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Current Council Agenda and Past Meeting Information

 

CITY COUNCIL AGENDA ITEM NO. 21

Meeting Date: June 27, 2006

Subject/Title: Approve a resolution amending the 2005/06-2006/07 Operating Budget and approving the recommended budget adjustments

Submitted by: Kerry Breen, Financial Services Manager

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

RECOMMENDATION
Approve a resolution amending the 2005/06-2006/07 Operating Budget and approving the recommended 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.

On January 24, 2006, the City Council approved Resolution No. 2006-7 amending the 2005/06 Operating Budget for the City of Brentwood.

BACKGROUND
The City operates on a two year budget cycle. Every two years, City Council approves an individual operating budget for each of the coming two fiscal years. Our current two year budget cycle covers fiscal years 2005/06 and 2006/07. Staff makes every effort to budget appropriately for each year, however, but the time the second year is ready to begin there are always unforeseen events, priority shifts, and State policy changes which have occurred since the initial budget adoption which necessitate modification to the second year of the budget.

CITYWIDE NEW POSITIONS

Staff is requesting the following new positions:

Position Cost

• Assistant City Attorney (September 1) – $142,914 to Attorney - General Fund
• Management Analyst – $91,972 to Parks - General Fund
• Term Building Inspector II (1 year term) – $127,644 to Building - General Fund
• Landscape/Facilities Worker – $87,298 to Citywide Park Assessment
• Accounting Assistant I (Utility Billing) – $68,171 split between Water,
Wastewater, and Solid Waste Funds
• Regulatory Compliance Supervisor – $118,832 to Water Fund
• Solid Waste Equipment Operator II – $84,057 to Solid Waste Fund

GENERAL FUND

We project that the General Fund will finish 2005/06 with $39.4 million in revenues. This is within 4% of our budgeted revenues of $40.9 million. The reason for the shortfall is a tremendous slowdown in development. We estimated issuing 1,200 permits during the fiscal year and it now appears that we will issue approximately 1,000. This slowdown in permit issuance resulted in a $1.3 million shortfall for our Building and Engineering revenues. The remaining shortfall of $.2 million was due to lower than anticipated parks registration fees. Development fees are collected at the beginning of a project, while the work performed by City staff typically occurs during the two to three years following the revenue. This has put the City in the difficult position of seeing our development fees decline while the workload on staff is still high due to all of the projects already in the pipeline.

We project that the General Fund will finish 2005/06 with $39.3 million in expenses, which compares favorably to our amended budgeted amount of $41.6 million. This $2.3 million savings was attributable to virtually every Department in the General Fund, with the Police responsible for $1.1 million of the savings due to having budgeted positions remain unfilled through the fiscal year.

The General Fund is projected to have a June 30, 2006 fund balance of $19,600,000. Fund Balance represents the total amount that revenues have exceeded expenses over the life of the fund. Fund Balance is comprised of two components, designated and undesignated reserves. Designated reserves are amounts that are earmarked for specific purposes. The General Fund has a total designated fund balance of $7,952,000 which is comprised of reserves for Pavement Management of $1,706,000, Facility reserves of $4,000,000, Village Community Resource Center reserves of $250,000, Compensated Absences reserves of $1,000,000, Storm Drainage reserves of $250,000, and Capital Facility reserves of $746,000.

The remaining $11,648,000 is considered undesignated reserves. This money would be used to help the City through economic uncertainties, local disasters, contingencies for unseen operating or capital needs, and is also necessary for cash flow requirements. The City’s Budget and Fiscal Policy require us to strive to maintain our undesignated reserves at 30% of the annual appropriations in the General Fund. The City currently has undesignated reserves which total 28% of our budgeted appropriations.

The proposed changes to the 2006/07 Operating Budget will net out to have a zero dollar impact on the General Fund. While there are some changes in individual revenue sources and expense items, these will offset each other and avoid any impact on the General Fund. We believe that the General Fund’s revenues will exceed our expenditures by $1.4 million in 2006/07, resulting in a General Fund balance of $21.0 million. Of this amount, $8.9 million will be designated reserves, while the remaining $12.1 million will be undesignated.

