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HomeMy WebLinkAboutItem 1a - Adopt Resolution Nos. 6972 and 6973 - 2013-14 Fiscal Year BudgetDATE: June 4, 2013 TO: Mayor and City Council STAFF REPORT Office of the City Manager FROM: Dominic Lazzaretto, City Manager Hue Quach, Administrative Services Director SUBJECT: APPROVING THE OPERATING BUDGET FOR FISCAL YEAR 2013 -14, AND A CAPITAL IMPROVEMENT AND EQUIPMENT PLAN FOR FISCAL YEARS 2013 -14 THROUGH 2017 -18 BY ADOPTING THE FOLLOWING RESOLUTIONS: RESOLUTION NO. 6972 ADOPTING THE OPERATING BUDGET FOR FISCAL YEAR 2013 -14 AND APPROPRIATING THE AMOUNTS SPECIFICIED THEREIN AS EXPENDITURES FOR THE VARIOUS FUNDS Recommendation: Adopt RESOLUTION NO. 6973 ADOPTING A CAPITAL IMPROVEMENT AND EQUIPMENT PLAN FOR FISCAL YEARS 2013 -14 THROUGH 2017 -18 Recommendation: Adopt SUMMARY Sections 1204 and 1205 of the Arcadia City Charter require a public notice and a public hearing for consideration of the proposed Operating Budget and Five -year Capital Program for the ensuing fiscal year. The recommended actions are necessary to implement the budget for Fiscal Year 2013 -14, which is required to be adopted by July 1. This year's budget process included three Budget Study Sessions with the City Council. Based on the input received, the FY 2013 -14 Preliminary Budget was distributed to the City Council on May 16, 2013. Submitted for the City Council's review were all operating funds including General, Special Revenues, Enterprise, and the Successor Agency. Additionally, the City Council received the Capital Improvement and Equipment Replacement Fund budgets in a separate document. All funds total $88.2 million in expenditures, of which the General Fund's budget is $51.8 million. As Special Revenues, Enterprise, and Debt Service funds are restricted to specific purposes and ADOPTION OF FY 2013 -14 OPERATING BUDGET & 5 -YEAR CAPITAL IMPROVEMENT AND EQUIPMENT PLAN June 4, 2013 Page 2 of 15 are generally self- sustaining, this report will primarily focus on the General Fund's Operating Budget. The proposed budget has been prepared with an eye toward maintaining the high level of service that has been established in Arcadia while still identifying cost cutting measures wherever possible. Overall, the budget can be considered a "status quo" proposal; however, the methodology has been modified to be more transparent and more closely resemble actual revenue and expenditure patterns in the City. Through the development process, it became apparent that a balanced budget could be achieved for FY 2013 -14 without increasing fees or charges and without using General Fund Reserves. This would be accomplished through continuing to spend down capital fund balances to meet annual demands. This is a practice that has been in place in recent years to respond to the economic downturn. Unfortunately, those capital fund balances are beginning to be depleted and must be replenished to meet future infrastructure and equipment needs. In response to this, the proposed budget includes returning the City's utility users tax to the levels fully authorized by the citizens of Arcadia. As presented, the proposed FY 2013 -14 Operating Budget includes a revenue forecast of $51,777,900 against expenditures of $50,426,500. The net balance provides a surplus of $1.35 million that has been marked to be transferred to the Equipment Replacement Fund. Summarized in the table below is the General Fund Operating Budget for: FY 2012 -13 Year Ending Estimates, FY 2013 -14 Proposed Budget for Adoption, and FY 2014 -15 Preliminary Budget Outlook. Please note that FY 2014 -15 is not proposed for adoption as the City adopts the Operating Budget annually. ADOPTION OF FY 2013 -14 OPERATING BUDGET & 5 -YEAR CAPITAL IMPROVEMENT AND EQUIPMENT PLAN June 4, 2013 Page 3 of 15 The overall expenditure budget of the General Fund is proposed to increase 2.04 %. Where possible, expenditures have been cut in areas that would not directly affect services to the public. Increases to the expenditure budget are primarily the result of contractual labor agreements and the addition of new programs designed to effectively meet service demands. Revenue projections have been forecasted to increase 3.54% with an improved outlook in comparison to the prior Fiscal Year based on improvements in the housing industry and increasing consumer confidence. As