HomeMy WebLinkAboutFin Budget Amendments FY2011-12/ 1 /
Agenda Item No: 5 a
Meeting Date: March 5, 2012
SAN RAFAEL CITY COUNCIL AGENDA REPORT
Department: FINANCE DEPARTMENT
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Prepared by: Mark Moses, Interim Finance City Manager Approval ;t
Director
SUBJECT: 1) BUDGET UPDATE AND RESOLUTION ADOPTING AMENDMENTS
TO THE CITY OF SAN RAFAEL BUDGET FOR FISCAL YEAR 2011-
2012; 2) RESOLUTION ADOPTING THE MEASURE S COMMITTEE
REPORT COVERING THE ACTUAL FISCAL YEAR 2010-2011
GENERAL FUND RESULTS AND THE REVISED FISCAL YEAR 2011-
2012 GENERAL FUND BUDGET
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BUDGET AMENDMENT
As part of the budget monitoring process, the Finance Department conducts a mid -period review
of the City's financial performance. This report provides an explanation of the City's budget
condition in the current fiscal year (2011-2012) based on actual revenue and expenditure
performance for the seven months ending January 31, 2012, as compared to the budget approved
by Council in July 2011, and subsequently amended.
Based on this review and analysis, budget revisions are recommended to address projected
revenue and expenditure variances, and to account for recent changes in the California state law
that impact the funding of ongoing and future economic development activities. Our goal is to
ensure that the City successfully completes the current year with a balanced budget, and is well-
positioned for the fiscal year 2012-201.3 budget development process.
The fiscal year 2011-2012 budget was balanced through staffing attrition, a combination of salary
reductions and freezes, a number of revenue enhancements, and transfers from non -operational
sources (e.g., the employee retirement fund). The City continues to implement these and other
budget -related initiatives outlined in the Recession Action Plan with an emphasis on minimizing
the impact on services delivered to the public.
FOR CITY CLERK ONLY
File No.:
Council Meeting:
Disposition: U t L
-
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2
MEASURE S
In the years leading up to fiscal year 2005-2006, the City faced serious structural budget
imbalances. In November 2005, the citizens of San Rafael approved a 0.50 percent transaction
and use tax. The transactions and use tax (Measure S) has provided much needed relief to
preserve essential services in the face of eroding revenues. One of the requirements of the
ordinance is an independent citizen's oversight committee which is required to review the
collection and expenditure of tax revenues each fiscal year to verify that these revenues are only
spent on local municipal services as specified by the ordinance. The Committee's report is
included of this staff report.
FISCAL FEAR 2011-2012:
Since the beginning of this fiscal year, the national economy has struggled with the aftermath of a
severe and protracted recession. Meanwhile, the State of California is layering additional budget
cuts on previous ones. The State continues to push services out to local agencies and to divert
local revenues in its attempt to achieve budget stability and avert a cash-flow crisis. One of its
most dramatic actions was AB XI 26, which dissolved all local redevelopment agencies as of
January 31, 2012, and established successor agencies effective February 1, 2012. This action
abruptly phases out economic development project activity historically funded through property
tax increment, and immediately transfers the financial burden of economic development -related
initiatives and support to the City's general fund, or other sources. The legislation does provide,
however, for the direct administrative support required up to $250,000.
Locally, major revenues such as property tax and sales tax appear to have stabilized and achieved
moderate growth. This growth is expected to be modest for the next few years. Further, the base
from which this growth is expected has been effectively reset, since both property tax and sales
tax revenues remain lower than their respective peaks in fiscal 2007-2008.
Overall, the City's financial position is fairly consistent with the forecast as adopted in July. At
the end of January, General Fund expenses should be approximately 58 percent consumed; and
the total operating appropriations for the General Fund are on track, with most departments at or
below this level. Actions that need to be taken to address changes that have an impact on the
remainder of the year are discussed below.
RE VEVUES AVD OTHER RESOURCES:
Exhibit I presents the status of General Fund revenues and other resources as of January 3 ) 1,
2012.
