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HomeMy WebLinkAbout8.3 Preliminary Fiscal Year 2021-22 General Fund Budget (2)STAFF REPORT CITY COUNCIL Page 1 of 5 Agenda Item 8.3 DATE:April 20, 2021 TO:Honorable Mayor and City Councilmembers FROM:Linda Smith, City Manager SUBJECT:Preliminary Fiscal Year 2021-22 General Fund Budget Prepared by: Lisa Hisatomi, Director of Administrative Services EXECUTIVE SUMMARY: The City Council will review the Preliminary Fiscal Year 2021-22 Budget, focusing on the General Fund. As this is the second year of the City's two-year budget, this information will supplement the budget document adopted by the City Council in June 2020. The updated Capital Improvement Program is presented under a separate item. STAFF RECOMMENDATION: Receive the report and provide direction to Staff related to the budget adoption scheduled for June 1, 2021. FINANCIAL IMPACT: The Preliminary Budget results in an increase to revenues of $5,225,044 and a decrease to operating expenditures of $31,527 in the General Fund from the Amended Fiscal Year 2020-21 Budget. After transfers out, total General Fund reserves are projected at $188,198,826, an increase of $9,391,585 over Fiscal Year 2020-21. DESCRIPTION: The City of Dublin utilizes a biennial budget process, in which a comprehensive budget document is prepared that establishes high-level priorities and specific departmental goals for a two-year period. The second year of the cycle is the "update year", in which projections are revised and significant changes highlighted, while the original document continues to serve as the guiding financial plan. As in prior years, this report focuses on the General Fund, as there are no major budgetary changes in other funds. This report discusses updates to the City's major revenue categories and refines expenditure projections, reflecting the most recent information. The analysis compares the Preliminary Fiscal Year 2021-22 Budget to the Amended Fiscal Year 2020-21 Budget. 577 Page 2 of 5 Summary The Preliminary Budget (Table 1 and included as Attachments 1 – 2) projects an operating surplus in the General Fund (ongoing revenues less ongoing expenditures) of $15,173,535 which is $3,121,424 higher the Fiscal Year 2020-21 Amended Budget before carryovers from the prior year and transfers out. After adjustments and transfers, total reserves are projected at $188,198,826, an increase of $9,391,585 (5.3%) over the prior year. Revenues in Fiscal Year 2021-22 are increasing a net $5,225,044 (5.6%) over the prior year, due primarily to higher property tax and sales tax revenue. Expenditures are increasing $2,103,620 over the prior year. Changes by categories are explained in the section below. Table 1: Operating Budget Impact & Reserve FY 2020-21 Amended FY 2021-22 Update $ Change % Change Revenues $93,753,539 $98,978,583 $5,225,044 5.6% Expenditures 81,701,428 83,805,048 2,103,620 2.6% Ongoing Operating Budget Impact $12,052,111 $15,173,535 $3,121,424 25.9% Carryovers from Prior Year 2,135,147 Contribution to OPEB/PERS 4,000,000 2,000,000 Net Transfers In/Out 17,758,948 3,781,950 Total Reserves, End of Year $178,807,241 $188,198,826 $9,391,585 5.3% The following is a summary of the net changes reflected in the Preliminary Budget as compared to the Fiscal Year Amended Budget (+/-$250,000): Revenue Changes Property Tax Revenue – increase of $2,367,000 (+4.7%) In recent years, Dublin’s Property Tax revenue has generally increased an average of $3.5 million per year on secured and unsecured values. The preliminary estimate for Fiscal Year 2021-22 reflects an increase of approximately $2.4 million, which is $1,100,000 lower than the recent annual growth. This is attributable to the net impact of the following factors: CPI adjustment of 1.036%, out of a maximum of 2.0% allowable by Prop 13. This is the 10th time in 46 years (since 1976-77) that