HomeMy WebLinkAboutItem 8.3 State Budget 04-05
CITY CLERK
File # D~[3][Q]-CZ]rm
AGENDA STATEMENT
CITY COUNCIL MEETING DATE: September 21, 2004
SUBJECT:
Update on the State Budget for Fiscal Year 2004-2005
Report Prepared by: Richard C. Ambrose, City Manager
ATTACHMENTS:
Budget Change Fonn
RECOMMENDATION: /71 JoY 1.
~- 2.
Approve Budget Change
Receive Report
FINANCIAL STATEMENT:
See Report
DESCRIPTION
This report will provide Council with the infonnation available to date regarding the State of California's
adopted budget and the impacts to the City's Fiscal Year 2004-2005 Budget and Financial Plan.
IMPLICATIONS FOR THE CITY'S ADOPTED BUDGET FOR FISCAL YEAR 2004-2005
On July 31,2004, the Governor signed the State's budget into law for Fiscal Year 2004-2005. While the
budget begins to tackle the State's shortfall, it continues to rely upon takeaways from local government,
one-time solutions, debt rollovers, and borrowing to close the deficit. Therefore, the threat to cities is not
yet over, since the State's problems have not been fully mitigated. Cities can continue to expect negative
budget effects, even into Fiscal Year 2005-2006. The chart on the next page summarizes the key elements
in the State budget agreement that are of interest and/or are applicable to local government for Fiscal Year
2004-2005.
In summary, the State budget agreement proposes several crucial future protections for city revenues,
including: complete protection of the remaining VLF, the property tax backfill for sales tax in the Triple
Flip, the constitutional guarantee to return the Y, cent sales tax suspended by the triple flip, complete
protection of the Bradley-Burns sales tax, a prohibition against future ERAF shifts, and a requirement for
a two thirds vote to reallocate the property tax (now a simple majority). It also refonns the unfunded
mandate reimbursement process, providing for a suspension of these mandates if the costs are not paid.
It should be noted, however. that all of these proposed protections are contin2ent upon the voters
approvin2 Proposition lA in the November 2004 election. A subsequent staff report will be presented
to Council this evening, to provide clarification and specific details on Proposition lA.
All budget items that pertain specifically to Dublin have already been considered as part of the City's
adopted budget, except one. An unexpected, yet positive outcome of the State budget process was the
reinstatement of the Booking Fees. In a trailer bill, provisions dealing with Booking Fees restored the
$38.2 million dollar backfill to cities and special districts (this will continue through Fiscal Year 2004-
-------------------------------------------------------------------------------------------------------------
COPIES TO:
gIfinance staff/state budget agenda
1~3
ITEM No.M
ty
2005, but will elapse on July 1,2005). Based on this unanticipated action, the City will be receiving :tTom
the State approximately $61,000 in Booking Fee reimbursements for Fiscal Year 2004-2005.
The chart presented here outlines key components in the revised budget agreement; delineates whether the
item is protected constitutionally or statutorily; and, defines which items pertain to the City and have been
considered/included in the City's Adopted Budget Plan:
Statutory or Accounted for in
Constitutional City FY 2004-2005
Item Revised Bud2et Agreement Protection Budeet
VLF Rate Reduced to 0.65% statutorily and Statutory Yes
property tax backfill provided between
0.65% and 2%.
Backfill if VLF Backfill provided if rate reduced Consti tutional N/A
Reduced below 0.65%
Increases in VLF Capped at 2% constitutionally but may Constitutional N/A
Rate be raised above 0.65% for city or
county purposes.
VLF Gap Loan Statutorily required in 2006-07. No Statutory N/A
Repayment future property tax loan/suspension if
unpaid.
Reallocation Local share (non-school/ERAF) may Constitutional Yes
Among Local be reallocated by 2/3 vote to other
Agencies local governments. In a county.
Legislature may not reallocate to
increase school or ERAF share.
Reallocation of property tax may not
be done to support state-mandated
programs.
Suspension Beginning in 2008-09, if Governor Constitutional N/A
Trigger proclaims "significant state fiscal
hardship."
Suspension Vote 2/3rds vote - separate bill providing Constitutional N/A
Needed for repayment.
Suspension --No more than 2 times in 10 years. Constitutional Yes
Limits --No loan until VLF Gap loan or
previous suspension loan paid.
--Cap of 8% of local share of property
taxes ($1.3 billion today).
Repayment Legislature must pass a statute to fully Constitutional N/A
terms repay loan with interest (as provided
by law) within three fiscal years.
Protection Protects the rate and method of Constitutional Yes
distribution of the local Bradley-Bums
sales tax and Transactions and Use
Tax. Guarantees return of Y, cent
Bradley Bums sales tax when Prop 57
bonds retired.
Reallocation None. Constitutional N/A
~~
Item
Scope-
Result of
Nonpayment
Revised Bud et A reement
Statute imposing mandate is
suspended if no state funding except
for specified employee rights and
benefits. Applies only to city, county,
s ecial district mandates.
Clarifies mandate definition to include
cost shifts from the state to locals.
Legislature may approve a statutory
framework for voluntary exchanges of
ro erty tax and sales tax.
Mandate
Definition
Property
Tax/Sales Tax
Exchan es
Statutory or
Constitutional
Protection
Constitutional
Constitutional
Constitutional
Accounted for in
City FY 2004-2005
Bud et
N/A
N/A
N/A
The above infonnation was provided by the League of California Cities, a strong proponent of Proposition
1A. As mentioned previously, Staff will be providing Council with in-depth infonnation on Proposition
1A. But, in summary, if approved by the voters in November, it is hoped that Proposition 1A will restore
a much needed level of stability and protection for the funding needed for police, fire and other essential
local government services.
RECOMMENDATION
At this time, Staff recommends that Council a.) Approve the budget change adjusting the City's budget to
account for the reimbursement of booking fees (previously not anticipated during Fiscal Year 2004-2005)
and b.) Receive the report.
?;'ff
CITY OF DUBLIN
BUDGET CHANGE FORM
ltQ\
CHANGE FORM #
New Appropriations (City Council Approval Required):
Budget Transfers:
From Unappropriated Reserves
(If Other than General Fund, Fund No -
From New Revenues
From Budgeted Contingent Reserve (10800-799.000)
Within Same Department Activity
Between Departments (City Council Approval Required)
Other
Name:
Name: General Fund - Booking Fee Revenue
$60,748
Account #:
Name:
Account #: 001-565-025
Name:
Account #:
Name:
Account #:
Name:
Account #:
Name:
Account #:
Name:
Account #:
Name:
Account #:
Name:
Account #:
Account #:
ASD/Fin Mgr
~~
gnature
Date: ~
REASON FOR BUDGET CHANGE ENTRY: To adjust the City's budget to account for reimbursement of
booking fees not previously anticipated to be received from the State for Fiscal Year 2004-2005
City Manager:
Date:
Signature
As approved at the City Council Meeting on: Date:
Mayor:
Date:
Signature
Posted By:
Date:
Signature
G:\FInance S/ajJIFredlhadger change hookingfee revenae.doc
'1-21-D'1 '85
A-t+~v,^¿ vrt