Revenues:
Since July 1, 2011, City Council has approved revenue additions of $100,000 for a grant from
Marin Community Foundation for the Resilient Business program, and $65,000 for donations
directed to Camp Chance. These additions raised the budgeted revenues to $53,149,800 from the
originally adopted budget of $52,984,800. Although there was an unanticipated revenue loss of
approximately $180,000 due to S1389, which eliminated the allocation of vehicle license fees to
cities; revenues have been moderately stronger than projected. The following are the additional
W
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 3
adjustments to the revenue forecast, which has been increased to $53,474,404, which is
$324,604, or 0.6% higher than the previously revised revenue forecast of $53,149,800.
• Property tax — decrease of $81,279, mostly as a result of decreased supplemental taxes on
property sales. Secured property tax component is stable.
• Sales Tax — increase of $445,500, based on actual receipts for July, August and September
2011, and expected trends for the remainder of the fiscal year.
• TUT (Measure 'S') — increase of $123,000, based on actual receipts for July, August and
September 2011, and expected trends for the remainder of the fiscal year
• Use of Money & Property — decrease of $20,000 to reflect reduced investment earnings in
low interest environment.
• Licenses, Permits, Fines — one time increase of $95,000, based on settlement of old fines.
• Other Agency — decrease of $237,626, based on $180,530 loss of vehicle license fees and
$57,096 reduced CSA# 19 service billings to reflect a decrease in fire personnel costs.
Other Sources:
The current budget includes a provision for $2,490,940 in transfers to the General Fund from
various allowable sources. Based on activity and informational available through January 31,
2012, staff is recommending three changes to the budgeted transfers in for the fiscal year,
resulting in a decrease of $764,248, and revised budgeted transfers in of $1,726,692.
• Library State Grants Fund — decrease of $60,000, based on the loss of state funding that was
the anticipated source of these funds.
Employee Retirement Fund — decrease of approximately $800,000. Staff was recently
informed that the pension contribution for fiscal year 2012-2013 will rise by approximately
eight percent, or approximately $1.0 - $1.5 million, from the current contribution level. The
adopted fiscal year 2011-2012 budget assumed a modest increase for fiscal year 2012-2013
when the recommendation was made to transfer $1.0 million from the Employee Retirement
Fund to the General Fund to help meet the required contributions for fiscal year 2011-2012.
Staff is now recommending that the transfer be reduced as much as possible. This will
preserve resources available to buffer the impact of the eight percent increase in fiscal year
2012-2013. The reduced transfer will be offset by the moderately stronger revenues that we
have seen thus far (and that we expect to continue through the remainder of the fiscal year),
coupled with some one-time expenditure savings.
• Redevelopment Agency Funds — increase of $95,752, for the reimbursement of engineering
costs associated with capital projects in the redevelopment project areas incurred during the
first seven months of the fiscal year.
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 4
EXPENDITURES AND OTHER USES:
Exhibit H presents the General Fund expenditure and other uses status through January 31, 2012.
Expenditures: Since July 11, 2011, Council has approved expenditure additions of $313,523,
comprised of the rollover of $148,523 in obligations from the prior year, expenditures that are
funded by the $100,000 Marin Community Development grant and expenditures that are funded
by the $65,000 Camp Chance donations. These actions raised the budgeted expenditures to
$53,514,053 from the originally adopted budget of $53,200,530.
The following are the most significant additional adjustments to the expenditure forecast, which
has been increased to $53,420,497, which is $93,556, or 0.2% lower than the current budget of
$53 ),514,053. Major changes include:
• Non -departmental — reduction of $246,669, due to lower interest costs of $97,169 on the
IRAN (Tax Revenue Anticipation Note), a $74,500 reduction in County administrative
costs for property tax collection and disbursement, and other operational savings of
$75,000.
• City Manager/Council — addition of $112,387 most of which is to provide for economic
development activity and initiatives from February 1, 2012 through June 30, 2012,
previously provided for by the Redevelopment Agency.
• Police Department — reduction of $39,724, most of which is due to costs picked up by the
parking fund for related services.
• Fire Department — increase of $15,000, due to the addition of temporary help for open
space protection.