CPI was less than 2% and it is reflective of the impacts of the pandemic on the economy. A slight rebound in the number of home sales and sale prices in the second half of 2020. Lower growth in assessed values (AV) for new construction, due to the slowdown of development activities prior to the outbreak of COVID-19 and the impact of lockdowns. Continued restoration of AV previously reduced via Prop 8. Sales Tax Revenue – increase of $1,542,950 (+7.1%) The Preliminary Budget projects slight growth in auto sales, building upon the trend seen in the 578 Page 3 of 5 current year with the ongoing shift in buyer preference toward larger, pricier vehicles. The City will continue to experience steady growth in consumer goods and business categories during Fiscal Year 2021-22. With the planned elimination of the Blueprint for a Safer Economy, along with widespread distribution of vaccines, it is anticipated that the City will see a stronger recovery of sales tax revenues generated by the Restaurants, Fuel, and General Consumer Goods categories. However, it should be noted that the City is not expected to return to pre-pandemic Sales Tax revenue levels until Fiscal Year 2022-23. Development Revenue – increase of $926,251 (+13.7%) Development revenue projections are based on the timing of development projects. Entitlement work, plan checking, permitting, and construction activities for significant development projects slowed over the past year during the pandemic. The preliminary budget assumes a resumption of delayed development projects in Fiscal Year 2021-22. Charges for Services – net increase of $852,548 (+19.4%) Parks and recreation programs, including facility and field rentals, have been significantly impacted by the pandemic and Stay-at-Home Order, forcing the City to extend closures and cancellations and to make other unanticipated modifications to program offerings. It should be noted that the City developed this Preliminary Budget update without the benefit of the Governor Newsom announcement that the Blueprint for a Safer Economy will likely be rescinded on June 15, 2021. Depending on the outcome of that future decision, this category may be modified at the mid- year to reflect an increase in charges for services. At this time, the Fiscal Year 2021-22 Budget assumes the resumption of all programs in the fall of 2021 with modifications in place according to guidelines set forth by State of California related to reduced class and group sizes. The Fiscal Year 2021-22 budget reflects the opening of The Wave waterpark for the 2021 summer season with reduced capacity. Despite the limited reopening of facilities, events, and programs, the Preliminary Budget reflects 56% of recreation program revenues prior to the pandemic. Interest – decrease of $400,000 (-25.0%) Federal monetary policy has led to a low interest rate environment and thus, lowered interest income on the City’s pooled funds. Expenditure Changes Personnel Costs – increase of $1,467,460 (+13.1%) The increase in the Preliminary Budget is mainly attributed to: Increase in temporary salaries for parks and recreation programs. These positions were significantly reduced in the Fiscal Year 2020-21 Budget due to the cancellation of programs and are being restored in conjunction with the resumption of program offerings. COLA adjustment of 1.8%. Position Changes. The Position Allocation Plan includes the new position of Senior Office Assistant in the City Manager’s Office; and inclusion of full-year salaries for positions new in the current year (Chief Information Security Officer and Communications Analyst). 