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HomeMy WebLinkAbout02/28/1995, Agenda Council Agenda Tuesday, February 28, 1995 3. Approve mid-year budget request for capital improvement plan projects and equipment replacements in the amount of $1,356,800 summarized as follows: Fre Department Emergency Communication System $ 95,000 Street Light Acquisition Services 35,000 Marsh Street Reconstruction and Storm Drain Improvement 560,000 Islay Hill Park Fee Refunds 186,000 Pick-up Truck and Mower for New Park Maintenance 35,000 Parks and Recreation Office Building 151,000 Replace/Upgrade File Servers at City Hall, Corporation Yard and Park & Recreation Administration Office 34,800 Acquisition of Property at 860 Pacific 235,000 New Parking Lot at Palm and Morro 25.000 TOTAL $1,356,800 ► 2. PARKS & RECREATION OFFICE BUILDING (McCLUSKEY/LeSAGE/94-13B - 45 min.) Consideration of plans and specifications for "Parks and Recreation Office Building," Spec. No. 94-136; project cost estimate $590,000 including contingencies. ♦ RECOMMENDATION: By motion, approve plans and specifications, authorize staff to advertise for bids, and authorize the City Administrative Officer to award a construction contract if the lowest responsive, responsible bid is within the cost estimate. ► 3. HEADQUARTERS FIRE STATION (NEUMANN/92-04 - 60 min.) Consideration of a status report concerning the Headquarters Fire Station. ♦ RECOMMENDATION: Receive report and, by motion, approve the project scope. A. ADJOURNMENT. 3 city oSan tuis OBISPO State of California \ MID-YEAR BUDGET REVIEW P I } ` i For the 1993-95 Financial Plan FISCAL YEAR 1994-95 EXECUTIVE SUMMARY The purpose of this report is to answer three basic questions about our financial condition: ■ Where are we today? ■ Where will we be at the end of 1994-95? ■ What is our long-term financial outlook? The following are brief answers to these three questions. How are we doing today? Over the past several years, the City has been confronted with its most difficult fiscal situation in the post World War I1 era. State cuts to the City total close to $1.5 million annually since 1991-92. These cuts have occurred in different ways, ranging from County collection of property tax administration and booking fees in 1991-92 to direct property tax reductions in 1992- 93 and again in 1993-94. Combined with $3.5 million in local revenue losses resulting from the recession, this means we have about $5 million less today in operating revenues than we would have expected just a few short years ago under very modest revenue growth assumptions. This represents a decrease of about 25% in our General Fund resources. Nonetheless, the City's financial condition today continues to be strong by state and national standards. This is only true because of the difficult decisions we have made over the past several years to help us cope with these tougher times. For example: ■ The City has successfully abided by its longstanding policy of maintaining fund balances that are at least 20% of operating expenditures. These resources hold the City in good stead in economic downturns by retaining our ability to meet cash flow needs and respond to unforeseen circumstances, emergencies, or other unusual events. ■ The City uses the private sector to deliver numerous services, including refuse collection, transit, and selected janitorial, landscape and street maintenance services. This means fewer City employees and lower costs. ■ The City has stayed below standard municipal debt limits, resulting in fewer long-term obligations and a higher credit rating. ■ Significant expenditure reductions have been made. Cost reduction efforts are not new. During 1991-93, budgets were cut by over $4.5 million. This included reducing regular staffing by nine positions in conjunction with reorganizing several departments. These cuts were followed in 1993-95 by an additional reduction of over $2 million in General Fund operating costs, including eliminating 30 regular positions; and cuts in capital improvements of 50% from past levels. ■ General Fund revenues have also been increased over the past two years as part of an overall budget balancing strategy. Since 1991, the transient occupancy tax rate has been raised from 6% to 10%, and selected user fee increases have been implemented. ■ Our strong fund balance situation has also been used to its fullest strategic advantage. Rather than considering its use to fund ongoing operating deficits, it has been used to fund significant one-time capital projects - most notably the Performing Arts Center and Headquarters Fire Station - rather than relying solely on debt financing as previously planned for these projects. This approach reduces future ongoing costs that would have been incurred in repaying this debt. Where will we be at the end of 1994-95? Following this summary is a brief outline of our projected ending financial condition for the General Fund at June 30, 1995. By summarizing "where we're up" and "where we're down" from our projections in the 1994-95 Financial Plan Supplement, this outline shows that we will generally end 1994-95 in about the same financial condition as originally projected: operating revenues and expenditures are balanced, and ending fund balances are on target with our policy of maintaining balances that are at least 20% of operating expenditures. This