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CITY COUNCIL AGENDA ITEM 24

Meeting Date: February 12, 2002

Subject/Title: 2001/02 Mid-Year Budget Review and Recommended Budget Adjustments

Submitted by: Pamela Ehler, Director of Finance and Information Systems

Approved by: John Stevenson, City Manager


RECOMMENDATION
Approve a resolution authorizing amendments to the 2001/02 Budget.

PREVIOUS ACTION
June 12, 2001 the City Council approved resolution 2310 adopting the 2001/02 Operations
Budget.

BACKGROUND
This Mid-Year Budget review does not reflect any changes to the current revenue projections that may result from State budget adjustments. The events of September 11, 2001, coupled with a cooling economy have placed some of the City’s revenues in jeopardy in the legislatures upcoming debate over the 2002/03 State Budget. The Finance Department will come back with any necessary adjustments for next years budget in May of this year. By that date, the State budget impacts should be known and the Finance Department can project next years revenues with some certainty. Throughout each year, unanticipated expenditures and personnel changes make it necessary for additional funding requests and/or adjustments to the budget. Many of the reallocations are being recommended in preparation for anticipated State budget cuts.

GENERAL FUND

The General Fund’s Fund Balance on June 30, 2001 was $3,873,006. This represents a gain of $135,413 over the previous year and a $95,216 increase from the 2001/02 Budget projections. Revenue projections are being increased by $100,000 in this years budget due to a need for additional administration for the Redevelopment Agency and Developer Facility Fees. Due to implemented energy conservation measures at the swim complex, there will be no need for the $100,000 transfer from the General Fund to the Park Enterprise that had been projected.

New expenditures necessary to support the General Fund are due to reorganization and unexpected costs. Public Works transferred a full-time employee to Utility Billing (Finance). This eliminated the position and saves Public Works $72,000 a year.

With these adjustments it is projected the General Fund’s Fund Balance on June 30, 2002 will be $3,832,302. This is a Fund Balance equal to 30.27% of the annual General Fund expenditures. This percentage is well above the City’s budget guideline to maintain the General Fund Balance within 15% of the annual appropriations.



DEVELOPMENT SERVICES FUND
(Community Development, Capital Improvement Program, Engineering)

Revenues in this fund far exceed projections. Adjustments for salaries and reallocations total
$117,500.

Community Development Fund Balance for June 30, 2002 is estimated to be $4,760,732. This
represents an increase of $278,491 over the previous year.

Engineering has no adjustments to be made at this time. Engineering Fund Balance for June 30, 2002 is estimated to be $7,181,362. This represents an increase of $443,440 over the previous year.

WATER ENTERPRISE FUND

Revenues for this Enterprise are 58.8% of projections at mid-year. Adjustment requests cover
reallocation of staff and salary reclassifications totaling $37,917. Retained Earnings for June 30,
2002 is estimated to be $8,803,117 a decrease of $443,440 over the previous year. The current
rate study should cover this shortfall in future years.

WASTEWATER ENTERPRISE FUND

Revenues for this Enterprise are 57.5% of projections at mid-year. Adjustment requests cover a
State fine, reallocation of staff, State mandated testing, salary reclassifications, and emergency
discharge and holding system totaling $490,037. Retained Earnings for June 30, 2002 is
estimated to be $13,886,914, a decrease of $591,576 over the previous year. The current rate
study should cover this shortfall in future years.

SOLID WASTE ENTERPRISE FUND

Revenues at mid-year are 47.8% just short of projections. Adjustment requests cover reallocation of staff, salary reclassification, and a new equipment operator totaling $57,417. Retained Earnings for June 30, 2002 is estimated to be $1,711,514, an increase of $932,697 over the previous year.

PARK ENTERPRISE FUND

Revenues for this fund are 43.9% of projections at mid-year. District Tax revenues came in $55,000 above projections. Most of this Enterprise’s revenues come from Spring activities. Therefore, this fund is on target to meet the current projections. Adjustment requests cover staff positions, utilities, and vacation buy outs totaling $66,250. Retained Earnings for June 30, 2002
is estimated to be $$6,962,342, a decrease of $79,770 over the previous year. The current fee
study should cover this shortfall in future years.

Redevelopment Agency

During the first six months of the fiscal year 2001/02, expenses were either identified as resolution-approved expenditures yet not included in the Agency’s annual budget, or are new expenditures necessary to support the on-going Agency projects and programs. All project and program budget amendments reflected on the attached 2001/02 Redevelopment Budget Amendments have received Agency approval. The mid-year budget review and adjustments are necessary in an effort to capture and memorialize the approved expenditures in the Agency 2001/02 published budget. While Downtown Fund 301 and North Brentwood Fund 321 are available for general Agency expenses, the Low/Moderate Housing Fund 302 are reserved for those specific purposes.

Tax Increment projections from the County Auditor-Controller’s Office were $224,982 more than
what staff forecasted last year for 2001/02. Combined Fund Balance for the Agency on June 30, 2002 is estimated to be $2,134,073, a decrease of $646,937. This is due to increased project and program activity in support of the Agency objective to participate in redevelopment projects and activities including commercial, retail, industrial development programs, public improvements and facilities programs and the assistance and participation in the expansion and improvement of the supply of very low, low and moderate income housing, while investing tax increment receipts and bond proceeds in programs that will generate increased tax increment.

The City continues to benefit from prudent financial management. In a mid-year budget review,
the City’s fiscal 2001/02 budget appears to be fairly well positioned, as actual figures are
expected to achieve or improve upon budgeted figures.

Attachments
• 01/02 Budget Amendments
• 01/02 General Fund Budget Amendments
• 01/02 Redevelopment Budget Amendments

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