• Public Works — increase of $71,089, in order to cover $15,000 in temporary help for open
space protection, and $45,778 to provide for economic development activity and
initiatives from February 1, 2012 through June 30, 2012, previously provided for by the
Redevelopment Agency.
There were no significant changes to other general fund uses.
FISCAL IMPACT:
General Fund Impact:
The City's General Fund, which provides 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, and cultural programs) is currently
projected to be approximately $55.3 million for fiscal year 2011-2012. The recommendations in
this report bring the total down slightly to $55.2 million.
SAN RAFAEL CITY COUNCIL AGENDA REPORT l Page: 5
The following table summarizes the recommended changes described above and in Exhibit I and
Exhibit II and their combined impact on the adopted budget for fiscal year 2011-2012:
The General Fund reserve is now estimated to be 2.3%, or approximately $1.3 million, at the end
of fiscal year 2011-2012. Although staff does not anticipate contributing as significantly to the
reserve as provided for in the current budget, the revised budget preserves resources in the
employee retirement fund that will be available to buffer the impact of the significant increase in
pension contributions for fiscal year 2012-2013. The City Manager will preserve as much as
possible in the employee retirement fund while maintaining service levels as established by the
City Council for the remainder of the fiscal year.
iVIEASURE S COMMITTEE REPORT.
In November 2005, the citizens of San Rafael passed Measure S with a 70 percent voter
approval. This measure amended the Municipal Code to establish a .50 percent transaction and
use tax within the City of San Rafael. The ordinance also requires the appointment of an
independent citizen's oversight committee to review the collection and expenditure of tax
revenues. Since April 2006, the Measure S Oversight Committee has maintained oversight by
establishing a baseline policy and guideline.
The Committee met on February 15, 2012 to review the actual General Fund expenditures for
fiscal year 2010-2011. The Committee's written report, dated February 20, 2012, is attached to
this staff report as EXHIBIT III. The Committee found that Measure S revenues are being spent
consistent with the Transaction and Use Tax Ordinance. However, due to the decline in total
General Fund revenues, some essential service levels have been reduced relative to the inflation-
adjusted service levels of the 2005-2006 base year.
Adopted
Budget
Approved
Changes
Current
Budget
Recommended
Changes
New
Revised
Budget
Revenues
52,984,800
165,000
53,149,800
324,604
53,474,404
Transfers in
2,490,940
2,490,940
764,248)
1,726,692
Total Resources
$55,475,740
$165,040
$55,640,740
5439,644
$55,201,096
1
Expenditures
53,200,530
313,523
53,514,053
93,556)
53,420,497
Transfers out
1,763,250
1,763,250
6,500
1,769,750
Total Uses
$54,963,780
$313,523
$55,277,303$87,056
$55,190,247
Net Operating
$511,964
$148,523
$363,437
$352,588
$10,849
The General Fund reserve is now estimated to be 2.3%, or approximately $1.3 million, at the end
of fiscal year 2011-2012. Although staff does not anticipate contributing as significantly to the
reserve as provided for in the current budget, the revised budget preserves resources in the
employee retirement fund that will be available to buffer the impact of the significant increase in
pension contributions for fiscal year 2012-2013. The City Manager will preserve as much as
possible in the employee retirement fund while maintaining service levels as established by the
City Council for the remainder of the fiscal year.
iVIEASURE S COMMITTEE REPORT.
In November 2005, the citizens of San Rafael passed Measure S with a 70 percent voter
approval. This measure amended the Municipal Code to establish a .50 percent transaction and
use tax within the City of San Rafael. The ordinance also requires the appointment of an
independent citizen's oversight committee to review the collection and expenditure of tax
revenues. Since April 2006, the Measure S Oversight Committee has maintained oversight by
establishing a baseline policy and guideline.
The Committee met on February 15, 2012 to review the actual General Fund expenditures for
fiscal year 2010-2011. The Committee's written report, dated February 20, 2012, is attached to
this staff report as EXHIBIT III. The Committee found that Measure S revenues are being spent
consistent with the Transaction and Use Tax Ordinance. However, due to the decline in total
General Fund revenues, some essential service levels have been reduced relative to the inflation-
adjusted service levels of the 2005-2006 base year.
