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Home My WebLink About06/21/2005, PH 2C - ADOPTION OF 2005-07 FINANCIAL PLAN council, N66nD.� 6-21-05 acen6A REpoRt C I TY O F SAN LU I S OBISPO FROM: Ken Hampian, City Administrative Officer Bill Statler, Director of Finance & Information Technology SUBJECT: ADOPTION OF 2005-07 FINANCIAL PLAN CAO RECOMMENDATION Adopt a resolution approving the 2005-07 Financial Plan and 2005-06 Budget. DISCUSSION After twelve Council budget workshops and hearings beginning in August 2004, the 2005-07 Financial Plan is ready for adoption. Key features include: 1. Closes a $2.1 million annual General Fund budget gap — on the heels of a $7 million budget gap two years ago—in a responsible, balanced way. 2. Meaningfully invited community involvement, and responds to what we heard. 3.. Integrates Council goal-setting. 4. Is fiscally prudent. 5. Accomplished with significant employee involvement at all levels in the organization, and with no regular staff lay-offs. 6: Recognizes the uncertainties ahead. Major Challenges Remain. As pointed-out in the Budget Message, major fiscal challenges remain ahead of us. While the Financial Plan reasonably balances the delivery of core services with the resources available to us over the next two years, it does so by reducing service levels in all areas of the City's operations — including public safety and basic infrastructure maintenance like street paving. In the long-run, the City will not be well-served by these reductions, especially in our ability to adequately maintain existing facilities and infrastructure (let alone fund any of our long-term capital improvement goals or the needs that emerged from community workshops). For this reason, we need to develop a new, stable revenue source, which will require voter approval via a revenue ballot measure. The initial results of the feasibility analysis presented to the Council in May 2005 show that such a measure is viable, but it will require an effective public education and community outreach program, accompanied by strong fiscal accountability measures. Through the major City goal for Long-Term Fiscal Health, the Council has endorsed taking this next step, and we plan to return to the Council in July 2005 with a detailed action plan and budget for doing so. Ole-/ r ; Adoption of 2005-07 Financial Plan Page 2 Changes to the Preliminary Financial Plan At the June 7, 2005, meeting, we reviewed with the Council supplemental follow-up information, summary of budget changes to-date and recommended "work program" narrative changes (see side bar chart for a summary). The only outstanding item at that time was the cost and funding method of the candidate statements in the sample ballot. The Council subsequently decided at the June 7 o Candidate statements. meeting to reduce the cost of candidate statements per a Response to SLOPOA budget candidate from about $1,000 to $200 by limiting comments. statements to 200 words and providing Spanish a Minor work program revisions for translations upon voter request. The Council also consistency with related budget approved requiring candidates to pay for this cost. items. Planning Commission CIP There are no changes to the budget based on this conformance review. decision. a Property damage only collision investigation fees. Final Documents a Multi-dwelling rental inspection fees. After Council adoption of the 2005-07 Financial Plan, a CHC review fee backfill. we will prepare and distribute a final version reflecting a Parking Fund: Reduced budget of all approved changes from the Preliminary Financial $10,000 (perform"pay-on-foot' Plan. Based on these changes, we will also revise and study in-house). distribute a final version of Appendix B: Capital Improvement Plan. Along with a standard printed distribution of these documents, they will also be published on the City's web site. Additionally, we will prepare a Budget-in-Brief that highlights the City's budget process, key budget features, major City goals and basic "budget facts." This budget summary is widely distributed and is also published on the City's web site. Ongoing Monitoring Adoption of the Financial Plan is the beginning—not the end—of a continuous financial management process. Ongoing monitoring efforts include: 1. Interim Financial Reports. On-line access to "up-to-date" financial information is provided to staff throughout the organization. Additionally, comprehensive financial reports are prepared monthly to monitor the City's fiscal condition, and a concise but comprehensive report is issued on a quarterly basis. These are complemented by special reports such as the quarterly Sales Tax Newsletter,Monthly TOT Report and Monthly Investment Report. 2. Goal Status Reports. Formal reports are provided to the Council on an ongoing basis on status of Major City Goals, other important objectives and CIP projects. These are supplemented by ongoing updates through Agenda reports, Council Notes and other special reports. Adoption of 2005-07 FinancialPlanPage 3 3. Mid-Year Budget Reviews. The Council formally reviews the City's financial condition and makes "course corrections" as needed six months after the beginning of each fiscal year. 4. Financial Plan Supplement for 2006-07. While we prepare a two-year Financial Plan, appropriations are still made annually. As such, we will return to the Council in June 2006 for formal approval of the 2006-07 Budget. However, these "second year" appropriations will be based on the foundation developed during the two-year planning and budgetary process. In short, the Supplement is much like our mid-year budget reviews, and focuses on changes since adoption of the Financial Plan. 5. Comprehensive Annual Financial Report. This year-end report shows the final results of the City's financial operations for all funds. It includes audited financial statements by the City's independent -certified public accountant as well as a comprehensive "transmittal memorandum' highlighting key trends and findings about the City's financial condition. Budget Process Review Consistent with our long-standing practice, once the dust has settled for a few months on this Financial Plan process, we will review areas where it went well, and areas where we can improve in the future. This will include soliciting comments from the Council as well as Department Heads, Budget Review Team and key staff from the departments involved in the budget preparation process. This type of analysis has been very valuable in the past in surfacing areas of improvement. After completing this review, we will return to the Council at an appropriate time with recommendations for the 2007-09 Financial Plan process. ATTACHIqENT Resolution approving the 2005-07 Financial Plan and 2005-06 Budget G:Budget Folders/Financial Plan/2005-07 Financial Plan/Preliminary Budget/Agenda Reports/Adoption of 2005-07 Financial Plan RESOLUTION NO. (2005 SERIES) A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO APPROVING THE 2005-07 FINANCIAL PLAN AND 2005-06 BUDGET WHEREAS, the City Administrative Officer has submitted the 2005-07 Financial Plan to the Council for its review and consideration in accordance with budget policies and objectives established by the Council; and WHEREAS, the 2005-07 Financial Plan is based upon extensive public comment and direction of the Council after twelve scheduled budget study sessions and public hearings. NOW, THEREFORE, be it resolved by the Council of the City of San Luis Obispo that the 2005-07 Financial Plan is hereby:approved and that the operating, debt service and capital improvement plan budget for the fiscal year beginning July 1, 2005 and ending June 30, 2006 is hereby adopted. On motion of seconded by and on the following vote: AYES: NOTE: ABSENT: the foregoing Resolution was passed and adopted on June 21, 2005. Mayor David F. Romero, ATTEST: Audrey Hooper, City Clerk APPROVED: Jona . Lowell, City Attorney