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HomeMy WebLinkAbout2011-06-20_cityofsanrafael_f20c8e92cd80633bcbfa3d608ebe5d2921 Agenda Item No: Meeting Date: June 20, 2011 SAN RAFAEL CITY COUNCIL AGENDA REPORT Department: CITY MANAGER Prepared by: Nancy Mackle, City Manager City Manager Approvals ` SUBJECT: REVIEW OF CITY OF SAN RAFAEL BUDGET FOR FISCAL YEAR 2011-2012 RECOMMENDATION: Review staff report, and provide any final direction needed for formal budget adoption at July 5th, 2011 City Council meeting. BACKGROUND: The City must adopt a balanced budget for all funds for this coming fiscal year. This report will provide the City Council and community with an update on the proposed budget for fiscal year 2011-2012. The City Council has reviewed fiscal year 2011-2012 budget information in several public sessions and in much detail over the past few months as summarized below: On March 7th, 2011 the Interim City Manager Jim Schutz provided a detailed report which summarized the budgetary issues before us, actions taken to date, and indicated that the City would again be facing a General Fund deficit for the upcoming 2011-12 fiscal year. This report provides detailed background addressing how the City has addressed the recession over the last couple of years and what issues are before us. 2. On March 21St, the Finance Director provided a Preliminary Budget report indicating an approximate $4.4 million General Fund deficit. This report summarizes the key elements of the projected 2011-12 deficit. 3. On April 18th, our Finance Director provided a Preliminary Budget, with updated expenditures from each department and updated forecasts for revenues, and at that time still indicated an approximate $4.4 million deficit for the upcoming fiscal year. 4. On May 5th, the City Council held a study session on Service Area Prioritizations, hearing presentations from staff regarding past and future budget impacts on City services and programs. FOR CITY CLERK ONLY File No.: Council Meeting: Disposition: SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2 5, On May 16th, the Council was presented with a budget report including: a. Results of the City Council prioritization exercise from the May 5th study session b. Departmental Goals and Objectives (based on current staffing levels) c. Capital Improvement Program for 2011-12 d. City Manager recommendations for a partial list of solutions, including one-time and ongoing budget reductions, shrinking the remaining FY2011-12 General Fund budget deficit to approximately $2.2 million. 6. Most recently, at the June 6, 2011 meeting, staff presented another budget update, with additional City Manager recommended actions to balance the budget, resulting in a remaining deficit of approximately $2 million for FY2011-12. Cleary, solving the budget deficit is of utmost importance to City Council and staff, as evidenced by the numerous reports and hours dedicated to this issue. Additional actions are underway, as discussed below. ANALYSIS: Overall Budget: The total projected overall fiscal year 2011-2012 budget for the City is estimated to be approximately $85 million. This sum reflects all funds and operations for the City, inclusive of appropriations of new resources for one time and capital projects (shown as $4.5 million in the table below). A final review of contractual commitments and operating expenses has been finalized by Finance Department staff, with input from all City Departments. CITY OF SAN RAFAEL FISCAL YEAR 2011-2012 BUDGET FIGURES MESM7 71111111 mal Total City Budget 1$85.7 Less: Capital and Special Proiect 1 (4.5) Total Operating Budget 81.2 Less: Restricted Funds Gas Tax, etc. 25.7 General Fund Operating Budget 55.5 Add: General Fund Program Support & Projects 1.9 Total General Fund Appropriation $57.4 General Fund: The City's General Fund, which accounts for most of the major services to our residents and businesses (such as police, fire suppression and prevention, planning, building, library, parks, streets, engineering, traffic enforcement and management, cultural programs) is projected to be approximately $57 million for fiscal year 2011-2012, SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 3 Revenues. Revenue enhancements are assumed as a result of a fee schedule update and two new retail businesses. The master fee schedule will be presented in July to the City Council for approval. The projected budget assumes revenue increases from the addition of Honda and TJ Max (in the former Borders location). Additional ideas for future revenue increases are being studied, such as concepts for sharing services with other jurisdictions, but until details are