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 6
The City Council may choose to:
1. Accept the report and recommendations, and adopt Resolutions as presented, or
2. Make modifications to the recommendations, which would result in a change in the total
revenue forecasts and/or appropriations.
3. Take no action. Request staff to bring back information or other alternatives to address
the issues presented in the mid -year review, analysis and discussion.
ACTION REQUIRED:
Staff recommends Council accept the report and adopt the Resolutions as presented.
ATTACHMENTS
W:\Management Services- WorkFile),Finance- WorkFile\Council Material\Staff Reports\1201 I\City\l 1-12 mid -year budget.doc
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EXHIBIT III
City of San Rafael
Measure S Oversight Committee Report
February 20, 2012
The City of San Rafael Measure S Oversight Committee (the Committee)
reviewed both the revised budget for the city of San Rafael fiscal year
beginning on July 1, 2011 and the actual final figures for the previous
fiscal year ending June 30, 2011. The Committee paid particular
attention to the actual and budgeted expenditures for the Public Works
Department, the Fire Department and the Police Department which are
considered the core of the "essential services" contemplated under
Measure S.
Comparing the actual General Fund expenditures for the fiscal year July
1, 2010-2011 and the revised budgeted expenditures for the fiscal year
July 1, 2011- 2012 to the inflation adjusted 2005 - 2006 baseline year,
the Committee finds the following:
Actual 10/11 vs base Budget 11/12 vs base
Fire Department +9% -2%
Police Department +3.6% -1.77%
Public Works -14.4% -11.5%
The Committee finds that the expenditures for two of the the three
"essential services" departments, Police and Fire, are close to keeping
up with the inflation adjusted 2005-2006 baseline year total
expenditures for these departments. By this metric, Measure S funds
are being properly allocated. Nonetheless, due to operating cost
increases beyond inflation, and shortfalls in all sources of city general
fund revenues, including the Measure S Transaction and Use Tax, it has
not been, and will not be, possible to maintain the level of baseline year
"essential services" that are provided by these departments, despite the
use of increased overtime, the incorporation of additional efficiencies,
and recent wage concessions. Expenditures for the the third "essential
service" department, Public Works, are projected to be well below the
inflation adjusted baseline expenditure for this department, also
resulting in an inability to maintain the level of service as at the baseline
year. There has been an aggregate headcount decrease in the three
"essential service" departments since the base year of approximately
13.2% for fiscal year 2010 - 2011, and 15.1% for fiscal year 2011 -2012.
Total General Fund revenue is projected to decrease in budget year
2011 - 2012 by $2M (3.5%) compared to revenue in the 2010 - 2011
budget year, and it will have decreased by $4.3M (7.16%) compared to
the inflation adjusted revenue of the 2005 - 2006 baseline year.
Therefore, in the opinion of the Committee, these essential services are
not being, and will not be, maintained as contemplated by Measure S.
While the Committee finds that Measure S funds are being spent
consistent with the Transaction and Use Tax ordinance, the revenue
from Measure S, combined with the general fund revenue from all other
sources, is insufficient to maintain "essential service" levels at the 2005
- 2006 baseline year level.
Respectfully submitted:
F`
,/hmidt, Chair
ackiep Schmidt,
Lisa Id
stein Fait i e -Chair
a cam, Committee Member
Gladys Gillilod, Committee Member
Cliff Detz, Committee Member
Vickie Hatos, Committee Member
RESOLUTION NO. 13305
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF SAN RAFAEL ADOPTING AMENDMENTS
TO THE 2011-2012 BUDGET
WHEREAS, the City Council approved Resolution 13192 adopting the fiscal year
2011-2012 budget; and
WHEREAS, the changes in available funding sources require adjustments to
some City operations; and
WHEREAS, it is the intention of this Council to review recommendations from
staff regarding the City's financial condition, including revenue projections and available
resources and provide funding for various ongoing, capital and other service needs; and
WHEREAS, after examination, deliberation and due consideration, the City
Council has approved the staff report and recommendations, and directs the City
Manager to maximize preservation of funds in the employee retirement fund without
compromising General Fund service levels as established by the City Council for this
fiscal year.
