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. 25

Meeting Date: June 24, 2008

Subject/Title: Adopt a resolution amending the 2008/09 Operating Budget

Submitted by: Kerry Breen, Business Services Manager

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

RECOMMENDATION
Adopt a resolution amending the 2008/09 Operating Budget.

PREVIOUS ACTION
On June 26, 2007 the City Council approved Resolution No. 2007-150 adopting the 2007/08-2008/09 Operating Budget for the City of Brentwood.

On January 22, 2008, the City Council approved Resolution No. 2008-19 amending the 2007/08 Operating Budget and approving recommended mid-year budget adjustments.

On May 27, 2008, the City Council approved Resolution No. 2008-137 adopting the 2008/09 – 2012/13 Capital Improvement Program Budget.

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 2007/08 and 2008/09.

On January 22, the City Council approved a series of budgetary reductions which reduced the General Fund’s 2007/08 revenue budget by $5,000,000 and the expense budget by $5,011,923. Since that time, the national residential housing market downturn has continued to escalate. The unraveling of the subprime mortgage market has helped send local foreclosure filings to all time highs while at the same time, the tightening requirements of the credit market have limited the pool of qualified homebuyers. Declining home values have eliminated the use of home equity for consumer purchasing and helped put the economy on the verge of a recession. These problems have been magnified in communities, such as ours, which experienced the highest growth rates and property appreciation during the early to middle part of this decade. Much of east Contra Costa County, including Brentwood, is now facing a difficult financial environment.

Following the January 22nd budget reductions, staff began planning for the 2008/09 budget and has reduced expenditures wherever possible. Many of the Departments have undergone reorganizations and/or employee reductions to reflect the changing demands of City staff workloads. In addition, Council’s reductions from January were only for the 2007/08 budget and have not yet been incorporated into the 2008/09 Operating Budget. Many of the proposed reductions before Council tonight are items that were reduced in the 2007/08 budget and are once again being proposed as reductions for the 2008/09 budget.

A significant change for the 2008/09 amended budget is the merging of the CIP Administration Fund into the General Fund. The CIP Administration Fund accounted for the staff and other related expenses required to administer the CIP program. As part of previous budget initiatives to prepare for a gradual development slowdown, the staffing levels of the CIP Administration Fund were cut from 14 in 2005/06 to 8 in the original 2008/09 budget. Through attrition, reorganization and layoffs, the staffing level for this Division has been further reduced to only 4 as part of tonight’s proposed amendments.

The City also continues to provide financial support for several local organizations. Ongoing support from the City should be carefully considered as we attempt to strike a balance between the community benefits provided and the financial capability of the City to continue subsidizing outside agencies. Funding is included in the 08/09 Amended Operating Budget for:

• VCRC - $98,379
• Library - $151,185
• Dimes a Ride - $50,000
• Delta Community Services - $24,000
• Senior Nutrition Program - $19,452
• Police Activities League - $216,002
• Fountain, Women’s Club, BANC, and Bicycle - $27,133

The State of California is also experiencing difficulty with its budget. Unfortunately for local governments, the State has a history of balancing their budgets through takeaways and “loans” from cities and counties. On January 10th, the Governor declared a fiscal emergency to enact mid year 2007/08 spending cuts and simultaneously released his proposed 2008/09 State budget. On May 14th Governor Arnold Schwarzenegger released the State’s revised 2008/09 budget. Fortunately, the Governors’ proposed budget follows his stated philosophy that the State must address its own budget problems and does not look to balance their budget on the backs of local governments. On the other hand, the State’s budget is far from finalized and the Legislative Analyst’s Office (LAO) has presented a series of budget proposals to the Governor which included additional takeaways from local governments. The Governor’s proposals, which staff has included as revenue reductions in the amendments before Council tonight, include:

• COPS/Juvenile Justice Grants. The City has been receiving $100,000 annually for the Gang Suppression Grant. The Governor has proposed a 10% cut to this program, costing the City $10,000. These funds are not part of the General Fund.

• Booking Fees. Payments to counties for booking fees were also subject to a 10 percent reduction. As such, the City may have to make up the difference to the County. This is estimated to cost the City approximately $50,000.

• Reimbursement State Mandates Program. As expected, there will be no new funding for Mandated Costs. This will cost the City approximately $123,494.

The LAO’s proposed budget includes additional takeaways of $111,660 from the Prop 172 ½ cent sales tax, $214,728 in motor vehicle license fees, and an additional $150,000 in booking fee/COPS Gang Suppression Grant funding. While staff is making every effort to budget appropriately for the probable takeaways, we must do so without excessively reducing revenues. The LAO’s proposal includes takeaways the Governor hasn’t yet even considered implementing. The budget amendments included in this staff report include all of the reductions in the Governor’s proposed budget from May 14th as well as an additional $196,660 to cover potential takeaways in other areas identified by the LAO. Unfortunately, staff has learned that the State is not likely to finalize their budget any earlier than September or October which precludes us from including definitive fiscal impacts from the State’s 2008/09 Budget. Staff will keep the City Council informed of all developments from the State as updates become available.