Revenues

Property taxes, sales taxes, and development fees are expected to be $700,000 higher than originally budgeted. Our Engineering Fees will receive a boost from a couple of major projects that we had anticipated taking place in 2005/06 that will now take place in 2006/07, while our sales and property taxes have been consistently surpassing expectations.

We anticipate a net revenue increase of $203,810 from Parks and Recreation, due primarily to the Heritage High Pool and reimbursement of landscape maintenance costs by the Highway 4 Bypass. There are also requests for expenditures below for the Heritage High Pool and the Highway 4 Bypass.

We also anticipate a decrease of $150,000 in our Planning Fees given the declining revenues that we have seen in this area over the past 18 months.

Expenses

Staff expects a salary savings of $639,389 associated with having budgeted positions unfilled at various times throughout the year. This savings is attributable to multiple departments in the General Fund. Individual department budget amendment requests are as follows:

City Council
• $12,000 for shared lobbying costs with the City of Antioch to secure Highway 4 funding. This marks the continuation of the momentum established between the joint efforts of our City and the City of Antioch to help ensure that we take advantage of all funding assistance opportunities available to us and relieve traffic congestion problems on Highway 4 and East County.

City Attorney
• $133,932 for legal and administrative costs.
• $142,914 for the new Assistant City Attorney position which is anticipated to be filled September, 2006.

City Clerk
• $25,000 decrease as previously budgeted costs for software for retention files are not expected to be incurred.

Economic Development
• $100,990 for development along the Highway 4 Bypass.

Human Resources
• $5,510 for safety supplies.

Non Departmental
• $137,500 primarily for organizational development and animal services.

Parks and Recreation
• $169,954 for the Heritage High Pool.
• $91,792 for the new Management Analyst Position.
• $51,500 for landscape maintenance costs associated with the Bypass. This has offsetting revenue of $62,000 as described above.
• $20,183 for general operations.

Police
• $190,635 for utilities, increased fuel costs, and general administrative expenses.

Building
• $127,644 for the new one year Term Building Inspector II position. This position is necessary despite the decreased development revenue as development fees are paid well in advance of when City staff works on the project and the City still has several projects in the pipeline.
• $28,590 in other personnel costs.
Planning
• $200,000 for a General Plan update.

Engineering
• $5,055 in personnel related costs.

Citywide Park Assessment Fund

The Citywide Park Assessment Fund provides for the maintenance of all City Parks that are not in a Lighting and Landscape District. This fund is projected to have a fund balance of $190,000 as of June 30, 2006. Staff is requesting an additional appropriation of $87,298 for a new Landscape/Facilities Worker position. If approved, the projected fund balance at June 30, 2007 would be $108,885. Reserves for the Citywide Park Assessment are kept in our Parks Replacement internal service fund.

Agriculture Administration

The Agriculture Administration Fund receives 20% of the Agriculture Preservation fees collected from developers and is used for administrative purposes associated with establishing, monitoring and managing farmland conservation easements. The fund is projected to have a fund balance of $890,000 as of June 30, 2006. Staff is requesting a budgetary increase of $85,300 for an EPS study and for donations for agricultural marketing. If approved, the projected fund balance at June 30, 2007 would be $615,850.

Affordable Housing In Lieu

The Affordable Housing In-Lieu Fund accounts for development fees collected for affordable housing. The fund is projected to have a fund balance of $5,400,000 as of June 30, 2006. Staff is amending our revenue estimates up by $72,965 for developer fee revenue and requesting additional appropriations of $900,000 for various affordable housing projects. If approved, the projected fund balance at June 30, 2007 would be $4,088,265

Public Art

The Public Art Fund accounts for development fees collected for public art. This fund is projected to have a fund balance of $329,000 as of June 30, 2006. Staff is requesting a budgetary increase of $100,000 for a cultural arts master plan. If approved, the projected fund balance at June 30, 2007 would be $631,439.

Capital Improvement Program Administration

This Fund accounts for the administration of the Capital Improvement Program. CIP Administration is funded through development fees and only transfers in enough money to cover the expenses. Therefore, this fund is never projected to have an ending fund balance. Staff is adjusting our revenue projections higher by $253,193 in facility fees, and requesting $244,193 in additional appropriations for various CIP projects including updating the master plan, aerial photos, and development process review. We are requesting $9,000 more in revenue because the Engineering/Public Works reorganization, which Council approved May 9, had a $9,000 net expense to the CIP.

