HomeMy WebLinkAbout06/04/2019 Item 14 - ElkeCity of San Luis Obispo, Council Memorandum
Council Agenda Correspondence
DATE: May 31, 2019
TO: City Council
FROM: Brigitte Elke, Finance Director
VIA: Derek Johnson, City Manager DJ
SUBJECT: 2019-21 Financial Plan
Attached please find several changes and additions to the 2019-21 Financial Plan document that
was distributed on May 22, 2019.
1. The City Council page in the introduction was updated.
2.Changes were made to the Budget at a Glance section for the General Fund in order to better
represent the tax revenue numbers (packet page 80). Additionally, the table on packet page 82
was updated to reflect the correct numbers.
3. Two sections were omitted in the document that are provided here:
a.Fund Structure under Financial Plan Framework. – Addendum B
b. Reimbursement, operating, and fund transfers under Operating Budgets – Addendum C
All changes will be reflected and integrated in the final budget document before it is being
published.
Attachments:
Revised Packet Page 15 – City Profile – City Council
Revised Packet Pages 79 – 86 – Budget at a Glance
Addendum B1 – B3
Addendum C1 – C2
Item #14 - Agenda
Correspondence
The City of San Luis Obispo is a charter city and operates under the "Council-Mayor-City Manager"form of
municipal government.The five-member City Council consist of the directly-elected Mayor and four City
Council Members.The Mayor is elected to a two-year term and Council Members are elected to four-year
terms.
The City Council is the legislative authority and sets the policies under which the City operates.The City
Council has the power to adopt ordinances and resolutions,make appointments to the City's advisory
bodies,establish policies and approve programs,appropriate funds,adopt budgets,and approve contracts.
The Mayor presides at all meetings of the City Council and is recognized as the official head of the City for
all ceremonial purposes.
CITY P ROFILE
City Council
2019–21 City Council Financial Plan Vision
The City of San Luis Obispo is a dynamic community embracing its future while
respecting its past with core values of civility, sustainability, diversity, inclusivity,
regionalism, partnership, and resiliency.
Andy Pease
Vice-Mayor
Carlyn Christianson
City Council
Aaron Gomez
City Council
Erica A. Stewart
City Council
Heidi Harmon
Mayor
8 Packet Page 15
Budget at a Glance
Budget at a Glance – General Fund
The City of San Luis Obispo 2019-21 Financial Plan provides the detailed approach to address community
priorities in a fiscally responsible manner. The Financial Plan is aligned with the City Council’s Major City
Goals, supports the core services of the City, and maintains and replaces its assets. The Financial Plan also
provides clear direction and authority to spend funds appropriated according to the services outlined. This
Budget at a Glance concentrates on the General Fund. You can find information pertaining to the Water
and Sewer Utilities, Parking, and Transit in the section “Business Activities” section of the budget.
The Financial Plan is centered around the 2019-21 strategic priorities (Major City Goals) that were
developed through extensive community outreach and input, resulting in five major city goals that
provide for overlapping efforts in achieving the desired outcome.
Packet Page 79
Budget at a Glance
Where the Money Comes From
Revenue – General Fund
Similar to most municipalities in California, various tax revenues
are the largest source of revenue for the General Fund, financing
the majority of the services. In the first year of the 2019-21
Financial Plan, the City has budgeted a new tax source to its
portfolio with the passing of the Cannabis tax voted in by the
community in November 2018.
Though taxes make up the majority of the revenue, user fees for
services are another important income for the City; in 2019-20,
revenue from this source is anticipated at $14 million.
