CC 2013-06-11_11.a. FY 2013-14 and 2014-15 Biennial BudgetI •' �1 I
FROM: TO: CITY COUNCILISUCCESSOR AGENCY BOARD OF DIRECTORS
DEBBIE MALICOAT, • OF ' SERVICES
DATE: JUNE 11, 2013
RECOMMENDATION:
It is recommended the City Council adopt the attached resolution approving the FY
2013 -14 Budget.
FINANCIAL IMPACT:
The total citywide budget for FY 2013 -14 is $23,955,195 and $23,024,212 for FY 2014-
15. The total General Fund budget is $13,608,385 for FY 2013 -14 and $14,029,090 for
FY 2014 -15.
BACKGROUND:
The City Council held budget workshops on January 8th and May 20th. At the January 8th
workshop, the Council provided direction on budget goals. At the May 20th workshop,
staff presented the Preliminary FY 2013 -14/ FY 2014 -15 Biennial Budget documents for
the Council to review. Staff received direction to increase the City's expenditures in
sidewalk repairs, which has now been incorporated into the recommended Biennial
Budget. The budget reflects an increase in these expenditures as well as some
additional minor adjustments to revenues. No significant changes have been made to
the Budget since Council reviewed the preliminary document. Specifically, the following
changes are incorporated into the final budget document:
1. Increase sidewalk repair expenditures from $65,000 annually to $80,000
beginning in FY 2014 -15.
2. Reduce Parkside Assessment District assessment revenues from $50,000 to
$41,210 annually.
3. Reduce Children in Motion program revenues from $275,000 to $258,500 in FY
2013 -14.
4. Increase Police Department budget by $2,500 annually.
Item 11.a. - Page 1
CITY COUNCIL
FY 1 2014-15
JUNE 11, 1
PAGE 2
As presented, the second year of the budget relies on reserves in the General Fund.
The budget document includes both fiscal years in order to: (1) determine the amount of
the deficit in the General Fund for the second year and (2) streamline the budget
process for FY 2014 -15. However, the City Council is only requested to approve the
first year of the budget.
The Biennial Budget was developed by incorporating budget goals and priorities
recommended by staff and approved by City Council at the January 8th meeting. Goals
recommended were based on the assumption of maintaining existing service levels.
The goals also reflected the previously established Critical Needs Action Plan, which
identified agreed upon major citywide priorities. The major citywide goals approved are:
• Complete design and pursue approval of State and Federal funding for the Brisco
Road Interchange project.
• Fully fund and construct the pavement management program to establish and
maintain a schedule of improving all streets in the City on a 7 -year cycle.
• Continue an escalated sidewalk repair program.
• Address the Police Department's facility needs.
• Address the Corporation Yard facility needs.
• Implement recommendations to address the City's water needs through a
combination of conservation measures, potential recycling efforts and additional
water supply that may become available.
• Implement a City Charter planning process.
• Develop and implement recommendations to enhance customer service.
The budget recommendations incorporate a balanced and responsible approach to
meeting the City's short and long -term needs in a cost effective manner. The Biennial
Budget is an important document because it serves as staff's recommendation, and
ultimately Council's direction, for the work program for the upcoming two -year period. It
also represents the collective recommendation of the executive team and is the product
of a significant work effort by all City staff.
ANALYSIS OF ISSUES:
As discussed on May 20th, the proposed City budget represents a mixture of both
increased financial stability, but also continued challenges and constraints. The City is
projected to finish FY 2012 -13 with General Fund revenues exceeding expenditures,
which is a substantial accomplishment given that the City had initially anticipated use of
over $450,000 in reserves. On the other hand, continued budget shortfalls are projected
in FY 2013 -14 and FY 2014 -15. The ongoing shortfall has been meaningfully reduced
and, given measures underway to further reduce costs, staff's goal is to achieve a fully
balanced budget during the course of the next fiscal year.
Item 11.a. - Page 2
CITY COUNCIL
FY 2013-14/
JUNE 11, 2013
PAGE 3
Budgets for all funds are incorporated into the document. The FY 2013 -14 proposed
budget is balanced, will continue to fund the high quality of services provided to the
community, and will invest in the future through capital improvements and maintenance
activities.
General Fund
The General Fund balance is projected to be at least $3,205,420 by the end of the
biennial budget period. This amount will exceed the City's policy goal of 20% of General
Fund expenditures. As discussed on May 20th, there is a significant increase in lease
costs due to proposed leasing of the computer network upgrade and vehicle
replacements in the Public Works Department. In addition, the Biennial Budget
addresses projected impacts from the Federal Affordable Health Care Act.
Enterprise Funds
Both the Water and Sewer Funds are also balanced and fully fund the projects
approved by the City Council in the Water and Wastewater Master Plans. The Water
Fund has a projected fund balance at the end of FY 2014 -15 of $12.7 million, which
remains well above the policy goal of 60 days of operating expenses plus $500,000.
The ending fund balance for the Sewer Fund is projected to be $802,461, which also
meets the policy goal for the first time in many years. These recommendations will
establish the enterprise budgets in a strong position as the City begins the process of
preparing the next water and sewer rate study.