City Rentals Enterprise

The City Rentals Enterprise is projected to have a June 30, 2006 fund balance of $74,274. Staff is requesting an additional $1,471 in appropriations for personnel costs. If approved, the projected fund balance on June 30, 2007 is projected to be $72,803.

Housing Enterprise

The Housing Enterprise is projected to have a June 30, 2006 fund balance of $363,408. Staff is lowering revenue estimates down $220,339 and requesting additional appropriations in the amount of $90,215 for costs primarily associated with the new Housing rental program. After these budget amendments, June 30, 2007 fund balance is projected to be $49,463.

Solid Waste Enterprise

The Solid Waste Enterprise is projected to have a June 30, 2006 fund balance of $1.8 million. Additional appropriations in the amount of $266,000 for contractual service, containers, and fuel are being requested, along with $106,758 for a new Solid Waste Equipment Operator II position and a portion of a new Utility Billing Accounting Assistant I position, for a total requested increase of $372,758. The Utility Billing position is spread over Solid Waste, Water, and Wastewater. If approved, fund balance as of June 30, 2007 is projected to be $2.8 million.

Water Enterprise

The Water Enterprise is projected to have a June 30, 2006 fund balance of $10.0 million. Additional appropriations in the amount of $141,602 are requested to fund a portion of the Utility Billing position described above as well as a Regulatory Compliance Supervisor. If approved, staff estimates that fund balance will remain unchanged as of June 30, 2007.

Wastewater Enterprise

The Wastewater Enterprise is projected to have a June 30, 2006 fund balance of $2.4 million. Staff is requesting an appropriation increase of $129,461 for a portion of the Utility Billing position described above, as well as costs associated with NPDES compliance. If approved, fund balance as of June 30, 2007 is projected to remain unchanged.

INTERNAL SERVICES (REPLACEMENT PROGRAMS)

Collectively, the Internal Service Funds are projected to have a net assets balance of $14.3 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 is used to pay for retiree medical costs.

Requests for internal service budget amendments include:

Emergency Preparedness
• $45,000 for EOC equipment and training. The Emergency Preparedness Fund proved necessary this past winter as it was used to help pay for the cleanup costs after the December/January flooding problems in the City. Over $150,000 was paid from this fund during that time frame.

Information Services
• $32,500 for moving internet services to the Data Center
• $24,000 revenue increase as a transfer from the General Fund.

Tuition Program
• $1,500 in appropriations for fiscal year 2005/06
• $10,000 for fiscal year 2006/07.

Facilities Maintenance
• $1,763 for personnel costs

LLD Replacement
• $90,240 for citywide park equipment repairs.

Insurance
• $30,000 for unmet liability

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. Staff anticipates brining the fiscal model to Council in the next few months.

Attachments
Resolution

RESOLUTION NO. __________________

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BRENTWOOD TO APPROVE AMENDING THE 2005/06-2006/07 OPERATING BUDGET AND APPROVING THE RECOMMENDED 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, On January 24, 2006, the City Council approved Resolution No. 2006-7 amending the 2005/06 Operating Budget for the City of Brentwood; and

WHEREAS, adequate resources are available to fund the approved and requested appropriations while assuring that operating revenues fully cover operating expenditures and that fund balances are maintained at minimum policy levels (30% of operating expenditures); and

WHEREAS, the budget amendments will have no net impact on the General Fund; and

WHEREAS, it is projected that the fund balance of the General Fund will be $19.6 million on June 30, 2006 and total appropriations for 2006/07 will not exceed $43,570,742; and

WHEREAS, it is projected that the fund balance of the Citywide Park Assessment Fund will be at $190,000 as of June 30, 2006 and total appropriations for 2006/07 will not exceed $2,001,141; and

WHEREAS, it is projected that the fund balance of the Agriculture Administration Fund will be at $890,000 as of June 30, 2006 and total appropriations for 2006/07 will not exceed $394,150; and

WHEREAS, it is projected that the fund balance of the Affordable Housing In Lieu Fund will be at $5,400,000 as of June 30, 2006 and total appropriations for 2006/07 will not exceed $2,452,500; and

WHEREAS, it is projected that the fund balance of the Public Art Fund will be at $329,000 as of June 30, 2006 and total appropriations for 2006/07 will not exceed $250,969; and