There are also pending employee contractual negotiations which have not yet been incorporated in the budget amendments in this staff report. The Brentwood Police Officer’s Association and Non-Represented staff are continuing negotiations for their 2008/09 compensation contracts. Staff has included a 3% CPI adjustment for all of the impacted employees and will bring back updated fiscal impacts when the contracts are finalized.

Despite the challenging economic environment, the proposed budget amendments allow the City to remain focused on Council’s priorities of public safety and code enforcement, while continuing to operate in a fiscally sustainable and responsible manner, where revenues meet or exceed operational expenditures.

General Fund

Revenues

The largest source of revenue for the General Fund is property taxes. Historically the City has enjoyed 20-25% annual increases in assessed valuation which was attributable to both rising residential values and the added impact of vacant raw land being converted into homes and commercial centers. Despite the turmoil in the housing market, the City’s secured property taxes increased by 13% during the 07/08 fiscal. However, supplemental property tax revenue decreased from $802,892 to $91,541 (89%), leading to an overall net increase of property tax revenue of only 3% for the fiscal year. Following the 13% increase for the 07/08 fiscal year, staff believes that our secured property tax revenue will grow by just 3% in the 2008/09 fiscal year. Staff is expecting supplemental property tax revenue to remain unchanged for the 08/09 fiscal year. These assumptions have caused staff to recommend a $1.1 million decrease in property tax revenue for the 08/09 fiscal year.

Sales tax is the General Fund’s second largest source of revenue. A lack of construction spending in the City, decreases in home values, which restrict the use of home equity lines to fund large purchases, and small population increases have all caused sales tax revenues to suffer. The slowdown in sales tax growth has been dramatic – from annual increases of 20-25%, to a projected annual increase of 3%, despite the opening of major retailers in the City. However, the City should benefit from the opening of the Streets of Brentwood lifestyle center in the Fall of 2008. Sales tax revenue was reduced by $2.0 million as part of the 2007/08 mid year reductions and staff is recommending a decrease of $2.5 million for 2008/09.

Real Property Transfer tax is received by the City when homes are sold in the City. The slowdown in the residential market has resulted in lower property values and significantly fewer real estate transactions. The number of units sold in Brentwood has fallen substantially over the past few years, and at this point we recommend reducing our Real Property Transfer Tax revenue by $500,000.

Motor Vehicle In Lieu fees come from the State for the City’s portion of vehicle registration fees. With the State’s commencement of the “Triple Flip” a few years back, the growth of this revenue source is now tied to growth in City assessed valuation. With the slumping housing market, staff is recommending a reduction of $500,000 in this revenue source.

Building, Planning and Engineering fees, which are development driven revenues, are yet another revenue source suffering from the residential slowdown. From 2000/01 through 2006/07 the City averaged $9.0 million in annual revenue from these three sources and we have not seen a yearly total under $5.5 million since the 1998/99 fiscal year, when $4.9 million was collected. With our current forecast of just 35 single family permits for next fiscal year, we recommend a reduction of $4.1 million in these fees, bringing the revenue budget all the way down to $2.6 million.

Transfers In typically come from sources such as the Gas Tax, Vehicle Abatement, Community Facilities District transfers and excess money from projects which have been completed with funds still remaining. Staff is recommending that the total transfers in be increased by $800,000 for the 2008/09 fiscal year.

The Emergency Preparedness fund was established several years ago with a transfer of $5 million of General Fund reserves. Since that time, the account balance has grown to $5.9 million through interest earnings. Staff recommends that the interest earned in this fund during 2008/09 be transferred back to the original Fund which contributed the cash. This would mean a net revenue increase to the General Fund of $200,000.

There are a few additional reductions to the budgeted General Fund revenues. Preparing for the State’s 2008/09 budget takeaways has caused staff to reduce Mandated Cost Reimbursements by $123,494, the Prop 172 ½ cent sales tax by $111,660, and VLF revenue by $80,000. A reduction in funding from Brentwood Unified School District for their use of a City School Resource Officer will cost the City $42,500. Parks and Recreation revenue will be reduced by $427,316, primarily because of lower property tax revenues. Staff is also projecting a $144,097 reduction in rental income due to Precision Cabinets terminating their lease agreement with the City. All other miscellaneous revenue adjustments throughout the General Fund total a net decrease of $293,963. This is comprised of several smaller budget adjustments in multiple accounts including transient occupancy tax, franchise fees, miscellaneous income and fines.