579 Page 4 of 5 Benefits – increase of $361,315 (7.2%) The increase in benefit costs is due to an increase in retirement costs and health insurance premiums. Contract Services Expenditures – increase of $577,021 net of budget carryover (+1.1%) The Fiscal Year 2021-21 Amended Budget includes a contract services budget carryover of $1,709,768 from Fiscal Year 2019-20. Excluding the carryover, the Preliminary Budget projects a net increase of $577,021, as illustrated in Table 2: Table 2: Contract Services Changes Contracted Services FY 20-21 Amended Carryover 2020-21 FY 21-22 Update $ Change % Changefrom 2019-20 Net of Carryover Police Services $21,443,621 $145,231 $21,298,390 $22,294,777 $996,387 4.7% Fire Services 14,178,578 14,178,578 14,609,570 430,992 3.0% Maintenance Services 5,736,382 5,736,382 5,923,836 187,454 3.3% Development 4,878,821 4,878,821 4,057,935 -820,886 -16.8% Other Contracted Services 9,281,633 1,564,537 7,717,096 7,500,170 -216,926 -2.8% Total $55,519,035 $1,709,768 $53,809,267 $54,386,288 $577,021 1.1% Police and Fire Services budget increases are due primarily to annual COLA and benefit cost increases. The Police Services budget includes one additional School Resource Officer, funded by the California Department of Justice Tobacco Grant (not in the General Fund), beginning in Fiscal Year 2021-22 for three years. Development-related and other general City contract costs are budgeted according to anticipated service levels for specific projects. Transfers Out The Preliminary Budget includes transfers out of $1,000,000 to the Internal Services Fund – Facilities for preventive maintenance, and $3,838,550 to capital improvement projects, of which $1,433,905 comes from Committed/Assigned reserves. CIP projects funded by the General Fund are shown in Table 3 below. 580 Page 5 of 5 Table 3: Transfers Out to the Capital Improvement Program Reserves / Projects Amount Committed/Assigned $1,433,905 Civic Center Rehabilitation 1,123,050 Green Stormwater Infrastructure 310,855 Undesignated $2,404,645 Alamo Creek Park - Fence Replacement 450,000 Audio Visual System Upgrade 44,020 Citywide Bicycle and Pedestrian Improvements 108,000 Citywide Energy Improvements 115,780 Downtown Dublin Street Grid Network 60,210 Downtown Dublin Town Square Park 29,505 Resiliency & Disaster Preparedness Improvements 681,010 Restrooms Replacement 916,120 Total $3,838,550 10-Year Forecast and Next Steps Staff will provide an update to the 10-Year General Fund Forecast along with a discussion of the assumptions used in the Forecast with the final budget proposal scheduled for June 1, 2021. Staff is seeking direction from the City Council on other items it wishes to include in the Fiscal Year 2021-22 Budget. STRATEGIC PLAN INITIATIVE: Strategy 2: Explore New City Revenue Streams for Long Term Financial Stability Objective D: Continue to maintain strong fiscal policies. NOTICING REQUIREMENTS/PUBLIC OUTREACH: The City Council Agenda was posted. ATTACHMENTS: 1) Preliminary Fiscal Year 2021-22 General Fund Summary 2) Preliminary Fiscal Year 2021-22 General Fund Reserves 581 Attachment 1PRELIMINARY GENERAL FUND SUMMARY Actual 2019-20 Adopted 2020-21 Amended 2020-21 (2) FY 2021-22 Update Revenues Property Tax $49,086,335 $48,896,000 $50,396,000 $52,763,000 $2,367,000 4.7% Sales Tax 21,439,886 19,595,050 21,595,050 23,138,000 1,542,950 7.1% Sales Tax Reimbursements (407,431)(610,000)(610,000)(610,000) Development Revenue 6,412,012 6,951,077 6,780,667 7,706,918 926,251 13.7% Transient Occupancy Tax 1,567,987 1,000,000 650,000 750,000 100,000 15.4% Other Taxes 5,712,336 5,676,387 5,676,387 5,732,706 56,319 1.0% Licenses & Permits 236,972 238,506 340,506 313,434 (27,072)-8.0% Fines & Penalties 85,128 107,432 62,432 107,432 45,000 72.1% Interest Earnings 3,652,445 1,600,000 1,600,000 1,200,000 (400,000)-25.0% Rentals and Leases 974,392 1,329,966 806,887 1,020,768 213,881 26.5% Intergovernmental 306,425 250,000 250,000 285,000 35,000 14.0% Charges for Services 5,948,509 6,222,359 4,401,546 5,254,094 852,548 19.4% Other Revenue 1,374,395 1,077,242 1,363,064 1,317,231 (45,833)-3.4% Subtotal Revenues - Operating $96,389,392 $92,334,019 $93,753,539 $98,978,583 $5,225,044 5.6% Transfers In $87,098 $56,600 56,600 56,600 - Unrealized Gains/Losses 6,433,261 - - Total Revenues $102,909,751 $92,390,619 $93,810,139 $99,035,183 $5,225,044 5.6% Expenditures Salaries & Wages $10,978,176 $11,886,262 $11,229,600 $12,697,060 $1,467,460 13.1% Benefits 4,890,980 5,016,611 5,008,869 5,370,184 361,315 7.2% Services & Supplies 2,928,191 3,892,942 3,929,767 4,083,011 153,244 3.9% Internal Service Fund Charges 2,977,333 3,685,246 3,685,246 3,907,322 222,076 6.0% Utilities 2,427,310 2,925,055 2,909,151 3,019,522 110,371 3.8% Contracted Services 46,071,154 53,053,169 55,519,035 54,386,288 (1,132,747)-2.0% Capital Outlay 3,959,753 397,883 1,228,302 118,677 (1,109,625)-90.3% Contingency & Miscellaneous 18,987 222,605 326,605 222,985 (103,620)-31.7% Subtotal Expenditures - Operating $74,251,883 $81,079,773 $83,836,575 $83,805,048 ($31,527)0.0% Operating Impact (REV-EXP)$22,137,509 $11,254,246 $9,916,964 $15,173,535 $5,256,571 53.0% Transfer Outs & Contributions to Other Funds Transfers Out (CIPs) - Undesignated $336,428 $1,159,855 $1,159,855 $2,404,645 $1,244,790 107% Transfers Out (CIPs) - Carryover from Prior Yr 3,502,246 (3,502,246)-100% Transfers Out (CIPs) - Com./Assig. Reser 7,668,923 71,715 13,153,447 1,433,905 (11,719,542)-89% Contribution to OPEB/PERS 1,000,000 3,000,000 1,000,000 (2,000,000)-67% Contribution to ISF 1,229,066 1,000,000 1,000,000 1,000,000 Total Expenditures $83,486,300 $84,311,343 $105,652,123 $89,643,598 ($16,008,525)-16.3% Impact on Total Reserves $19,423,451 $8,079,276 ($11,841,983)$9,391,585 TOTAL GENERAL FUND BALANCE $190,649,224 $198,728,500 $178,807,241 $188,198,826 $9,391,585 5.3% Contracted Services Actual 2019-20 Adopted 2020-21 Amended 2020-21 (2) FY 2021-22 Update Police Services (1)$19,619,858 $21,298,390 $21,443,621 $22,294,777 $851,156 4.0% Fire Services (1)13,325,437 14,178,578 14,178,578 14,609,570 430,992 3.0% Maintenance Services (MCE)4,860,718 5,736,382 5,736,382 5,923,836 187,454 3.3% Development (CDD and PW)3,142,265 4,616,073 4,878,821 4,057,935 (820,886)-16.8% Other Contracted Services 5,122,876 7,223,746 9,281,633 7,500,170 (1,781,463)-19.2% Total Contracted Services (2)$46,071,154 $53,053,169 $55,519,035 $54,386,288 ($1,132,747)-1.9% (1) Police and Fire liability insurance amounts are not included above, they are included in Services & Supplies. Change (Update vs Amended) Change (Update vs Amended) (2) Amended FY 20-21 Budget incudes $2,135,147 budget carryovers from FY 19-20, of that amount, $1,709,768 is for Contracted Services. 582 Attachment 2GENERAL FUND RESERVES RESERVE DESCRIPTION Actual 2019-20 Net Change Projected 2020-21 Net Change Projected 2021-22 Non-Spendable $13,061 $13,061 $13,061 Prepaid Expenses 13,061 13,061 13,061 Restricted $1,938,000 $441,000 $2,379,000 $441,000 $2,820,000 Cemetery Endowment 60,000 60,000 60,000 Developer Contr - Downtown 1,049,000 441,000 1,490,000 441,000 1,931,000 Developer Contr - Heritage Pk 19,000 19,000 19,000 Developer Contr - Nature Pk 60,000 60,000 60,000 Heritage Park Maintenance 750,000 750,000 750,000 Committed $57,828,474 ($11,890,387)$45,938,087 ($6,215,796)$39,722,291 Advance to Public Facility Fee 7,500,000 (999,835)6,500,165 (6,215,796)284,369 Downtown Public Impr 8,454,625 8,454,625 8,454,625 Economic Development 126,359 (126,359)0 0 Economic Stability 8,000,000 8,000,000 8,000,000 Emergency Communications 532,113 (1,736)530,377 530,377 Fire Svcs Pension/OPEB 5,324,225 5,324,225 5,324,225 Innovations & New Opport 1,065,471 (170,973)894,498 894,498 One-Time Initiative - Capital 4,993,150 (1,543,503)3,449,647 3,449,647 One-Time Initiative - Operating 503,860 503,860 503,860 Public Safety Reserve 2,000,000 2,000,000 2,000,000 Specific Committed Reserves Cemetery Expansion (CIP)1,447,764 (1,447,764) Contribution to Public Facility Fee 6,000,000 6,000,000 6,000,000 