City of Brentwood
Home PageContact Us!Back

City Administration

2010 Council Goals and Strategic Plan | City Council Members | Calendar of Events | Elections
eNotification | Sub-Committees| Pledge of Allegiance Sign Ups | Invocation Sign Up
Live Streaming Council Meeting | Streaming PC Help |
Streaming Mac Help |

Current Council Agenda and Past Meeting Information

 

CITY COUNCIL AGENDA ITEM NO. 7


Meeting Date: January 23, 2007

Subject/Title: Approve a resolution amending the 2006/07 Operating Budget and approving the recommended mid-year 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 2006/07 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.

On June 27, 2006 the City Council approved Resolution No. 2006-156 amending the 2005/06-2006/07 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, by the time we reach the midway point of the second year there are usually unforeseen events such as local or national economic events, priority shifts, or State policy changes, which occur and necessitate modification to the budget.

The chief economic headline of the past 6 months has been the dramatic slowdown in residential development and the pullback in the housing market. While we did lower our residential permit unit projections by 30% prior to the beginning of the fiscal year, it has become evident that we will not meet these lower unit projections estimates. Specific revenue budget adjustments are discussed later in this staff report.

We are currently able to fund all of our projects. While no one knows how long the slowdown will last, we will be monitoring this environment carefully over the next few months. We will discuss the slowdown, possible revisions in our development impact fees budgets, and their effects on future projects at the Capital Improvement Program (CIP) budget workshop in April.

General Fund

Revenues

The slowdown in development has caused us to reduce our fiscal year building revenue estimate by $2,500,000—a reduction of 43%. In addition, the slowing housing market has led to a decline in both new and existing housing sales. This is causing us to reduce our property transfer tax estimate, which is generated from the sale of property in the City, by $600,000—a reduction of 60%.

While the slowdown in development activity is far and away the dominating storyline in our current environment, there are still positive developments to report. Excluding the building and property transfer tax revenues discussed above, we anticipate an increase in revenues of $2,222,130 which is attributable to several sources including: motor vehicle fees, mandated cost reimbursements, and investment income.

We sometimes have programs where revenue increases are offset by matching expense increases--leading to a zero dollar net impact to the City. We are anticipating an additional $171,000 in program revenues for Parks and Recreation and $17,000 in additional Business License revenue for the Economic Development Department. Both of these items have matching expenses discussed again under the Expense heading below.

Finally, there will be a reduction in transfers-in of $83,975 from the Public Art Administration Fund. This change is discussed in detail under the Public Art Administration heading below.

In total, we anticipate a reduction in revenues of $773,845.

Expenses

Individual department budget amendment requests are as follows:

Economic Development
• $17,000 for Business License Grants. This expense also has offsetting revenue of $17,000 as mentioned above.

City Attorney’s Office
• $18,192 for a new Administrative Assistant II position to assist the City Attorney’s Office with increased filing and support needs as more legal work is now being handled in house. The City Attorney’s Office is currently utilizing 50% of a City Clerk employee. When this position is filled in March 2007, the current 50% position being utilized by the City Attorney’s Office will revert back to the City Clerk.

City Clerk
• $18,191 for the cost of relocating the existing 50% employee from the City Attorney’s Office back to the City Clerk. This employee will assist the City Clerk with filing and general administrative duties.

Parks and Recreation
• $171,000 for programs which are expected to be more than offset by bringing in an additional $171,000 in revenue, as mentioned above.

In total, we are asking for additional appropriations in the amount of $224,383.





Fund Balances/Reserves

Staff estimates that the General Fund’s revenues will exceed expenditures by $.1 million in 2006/07, resulting in a projected General Fund balance of $22.6 million as of June 30, 2007. 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 $9.2 million which is comprised of the following reserves: Pavement Management $1,700,000, Facility reserves $4,000,000, Village Community Resource Center reserves $500,000, Compensated Absences reserves $1,000,000, Storm Drainage reserves $500,000, City Hall reserves $1,000,000, and Information Systems Technology reserves $500,000.

The remaining $13.4 million is considered undesignated reserves. This money can 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 30% of our budgeted appropriations.