In total, these revenue reductions and interest income increases net to a total revenue decrease of $8,923,030 for the General Fund.

Expenses

City staff recognizes the need for operational expenses to be fully funded by current revenues. As such, staff investigated all potential sources for expense reductions to ensure that our revenue reductions would not lead to an operational deficit. Every department analyzed their budget for expenses that could be reduced or postponed. The following proposed reductions represent the collaborative effort of every City Department.

• Salary and Benefit expense reduction of $4,043,062. This savings was primarily achieved through the two rounds of layoffs, a slowdown in the escalation of health benefit rates, and the restructuring of the duties of existing employees. In addition, staff was also able to find additional areas of expense savings in our PERS and Worker’s Compensation costs. The Insurance Internal Service fund receives the savings realized from PERS and Worker’s Compensation. In effect, this transfers the savings of having unfilled positions and prepaying PERS to the Insurance Fund. Due to the size of the fund and the need to reduce General Fund expenses, the savings from PERS and Worker’s Compensation will not be transferred in this year which is forecasted to save the General Fund $500,000 this fiscal year.

• General Office Expense reduction of $768,925. This savings is due to a lowered depletion rate of supplies with the development downturn as well as through staff’s efforts to reduce purchases to a minimum.

• Special and Contractual Services reduction of $1,935,845. Reductions in special services and contractual services are generally one of the first sources of savings when budgeting is tight. While there are some contractual obligations which the City must continue to fund (e.g. the annual audit), the slowdown in development allows either the postponement of certain expenses or the elimination of other expenses as staff brings some of the work in house.

• Travel and Training reduction of $327,877. The City has historically been generous and proactive in offering top quality training and conference opportunities to staff. This reduction does not eliminate training – it balances what the City can realistically afford and the ongoing educational needs of City staff.

• Legal expense reduction of $145,450. With the addition of the new assistant City Attorney, staff has been able to continue reducing outside legal expenses by handling a greater amount of legal matters in house.

• Capital Purchases reduction of $267,650. Staff will be delaying purchasing fixed assets and vehicles when viable and appropriate.

• Internal Services reduction of $825,908. Staff identified areas of potential savings in many of our internal services funds which are then able to pass along those savings to the rest of the City. In addition, several of the non-replacement internal service funds (e.g. Information Services) have accumulated fund balances over the past couple of years as spending has declined. Non-replacement internal service funds typically operate with very little fund balance since current charges fund the current operations and there is little need to save for future large expenditures. As a result, the internal service funds, as a group, will be able to remain 100% fully funded while operating on less revenue.

• Operational Transfers Out reduction of $480,913. Staff was able to reduce the transfers to CIP projects by $238,455, primarily due to grant money received for the Pavement Management Program. In addition, we are able to reduce the General Fund subsidy of the Brentwood Technology Center by $219,000. While revenue for the Brentwood Technology Center is projected to decrease by $370,363, there is a savings as expenses are projected to decrease by $589,363. The major contributing factors for the expense savings were the closing of the Incubator which resulted in a $242,674 savings, and the elimination of facilities maintenance and information systems support charges, saving an additional $249,834.

• In total, we are suggesting a reduction in operating appropriations in the General Fund in the amount of $9,295,630. Staff is also recommending an increase in non-operational expense transfers out to fund CIP projects in the amount of $5,866,870.

Fund Balances/Reserves

The City continues to have healthy reserves. While revenues are projected to exceed operational expenses, the use of designated reserves will be used to fund the additional $5.9 million of non-operational transfers to CIP Projects during the 2008/09 fiscal year. The proposed budget amendments call for revenues to exceed operational expenses by $.4 million for the fiscal year.







Staff projects a fund balance of $16.6 million at June 30, 2009. Of this amount, $5.2 million is designated as follows:

Compensated Absences $1.4 Million
Village Community Resource Center $ .6 Million
Pavement Management $1.5 Million
Street Lights $ .3 Million
City Park $ .9 Million
City Rentals Reserve $ .5 Million

The remaining $11.4 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 amended 2008/09 Operating Budget proposes total General Fund expenses (exclusive of transfers) of $37,149,914. The City’s undesignated reserves of $11.4 million represent 31% of our budgeted appropriations.

Special Revenue Funds:

Gas Tax

The Gas Tax is primarily allocated by the State based on population. The development slowdown has caused staff to recommend a $51,338 reduction in both revenues and expenses. This will not have an impact on fund balance, which is expected to remain at $0 on June 30, 2009.

Police Grants

The Police Grants Fund accounts for money received for the annual Gang Suppression Grant from the State. The Governor’s latest budget proposal recommends reducing funding for this Grant by 10%, causing staff to recommend a reduction of $10,000 in revenues and an increase of $101,313 in expenses for this fund. The expense increase is necessary to avoid a buildup of available fund balance in this fund. After these budget changes, this fund is projected to have a fund balance of $40,000 on June 30, 2009.

