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Home My WebLink About06-01-2017 Item 1, BradfordCouncil Memorandum S Date: May 30, 2017 TO: FROM: VIA: SUBJECT: Mayor and Council Xenia Bradford, Interim Finance Director Katie Lichtig, City Manager rL COUNCIL MEETING: l Zvl% ITEM NO.: j�_ RECED MAY 3 072 17 SLO CITERK 2017-19 Preliminary Financial Plan: corrections to published Financial Plan document General Fund Five -Year Forecast Staff has identified a formula error in the General Fund Five -Year Forecast as published on page A 1-30 of the 2017-19 Preliminary Financial Plan. Attached is an updated General Fund Five - Year Forecast due to formula correction on line 36 in fiscal years 2019-20 through 2021-22 (corrections are highlighted in yellow). This formula correction impacts line 42 which is unassigned fund balance above policy reserve. However, the correction does not impact the fund balance for the proposed 2017-19 Preliminary Financial Plan, proposed revenues and expenditures, nor the analysis of the forecast. Line 35 of the forecast shows, annual resources over/under expenses, which shows a balanced budget in the first fiscal year of the financial plan. The General Fund Five -Year forecast shows that the projected expenditures begin to exceed projected revenues starting in fiscal year 2018-19 and significantly increasing thereafter, primarily due to slowing revenue growth and rising pension costs. Staff will return to Council in 2017-18 with recommendations for action to close the budget gap and balance the long-term fiscal forecast as part of the Council Adopted Fiscal Sustainability and Responsibility Major City Goal. Budget and Fiscal Policies Staff has identified that the published Budget and Fiscal Policies section included an outdated policy which was modified as part of the 2015-17 Financial Plan. On page B1-9, section D. Franchise Fees, will be replaced as follows. D. Cost of Service Fees. 2017-19 Preliminary Financial Plan Page 2 The City will treat the water and sewer funds in the same manner as if they were privately owned and operated. This means assessing reasonable cost of service fees in fully recovering service costs. The purpose of the cost of service fee is reasonable cost recovery for the use of the City's services such as street rights-of-way and public safety. The appropriateness of charging the water and sewer fund a reasonable cost of service fee for the use of the City streets is further supported by the results of studies in Arizona, California, Ohio and Vermont which concluded that the leading cause for street resurfacing and reconstruction is street cuts and trenching for utilities. Capital Improvement Program Public Art Master Planning Initiatives (annual) project summary on page E2-27 correctly states funding source as Public Art Fund. However, the project was incorrectly shown as funded by Parkland Development Fund on page E 1-11. The amounts of funding by Parkland Development fund should be decreased by $75,000 in both fiscal years and increased by the same amount in Public Art Fund (Art In -Lieu Fee). This correction will also be made in Changes in Financial Position, pages G 1-19 decreasing Capital Improvement Expenditures and G 1-17 increasing Capital Improvement Expenditures. There are sufficient funds in the Public Art Fund with this correction. The estimated fund balance in Public Art at the end of fiscal year 2018-19, with this correction, is projected at 18,000. Changes in Financial Position Further agenda correspondence will be issued to correct pages G1-5 through G1-7 due to Excel formula correction. This correction will not impact any other schedules, preliminary budget as proposed or fund analysis. Attachment: General Fund Five -Year Forecast General Futid Five Year Fiscal Forecas( 2017-19 Financial Nan S in 111 ACtUal Revised Five Year Forecast 1 1 1 1 2019-20 2020-21 1 17-19 Financial Plan 1 Sales Tax 17,498 16,584 16,932 17,277 17,186 17,659 18,170 2 Measure Y/G Sales Tax 7,178 7,391 7,607 7,679 7,636 7,790 7,959 3 Sales Tax Prop 172 405 428 437 445 445 454 463 4 Property Taxes 10,187 10,767 10,950 11,607 12,245 12,858 13,501 5 Property Tax in Lieu of VLF 4,113 4,365 4,593 4,846 5,088 5,343 5,610 6 Transient Occupancy Tax 7.113 7,186 7,294 7,440 7,663 8,008 8,368 7 Utility Users Tax 5,414 5,506 5,568 5,617 5,690 5,779 5,870 8 Franchise Fees 1,538 1,540 1,527 1,527 1,527 1,527 1,527 9 Business Tax 2,492 2,500 2,747 2,884 3,028 3,180 3,339 10 Real Property Transfer Tax 366 373 381 388 396 404 412 11 Subtotal Taxes 14 56,640 58,03560,906 63,001 12 Transfers In (Gas, TDA, CoS, Other) 2,924 2,353 3,398 3,359 2,377 2,377 2,377 13 Other Subventions & Grants 1,539 316 316 316 316 316 316 14 Development Review Fees 5,624 5,647 6,154 5,981 6,068 6,188 6,311 15 Recreation Fees 1,759 1,640 1,810 1,846 1,883 1,921 1,959 16 Other Service Charges 1,952 1,750 1,633 1,657 1,682 1,707 1,733 17 Other Revenues 891 543 543 543 543 543 543 18 Subtotal Non -Tax Revenues,(; �, �; 'I%,%n,Q�-113,853 13,70213,051 19 Total Resources 70..99376,052 20 Operating Expenses (excl PERS)2 46,223 49,548 50,746 50,817 53,147 54,349 55,665 21 PERS Normal Costs 3,612 3,866 3,058 3,020 3,080 3,157 3,236 22 PERS Unfunded Liability 5,629 6,871 8,134 9,330 10,591 11,416 12,264 23 PERS Discount Rate Adjustment 375 802 1,896 2,550 55,464 60,285 61,938 63,542 67,620 70,818 73,716 25 Debt Service 3,025 3,246 3,245 3,241 2,795 2,391 2,391 26 Transfer to CDBG 147 154 154 154 154 154 154 27 Transfer to Insurance Benefit Fund 2,124 1,740 750 500 - - - 28 Transfer to Parkland Development Fund 900 29 CIP - Fleet Replacement 384 - 674 508 485 500 500 30 CIP - IT Replacement 617 2,621 639 1,136 525 551 579 31 CIP - Major Facility Replacement 146 505 768 550 855 917 962 CIP - All Other & Local Measure Funded 32 projects) 3,329 6,507 3,552 3,797 1 3,502 3,550 3,728 33 Subtotal: r . --- - m9196'31 34 Total Expenditures 71.72032,029 35 Resources Over/(Under) Expenses 5,757 (6,869) 169 (15) (2,163) (2,829) (3,572) 36 Fund Balance, Beginning of Year 24,566 21,539 14,181 13,861 13,357 10,705 7,387 37 Nondispensable/Restricted/ Committed (8,074) (489) (489) (489) (489) (489) (489) 38 Funding Adjustment (709) - - - - 10,705 40 Reserve @ 20% Operating Costs (11,476) (10,851) (10,708) (10,767) (11,245) (11,501) (11,780) 41 Designated Reserve • 10,p(,;