Development Impact Fee Accounts
Development impact fee accounts are established to fund upgrades in public facilities
through fees from development projects. These accounts have experienced a significant
reduction in ongoing revenues due to the impact of the economy on new development,
which has in turn affected the City's ability to fund major capital improvements. Each of
the funds remains balanced. The most significant funds to note are the Traffic
Signalization and Park Development Funds, which have funds sufficient for new
projects. As a result, staff is initiating processes in both areas to prioritize needs in the
community during the upcoming year. Projected expenditures and fund balances are as
follows:
Fee
FY 2013 -14
FY 2014 -15
Balance
Fire Protection
$0
$0
$143,009
Police Protection
$20,000
$0
$62,421
Park Development
$0
$0
$680,433
Park Improvement
$20,000
$20,000
$84,960
Community Center
$0
$0
$38,082
Traffic Signalization
$0
$30,000
$408,947
Transportation Facility
$700,000
$0
$963,608
Water Neutralization
$105,900
$99,400
$193,867
Affordable Housing
$5,000
$5,000
$76,842
Item 11.a. - Page 3
CITY COUNCIL
FY 1 2014-15 BIENNIAL BUDGET
JUNE 11, 1
PAGE 4
Capital Improvement Program
The recommended Capital Improvement Program (CIP) includes the funding projected
necessary to address all of the major needs identified. These include the annual
Pavement Management Program, the Police Building remodel, the Brisco Interchange
project, sidewalk repairs, drainage repairs, upgrade of the Corporation Yard offices,
purchase of the Le Point Street parking lot property, ongoing Americans with Disabilities
(ADA) improvements, lighting at Don Roberts Field, undergrounding utilities on East
Grand Avenue, trenchless sewer rehabilitation, Sewer Lift Station No. 4 rehabilitation,
Fair Oaks Water Main improvements, Leanna Drive Creek Crossing Water Upgrade,
Well No. 11 Construction, and Reservoirs No. 3 and No. 4 Coating and Seismic
Evaluation.
Local Transportation Funds available for street improvements have increased by
roughly $200,000 due to the Five Cities area's recent designation as a Federal
"urbanized area ". Along with current year savings, this increases the Pavement
Management Program budget to over $1.2 million once again in FY 2013 -14.
Based on Council direction on May 20th, an increase in the City's expenditures for
sidewalk repairs has now been incorporated into the recommended budget. The
Biennial Budget reflects an increase from $65,000 annually to $80,000 beginning in FY
2014 -15.
ALTERNATIVES:
The following alternatives are provided for the Council's consideration:
1. Adopt resolution approving the FY 2013 -14 Budget;
2. Modify and approve FY 2013 -14 Budget;
3. Do not approve the FY 2013 -14 Budget;
4. Provide direction to staff.
ADVANTAGES:
The recommendations in the Budget reflect revenue and expenditure strategies that will
accomplish the following:
• Maintain key service levels;
• Maintain a substantial investment in improvements to the City's infrastructure and
facilities;
• Effectively manage current and future salary and benefit costs;
• Maintain reserves at or above the City's policy levels;
• Do not rely on tax or fee increases; and
• Limit reliance on one -time revenues.
Item 11.a. - Page 4
CITY COUNCIL
JUNE 11, 2013
PAGE 5
DISADVANTAGES:
The recommendations rely on negotiated concessions with employee unions that have
not yet been finalized, will utilize reserves, and will leave a projected shortfall in FY
2013 -14 and FY 2014 -15.
In addition, a number of uncertainties exist that could negatively impact revenue
projections and status of the proposed budget. These include the following:
• Implementation of the Affordable Care Act
• Future increases to PERS retirement rates; and
• Overall economic recovery.
ENVIRONMENTAL REVIEW:
No environmental review is required for this item.
PUBLIC NOTIFICATION AND COMMENTS:
The Agenda was posted in front of City Hall on Thursday, June 6, 2013 and on the
City's website on Friday, June 7, 2013. No comments were received.
Attachment:
1. City of Arroyo Grande FY 2013 - 14/2014 -15 Biennial Budget (on file in the
Administrative Services and City Clerk Departments for public review)
Item 11.a. - Page 5
WHEREAS, a proposed Biennial Budget for the City of Arroyo Grande for the Fiscal Years
commencing July 1, 2013 and ending June 30, 2014 and commencing July 1, 2014 and
ending June 30, 2015 was submitted to the City Council and is on file with the Director of
Administrative Services; and
WHEREAS, the City Council also serves as the Board of Directors of the Successor
Agency to the Dissolved Arroyo Grande Redevelopment Agency; and
WHEREAS, proceedings for adoption of said Budget have been duly taken; and
WHEREAS, the total Budget for FY 2013 -14 is $23,955,195.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE DOES
RESOLVE AS FOLLOWS:
SECTION 1. The Budget is adopted as the Biennial Budget for the City of Arroyo Grande
for the Fiscal Year commencing July 1, 2013 and ending June 30, 2014.
SECTION 2. At the close of each Fiscal Year, unexpended appropriations in the Operating
Budget will be carried forward to the next fiscal year as necessary to underwrite the
expense of outstanding purchase commitments. Unexpended appropriations for authorized,
but uncompleted projects as approved by the City Council may be carried forward to the
next succeeding Budget upon recommendation by the Administrative Services Director and
approval of the City Manager.
On motion of Council Member , seconded by Council Member , and on
the following roll call vote, to wit:
AYES:
Council Members
NOES:
Council Members
ABSENT:
Council Members
the foregoing Resolution was passed and adopted this day of 12013.
Item 11.a. - Page 6
• - 'a I •
KELLY WETMORE, CITY CLERIC
TIMOTHY J. CARMEL, CITY ATTORNEY
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