Cultural Arts Center 4,539,197 (4,539,197) Don Biddle Park (CIP)1,500,000 (1,500,000) Dublin Sports Ground (CIP)1,502,671 (1,502,671) Fallon Sports Park III Contingency 3,110,500 3,110,500 3,110,500 Maintenance Facility (CIP)58,350 (58,350)(0)(0) Utility Undergrounding (CIP)1,170,190 1,170,190 1,170,190 Assigned $64,390,838 ($4,674,038)$59,716,800 ($1,123,050)$58,593,750 Accrued Leave 1,044,730 1,044,730 1,044,730 Catastrophic Loss 17,702,316 17,702,316 17,702,316 CIP Carryovers 3,502,246 3,502,246 3,502,246 Fiscally Responsible Adj 325,000 325,000 325,000 Municipal Regional Permit 2,282,905 (177,522)2,105,383 2,105,383 Non-Streets CIP Commitments 2,462,100 2,462,100 2,462,100 Operating Carryovers 2,110,190 2,110,190 2,110,190 Parks and Streets Contingency 226,227 (24,957)201,270 201,270 Pension & OPEB 15,000,000 15,000,000 15,000,000 Pension Rate Stabilization Plan 2,000,000 (2,000,000) Relocate Parks Dept 250,000 250,000 250,000 Service Continuity 3,150,000 3,150,000 3,150,000 Specific Assigned Reserves Climate Action Plan 3,000,000 3,000,000 3,000,000 Contribution to ISF 1,500,000 1,500,000 1,500,000 Façade Improvement Grants 374,157 374,157 374,157 HVAC Replacement & Civic Ctr Improv. (C 4,202,041 (2,212,634)1,989,407 (1,123,050)866,357 Public Safety Complex (CIP)258,925 (258,925) Village Pkwy Pavemt Recon 5,000,000 5,000,000 5,000,000 Unassigned $66,478,851 $4,281,442 $70,760,293 $16,289,431 $87,049,724 Unassigned-Unrealized Gains 8,453,240 8,453,240 8,453,240 Unassigned (Available)58,025,611 62,307,053 78,596,484 TOTAL RESERVES $190,649,224 ($11,841,983)$178,807,241 $9,391,585 $188,198,826 583 Preliminary General Fund FY 2021-22 Budget April 20, 2021 ITEM 8.3 Background •Biennial budget process •FY 21-22 is an Update Year o Comparison to FY 20-21 Amended Budget •Focus on General Fund operating budget •No major operating changes in other funds GF Revenues Revenues -Net Increase $5,225,044 •Property Tax +$2,367,000 o CPI adjustment o Slight rebound # of home sales & price o Lower growth in new construction o Restoration of Prop. 8 •Sales Tax +$1,542,950 o Slight growth in Auto o Steady growth in Consumer Goods & Business o Stronger recovery in Restaurants & Fuel GF Revenues •Development Revenue: +$926,251 •Charges for Services +$852,548 o Parks & Recreation programs o Resumption of all programs with modifications o 56% of program revenues prior to the pandemic o Revenue may need modification –outcome of the Governor’s plan to fully reopen the economy •Interest -$400,000 GF Expenditures Expenditures -Net Increase $2,103,620 •Personnel Costs +$1,467,460 o Increase in temporary salaries o COLA adjustment o Position changes •Benefits +$361,315 •Contract Services +$577,021 o Increase in Police & Fire services o Decrease in Development-related and other general City contract costs Transfers Out Transfers Out to CIP = $3,838,550 •Committed/Assigned = $1,433,905 o Civic Center Rehabilitation o Green Stormwater Infrastructure •Undesignated = $2,404,645 o Alamo Creek Park -Fence Replacement o Audio Visual System Upgrade o Citywide Bicycle & Pedestrian Improvements o Citywide Energy Improvements o Downtown Dublin Street Grid Network & Town Square Park o Resiliency & Disaster Preparedness Improvements o Restrooms Replacement GF Reserves FY 2020-21 Amended FY 2021-22 Update $ Change % Change Revenues $93,753,539 $98,978,583 $5,225,044 5.6% Expenditures 81,701,428 83,805,048 2,103,620 2.6% Ongoing Operating Budget Impact $12,052,111 $15,173,535 $3,121,424 25.9% Carryovers from Prior Year $2,135,147 Contribution to OPEB/PERS/ISF 4,000,000 2,000,000 Net Transfers In/Out 17,758,948 3,781,950 Total Reserves, End of Year $178,807,241 $188,198,826 $9,391,585 5.3% Operating Surplus $15,173,535 Increase in GF Reserve $9,391,585 Next Steps Budget Adoption June 1, 2021 Other items or additional information to include in the FY 21-22 Budget? Questions?