NOW, THEREFORE, BE IT RESOLVED, by the San Rafael City Council that
Resolution 13192 for fiscal year 2011-2012 is amended for total General Fund
revenues to $53,474,404 and transfers in to $1,726,692 as presented on Exhibit I of the
staff report on file with the City Clerk; and amends General Fund expenditures to
$53,420,497, and transfers out to $1,769,750, as presented on Exhibit 11 of the staff
report on file with the City Clerk.
1, ESTHER C. BEIRNE, Clerk of the City of San Rafael, hereby certify that the
foregoing resolution was duly and regularly introduced and adopted at a regular
meeting of the Council of said City held on Monday, the 5th of March 2012, by the
following vote, to wit:
AYES: COUNCILMEMBERS: Connolly, Heller, Levine, McCullough & Mayor Phillips
NOES: COUNCILMEMBERS: None
ABSENT: COUNCILMEMBERS: None
ESTHER C. BEIRNE, City Clerk
RESOLUTION NO. 13306
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN
RAFAEL ADOPTING THE MEASURE 'S' COMMITTEE REPORT
COVERING THE ACTUAL FISCAL YEAR 2010-2011 GENERAL
FUND FINANCIAL RESULTS
WHEREAS, on November 8, 2005, the voters of San Rafael approved a Transactions and
Use Tax ("Measure S"). This measure amended the San Rafael Municipal Code to establish a .5%
retail transactions and use tax within the City of San Rafael; and
WHEREAS, the enabling ordinance required the appointment of an independent citizens'
oversight committee that is required to review the collection and expenditure of tax revenues
collected under the authority of this ordinance; and
WHEREAS, on February 15, 2012, the Committee met and reviewed the City's General
Fund actual financial results for fiscal year 2010-2011, and issued a written report dated February
20,2012;and
WHEREAS, the Committee reviewed budgeted expenditures for three departments (Fire,
Police and Public Works) and found that expenditures ranged from 1.77% to 11.5% less than the
inflation-adjusted fiscal year 2005-2006 baseline; and
WHEREAS, the Committee found that Measure `S' revenues are being spent consistent
with the Transactions and Use Tax Ordinance; the Committee noted that even with Measure 'S'
funding it was necessary to reduce some essential service levels due to the fact that General Fund
revenues remain lower than the inflation-adjusted baseline.
NOW, THEREFORE, BE IT RESOLVED, the San Rafael City Council adopts the report from the
Measure 'S' Committee, a copy of which is hereby attached hereto as Exhibit A and by this
reference made a part hereof.
1, ESTHER C. BEIRNE, Clerk of the City of San Rafael, hereby certify that the foregoing resolution
was duly and regularly introduced and adopted at a regular meeting of the City Council of said City
held on Monday the 5th day of March, 2012, by the following vote, to wit:
AYES:
COUNCIL MEMBERS:
Connolly, Heller, Levine, McCullough & Mayor Phillips
NOES:
COUNCIL MEMBERS:
None
ABSENT:
COUNCIL MEMBERS:
None
ESTHER C. BEIRNE, City Clerk
W:,Manageinent Services- WorkFileTinance- WorkFile Council Material",,Resolutions�2012,ivleastire S comm 10-11 final reso.doc
EXHIBIT A
City of San Rafael
Measure S Oversight Committee Report
February 20, 2012
The City of San Rafael Measure S Oversight Committee (the Committee)
reviewed both the revised budget for the city of San Rafael fiscal year
beginning on July 1, 2011 and the actual final figures for the previous
fiscal year ending June 30, 2011. The Committee paid particular
attention to the actual and budgeted expenditures for the Public Works
Department, the Fire Department and the Police Department which are
considered the core of the "essential services" contemplated under
Measure S.