Taxes & Franchise Revenue
Projected
FY 20
Projected
FY 21
Variance
Tax & Franchise Revenue
Sales & Use Tax $ 25,899 $ 26,266 1%
General $ 17,675 $ 17,940 1%
Public Safety (Prop 172) $ 385 $ 369 -4%
Local Revenue Measure $ 7,840 $ 7,957 1%
Property Tax $ 17,921 $ 18,638 4%
General Property Taxes $ 12,477 $ 12,976 4%
Real Property Transfer Tax $ 380 $ 395 4%
Property Tax In Lieu Of Vlf $ 5,064 $ 5,266 4%
Transient Occupancy Tax $ 8,033 $ 8,133 1%
Lodging $ 7,757 $ 7,854 1%
Homestays $ 275 $ 279 1%
Utility Users Tax $ 5,854 $ 5,971 2%
Franchise Fees $ 1,558 $ 1,589 2%
Business Tax Certificates $ 2,942 $ 3,001 2%
Cannabis $ 650 $ 1,500 231%
Total Tax & Franchise Revenue $ 62,856 $ 65,097 4%
(in thousand)
85%
15%Taxes
Fees for
Services
Packet Page 80
Budget at a Glance
User Fee and Charges
Fees for Services Projected
FY 20
Projected
FY 21
Variance
Police Services $ 742 $ 742 -
Fire Services $ 1,400 $ 1,416 1%
Development Review $ 5,333 $ 5,526 4%
Parks & Recreation $ 1,915 $ 1,946 2%
General Government $ 560 $ 571 2%
Cannabis $ 400 $ 750 188%
Other Revenues $ 3,230 $ 2,036 -62%
Subventions & Grants $ 900 $ 900 -
Total Fees & Other Revenue $ 14,480 $ 13,787 -37%
(in thousand)
$60,724 $62,856 $65,097 $66,268 $67,435 $68,566 $11,215
$14,480 $13,787 $14,325 $14,621 $14,922
2018-19 2019-20 2020-21 2021-22 2022-23 2023-24
Tax Revenue Fee Revenue
Packet Page 81
Budget at a Glance
What the Money is Spent On
Operating Budget- General Fund
The City of San Luis Obispo provides services to the community by incurring operating and capital
expenditures. It fulfills its core services through its employees in Public Safety, Park & Recreation, Public
Works, Utilities, and Community Development which are supported by internal services departments such
as Administration, Finance, City Attorney, and Human Resources. With each service, the capital cost of
any equipment, infrastructure or facility needed to deliver the service must be considered in addition to
the ongoing operation and labor cost of providing the service to the Community.
Like most municipalities, the City is faced with balancing rising costs, limited resources, and providing
excellent levels of service to its citizens. To achieve this balance through the budget process, departments
undertake re-analysis of budget needs and endeavor to find economies and efficiencies that are expected
of a prudent budgeting process. Staff explore opportunities to increase efficiencies throughout the City’s
operations focusing on providing core services to the community.
The 2019-21 Financial Plan reflects the strategic approach to cost savings and ways to do business
differently (see Strategic Planning section).
The City’s annual operating budget for the General Fund totals
$65 million and includes 54 programs reaching from City
Administration to Building and Safety, Development Review,
Accounting, Purchasing, Emergency Response, Aquatics, Golf,
Senior Services, Police Patrol, Traffic Safety, Streets & Sidewalk
Maintenance, Transportation Planning, and the Urban Forest.
Operating Budget by Category
Category 2019-20 2020-21 Variance
City Administration $ 7,146,436 $ 7,369,051 3%
City Attorney $ 677,237 $ 705,122 4%
Community Development $ 4,798,760 $ 4,851,870 1%
Finance $ 1, 912,718 $ 1,985,452 4%
Non-Departmental $ 1,031,183 $ 1,183,738 4%
Fire $ 13,019,071 $ 13,439,611 3%
Human Resources $ 1,363,945 $ 1,404,100 3%
Parks & Recreation $ 4,303,161 $ 4,448,221 3%
Police $ 17,685,865 $ 18,669,167 6%
Public Works $ 13,138,969 $ 13,309,803 1%
Total $ 65,077,345 $ 67,366,135 3%
77%
8%
9%
6%Staffing
Contract
Services
Other OpEx
Transfer
Packet Page 82
Budget at a Glance
Operating Budget by Category
Program Enhancements
Program enhancements were included in the 2019-21 Financial Plan to address:
Major City Goals
Public Health
Thoughtful
Reorganizations
Combined Requests 2019-20 2020-21 Variance
One-Time Requests for 2019-21 $786,771 $527,797 -33%
Requests for Ongoing Enhancements $915,642 $1,091,793 19%
Total Request $1,702,413 $1,619,590 -5%
11%
1%
7%5%
20%
2%
7%
27%
20%
City Administration City Attorney Community Development
Finance Fire Human Resources
Parks & Recreation Police Public Works
Packet Page 83
Budget at a Glance
Capital Budget – General Fund
The City’s 20-year capital budget is a plan that identifies projects,
needed funding, and timelines including the impact of multi-year, and
multi-department projects. Capital requirements are driven by the
need to maintain, upgrade, or replace existing ageing infrastructure,
meet industry standards, populations growth and invest in new capital
assets in alignment with the City’s major city goals and community
need.
The Capital budget allocation for the Financial Plan period from the General Fund totals $16.9 million and
includes projects such as bridge replacement, street rehabilitation, urban forest care, and playground
equipment.