WHEREAS, it is projected that the fund balance of the Capital Improvement Administration will be at $0 as of June 30, 2006 as only enough revenue to cover expenses is transferred in, and the total appropriations for 2006/07 will not exceed $3,599,323; and

WHEREAS, it is projected that the fund balance of the City Rentals Enterprise Fund will be at $74,274 as of June 30, 2006 and total appropriations for 2006/07 will not exceed $1,098,871; and

WHEREAS, it is projected that the fund balance of the Housing Enterprise Fund will be at $363,408 as of June 30, 2006 and total appropriations for 2006/07 will not exceed $920,472; and

WHEREAS, it is projected that the fund balance of the Solid Waste Enterprise Fund will be at $1,800,000 as of June 30, 2006 and total appropriations for 2006/07 will not exceed $7,118,553; and

WHEREAS, it is projected that fund balance of the Water Enterprise Fund will be at $10,000,000 as of June 30, 2006 and total appropriations for 2006/07 will not exceed $13,421,761; and

WHEREAS, it is projected that the net assets of the Wastewater Enterprise Fund will be at $57,000,000 as of June 30, 2006 and total appropriations for 2006/07 will not exceed $6,963,016; and

WHEREAS, it is projected that the fund balances of the Internal Services Funds will be at $14,300,000 as of June 30, 2006 and total appropriations for 2006/07 will not exceed $7,516,836; and

WHEREAS, the Tuition Fund has seen increased participation and an additional $1,500 in appropriations for fiscal year 2005/06 is approved, for a total appropriations not to exceed $11,500; and

WHEREAS, the City Council of the City of Brentwood has reviewed the 2005/06-2006/07 Operating Budget Amendments

NOW, THEREFORE BE IT RESOLVED that the City Council of the City of Brentwood hereby adopts the appropriations and revenue adjustments to the 2005/06-2006/07 Operating Budget for the City of Brentwood as further specified in the attached Exhibit “A” which is incorporated herein by reference.

PASSED, APPROVED AND ADOPTED by the City Council of the City of Brentwood at a regular meeting held on the June 27, 2006 by the following vote:

Exhibit “A”

Appropriations and Revenue Adjustments to the 2005/06-2006/07 Operating Budget for the City of Brentwood:

2006/07 General Fund Revenue
Increase $700,000 for Property taxes, sales taxes, and development fees
Increase $203,810 for Parks and Recreation
Decrease $150,000 for Planning Fees

2006/07 General Fund Expenses
Decrease $639,389 across all departments for salary savings
Increase $12,000 for City Council
Increase $276,846 for City Attorney
Decrease $25,000 for City Clerk
Increase $100,990 for Economic Development
Increase $5,510 for Human Resources
Increase $137,500 for Non-Departmental
Increase $333,429 for Parks and Recreation
Increase $190,635 for Police
Increase $156,234 for Building
Increase $200,000 for Planning
Increase $5,055 for Engineering

2006/07 Other Funds Revenues
Increase $72,965 for Affordable Housing In Lieu Fund
Increase $253,193 for Capital Improvement Program Administration Fund
Decrease $220,339 for Housing Enterprise

2006/07 Other Funds Expenses
Increase $87,298 for Citywide Park Assessment Fund
Increase $85,300 for Agriculture Administration Fund
Increase $900,000 for Affordable Housing In Lieu Fund
Increase $100,000 for Public Art Fund
Increase $244,193 for Capital Improvement Program Administration Fund
Increase $1,471 for City Rentals Fund
Increase $90,215 for Housing Fund
Increase $372,758 for Solid Waste Fund
Increase $141,602 for Water Fund
Increase $129,461 for Wastewater Fund
Increase $45,000 for Emergency Preparedness Fund
Increase $56,500 for Information Services Fund
Increase $10,000 for Tuition Program Fund
Increase $1,763 for Facilities Maintenance Fund
Increase $90,240 for LLD Replacement Fund
Increase $30,000 for Insurance Fund

2005/06 Other Funds Expenses
Increase $1,500 for Tuition Program Fund
 

City Administration
City of Brentwood City Council
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Brentwood, CA 94513
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Fax (925) 516-5441
E-mail allcouncil@brentwoodca.gov