Arts Commission

Staff is recommending a $34,627 reduction in expenses and a reduction of $34,501 in revenues as the scope of this program has been decreased. After these budget changes, the fund is projected to have a fund balance of $16,965 on June 30, 2009.

Community Facilities Districts

The Community Facilities District Funds account for a special tax which is used for multiple purposes including public safety, joint use school facilities and open space. Staff is recommending an increase of $1,069,062 in expenses which will be used to fund capital projects. Staff is also recommending a $172,290 increase in revenue to account for increased unit counts within the Districts. After these budget changes, the fund is projected to have a fund balance of $1,882 on June 30, 2009.



Lighting and Landscaping Districts

Staff recommends an increase of $760,365 in expenses and an increase of $186,561 in revenues in the Lighting and Landscaping District Funds. This is necessary to account for a few new Districts that were opened during the past fiscal year. After these budget changes, the cumulative fund balance of all of the Lighting and Landscaping District Funds is projected to be $2.1 million on June 30, 2009.

Development Fees

The City has multiple Development Fee Funds which account for the facility fees paid to the City during the development process. The adoption of the CIP Budget on May 27th amended the majority of these accounts; however, there are a few funds that are not handled through the CIP budgeting process. The primary factor in these adjustments is the slowdown in development. Staff recommends the following budget amendments:

Increase in Fire Facility Fee revenue of $26,080 for investment income; decrease of $2,500 in expenses and a decrease of $1,855 in revenue in the Open Space Fund; increase of $7,750 in revenue and decrease of $111,000 in expenses in the Ag Administration Fund; increase of $31,000 in revenue and decrease of $1,485,359 in expenses in the Ag Land Fund; decrease of $3,486,645 in revenues and decrease of $1,151,767 in expenses in the Affordable Housing In Lieu Fund; increase of $200,000 in both revenues and expenses in the Housing First Time Buyers Fund as discussed under the “Housing” section below; increase of $676 in interest income for the Parking In Lieu Fund and a $3,300 increase in expenses for the Public Art Acquisition Fund.

Redevelopment Agency

The changes for the Redevelopment Agency budget have been presented in a separate staff report on tonight’s agenda for Council consideration.

Enterprises:

Housing Enterprise

The Housing Enterprise Fund encompasses two divisions including one for the administrative and operational expenses for the Housing Division and one for the Housing Rental Program. On May 27, 2008, Council accepted the Management Partners Affordable Housing Obligations and Options Assessment Report which contained a series of recommendations designed to promote financial sustainability of the City’s Housing Administration Fund and to allow the Fund to continue its purpose of managing and overseeing the programs and projects authorized by City’s Affordable Housing Ordinance.

Recommendation #1 in the report was for re-allocation of a portion of staffing costs from the Housing Administration Division to the Redevelopment Agency, where legally permissible, to partially address funding deficiencies. Staff’s proposed 2008/09 operating budget revisions include decreasing staffing levels originally budgeted for in Housing Administration from 2.60 FTEs to 0.70 FTEs, with a reciprocal increase to the Redevelopment Agency. This has resulted in a proposed reduction in personnel costs of $266,162 for the Housing Enterprise. In addition, staff is recommending an additional $82,253 in operational expense reductions and a reduction of $927,853 in development fee, rental, and investment income. The cumulative effect of these changes still results in a budgeted shortfall for the Housing Administration Division.

Recommendation #2 in the report calls for a subsidy from the Affordable Housing In Lieu Fund during those years when annual collection of developer in-lieu fees are insufficient to cover the annual budget shortfalls in the Housing Administration Division. The recommendation further stated that the subsidy would take the form of a low-interest loan. Staff is proposing establishing a loan from the Affordable Housing In Lieu Fund in the amount of $248,233 to cover the anticipated shortfall in the Housing Administration Division for the 2008/09 fiscal year. The loan will accrue interest quarterly at the Local Agency Investment Fund (LAIF) rate and staff is also proposing an expense of $12,412 for interest be added to the Housing Administration Division budget as well. After these budget changes, the fund balance of the Housing Enterprise Fund is projected to be $2.6 million as of June 30, 2009 (majority of this total is due to the Fund’s real property holdings).

Recommendation #4 calls for the continuation and expansion of the Down Payment Assistance Programs (DAP & GAP) by transferring an amount from the Affordable Housing In Lieu Fund commensurate with the DAP & GAP program demands during fiscal years when little or no developer in-lieu fees are paid to the DAP & GAP Program. In accordance with this recommendation, staff is recommending a $200,000 transfer from the Affordable Housing In Lieu Fund to the Housing First Time Buyers Fund as described in the “Development Fees” section above.