Capital Expenditures
CIP by Fund (in thousand) Projected
FY 20
Projected
FY 21
Variance
General CIP $ 934 $ 521 -44%
SB1 $ 818 $ 1,325 62%
Local Revenue Measure CIP $ 3,642 $ 3,698 2%
Fleet $ 593 $ 602 2%
IT infrastructure $ 885 $ 904 2%
Major Facility Replacements $ 516 $ 524 2%
Infrastructure Investment Fund $ 1,900 $ 119 -94%
Total CIP Investment $ 9,288 $ 7,693 -17%
6%
11%
7%
43%
22%
11%
CAPITAL INVESTMENT BY GOVERNMENTAL
FUND
Facilities
Information Technology
Fleet
Local Revenue Measure
Infrastructure Investment
General CIP
Packet Page 84
Budget at a Glance
Investment in Major City Goals Strategic Work Programs
For details on the individual objectives and work programs, please see the Strategic Priorities section.
General Fund Debt
Debt Issue - Asset Outstanding
Principal
Annual
Payment
Final
Year
FY 2020
2010 Lease Fire Truck (Apparatus) $128,738 $128,738 2020
2015 Lease Mobil Data Equipment Lease $44,291 $44,462 2020
2014 Lease Copiers $5,324 $5,347 2020
2016 Lease Fire Pumper & Street Sweeper $236,054 $240,067 2021
2017 Lease Dump Truck & Sweeper $343,021 $141,227 2023
2014 Energy Resources Conservation State Loan $323,347 $94,242 2024
2018 Lease Fire Truck $449,528 $146,131 2024
2012 Lease Revenue Refunding Bonds $3,230,000 $384,200 2030
2018 Refunding Bond $9,743,125 $969,097 2039
2014 Lease Revenue LOVR Overpass $6,805,000 $588,006 2045
Total General Fund Debt $21,308,428 $2,741,517
Total
Investment
$1.4 million
Total
Investment
$14 million
Total
Investment
$55 million
Total
Investment
$17 million
Total
Investment
$42 million
Housing Fiscal
Sustainability
Sustainable
Transportation
Climate
Action
Downtown
Vitality
Packet Page 85
Budget at a Glance
Total General Fund Expenditure Budget
General Fund Reserve Levels
Per the Fiscal Policies (see Reference Material), the City will maintain a minimum fund balance of 20% of
operating expenditures in the General Fund. This is considered the minimum level necessary to maintain
the City’s credit worthiness and to adequately provide for:
Economic uncertainties, local disasters, and other financial hardships or downturns in the local or
national economy.
Contingencies for unforeseen operating or capital needs.
Cash flow requirements.
In addition, the City maintains a revenue stabilization reserve at $1 million and, new with the 2019-21
Financial Plan, a capital reserve to offset unanticipated cost increases, unforeseen conditions, and urgent,
unanticipated projects and to provide for continued investment in infrastructure maintenance and
enhancement.
Projected
FY 20
Projected
FY 21
General Reserve $ 10,184 $ 10,307
Revenue Stabilization $ 1,000 $ 1,000
Capital Reserve $ 500 $ 750
(in thousand)
$-
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
$70,000,000
$80,000,000
$90,000,000
2019-20 2020-21
Operating Expenses Capital Expenses
Debt Expense Total General Fund
Packet Page 86
Operating Budgets
Transfers
Interfund Transfers
The City’s General Fund receives reimbursements and operating transfers for various services and
activities that are provided by General Fund operating programs. In turn, the General Fund provides
funding to internal services’ funds for specific uses. The amounts shown below represent the anticipated
funding that will be transferred between the funds.
Reimbursement Transfers
These transfers reimburse the General Fund for direct cost incurred for service to the City’s other funds,
mainly its Enterprise Funds. The cost comes largely from internal services departments such as City
Administration, Human Resources, City Attorney’s office, and Finance. It is annually assessed through
the City’s Cost Allocation Plan (CAP).
Fund 2019-20 2020-21
Transfer out Transfer In Transfer out Transfer In
General Fund 4,271,664 $4,363,217
Parking Fund $537,277 $548,023
Sewer Fund $1,711,224 $1,745,448
Transit Fund $276,806 $282,342
Water Fund $1,592,154 $1,623,997
Whale Rock Fund $160,203 $163,407
Total $4,271,664 $4,271,664 $4,363,217 $4,363,217
Operating Transfers
Fund 2019-20 2020-21
Transfer out Transfer In Transfer out Transfer In
General Fund $4,410,000 $3,304,000 $4,876,000 $3,365,700
Gas Tax Fund $1,000,000 $1,020,000
Housing Fund $57,000 $58,200
TDA Fund $45,000 $45,900
TIF Fund $280,000 $285,600
TBID Fund $32,100 $32,800
Parking Fund $227,700 $227,700
Sewer Fund $718,500 $732,900
Water Fund $943,700 $962,600
Insurance Fund $4,410,000 $4,876,000
Total Operating Transfer $7,714,000 $7,714,000 $8,241,700 $8,241,700
Addendum C1
Operating Budgets
Transfers
Replacement Transfers
The City currently invest funding into the maintenance and replacements of its Fleet assets, its
Information Technology Infrastructure, and its Major Facilities through designated funds. This allows for
funding to be available when scheduled replacements and maintenance work is needed.