Community Facilities Districts

The Community Facilities District Funds collect special benefit assessments levied on property owners for public benefit purposes such as police services, joint-use school facilities, pavement management, and open space preservation. We anticipate a revenue increase of $648,805 and are requesting approval for additional appropriations in the amount of $641,505 to be used for police services and pavement management, with an additional appropriation for the remaining $7,300 to cover investment advisory services costs. The Community Facilities Districts typically spend virtually everything they receive and this year will be no exception as we believe revenues and expenses will be equal leading to a zero dollar change in the existing fund balance amount of $40,128.

Public Art Administration

The Public Art Administration Fund holds the administrative piece of the development fees collected for public art. This fund is also being impacted by the slowdown in development and anticipates a reduction of $131,414 in revenue and a decrease in its transfer-out to the General Fund of $83,975. The transfer is made annually to reimburse the General Fund for the salary expenses of the Public Art Program. This reduction causes a decrease in General Fund revenue, which is discussed under that subheading. We anticipate that expenses will exceed revenues by $31,713 in the Public Art Administration for the 2006/07 fiscal year, requiring the fund to use all of its reserves leading to an ending fund balance of $0.

Asset Forfeiture

This Fund accounts for property or funds seized by the Police Department. The County informs us when we are to disburse the funds. Unfortunately, we do not control the timing of the disbursements which makes it difficult to budget since it can be years between when we receive the assets and when we dispose of them. In case we have assets to be disposed of we are requesting appropriations in the amount of $16,500. We estimate that expenses will exceed revenues by $17,300 in this fund for the fiscal year. This is not unusual as the timing of when we take in the funds can vary so substantially and in this case we are disbursing funds received over previous fiscal years. We anticipate that the fund balance of the Asset Forfeiture fund will be $22,641.

Solid Waste Enterprise

Staff is requesting that the Solid Waste Enterprise receive additional appropriations of $55,356 for costs associated with purchasing mandated diesel filters for their vehicles as well as for upgrading their bobcat to a backhoe. We estimate that revenues will exceed expenditures by $871,958 during the fiscal year, leaving the fund with a fund balance of $3,606,178 on June 30, 2007.

Water Enterprise

Staff is requesting appropriations of $33,000 to pay for the water portion of a water and wastewater rate study. After this amendment we estimate that expenses will exceed revenues in the Water Enterprise by $3,826,846 for the fiscal year. This is due to transfers of over $4.5 million that are being made this fiscal year to fund Capital Projects. The most significant of these projects is the Water Treatment Plant. We anticipate that the Water Enterprise will have a fund balance of $4,603,196 as of June 30, 2007.

Wastewater Enterprise

Staff is requesting appropriations of $65,000 to pay for the wastewater portion of a water and wastewater rate study as well as for the purchase and repair of specialized equipment. We anticipate that Wastewater expenses will exceed revenues by $220,572 for the fiscal year. Staff is currently working on a rate study to address this and to ensure that our revenue stream will cover our expenses. Fund Balance is estimated to be $20,838,812 as of June 30, 2007.

Tuition Internal Service Fund

The Tuition Internal Service Fund provides limited higher education reimbursement to City employees who meet specific criteria. Staff is requesting an additional $10,000 in appropriations for tuition reimbursement. For the year the tuition fund will see expenses exceed revenues by $18,700. Internal Service funds receive their funding from the other departments who use the service. We are not recommending that we increase the Tuition Fund’s charges to the other City departments at this time since we have enough reserves to cover this shortfall. We estimate that the fund balance of the Tuition Fund will be $40,314 as of June 30, 2007. We will re-analyze the chargeback amounts to the other Departments during our next budget cycle.

Fleet Maintenance Internal Service Fund

The Fleet Maintenance Fund provides for the ongoing maintenance of all City vehicles except for Police. Staff is requesting an additional $75,000 in appropriations to pay for vehicle parts, oil, hazardous material storage bins, and equipment. We estimate that revenues will exceed expenditures by $35,439 for the fiscal year and that the Fleet Maintenance Fund will have a fund balance of $337,378 on June 30, 2007.


Housing Fund

While Staff is not recommending any budget changes be made at this time for the Housing Fund, the development slowdown has helped bring forward some long-term financial viability concerns. Staff will be conducting a long range study of the Housing program as it is currently structured and will report back to Council as soon as possible with recommendations.