City Rentals Enterprise

The City Rentals Fund accounts for the activities of the Brentwood Technology Center. This fund has struggled to operate independently and has always required a subsidy from the General Fund. Most of the rentable space has been vacated in anticipation of providing space for temporary relocation during the Civic Center projects. As such, staff is recommending a reduction of revenue of $589,463 and a reduction of expenses of $551,336. As part of these changes, the General Fund’s subsidy will decrease from $312,000 to $93,000. After these budget changes, this fund is projected to have a fund balance of $.1 million on June 30, 2009.

Solid Waste Enterprise

Staff is recommending a decrease in operational revenue of $165,430 for the Solid Waste Enterprise Fund, due to the slowdown in population growth. Staff is also requesting a net increase in expenses of $194,760, which is primarily attributable to increased vehicle replacement costs. Revenues are expected to exceed expenditures in the Solid Waste Fund by $1.1 million for next fiscal year in anticipation of bond proceeds being received for the Solid Waste Transfer Station. After these budget changes, the fund balance of the Solid Waste Enterprise Fund is projected to be $16.1 million as of June 30, 2009 (total includes infrastructure).

Water Enterprise

Staff is recommending an increase in investment income of $315,500 and operational revenue increases of $84,457 for the Water Enterprise Fund. Staff is also requesting a net increase in expenses of $2,471,165, which is primarily due to a restructuring of debt service which is currently budgeted through the Water Facility Fee Fund, as well as additional purchased water requirements as we continue to see extended drought conditions in Northern California. Revenues are expected to exceed operational expenditures by $.7 million during the next fiscal year. After these budget changes, the fund balance of the Water Enterprise Fund is projected to be $78.0 million as of June 30, 2009 (total includes infrastructure).



Wastewater Enterprise

Staff is recommending an increase in operational income for the Wastewater Enterprise Fund of $282,170. This is to account for the wastewater rate increases which were approved as part of the Wastewater Rate Study adopted by Council on October 9, 2007. Staff is also recommending an increase of $295,146 in supplies and services for increased operational costs; a decrease of $30,346 in personnel and benefits expenses due to lower benefit costs; a decrease of $136,016 in internal services costs and a decrease of $541,554 in capital outlay. Expenses are expected to exceed revenues by $.6 million during the fiscal year which is consistent with the figures presented in the Wastewater Rate Study. A series of yearly rate increases were approved to ensure that the use of reserves will not be necessary in future years and the rate study concluded that with the increases the fund will break even by 2009/10. The fund balance of the Wastewater Enterprise Fund is projected to be $67.6 million as of June 30, 2009 (total includes infrastructure).

Emergency Preparedness

The Emergency Preparedness Fund provides a source of funding in the event of a City emergency. Staff is recommending lowering the interest income and transfers in budget from $305,577 to 0. In addition, we are recommending an increase in expenses of $13,000 to purchase additional emergency radios. After this change, the Emergency Preparedness Fund is expected to have a Fund Balance of $5.8 million at June 30, 2009.

Information Services

The Information Services Fund provides a source of funding for repairs and maintenance of the City’s Information Systems network. Staff recommends a reduction of $89,580 for supplies and services, an increase of $939 in internal service expenses and, due to employee allocation changes, an increase of $104,538 in personnel costs. In addition, staff is recommending a reduction in transfers in from other funds in the amount of $124,715 as there is sufficient fund balance to absorb this revenue decrease. The fund balance of the Information Services Fund is expected to be $161,000 at June 30, 2009.

Equipment Replacement

The Equipment Replacement Fund provides a source of funding for the systematic replacement of City vehicles and equipment. Staff is recommending a decrease of $154,633 in capital outlay and also recommends the lowering of the transfers in the budget by $489,906 to reflect the fact that there are sufficient reserves and accumulated savings and interest income to safely allow for a reduction. After this change, the Equipment Replacement Fund is expected to have a fund balance of $10.2 million at June 30, 2009 (total includes vehicles and equipment).

Information Systems Replacement

The Information Systems Replacement Fund provides a source of funding for the ongoing replacement of the City’s Information System inventory, including computers and the phone system. After analyzing the future replacement needs of the City’s Information Systems equipment, staff is recommending increasing the transfers in from other funds by $16,278. After this change, the Information Systems Replacement Fund is expected to have a fund balance of $287,000 at June 30, 2009.




Facilities Replacement

The Building Replacement Fund provides a source of funding for the major repairs and replacement of the City’s buildings. The new City Hall will provide two major short term benefits to this fund. First, we will attempt to defer all non-critical repairs on the existing buildings as they will soon be torn down and second, the new City Hall should not require a great deal of repairs during the first several years of it’s life giving staff the time to begin building up reserves. Staff recommends that the fund balance be maintained at the current level of $.9 million. This allows for a reduction of $253,099 in charges made to the other funds, in addition to a decrease in interest income of $5,000 and a decrease in supplies of $5,700, while still allowing the fund to have a $.9 million fund balance at June 30, 2009.

