanitation (220) 2,683,682 5,867,791 (5,153,095) (400,000) 2,998,378 Sanitation Capital (520) 1,875,481 2,175,925 - (2,000,000) 2,051,406 Equipment Replacement (720) 5,229,850 675,000 - (2,729,027) 3,175,822 Capital Projects (500) 9,988,746 484,676 - (1,157,022) 8,843,234 Business Investment (115) 1,966,199 2,950,395 (3,500,000) - 1,416,594 Measure M (263) 613,634 3,184,625 (593,017) (2,105,000) 1,100,242 Gas Tax (270-272) 1,803 3,831,341 (2,869,068) (838,883) 125,193 RMRA— SB1 (274) - 2,363,852 - (2,349,538) 14,314 �. � • � � � � : � , �:� ��� � � � � � ��� � ��� � � ��� � � � � � ���_� ������ � ���_� ��� � � � � � ��� �� ���� � � �� � � � � �it��of �'e�.�. � `�� ��� �wr�� ��.�Nc� ���za f�NE �� F�� ����1' �="�CE` I"t �MER'�L Capital Im rovement Pro ram p � III � I1 � 1111 � � 1 � � 1 � � 111 � � � � 111 � 1 � � 11 � � I � � I � � � � � � � � � I � � IIIIII � � � I � � l � l � � f111 � 1: �CCity of �r���;� Capita ) Improvement Program ■ 102 carryover projects ■ 16 new projects • $31 million investment in City infrastructure for FY 20 ■ Project Highlights — Design of new Fire Headquarters — Design of proposed Old Towne East Parking Structure — $11.4 million investment in street maintenance and rehabilitation — $4.1 million investment in water system — Improvements at various parks and libraries �: �! • � � � � �:' � �- : , . � � � � � � � � � � � � � � � � � � � � � � � r � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �City of ra��;� New FY 20 CIP Projects by Fund Type Internal Service Funds $3,964,000. ; - Transportation Funds Landscape Maint. District _.�.OG� $5,293,422 $303,000 Capital Projects Fund $507,022 ��' `" ��� '� �;r: W ��.� �'�`�' Successor Agencf ��,-�c+� �� '� �� �� $1,950,000 '` .�,. �� �;� �� ����� �� �s�� ;1=Xs � ;�_., � • � � � ; � � � : , � ��� �� � � � I � I � I � � II � � � � � �� � � � � � � � � � � � � � C � � � � � I11 � 11 � 1 � 1 � [ �� �� � I � 1 � �_ � � ��� � �it��c�f ����� �� ��� ��v�� ��a�c� ��az� �r�E �F ��� �'����r ���c�� �� �r������ Annual Fee U dates p I � I � I � � I � It � l � � � l � � l1 � � 11 � 11111 �11 � 11 � � � 1 � � 1 � � i � � 11 � � 1 � � � ll � l � l � � � � � � 1 � � 11 � � �City of ran�e Summary of Fee Changes ■ Building Division permit fees ■ Fire inspection fees — New Construction Inspection and Plan Check — Annual inspections ■ Other changes reflect increases in CPI • Addition of animal control fees — Collected by Orange County Animal Control and credited toward City's costs • These fees decrease animal control costs rather than add revenue — Proposed increase in dog license from $28 to $35 � Reduces total animal control costs by approximately $125,000 � • � , � � � , � � � � ii � � � � c � � � � � � � c � � � � � � � � � � � � � � i � � � i � iiiliii � � � � iiiiiii � � � � � � ii � ii � � � � � � � � �City of r'ci.I1�,e Fees by Department ' w11�'� �R]L�d�'�t*+#.c -.. ., .. .`,< . . a.,.,� v �,i my're' �"��y.,�." _���� - ;�� °�� :.ew =-�t. .<ze�,*e�- mw.�.�.ap ;,y>ta .v. -.. , , �,'�� - �5 . �g II t l����w�5 , �.� t � � � € �� � „ � �a��`' . ....y. ,_. � ��.. _... � #�� � 4 ��,�,�•>�a� iy� t " ���� Y..� `�� m _ra�, _ ,•, a p � ,• � "" ,,,;:� ..�-�,� �- :� .:..f._. � � � �o • � �, � � City Clerk $ 138,619 $ 242,882 $ (104,263) 57% $ 143,073 $ 4,445 59% Community Development 2,660,541 2,678,741 (18,200) 99% 2,528,569 (131,972) 94% Community Services 1,013,468 2,110,038 (1,096,570) 48% 1,013,468 0 48% Finance 672,915 1,835,631 (1,256,824) 37% 672,915 0 37% Fire 999,354 1,074,182 (74,828) 93% 1,074,182 74,828 100% Library 58,346 112,143 (53,797) 52% 58,346 0 52% Police 735,535 1,245,043 (509,508) 59% 767,314 31,779 62% Public Works 751,515 862,781 (57,135) 86% 772,509 20,994 90% . _ � :� � � � _ .�. � � • � � : R : � . � � � � : , �.