demonstrates two important things: that the tough budget cuts and revenue increases implemented as part of the 1993-95 Financial Plan were necessary; and that we are on the road to accomplishing the long-term stability that those actions were intended to achieve. There continue to be many uncertainties. The revised 1994-95 financial projections have been based on a number of assumptions using the best information available to us today. But there continues to be a number of uncertainties that cannot be accurately forecasted at this time: ■ The recovery of the State's economy and how it will affect us locally. ■ Recognition that even if a state-wide recovery occurs, it is not clear how this will benefit us locally given increased competition from the North and South county areas. ■ The State's own budget difficulties and how resolving them will affect us locally. Depending upon the solution, further State cuts can have two impacts on us: direct cuts to City revenues; and impacts on the local economy as the State makes its own budget cuts affecting local employers such as Cal Poly, CMC, Cuesta College, and the County. What about after 1994-95? As noted above, there are a number of financial uncertainties and challenges facing us in the years ahead. If we do not begin sustained economic recovery from the recession, and if the State continues to take revenues from us, then we will need to again revisit our financial situation in a fundamental way. However, based on the best information available to us at this time, it appears that we have appropriately positioned ourselves for 1995-97 and beyond. We have limited resources but we also have important goals. Our past downsizing and budget reduction efforts do not mean that we should stop all progress toward achieving important goals and objectives. To the contrary, these past cuts were specifically made in areas of lesser priority so we would have the resources necessary to fund higher priority service and facility needs. This mid-year budget review recommends allocating resources for some of these important community priorities, including improving Marsh Street in the downtown core, building offices for the Parks and Recreation Department, restoring emergency communications lost in the Highway 41 fire, building Islay Hill Park, and acquiring expansion property for the Chorro/Marsh parking structure. In summary. Accomplishing our goals and objectives requires the financial resources to do so. Current trends underscore our need to be concerned about our economic base and what we can do to strengthen it. They also underscore our need to continue our commitment to increasing productivity, containing costs, and strengthening our revenue base. General Fund Financial Condition Summary Comparison of mid—year budget projections with those initially presented m the 1993-95 Financial Plan Supplement for 1994-95.- Where 994-95:Where we're up . . . . . . . 7� Headquarters fire station grant* 611,000 Beginning fund balance (net of carryovers)* 422,000 Sale of 860 Pacific building to Parldng Fund* 235,000 FEMA reimbursement — Hwy 41 fire* 1699500 Utility user taxes 1209000 Building permits 1129500 Debt service* 1089700 Child care service charges 50,000 1,828,700 * one—time resources Where we're down . . . . . . Mid—year budget requests 1,2289700 Recreation fees (except child care service charges)* 148,400 Property taxes* 1229700 Tranisent occupancy taxes* 1449800 Franchise fees* 969100 Other ups (downs) 41,600 1,782,300 * ongoing shortfalls Net change . . . . . . 46,400 ENDING FUND BALANCE — JUNE 30, 1995 4,002,400 Percent of operating expenditures 20.0% Note: As highlighted above, the net change of$46,400 reflects$1.4 million in one—time resources(about$300,000more than$1.1 million in one—time capital outlay costs)but ongoing revenue reductions of about$500,000. TABLE OF CONTENTS EXECUTIVE SUMMARY PREFACE A. Transmittal Memorandum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1 B. Excerpts from the December 1994 Quarterly Financial Report Transmittal Memorandum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1 Changes in Fund Balance All Funds Combined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-2 Special Revenue Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-3 Capital Outlay Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-4 Enterprise Agency Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-5 Operating Programs Revenue Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-6 Operating Programs Expenditure Summary . . . . . . . . . . . . . . . . . . . . . . . . . B-10 C. Financial Condition Summaries Revenues by Major Category and Source C-1 Combined Statement of Operating Program Expenditure Projections . . . . . . . . C-5 Operating Expenditures by Program Public Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-6 Public Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-7 Transportation . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . C-8 Leisure, Cultural & Social Services . . . . . . . . . . . . . . . . . . . . . . . . . . C-9 Community Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-10 General Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-l l Capital Outlay - All Funds Combined . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-12 Combining Fund Balance Statements All Funds Combined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-13 All Government Funds Combined . . . . . . . . . . . . . . . . . . . . . . . . . . C-14 All Enterprise and Agency Funds Combined . . . . . . . . . . . . . . . . . . . C-15 Individual Fund Balance Statements General Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-16 Special Revenue Funds Business Improvement Area (BIA) Fund . . . . . . . . . . . . . . . . C-17 Community Development Block Grant (CDBG) . . . . . . . . . . . C-18 Gas Tax Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-19 Transportation Development Act Fund (TDA) . . . . . . . . . . . . . C-20 Capital Project Funds Capital Outlay Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-21 Parkland Development Fund . . . . . . . . . . . . . . . . . . . . . . . . . C-22 Equipment Replacement Fund . . . . . . . . . . . . . . . . . . . . . . . . C-23 Debt Service Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-24 Enterprise Funds Water Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-25 SewerFund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-26 Parking Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-27 TransitFund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-28 Golf Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-29 Agency Fund Whale Rock Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . C-30 D. Mid-Year Budget Requests Summary of 1994-95 Requests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-a Operating Program Requests Public Safety Disaster recovery costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1 Public Utilities Franchise renewal consultant services . . . . . . . . . . . . . . . . . . . D-2 Leisure, Cultural & Social Services Childcare increased program participation and new training requirements . . . . . . . . . . . . . . . . . . . D-4 Community Development Computer mapping Projects . . . . . . . . . . . . . . . . . . . . . . . . . . D-6 General Government Support services reorganization . . . . . . . . . . . . . . . . . . . . . . . . D-7 Ethernet Migration at 955 Morro, City Hall and Police Station . . . . . . . . . . . . . . . . . . . . . D-9 Capital Project Requests Public Safety Emergency response communication equipment . . . . . . . . . . . D-11 Transportation Street light acquisition services . . . . . . . . . . . . . . . . . . . . . . . D-13 Marsh street reconstruction and storm drain improvement . . . . . . . . . . . . . . . . . D-15 Acquisition of property at 860 Pacific Street . . . . . . . . . . . . . . D-19 New parking lot at Palm and Morro . . . . . . . . . . . . . . . . . . . D-20 Leisure, Cultural & Social Services Islay Hill Park fee refunds . . . . . . . . . . . . . . . . . . . . . . . . . . D-21 Pick-up truck and mower for new park maintenance . . . . . . . . D-23 Parks and Recreation office building . . . . . . . . . . . . . . . . . . . D-24 General Government Replace/Upgrade file servers at City Hall, Corporation Yard and Parks & Recreation Offices . . . . . . . . . . . . . D-26 ti. PREFACE The City's two-year Financial Plan provides for the submittal of a report on the financial.status of the City to the Council every six months. Although quarterly financial reports are distributed to the Council on an ongoing basis, the formal submittal of a review at the mid- point of the fiscal year provides an opportunity to identify and present any fiscal problem areas to the Council and to recommend corrective action or additional funding if required. To accomplish. these goals,'the Mid-Year Budget Review document for 1994-95 has been organized into the following sections: Section A - Transmittal Memorandum The transmittal memorandum provided in.this section summarizes the City's financial position at the mid-point of the fiscal year, highlights significant trends and concerns, and makes recommendations as appropriate. Section B -.Excerpt from the December Quarterly Financial Report The Quarterly Financial Report (QFR) for.December 1994 has been previously distributed to the Council. For reference purposes, the transmittal memorandum from the December QFR along with the changes in fiord balances, operating revenues, and operating program expendituresummary from that document have been provided in this section of the Mid=Year Budget Review. Section C - Financial Condition Summary This section summarizes the City's financial condition at the mid-point of the fiscal year, and projects the City's financial position at the end of the year. This section is organized into three major areas: ■ Summary of actual revenues for 1993-94 and a comparison of current projections for 1994-95 compared with original budget estimates. Summary of the current operating and capital budget by function and program for 1994- 95 based on the original budget as adopted by the.Council, encumbrances/carry=overs, Council approved budget changes, and mid-year budget requests. ■ Summary of actual revenues, expenditures, and changes in fund balance for 1993-94 for each of the City's operating funds and a comparison of current projections for 1994- 95 compared with original budget estimates based on the revised revenue projections and recommended expenditure changes. Section D - Mid-Year Budget Requests The mid-year budget requests submitted by the operating departments and recommended by the City Administrative Officer for Council approval are provided in this section.