Tuition Reimbursement

The Tuition Reimbursement Fund provides a source of funding for expenditures relating to continuing education. Staff has determined that an additional $10,000 in budgeted expenditures is necessary to avoid declining reimbursement requests. Staff is also recommending a reduction in transfers in of $156 to this fund. The fund balance of the Tuition Reimbursement Fund is expected to be $8,000 at June 30, 2009.

Fleet Maintenance

The Fleet Maintenance Fund provides a source of funding for repairs and maintenance of the City’s vehicle fleet. Staff recommends a reduction of $13,485 for supplies and services, a reduction of $32,969 in personnel and benefits expenses, and a reduction of $16,318 in internal service expenses. In addition, staff is recommending a reduction in transfers in from other funds in the amount of $186,605. The fund balance of the Fleet Maintenance Fund is expected to be $97,000 at June 30, 2009.

Facilities Maintenance

The Facilities Maintenance Fund provides a source of funding for the custodial and janitorial needs of the City. Staff recommends a reduction of $46,212 for supplies and services, a reduction of $23,206 in personnel and benefits expenses, and a reduction of $7,252 in internal service expenses. In addition, staff is recommending a reduction in transfers in from other funds in the amount of $105,548 and a reduction of interest income of $2,000. The fund balance of the Facilities Maintenance Fund is expected to be $44,000 at June 30, 2009.

Parks and LLD Replacement

The Parks and LLD Replacement Fund provide a source of funding for on-going replacement of the fixed assets in the City’s Parks and Lighting and Landscaping Districts. Staff has reanalyzed the needs for replacement for the 2008/09 fiscal year and is recommending an increase of $8,740 for supplies and services. Staff is also anticipating an increase in transfers in of $597,170 as additional areas have come on line since the initial adoption of the 2008/09 Operating Budget. The fund balance of the Parks and LLD Replacement Fund is expected to be $2.7 million at June 30, 2009.

Insurance Fund

The Insurance Fund provides a source of funding for the retiree medical and insurance costs of the City. The rising costs of health insurance and other post employment benefits (OPEB) have been a topic of national concern and debate over the past few years. The City recognized the need to begin setting funds aside several years ago and established this fund through the accumulation of PERS prepayment savings, Workers Compensation savings, PERS savings achieved through having budgeted positions remain vacant, and eventually through interest earnings on what would become a sizeable accumulation of funds. Staff is currently working with an outside agency on a required actuarial valuation study to determine the exact dollar amount of the City’s OPEB liability and will be bringing that study, along with funding strategies including partial use of these funds, to City Council for consideration next fiscal year.

Since inception, the Insurance Fund has amassed a $5.6 million balance and staff is recommending suspending this year’s transfer of PERS and Worker’s Compensation savings. This will result in a budgeted revenue reduction of $900,000 for the PERS and Workers Compensation savings. Staff is also proposing a $35,000 reduction in interest income, due to lowered interest rates, and a $2,804 reduction in transfers in for a total revenue reduction of $937,804. Staff is also proposing an appropriation increase of $53,440 for additional retiree medical costs associated with recent retirements. The fund balance of the Insurance Fund is expected to be $5.2 million at June 30, 2009.

FISCAL IMPACT
The budget amendments proposed would be consistent with the City’s belief that current revenues should cover current operational expenses. The Finance Department is currently working on updating the 10-year fiscal model to incorporate the development slowdown and will bring this to Council approximately one month after the finalization of the pending labor contracts. Staff will also provide additional updates on State budget developments as they become available.

Attachments
Resolution
Exhibit “A”


























RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BRENTWOOD AMENDING THE 2008/09 OPERATING BUDGET

WHEREAS, on June 26, 2007 the City Council approved Resolution No. 2007-150 adopting the 2007/08-2008/09 Operating Budget for the City of Brentwood; and

WHEREAS, on January 22, 2008 the City Council approved Resolution No. 2008-19 amending the 2007/08 Operating Budget for the City of Brentwood; and

WHEREAS, on May 27, 2008, the City Council approved Resolution No. 2008-137 adopting the 2008/09 – 2012/13 Capital Improvement Program Budget.