Comparing the actual General Fund expenditures for the fiscal year July
1, 2010-2011 and the revised budgeted expenditures for the fiscal year
July 1, 2011- 2012 to the inflation adjusted 2005 - 2006 baseline year,
the Committee finds the following:
Actual 10/11 vs base Budget 11/12 vs base
Fire Department +9% -2%
Police Department +3.6% -1.77%
Public Works -14.4% -11.5%
The Committee finds that the expenditures for two of the the three
"essential services" departments, Police and Fire, are close to keeping
up with the inflation adjusted 2005-2006 baseline year total
expenditures for these departments. By this metric, Measure S funds
are being properly allocated. Nonetheless, due to operating cost
increases beyond inflation, and shortfalls in all sources of city general
fund revenues, including the Measure S Transaction and Use Tax, it has
not been, and will not be, possible to maintain the level of baseline year
"essential services" that are provided by these departments, despite the
use of increased overtime, the incorporation of additional efficiencies,
and recent wage concessions. Expenditures for the the third "essential
service" department, Public Works, are projected to be well below the
inflation adjusted baseline expenditure for this department, also
resulting in an inability to maintain the level of service as at the baseline
year. There has been an aggregate headcount decrease in the three
"essential service" departments since the base year of approximately
13.2% for fiscal year 2010 - 2011, and 15.1% for fiscal year 2011 -2012.
Total General Fund revenue is projected to decrease in budget year
2011 - 2012 by $2M (3.5%) compared to revenue in the 2010 - 2011
budget year, and it will have decreased by $4.3M (7.16%) compared to
the inflation adjusted revenue of the 2005 - 2006 baseline year.
Therefore, in the opinion of the Committee, these essential services are
not being, and will not be, maintained as contemplated by Measure S.
While the Committee finds that Measure S funds are being spent
consistent with the Transaction and Use Tax ordinance, the revenue
from Measure S, combined with the general fund revenue from all other
sources, is insufficient to maintain "essential service" levels at the 2005
2006 baseline year level.
Respectfully submitted:
ckie Schmidt, Chair
Lisa Wldstein Fait, i e -Chair
a am, Comm' tee Member
(/I/, A b"
Gladys Gillilnd, Committee Member
Cliff Detz, Committee Member
Vickie Hatos, Committee Member
CITY OF SAN RAFAEL
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INSTRUCTIONS: USE THIS FORM WITH EACH SUBMITTAL OF A CONTRACT, AGREEMENT,
ORDINANCE OR RESOLUTION BEFORE APPROVAL BY COUNCIL / AGENCY.
SRRA / SRCC AGENDA ITEM NO.
DATE OF MEETING: 3/5/2012
FROM: Mark Moses, Interim Finance Director
DEPARTMENT: Finance
DATE: 2/27/2012
TITLE OF DOCUMENT: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN RAFAEL
ADOPTING AMENDMENTS TO THE 2011-2012 BUDGET
Department Head (signature)
(LOWER HALF OF FORM FOR APPROVALS ONLY)
APPROVED AS COUNCIL/ AGENCY
AGENDA ITEM:
City Manager (signature)
APPROVED AS TO FORM:
City Attorney (sign ure)
CITY OF SAN RAFAEL
INSTRUCTIONS: USE THIS FORM WITH EACH SUBMITTAL OF A CONTRACT, AGREEMENT,
ORDINANCE OR RESOLUTION BEFORE APPROVAL BY COUNCIL / AGENCY.
SRRA / SRCC AGENDA ITEM NO. =.
DATE OF MEETING: 3/5/2012
FROM: Mark Moses, Interim Finance Director
DEPARTMENT: Finance
DATE: 2/27/2012
TITLE OF DOCUMENT: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN RAFAEL
ADOPTING THE MEASURE 'S' COMMITTEE REPORT COVERING THE ACTUAL FISCAL YEAR 2010-
2011 GENERAL FUND FINANCIAL RESULTS
Department Head (signature)
(LOWER HALF OF FORM FOR APPROVALS ONLY)
APPROVED AS COUNCIL / AGENCY
AGENDA ITEM:
rr
v .
City Manager (signature)
APPROVED AS TO FORM:
1`
City Attorney (signatur
