CC 2017-02-14_09d Deferral of 2 Year Budget Plan
MEMORANDUM
TO: CITY COUNCIL
FROM: ROBERT K. MCFALL, INTERIM CITY MANAGER
DEBBIE MALICOAT, ADMINISTRATIVE SERVICES DIRECTOR
SUBJECT: DEFERRAL OF TWO-YEAR BUDGET PLAN TO BEGIN IN FISCAL YEAR
2018/19 AND CONTINUING WITH A ONE-YEAR BUDGET FOR FISCAL
YEAR 2017-18
DATE: FEBRUARY 14, 2017
RECOMMENDATION:
It is recommended the City Council approve deferring the next two-year budget plan to start
in Fiscal Year 2018/19, and continuing with a one-year budget for Fiscal Year 2017/18.
IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:
There is no significant financial impact from this request; the overall staff burden of
preparing the budget for FY 2017/18 will be slightly lowered resulting from only preparing a
one-year budget for that year, but will return to normal staff demand for FY 2018/19.
BACKGROUND:
For the past many budget cycles, the City of Arroyo Grande has adopted a two-year budget
plan, coupled with approval of a specific annual operating budget. A two year budget plan
is considered a municipal government “best practice” and promotes more effective
budgeting and longer range financial planning, particularly when coupled with other
strategic planning effects that assure the budget process reflects the adopted goals of the
community. The City of Arroyo Grande typically adopts an annual Critical Needs Action
Plan or work program, a long range Capital Improvement Program and forecasts revenues
and expenses over a ten-year period of time. These are practices that exhibit competent
governmental budgeting and encourage community engagement and disclosure.
The next two-year budget cycle would typically begin with the upcoming Fiscal Year budget
beginning in 2017/18.
ANALYSIS OF ISSUES:
While evaluating the upcoming fiscal year that would normally initiate the beginning of the
next two-year budget plan, opportunities have become apparent that make considering
deferring this action for one year a more effective alternative, re-establishing the two-year
budget cycle to initiate in even-calendar years.
Item 9.d. - Page 1
CITY COUNCIL
DEFERRAL OF TWO-YEAR BUDGET PLAN TO BEGIN IN FISCAL YEAR 2018/19
AND CONTINUING WITH A ONE-YEAR BUDGET FOR FISCAL YEAR 2017-18
FEBRUARY 14, 2017
PAGE 2
The first consideration evaluated with regard to possibly deferring the upcoming two-year
budget is the absence of a permanent City Manager. The adopted budget is the
fundamental tool the City Council uses to provide for the accomplishment of Council
adopted goals and vision, and a reflection of input from the community. The City Manager
typically provides a key leadership and engagement role in this process and is the individual
held most accountable for its proper implementation. Not being a part of the process
creates some level of disadvantage in the accomplishment of this responsibility. Deferring
the two-year budget for one year would permit the new City Manager to be a part of the
entire budget planning and adoption process.
Additionally, the current election cycle results in the potential for three new Council
members beginning service simultaneously with the beginning of the odd-year two-year
budget cycle. In some instances, this would be inconsequential if the election merely re-
elects existing or previously experienced Council members. But in the event a new council
member(s) is elected, the additional time that re-sequencing the budget cycle would create
could prove to be advantageous in allowing the new council member time to gain more
overall experience.
There also has been discussion of the budgetary planning advantage of the Five Cities Fire
Authority (FCFA) being on the same two year budget cycle as the City of Arroyo Grande, for
the primary reason it would allow for better coordination of considering budgetary needs
and requests that originate from the FCFA. In discussing this proposal with the FCFA, the
Fire Chief has expressed interest in also beginning a two-year budget plan, but would need
another year to prepare and implement the same. Deferring the City of Arroyo Grande
budget for one year would accommodate the FCFA schedule.
Lastly, both Grover Beach and the Oceano Community Services District have expressed
interest in establishing a two-year budget plan to coordinate with the FCFA. Having all the
member agencies on the same budget cycle would provide a number of benefits for more
effective overall long range planning.
ALTERNATIVES:
The following alternatives are provided for the Council’s consideration:
1. Accept the recommendation to defer the two-year budget plan until FY 2018/19;
2. Continue with the two-year budget plan for FY 2017/18;
3. Discontinue two-year budget planning; or
4. Provide direction to staff.
ADVANTAGES:
Continuing with a two-year budget plan is essential to proper operational planning.
Deferring the beginning of the next cycle for one year, to FY 2018/19, provides a number of
on-going benefits in addition to coordinating with key regional partners.
Item 9.d. - Page 2
CITY COUNCIL
DEFERRAL OF TWO-YEAR BUDGET PLAN TO BEGIN IN FISCAL YEAR 2018/19
AND CONTINUING WITH A ONE-YEAR BUDGET FOR FISCAL YEAR 2017-18
FEBRUARY 14, 2017
PAGE 3
DISADVANTAGES:
The City would essentially extend another one year budget without the benefit of a
comprehensive new strategic or community based goal setting plan.
ENVIRONMENTAL REVIEW:
None required.
PUBLIC NOTIFICATION AND COMMENTS:
The Agenda was posted at City Hall and on the City’s website in accordance with
Government Code Section 54954.2.
Item 9.d. - Page 3
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