� a _ _ . _ ��IIIiIIIfI � � � � � I � SC � � � C � � � � � C � � � 1111 � 11 � 11i � � Illl City of r�.ng� `�1E QL13 �YV�tE �}RANGE t�LAZA i�NE OF TNE �R�kT ��ACES lt� �,�{MER�CA Beyo n d FY 20 III11 � 111111111111111111111 11111111111111111111 � 11111111111 � 11111111111 � 111 � �City of ran�;e Beyond FY 20 ■ General Fund Cost Increases — FY 21 • CaIPERS increases - $2.1 million • Negotiated labor increases - $1.9 million — FY 22 and beyond • Unfunded liability increases of $2 million per year — Assumes CaIPERS meets rate of return assumptions # , � � � � � ; � i � ii � � � iiic � � � � � � � c � � � � � � � � � � � � � � � i � � � � i � i � ii � � i � � iii � � � ii � � � � � i � � � � iii � � i � �. �City of range Economic Outlook ■ Positives — Low interest rates — Low unemployment — Strong local economy — Longest growth period in history ■ Concerns — Real estate slowing down — Tariffs? — Advanced economic indicators � • �! , R � � : , ; IIIIIIIIIIC � � � � = � � � � � � � � � � � � C � � � � II � Iflll � lllill � ll � lllllll � � llll � � lllil � lli �City of ran�;e Conclusion ■ FY 20 Budget is balanced • Leading economic indicators are mixed — Should leave FY 20 untouched — Economic slow-down indicators have begun to show � Staff Recommendations — Resolutions to adopt budget, Gann Appropriations limit, 7-year Measure M2 Capital Improvement Program, and updated Master Schedule of Fees and Charges — Finding that appropriations are under the Gann limit — Each action should be acted upon individually as listed in staff report A • � � � � � : � IIII � III � IC � � � � � � � G � � s � � � � � � C � � � � 11111111111111111111111111111111 � 11 � llill �l , �, -- City of range � • • • . • - • • • • Public Hearing � June 11, 2019 --�, q pF��9 ,� ,GaaPo�T �C . '���``' eo '�, . *� ��*, AGENDA ITEM o'; a� ;2 �?��,q�x,�6,,�..����Q. ��°�' June 11, 2019 TO: Honorable Mayor and Members of the City Council THRU: Rick Otto, City Manager FROM: William M. Kolbow, Administrative Services Director�,h`/'G�� REVIEW: City Manager� Finance �� 1. SUBJECT Proposed Fiscal Year 2019-2020 City of Orange Budget and Five Year Capital Improvement Program including approval of recommended personnel actions. 2. SUMMARY Each spring, staff presents to the City Council an Annual Budget that serves as the City's financial and operational plan for the upcoming fiscal year. This budget document is prepared following two City Council study sessions during which various aspects of the proposed budget were considered and Council direction was given. Staff is also proposing adjustments to, the Master Schedule of Fees and Charges. The proposed adjustments are based on the presentations by staff and feedback from the City Council at the March and April Budget Study Sessions. 3. RECOMMENDED ACTION At the conclusion of the public hearing, five action items are recommended to adopt the FY20 Budget. These are: 1. Approve Resolution No. 11168 adopting the Budget for Fiscal Year 2019-20; 2. Approve Resolution No. 11169 adopting the Gann Appropriations limit of $185,422,595 for Fiscal Year 2019-20; 3. A motion making a finding that the portion of the Fiscal Year 2019-20 Budget subject to the Gann limit is $102,057,959, and therefore within the limit; 4. Approve Resolution No. 11170 authorizing staff to submit to the Orange County Transportation Authority the Measure M2 Seven-Year Capital Improvement Program for Fiscal Year 2019-20 through 2025-26, to comply with Measure M2 eligibility criteria, and; ITEM ��j � 06/11/2019 5. Approve Resolution No. 11171 amending the Master Schedule of Fees and Charges for various services and the rental of rooms and equipment. 4. FISCAL IMPACT . . . Adoption of the annual budget establishes the City fiscal plan for the year. 5. STRATEGIC PLAN GOALS Goal 2: Be a fiscally healthy community. a: Expend fiscal resources responsibly. b: Analyze future fiscal needs and potential revenue opportunities. c: Provide appropriate reserves. 