WHEREAS, the City has gone from issuing over 1,450 permits in 2004/05 to approximately 35 permits for the 2008/09 fiscal year; and

WHEREAS, budgeted revenue reductions total $8,923,030 for the General Fund; and

WHEREAS, budgeted appropriation reductions for operations total $9,295,630 for the General Fund; and

WHEREAS, budgeted appropriation increases for one time transfers associated with CIP Projects total $5,866,870 for the General Fund; and

WHEREAS, staff recommends a reduction of revenue of $51,338 and a reduction of expenses of $51,338 in the Gas Tax Fund; and

WHEREAS, staff recommends a reduction of revenue of $10,000 and a increase of expenses of $101,313 in the Police Grants Fund; and

WHEREAS, staff recommends a reduction of revenue of $34,501 and a reduction of expenses of $34,627 in the Arts Commission Fund; and

WHEREAS, staff recommends an increase of revenue of $172,290 and an increase of $1,069,062 in debt related expenses in the Community Facilities District Funds; and

WHEREAS, staff recommends an increase of revenue of $186,651 and an increase of $760,365 in expenses in the Lighting and Landscaping District Funds; and

WHEREAS, staff recommends an increase in Fire Facility Fee revenue of $26,080 for investment income; a decrease of $2,500 in expense and $1,855 in revenue in the Open Space Fund; increase of $7,750 in revenue and decrease of $111,000 in expenses in the Ag Administration Fund; an increase of $31,000 in revenue and decrease of $1,485,359 in expenses in the Ag Land Fund; a decrease of $3,486,645 in revenue and decrease of $1,151,767 in expenses in the Affordable Housing In Lieu Fund; an increase of $676 in interest income for the Parking In Lieu Fund; and a $3,300 increase in expenses for the Public Art Acquisition Fund; and

WHEREAS, staff recommends a reduction in budgeted personnel expenses of $266,162, a reduction of $82,253 for other operational expenses, a reduction of revenue of $927,853, establishment of a loan from the Affordable Housing In Lieu Fund in the amount of $248,233, adds $12,412 in interest expense in the Housing Enterprise, and establishes a transfer of $200,000 from the Affordable Housing In Lieu Fund to the Housing First Time Buyers Fund with an increase in expenditures of $200,000 in the Housing First Time Buyers Fund; and

WHEREAS, staff recommends a reduction of revenue of $589,463 and a reduction of expenses of $551,336 in the City Rentals Enterprise Fund; and

WHEREAS, staff is requesting an increase of $194,760 in expenses and a decrease of $165,430 in revenue for the Solid Waste Enterprise Fund; and

WHEREAS, staff is requesting an increase of $2,471,165 in expenses and an increase of $399,957 in revenue for the Water Enterprise Fund; and

WHEREAS, staff is recommending an increase of $295,146 for supplies and services, a decrease of $30,346 in personnel and benefits expenses, a decrease of $136,016 in internal service expenses, an decrease of $541,554 in capital outlay, and an increase of $282,170 in operational revenue for the Wastewater Enterprise Fund; and

WHEREAS, staff is recommending lowering the revenue budget to $0 and increasing expenses by $13,000 in the Emergency Preparedness Fund; and

WHEREAS, staff is recommending a reduction of $89,580 for supplies and services, an increase of $104,538 in personnel and benefits expenses, an increase of $939 in internal service expenses and a reduction of $124,715 in transfers in from other funds for the Information Services Fund; and

WHEREAS, staff is recommending lowering the capital outlay by $154,633 and the transfers in budget in the Equipment Replacement Fund by $489,906 to reflect that there are sufficient reserves and accumulated savings and interest income to allow for the reduction; and

WHEREAS, staff is recommending raising the transfers in budget in the Information Systems Replacement Fund by $16,278 to ensure sufficient reserves for future replacement costs; and

WHEREAS, staff is recommending lowering the transfers in budget in the Facilities Replacement Fund by $253,099, lowering interest income by $5,000, and lowering appropriations for supplies by $5,700; and

WHEREAS, staff is requesting an additional $10,000 in budgeted expenditures and a decrease of $156 in transfers in from the Tuition Reimbursement; and

WHEREAS, staff is recommending a reduction of $13,485 for supplies and services, a reduction of $32,969 in personnel and benefits expenses, a reduction of $16,318 in internal service expenses and a reduction of $186,605 in transfers in from other funds for the Fleet Maintenance Fund; and

WHEREAS, staff is recommending a reduction of $46,212 for supplies and services, a reduction of $23,206 in personnel and benefits expenses, a reduction of $7,252 in internal service expenses, a reduction of $105,548 in transfers in from other funds and a reduction of $2,000 in interest income for the Facilities Maintenance Fund; and

WHEREAS, staff is recommending a addition of $8,740 for supplies and services and a increase of transfers in from other funds in the amount of $597,170 for the Parks and LLD Replacement Fund; and

WHEREAS, staff recommends a budgeted revenue reduction of $900,000 for the PERS and Workers Compensation savings, a $35,000 reduction in interest income, a $2,804 reduction in revenue transfers, and a $53,440 increase in additional retiree costs in the Insurance Fund; and

WHEREAS, the City Council of the City of Brentwood has reviewed the 2008/09 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 2008/09 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 24, 2008 by the following vote:

Exhibit “A”

Appropriations and Revenue Adjustments to the 2008/09 Operating Budget for the City of Brentwood:

2008/09 General Fund Revenue
Decrease $1,100,000 for Property Taxes
Decrease $2,500,000 for Sales Tax
Decrease $500,000 for Real Property Transfer Tax
Decrease $4,100,000 for Building, Planning, and Engineering Fees
Decrease $427,316 for Parks and Recreation
Decrease $580,000 for Motor Vehicle In Lieu
Decrease $144,097 for Rental Income
Decrease $123,494 for Mandated Cost Reimbursements
Decrease $111,660 for Prop 172 ½ cent sales tax
Decrease $42,500 for School Contributions
Decrease $293,963 for Miscellaneous items
Increase $200,000 for Interest Income
Increase $800,000 for Transfers In

2008/09 General Fund Expenses
Decrease $4,043,062 for Salaries and Benefits
Decrease $768,925 for General Office Expense
Decrease $1,935,845 for Special and Contractual Services
Decrease $327,877 for Travel and Training
Decrease $145,450 for Legal
Decrease $267,650 for Capital Purchases
Decrease $500,000 for PERS and Worker’s Comp Savings
Decrease $825,908 for Transfers to the Internal Service Funds
Decrease $480,913 for Operational Transfers Out
Increase $5,866,870 for Non-Operational Transfers Out

2008/09 Other Funds Revenues
Decrease of $51,338 in the Gas Tax Fund
Decrease of $10,000 in the Police Grants Fund
Decrease of $34,501 in the Arts Commission Fund
Increase of $172,290 in the Community Facilities District Funds
Increase of $186,561 in the Lighting and Landscaping Districts Funds
Increase of $26,080 in the Fire Facility Fee Fund
Decrease of $1,855 in the Open Space Fund
Increase of $7,750 in the Ag Administration Fund
Increase of $31,000 in the Ag Land Fund
Decrease of $3,486,645 in the Affordable Housing In Lieu Fund
Increase of $676 in the Parking In Lieu Fund
Increase of $200,000 in the Housing First Time Buyers Fund
Decrease of $927,853 in the Housing Enterprise Fund
Increase of $248,233 in the Housing Enterprise Fund (loan from Affordable Housing In Lieu Fund)
Decrease of $589,463 in the City Rentals Enterprise Fund
Decrease of $165,430 in the Solid Waste Enterprise Fund
Increase of $399,957 in the Water Enterprise Fund
Increase of $282,170 in the Wastewater Enterprise Fund
Decrease of $305,577 in the Emergency Preparedness Fund
Decrease of $124,715 in the Information Services Fund
Decrease of $489,906 in the Equipment Replacement Fund
Increase of $16,278 in the Information Systems Replacement Fund
Decrease of $258,099 in the Facilities Replacement Fund
Decrease of $156 in the Tuition Reimbursement Fund
Decrease of $186,605 in the Fleet Maintenance Fund
Decrease of $107,548 in the Facilities Maintenance Fund
Increase of $597,170 in the Parks and LLD Replacement Fund
Decrease of $937,804 in the Insurance Fund

2008/09 Other Funds Expenses
Decrease of $51,338 in the Gas Tax Fund
Increase of $101,313 in the Police Grants Fund
Decrease of $34,627 in the Arts Commission Fund
Increase of $1,069,062 in the Community Facilities District Funds
Increase of $760,365 in the Lighting and Landscaping Districts Funds
Decrease of $2,500 in the Open Space Fund
Decrease of $111,000 in the Ag Administration Fund
Decrease of $1,485,359 in the Ag Land Fund
Decrease of $1,400,000 in the Affordable Housing In Lieu Fund
Increase of $248,233 in the Affordable Housing In Lieu Fund (loan to Housing Fund)
Increase of $3,300 in the Public Art Acquisition Fund
Increase of $200,000 in the Housing First Time Buyers Fund
Decrease of $336,003 in the Housing Enterprise Fund
Decrease of $551,336 in the City Rentals Enterprise Fund
Increase of $194,760 in the Solid Waste Enterprise Fund
Increase of $2,471,165 in the Water Enterprise Fund
Decrease of $412,770 in the Wastewater Enterprise Fund
Increase of $13,000 in Emergency Preparedness Fund
Increase of $15,897 in the Information Services Fund
Decrease of $154,633 in the Equipment Replacement Fund
Decrease of $5,700 in the Facilities Reimbursement Fund
Increase of $10,000 in the Tuition Reimbursement Fund
Decrease of $62,772 in the Fleet Maintenance Fund
Decrease of $76,670 in the Facilities Maintenance Fund
Increase of $8,740 in the Parks and LLD Replacement Fund
Increase of $53,440 in the Insurance 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