The individual expenditure is accounted for under the City’s Capital Improvement Plan which includes a
replacement schedule for the City’s fleet proposed over the Financial Plan period.
Fund 2019-20 2020-21
Transfer out Transfer In Transfer out Transfer In
General Fund $1,994,000 $2,031,000
Fleet Fund $593,000 $602,000
IT Replacement Fund $885,000 $904,000
Major Facilities Replacement Fund $516,000 $524,000
Total $1,994,000 $1,994,000 $2,031,000 $2,031,000
Addendum C2
Financial Plan Framework
Fund Structure
The City’s financial structure is separated into governmental and business activities. Five major funds are
administered and reported on. Each fund balances all revenues and expenditures to ensure that there is
no immediate or emerging structural budget deficit. Business activities are distinguished from
governmental funds by their similarity to private sector enterprises and are financed solely through user
charges.
General Fund
The General Fund is mostly derived
through various tax incomes ranging from sales
and use tax to property, transient occupancy,
and utility user tax levies. It also collects service
fees to recover the reasonable costs for specific
services. The General Fund provides the sources
for public safety services, community
development, parks & recreation, public works,
and administrative services.
Water Fund – Public Utilities
The City’s Water Fund is a business-
activity and is therefore funded solely through its
own rates to provide service. It treats and
delivers water to the public from three surface
reservoirs as well as recycled water for
landscape irrigation. The water service is
provided to all property owners in the City
including parks and sport fields.
Sewer Fund – Public Utilities
The City’s Sewer Fund is also a
business-activity and fund and
operates and maintains the City’s sanitary sewer
system and the Water Resource Recovery
Facility. An efficient sanitary sewer system that
collects and treats wastewater provides a
foundation for public health and community
well-being. User fees are the primary source of
revenue for this fund.
Parking Fund – Public Works
The City’s Parking Fund implements
the Access and Parking
Management Plan and directs the operation and
maintenance of the City’s parking facilities.
These facilities include parking lots in Downtown
and Railroad Square, on-street parking,
residential parking districts, and three parking
structures. The operation is paid for by parking
user fees.
Transit Fund – Public Works
The City’s Transit Fund provides
daily fixed-route transit service to
the general public within City limits and to Cal
Poly University. It also includes the Downtown
trolley service connecting downtown with the
lodging district on upper Monterey Street. The
services are paid for partially by user fares and
receives federal and state funding. It is therefore
considered a business activity fund.
Addendum B1
Financial Plan Framework
Fund Departments/Programs1
General
Fund
•City
Administration
•City Attorney
•Community
Development
•Finance
•Fire
•Human Resources
•Parks &
Recreation
•Police
•Public Works
Fund Departments/Programs1
Water
Fund
•Water
Administration &
Engineering
•Water Treatment
•Water Source of
Supply
•Reservoir
Operation
•Water
Distribution
•Water
Resources
Fund Departments/Programs1
Sewer
Fund
•Wastewater
Administration &
Engineering
•Environmental
Compliance
•Water Resource
Recovery
•Utilities Revenue
•Water Quality Lab
•Wastewater
Collection
•Solid Waste
Recycling
Fund Departments/Programs1
Parking
Fund
•Parking
Operations and
Maintenance
Fund Departments/Programs1
Transit
Fund
•Transit
Operations and
Maintenance
1 Departments are listed for the General Fund and programs are listed for Enterprise Funds.
Addendum B2
Financial Plan Framework
Fund Structure
Governmental Funds
In addition to the five major funds (general, parking, sewer, transit and water), the City maintains a fund
structure to account for special revenue, capital projects, and its debt service. As the General Fund,
these funds belong to the governmental activities and are distinguished by their measurement focus on
determining financial position and changes in financial position according to the modified accrual
method of accounting, rather than upon determining net income.
Local Revenue Measure Sub-Fund
Special Revenue Funds
Downtown Business Improvement
District
Gas Tax Fund
Transportation Development Act Fund
Law Enforcement Grant Fund
Public Art (Private Sector Contributions)
Fund
Tourism Business Improvement District
Fund
Capital Project Funds
General Purpose CIP
Parkland Development Fund
Transportation Impact Fee Fund
Open Space Protection Fund
Airport Area Impact Fee Fund
Affordable Housing Fund
Fleet Replacement Fund
Los Osos Valley Road sub-Area Fee Fund
Information Technology Replacement
Fund
Major Facility Replacement Fund
Infrastructure Investment Capital Fund
Addendum B3