worked out, no projections are included in our current revenue estimate. Expenditures. Expenditures are projected to be reduced in two ways. First, position eliminations and other departmental cost savings have been proposed. These reductions were presented to the City Council on May 16th and June 6th, totaling $2.4 million in one time and ongoing savings, and are summarized on Exhibit A. This Exhibit also includes additional cost cutting actions that are recommended to eliminate the remaining approximate $2 million deficit. The most significant personnel actions include the following: • Elimination of a soon-to-be vacant Fire Captain position (due to an upcoming retirement). This will reduce the hours available for the Wildland Urban InterfaceNegetation Management program and limit Fire Investigation services. • Elimination of the Code Enforcement Supervisor position, which is currently vacant. This will create a slower cycle for code enforcement inspection as well as slower response to complaints. • Elimination of a Police Sergeant position, currently vacant, a position that formerly supervised the motor unit. This will result in reassigning our last motor officer back into patrol, which would mean less traffic enforcement and less ticket revenue. • Elimination of a Police Officer position, currently vacant. This will result in re -assigning an Officer, currently in charge of organizing departmental training, back into patrol. This re -assignment is possible because Police training hours have been reduced significantly as a budget reduction action ($80,000 in overtime reductions, approved by City Council on May 16th) • Reduction in contractual services in the Office of Emergency Services (OES). This will result in a reduction of training and other preparedness measures in the community. The second approach to solving the remaining deficit is assumed to be through a 4% total compensation reduction across all bargaining units, for the term of the upcoming labor contracts. Labor negotiations are still ongoing as of the writing of this report. The value of the 4% reduction is approximately $1.4 million for the 2011-12 fiscal year in the General Fund alone. After the conclusion of negotiations, labor contracts will be presented to the City Council for consideration and approval. Without this reduction in total compensation, the budget cannot be balanced, unless the City Council authorizes eliminating approximately 10-12 positions, in addition to those listed in Exhibit A. Significant reductions in community services and programs would result if the City were to eliminate that many additional positions. SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 4 With the budget in balance as proposed, the City will continue to have several vacant positions that will not be eliminated. I am not recommending, however, that they be filled at this time. Facing another significant deficit next year, in most cases it will not make sense to fill a vacancy. On a case by case basis, vacancies will be considered for hiring. For example, if non General Fund monies are found to pay for the position, or if safety or fiscal analysis indicates it is prudent to fill a vacancy to avoid extensive overtime, a recruitment may be approved. Reserves. The General Fund reserves are estimated to be 3.3% of our General Fund, and remain at a very low amount of approximately $1.9 million. This amount is still well below the 10 percent goal in our approved financial policies. Other Funds. The Parking Fund requires additional action, as described below, but all other City funds are projected to be balanced for FY 2011-12. Parking Services Fund Parking Services is an enterprise fund which is designed to be self-sustaining (i.e., revenues covering all costs) and not negatively impacting the General Fund. Revenues are generated primarily through charging for the use of parking garages, structures, metered street spaces, and also through citation fees. Typically, the City has increased parking and citation rates every two years. However, the last parking rate increase was in Fall 2007, as we have continued to defer increases due to the poor economy. Not only have the costs increased to operate Parking Services since 2007, but the State has repeatedly taken more and more of the revenue from parking citations. The State currently takes $12.50 out of each citation. These facts have caused Parking Services to rely on reserves to balance the annual budget — a condition that can not continue. The solution to the current budget challenges for Parking Services is the same as the City overall — reduce expenditures and look to increase revenues as appropriate. As