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CITY COUNCIL AGENDA ITEM NO. 2

Meeting Date: January 24, 2006

Subject/Title: Approve a resolution amending the 2005/06 Operating Budget and approving the recommended mid-year budget adjustments

Submitted by: Kerry Breen, Accounting Manager

Approved by: Pam Ehler, Director of Finance and Information Systems

RECOMMENDATION
Approve a resolution amending the 2005/06 Operating Budget and approving the recommended mid-year budget adjustments.

PREVIOUS ACTION
On June 14, 2005 the City Council approved Resolution No. 2005-143 adopting the 2005/06-2006/07 Operating Budget for the City of Brentwood.

BACKGROUND
The 2005/06 Operating Budget adheres to the City Council’s Goals and Objectives. In accordance with the Budget Development Guidelines, the budget is free from reliance upon non-recurring revenue sources and does not commit to spending more than realistic estimates of revenues. Fund balances (reserves) are to be maintained at minimum policy levels (30% of operating expenditures). Each fund requesting an amendment to the 2005/06 Operating Budget will have enough current year revenue to avoid using reserves.

In order to keep up with the fast pace of growth, the budget is reviewed quarterly, or sooner if necessary, to allow the City Council to respond to changes in the economy or development community in a timely manner. Throughout the year, additional expenditures not previously budgeted are incurred by required professional services, purchasing facilities, new programs or commissions, or simply were not anticipated during the budget process. These additional funding requests have been made for costs that were not originally anticipated for fiscal year 2005/06.

GENERAL FUND

A total increase of $961,694 in revenue and $414,074 in expense adjustments is requested for the General Fund, which will result in an increase of $547,620 to the fund balance (reserves). It is projected the fund balance of the General Fund will be $19,837,457 on June 30, 2006.

General Fund revenue projections are based on a conservative evolution in our local economy and assume no further State budget cuts.

Revenues
$525,950 - Additional revenues are due to projected increases in Property Tax, Sales Tax, CFD revenues, and Building Fees.

$559,947 - The State repayment for the Vehicle License Fees that were borrowed in 2003/04. This one time repayment was not required to be made until the 2006/07 fiscal year; however, the State has repaid the loan this year.

$(250,000) – Decrease in Planning Fee Revenues.

$87,297 – User Fees at the new Heritage High Pool. There is a request for an expenditure adjustment relating to this item below.

$38,500 – Parks and Recreation Fees for Kidz Love Soccer and Edna Hill Gym. There is a request for expenditure adjustment relating to this item below.

Expenditures

General Fund Transfer to City Rentals Fund - $20,000 - Legal expenses.

Economic Development - $25,000 – Advertising and an East County Workforce Survey.

Parks and Recreation - $149,074 – Heritage High Pool expenses of $110,574 which will have offsetting revenues of $87,297 as described above, the remaining $38,500 is for the Kidz Love Soccer Program and Edna Hill Gym, which will also have offsetting revenues in the amount of $38,500 as described above.

Streets - $90,000 - Electric and maintenance costs for signal intersections.

Building - $130,000 - Costs for a contract building inspector through the end of the fiscal year and Code Enforcement computers and software.

CITY RENTALS ENTERPRISE
Net Assets at June 30, 2006 is projected to be $74,274 for City Rentals. The General Fund has historically provided a subsidy in order to help City Rentals balance their budget. City Rentals is requesting an additional $20,000 to cover legal expenses, which will be offset by an additional $20,000 subsidy from the General Fund.

SOLID WASTE ENTERPRISE

The Solid Waste Enterprise is projected to have a net assets balance of $4.3 million on June 30, 2006. Additional appropriations in the amount of $401,000 are being requested for costs associated with purchasing additional garbage containers, additional fuel costs, the purchase of a 4-axel-roll-off-truck, assistance with the data conversion for their new software, and an external defibrillator. For FY 2005/06, total revenues are projected to be $7,231,900 and total appropriations will not exceed $7,060,149.

INTERNAL SERVICES (REPLACEMENT PROGRAMS)

Collectively, the Internal Service Funds are projected to have a fund balance of $16.3 million as of June 30, 2006. All Internal Service Funds have been 100% funded which ensures that scheduled replacement needs can be met. The Replacement programs assure that we have sufficient funds on hand for the replacement of such things as police cars, trash trucks, computers, and other miscellaneous equipment on a regular schedule. Internal Services also has an Emergency Preparedness Fund which can be used in response to critical incidents or catastrophic events and an Insurance Fund which will be used to pay for retiree medical costs.

The only appropriation request for an Internal Service Fund is $431,725 from the Building Replacement fund for the repavement of the Brentwood Center Parking lot. We also anticipate $292,614 in reimbursements from property owners in the Brentwood Center, meaning the net impact to the Building Replacement Fund will be a decrease to net assets of $139,111.

FISCAL IMPACT
As always, staff has intentionally overestimated expenditures and intentionally underestimated revenues to maintain a conservative budget and fiscal policy. To ensure that the City remains financially healthy over the next decade, the Finance Department is currently preparing a 10-year forecast of the City’s revenues, expenses and fund balances. This fiscal model will also identify staffing needs and a strategic plan will be developed. The budget amendments do not include any new positions so that we can analyze our staff needs at build out and begin to adjust accordingly.

Attachments
Resolution

RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BRENTWOOD TO APPROVE AMENDING THE 2005/06 OPERATING BUDGET AND APPROVING THE RECOMMENDED MID-YEAR BUDGET ADJUSTMENTS

WHEREAS, on June 14, 2005 the City Council approved Resolution No. 2005-143 adopting the 2005/06-2006/07 Operating Budget for the City of Brentwood; and

WHEREAS, a total increase of $961,694 in revenue and $414,074 in expense adjustments is requested for the General Fund, which will result in an increase of $547,620 to the fund balance (reserves). It is projected the fund balance of the General Fund will be $19,837,457 million on June 30, 2006; and

WHEREAS, City Rentals is requesting an additional $20,000 to cover legal expenses, which will be offset by an additional $20,000 subsidy from the General Fund; and

WHEREAS, the Solid Waste Enterprise is requesting additional appropriations in the amount of $401,000 for costs associated with new purchasing additional garbage containers, additional fuel costs, the purchase of a 4-axel-roll-off-truck, assistance with the data conversion for their new software, and an external defibrillator. For FY 2005/06, total revenues are projected to be $7,231,900 and total appropriations will not exceed $7,060,149; and

WHEREAS, the only appropriation requests for an Internal Service Fund is $431,725 from the Building Replacement fund for the repavement of the Brentwood Center Parking lot. We also anticipate $292,614 in reimbursements from property owners in the Brentwood Center, meaning the net impact to the Building Replacement Fund will be a decrease to net assets of $139,111.

NOW, THEREFORE BE IT RESOLVED that the City Council of the City of Brentwood approves amending the 2005/06 Operating Budget and approves the recommended mid-year budget adjustments as stated in the above recitals.

PASSED, APPROVED AND ADOPTED by the City Council of the City of Brentwood at a regular meeting held on the 24th day of January 2006 by the following vote:

 

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