6. DISCUSSION AND BACKGROUND Subject to testimony received this evening at the noticed public hearing, adoption of the FY 2019-20 (FY 20) Budget and related documents will ensure the City has established a set of legally adopted appropriations, met all the requirements of the Gann Initiative, and complied with the Measure M and Transportation Congestion Relief Fund (TCRF) funding requirements (Maintenance of Effort) of a Seven-Year Transportation Capital Improvement Plan. The FY 20 budget represents the City's spending plan for the coming fiscal year, which will begin July 1, 2019 and end June 30, 2020. In preparing the FY 20 budget, the City Council conducted two study sessions to discuss various aspects of the proposed budget. Council deliberated extensively regarding methods to balance the FY 20 budget, while also recognizing the need to ensure the City's General Fund budget remains in a solid financial position. Through the leadership of the City Council, the resulting budget document has been developed in a collaborative manner involving all City departments. The proposed FY 20 General Fund Budget is balanced with a slight surplus of about$66,000. The attached Budget Message provides in detail how we are able to present a balanced budget for FY 20. The budget presented at this Public Hearing is an abbreviated version of the complete budget package, but contains all of the information and attachments required for adoption. As such, the essential elements that are included and required for adoption of the FY 20 Budget are: • Budget Message • Budget Resolutions • Selected Budget Worksheets o Fund Balances o Transfers o Revenues and Expenditures o Recommended Staffing Changes o Schedule of Positions o Carryovers o Successor Agency (Redevelopment Agency) Debt Issues o Capital Improvement Projects for FY 20 • Budget Workplans for FY 20 ITEM 2 06/11/2019 • Five-Year Capital Improvement Plan Fee Study At the April 23, 2019 Budget Study Session, staff presented the proposed fee changes to our fee schedules.These changes were based on a review of specific fees and an update to the fee model with revised time estimates and costs for delivering the services. With the recommended fees, we expect to recover approximately 69%of costs associated with the services provided. The proposed changes to the fees will result in no net revenue impact. In addition, staff is recommending to add the animal control and shelter charges, to be administered and collected by Orange County Animal Care (OCAC). As cities are allowed to set their own fees for animal licenses and services instead of mirroring OCAC's base fees, the proposed fee increase will generate an additional $125,000 to offset the total cost for the OCAC contract of$2.0 million. Resolution No. 11171 includes an updated Master Schedule of Fees that reflects all the recommended fee changes. 7. ATTACHMENTS • Resolution No. 11168 • Resolution No. 11169 • Resolution No. 11170 • Resolution No. 11171 • Budget Message • Selected worksheets for the Proposed FY20 Budget o Historical Summary of Revenues and Expenditures by Fund Type o Schedule of Changes in Fund Balance o Schedule of Transfers o Historical Schedule of Revenue Sources by Fund o Schedule of Revenues Sources - Detail o Summary of All Fund Expenditures by Department o Historical Schedule of Expenditures by Fund o Summary of General Fund Expenditures by Department o Schedule of All Fund Expenditures by Department o Schedule of Positions - Citywide Summary and by Department o Schedule of Operating Carryover Appropriations o Successor Agency Debt Issues o Schedule of New Capital Improvement Funding by Fund o Workplans for FY20 o Five-Year Capital Improvement Plan ITEM 3 06/11/2019