a direct companion to the action recommended in this report below, which is to reduce staff, staff will be bringing to the Council in July a recommendation for the master fee schedule, to include a more modest revenue increase in citation rates. This increase, combined with cost reductions, will allow for a more sustainable fund in the future. The Parking Services position eliminations shown in this staff report represent an approximate 20% decrease to staffing levels — an almost $400,000 cost reduction, which corresponds closely to the reduction in revenues Parking has been experiencing. Parking Services has also reduced non -staffing costs as well. This is a significant restructuring of Parking Services and will result in slowing down maintenance projects and customer service response times, in addition to have a reduced staff presence in garages and lots. The recommended position eliminations include the following: • Administrative Assistant I (vacant) • Police Security Officer (layoff) • Supervising Parking Enforcement Officer (layoff) • Parking Maintenance and Collections (layoff) SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 5 FISCAL IMPACT: There is no fiscal impact at this time, as staff plans to return to the Council for final approval of the budget at the July 5th meeting. The proposed budget for FY2011-12 as presented today is balanced for all funds. It is, however, based on the best assumptions we can make with the information available to us at this time. If actual revenue and expenditures differ from our assumptions, as often happens, staff will return with budget amendments mid year, or sooner, to correct our fiscal course of action. It is important to note that at the time of the writing this report, the State budget balancing impacts are unknown and could be significant to the City's budget. The State Legislature passed a budget this week, however the Governor quickly announced he would veto the main budget bills. Two Redevelopment bills were passed that would significantly impact our Economic Development Department staffing and programs. The California Redevelopment Association announced litigation would be pursued on the Redevelopment components of the budget. Meanwhile, we await the final State budget to also hear the impacts on booking fees and Literacy Program funding. It is also worth noting that the adoption of a balanced budget for Fiscal Year 2011-12 does not mean the City's General Fund structural deficit has been solved. This is due to the use of "one time" solutions, which are a significant source of the budget balancing actions this coming year. This use of one time solutions allows the City to avoid eliminating much—needed services to the community, but it does not provide a longer term sustainable budget solution — that solution will require additional sources of revenue or deeper cost cutting in the future. OPTIONS: The Council could accept the report for the City's proposed budget for fiscal year 2011-2012, for final adoption on July 5, 2011; or the Council could direct changes to the proposed budget for fiscal year 2011-2012, and staff will return with those changes on July Stn RECOMMENDATION. Accept staff recommendations for FY 2011-12 budget. EXHIBIT A: Budget Balancing Actions for FY2011-12 FISCAL YEAR 2011-2012 GENERAL FUND BUDGET CITY MANAGER RECOMMENDATIONS JUNE 20, 2011 EXHIBIT A JGne:20; ,20,1 i its/= vuncil Actions < ; . Ongoing Reductions: 1 $ 1,446,448 No FTE's 1 $ 1,446,448 90,833 FD Elimination of Fire Captain (retirement) -Net of revenue loss $ 206,500 -1.00 $ 206,500 CD Elimination of Code Enforcement Supervisor vacant $ 145,850 -1.00 $ 145,850 PD Elimination of Sergeant vacant - Net of revenue loss $ 136,664 -1.00 $ 136,664 Pb Elimination of Officer vacant $ 133,098 -1.00 $ 133,098 FIN Reduced Parking Fund contribution to General Fund $ (40,000) No FTE's $ 40,000 MS Reduce Contractual Services in OES $ 50,000 No FTE's $ 50,000 One-time Savings: CM Total Comp Savings- all Bargaining Units 1 $ 1,446,448 No FTE's 1 $ 1,446,448 90,833 Supervising Parking Enforcement Officer $ 113,000 -1.00 Subtotal June 20th $ 2,078,560 $ 2,078,560 -1.00 $ 89,667 Administrative Assistant I $ GRAND TOTAL GENERAL FUND $ 4,544,902 -5.83 $ 4,494,742 Parking Services Reductions (non General Fund) FY 2011-12 Ongoing Savings: Annual Savings FTE Savings Police Security Officer $ 109,000 -1.00 $ 90,833 Supervising Parking Enforcement Officer $ 113,000 -1.00 $ 94,167 Parking Maintenance and Collections $ 107.600 -1.00 $ 89,667 Administrative Assistant I $ 62,600 -1_00 $ 52,167 Total Parking Services $ 392,200 -4.00 $ 326,833 GRAND TOTAL STAFFING REDUCTIONS - ALL FUNDS -9.83