FISCAL IMPACT
As always, staff has intentionally overestimated expenditures and intentionally underestimated revenues to maintain a conservative budget and fiscal policy. The effects of the budget changes can be seen in Exhibit “A”. 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 is excited at the power that the fiscal model will give us as both a budgeting and forecasting tool. The fiscal model will be brought to Council in February.


Attachments
Resolution





RESOLUTION NO. __________________


A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BRENTWOOD TO APPROVE AMENDING THE 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 June 27, 2006 the City Council approved Resolution No. 2006-156 amending the 2005/06-2006/07 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, there is a tremendous slowdown in residential development leading to decreased building fees and transfer taxes for the general fund; and

WHEREAS, the General Fund is projected to have a surplus of $.1 million for the 2006/07 fiscal year; and

WHEREAS, it is projected that the fund balance of the General Fund will be at $22,600,000 as of June 30, 2007 and total appropriations for 2006/07 will not exceed $44,754,215; and

WHEREAS, it is projected that the fund balance of the Community Facilities District #2 Fund will be at $12,453 as of June 30, 2007 and total appropriations for 2006/07 will not exceed $459,324; and

WHEREAS, it is projected that the fund balance of the Community Facilities District #3 Fund will be at $13,687 as of June 30, 2007 and total appropriations for 2006/07 will not exceed $1,012,065; and

WHEREAS, it is projected that the fund balance of the Community Facilities District #4 Fund will be at $13,988 as of June 30, 2007 and total appropriations for 2006/07 will not exceed $621,097; and

WHEREAS, it is projected that the fund balance of the Public Art Administration Fund will be at $0 as of June 30, 2007 and total appropriations for 2006/07 will not exceed $54,994; and

WHEREAS, it is projected that the fund balance of the Asset Forfeiture Fund will be at $22,641 as of June 30, 2007 and total appropriations for 2006/07 will not exceed $20,000; and

WHEREAS, it is projected that the fund balance of the Solid Waste Fund will be at $3,606,178 as of June 30, 2007 and total appropriations for 2006/07 will not exceed $7,196,295; and

WHEREAS, it is projected that fund balance of the Water Enterprise Fund will be at $4,603,196 as of June 30, 2007 and total appropriations for 2006/07 will not exceed $17,306,266; and

WHEREAS, it is projected that the fund balance of the Wastewater Enterprise Fund will be at $20,838,812 as of June 30, 2007 and total appropriations for 2006/07 will not exceed $7,160,579; and

WHEREAS, it is projected that the fund balance of the Tuition Internal Services Fund will be at $40,314 as of June 30, 2007 and total appropriations for 2006/07 will not exceed $30,000; and

WHEREAS, it is projected that the fund balance of the Fleet Maintenance Internal Services Fund will be at $337,378 as of June 30, 2007 and total appropriations for 2006/07 will not exceed $961,524; and

WHEREAS, the City Council of the City of Brentwood has reviewed the 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 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 January 23, 2007 by the following vote:


Exhibit “A”

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

2006/07 General Fund Revenue
Increase $2,222,130 for various items such as Motor Vehicle Fees and Investment Income
Increase $17,000 for Business License Grants
Increase $171,000 for Parks and Recreation
Decrease $83,975 for Transfers-in from Public Art Administration Fund
Decrease $600,000 for Property Transfer Taxes
Decrease $2,500,000 for Building Fees

2006/07 General Fund Expenses
Increase $18,192 for City Attorney’s Office
Increase $18,191 for City Clerk
Increase $17,000 for Economic Development
Increase $171,000 for Parks and Recreation

2006/07 Other Funds Revenues
Increase $648,805 for Community Facilities Districts
Decrease $131,414 for Public Art Administration

2006/07 Other Funds Expenses
Increase $648,805 for Community Facilities Districts
Decrease $83,975 for Public Art Administration Fund
Increase $16,500 for Asset Forfeiture Fund
Increase $55,356 for Solid Waste Fund
Increase $33,000 for Water Fund
Increase $65,000 for Wastewater Fund
Increase $10,000 for Tuition Program Fund
Increase $75,000 for Fleet Maintenance Fund

 

City Administration
City of Brentwood City Council
150 City Park Way
Brentwood, CA 94513
(925) 516-5440
Fax (925) 516-5441
E-mail allcouncil@brentwoodca.gov