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Agenda Packet 2002-05-30 SP CITY COUNCIL City of AGENDA flrroyo qranae Michael A. Lady Mayor Thomas A. Runels Mayor Pro Tem Steven Adams City Manager Jim Dickens Council Member Timothy J. Cannel City Attorney Tony Ferrara Council Member Kelly Wetmore Director, Administrative SeIVices Sandy Lubin Council Member NOTICE OF SPECIAL MEETING CITY COUNCIUREDEVELOPMENT AGENCY AGENDA SUMMARY THURSDAY, MAY 30, 2002 6:30 P.M. Arroyo Grande City Council Chambers 215 East Branch Street, Arroyo Grande 1. CALL TO ORDER: 6:30 P.M. 2. ROLL CALL: COUNCIURDA 3. FLAG SALUTE 4. CITIZENS' INPUT, COMMENTS, AND SUGGESTIONS on Special Meeting Agenda Items. Members of the public wishing to address the Council/RDA on any item described in this Notice may do so when recognized by the Presiding Officer. 5. CONSIDERATION OF FISCAL YEAR 2002..Q3 PRELIMINARY ANNUAL BUDGET (ADAMS/SNODGRASS) The City Council/Redevelopment Agency will review the FY 2002-03 Preliminary Annual Budget. The City Council/RDA will consider adoption of the FY 2002-03 Budget at its Regular Meeting of June 11, 2002. 6. ADJOURNMENT to Regular City Council Meeting of Tuesday, June 11, 2002 at 7:00 p.m. in the Council Chambers, 215 East Branch Street. --"-- MEMORANDUM TO: CITY COUNCIL FROM: STEVEN ADAMS, CITY MANAGER/~ SUBJECT: FY 2002-03 PRELIMINARY BUDGET DATE: MAY 30, 2002 RECOMMENDATION: The FY 2002-03 Preliminary Budget is provided for review, discussion, public input and direction. No action is recommended at this time. The proposed budget will be placed on the June 11, 2002 City Council agenda for formal consideration. FUNDING: The proposed General Fund budget is $10,123,540 and the total recommended City budget is $18,609,497. All funds are balanced. DISCUSSION: Please find attached the recommended Preliminary Budget for FY 2002-03. The document represents the collective recommendation of the department directors for the work plan for the upcoming year. All funds are balanced under the proposal. We believe the draft budget addresses existing needs, but does so prudently by managing ongoing costs, balancing priorities and planning long term. City funds, as proposed, are balanced. When transfers are excluded, the total recommended Citywide budget is $16,051,047. After accounting for carryover appropriations from the prior year, this represents a decrease of 1.35% from the FY 2001-02 Amended Budget. However, the reduction results primarily from a decrease in new one-time funding for capital projects. The General Fund, which finances the majority of what are considered traditional government services, is proposed to be $10,123,540. This represents an increase of 2.9%. Before including service level changes and salary adjustments, the General Fund budget is reduced by approximately $242,200 from the current year adjusted budget. This is an indication of the operational efficiency of each of the City's departments. Projected revenues exceed the recommended expenses by $307,620. This is projected to remain positive after compensation adjustments are incorporated. ----- CITY COUNCIL FY 2002..Q3 PRELIMINARY BUDGET MAY 30, 2002 PAGE 2 The recommended budget addresses each of the budget priorities established by the City Council at the initiation of the budget process. New funding is included for an update to the City's Housing Element of the General Plan, the addition of one Maintenance Worker position for the addition of the Rancho Grande Park, the addition of one full-time paid Fire Engineer position, an increase in funding for street improvements, an extension and improvements to City Hall to make the building compliant with the Americans with Disabilities Act (ADA), costs for the November 2002 municipal election and employee compensation adjustments. These service level and budget adjustments were funded through increases in revenues, reductions in ongoing operational costs, and other cost saving measures. The most significant accomplishment is that the projected June 30, 2002 Fund Balance of the General Fund will exceed the City's 15% reserve policy goal for the first time. The current year fund balance is projected to be approximately $2,277,800 (24.3% of appropriations ). By the end of FY 2002-03, the proposed budget projects this to increase over $2.5 million. After compensation adjustments are addressed, it is projected that the fund balance will remain above $2.3 million. The City's Capital Improvement Program (CIP) will continue to make a significant investment in the community's future through the maintenance of the infrastructure system. Major projects programmed in FY 2002-03 include Rancho Grande Park, City Hall extension and ADA improvements, Creekside Path, Bridge Street bridge deck rehabilitation, Newsom Springs drainage improvements, Sewer Lift Station No.1, East Grand Avenue Phase 3 reconstruction, and Reservoir No.1 replacement. A plan is also incorporated in the 5-year CIP for completion of Branch Mill resurfacing in early FY 2003-04, which has been adjusted due to State funding delays. A plan to address a shortfall in the Redevelopment Agency Fund is on target. Based on current trends, the fund is expected to begin repaying outstanding debt by FY 2005-06. The one new revenue item within the Preliminary Budget is a recommendation to increase the City's Refuse Franchise Fee from 6% to 10%, effective April 1, 2003, to partially fund street sweeping services. The increased cost would result in a pass through to the customers. The increase is needed to fund operational costs to maintain the City's sewer system. It is proposed that street sweeping costs be paid from the refuse franchise revenue rather than sewer fees, as is currently done. The budget proposals also include contingency planning for potential impacts of the State budget crisis on local funding sources. Plans include unallocated funds within the budget, available reserves, holding the new Fire Engineer position vacant until January 1, 2003, review of other vacant positions, a delay in the City Hall extension project if necessary, and ongoing efforts to increase revenues and reduce costs. I would like to provide special recognition to the City's Director of Financial Services, Lynda Snodgrass, for another exceptional job in preparing the budget document. The -- ------_."--- CITY COUNCIL FY 2002-03 PRELIMINARY BUDGET MAY 30, 2002 PAGE 3 department directors should also be commended for the cost effective manner in which they have operated their departments and submitted their budget recommendations this year. Lastly, continued improvement to the City's financial condition is largely attributable to the ongoing prudent fiscal policies and direction of the City Council. The budget recommendations, as well as departmental goals and accomplishments, will be presented in more detail at the special City Council Study Session. Please feel free to contact staff with any questions or requests for additional information in the meantime. AL TERNA TIVES: The following alternatives are provided for the Council's consideration: - Receive and discuss recommendations; - Direct staff to provide additional information and/or make changes.