shown in the table above, the proposed Budget anticipates a surplus of $1.35 million available to be transferred to the Equipment Replacement Fund at the end of the Fiscal Year. The sections below summarize how this was accomplished. DISCUSSION Status of FY 2012 -13 Budget At the time of the FY 2012 -13 General Fund budget adoption in June 2012, a deficit of $1.5 million was projected. In recent years, surpluses have consistently materialized at FY 12 -13 Year Ending Estimates FY 13 -14 Proposed Budget FY 14 -15 Preliminary Budget Outlook Beginning Fund Balance $ 9,802,000 $ 11,380,910 $ 11,380,910 Estimated Revenue: Revenues 45,093,440 47,148,700 48,452,920 Transfers -In from other funds 4,680,830 4,629,200 5,119,400 Total Revenues 49,774,270 51,777,900 53,572,320 Proposed Expenditures: Transfers -Out to other funds 721,790 823,200 828,100 Expenditures 47,473,570 49,603,300 50,683,800 Total Expenditures 48,195,360 50,426,500 51,511,900 Revenue Over Expenditure 1,578,910 1,351,400 2,060,420 Transfer to Equipment 0 (1,351,400) (2,060,420) Replacement Fund Ending Fund Balance $ 11,380,910 $ 11,380,910 $ 11,380,910 The overall expenditure budget of the General Fund is proposed to increase 2.04 %. Where possible, expenditures have been cut in areas that would not directly affect services to the public. Increases to the expenditure budget are primarily the result of contractual labor agreements and the addition of new programs designed to effectively meet service demands. Revenue projections have been forecasted to increase 3.54% with an improved outlook in comparison to the prior Fiscal Year based on improvements in the housing industry and increasing consumer confidence. As shown in the table above, the proposed Budget anticipates a surplus of $1.35 million available to be transferred to the Equipment Replacement Fund at the end of the Fiscal Year. The sections below summarize how this was accomplished. DISCUSSION Status of FY 2012 -13 Budget At the time of the FY 2012 -13 General Fund budget adoption in June 2012, a deficit of $1.5 million was projected. In recent years, surpluses have consistently materialized at ADOPTION OF FY 2013 -14 OPERATING BUDGET & 5 -YEAR CAPITAL IMPROVEMENT AND EQUIPMENT PLAN June 4, 2013 Page 4 of 15 the end of each fiscal year as significant expenditure savings were achieved in the areas of salaries and benefits. Due to these previous experiences, the City Council approved the Proposed Budget with the belief that careful management of expenditures would again bring a balanced budget at the fiscal year's end. Since the FY 2012 -13 budget adoption, the economy has continued to improve and significant salary savings and other decreases in expenditures have again materialized. As a result, it is now expected that the City will experience a $1.6 million surplus for the fiscal year ending June 30, 2013. On the revenue side of the ledger, the largest increases have come from Property Tax and Property Transfer Tax. The City received one -time payments totaling $865,000 from the State Department of Finance due to the dissolution of the Arcadia Redevelopment Agency. Property Transfer Tax was the second largest increase and is expected to exceed budget by $118,780. The increase is attributed to the overall improvement in the housing market and continuing historically -low mortgage rates that have spurred home improvements and considerable demand for Arcadia properties. Additionally, an unexpected payment of $558,000 came to the City through settlement of a Property Tax Administration Fee case with the County of Los Angeles. As a result of these unexpected one -time payments and modest improvements in overall revenues, it is expected that General Fund revenues will surpass the adopted budget by $1,564,780. On the expenditure side, it is expected that the organization will complete the year by under spending allotments by $1,601,597. The largest of these savings are achieved in the salaries and benefits line items, totaling $1,319,831. Vacancy Factor As stated above, there is a consistent trend of departments under spending allocated budgets in the area of salaries and benefits. This is because the City has traditionally budgeted all positions as being fully occupied throughout the year. In reality, there is natural turnover that occurs when employees retire or move to other organizations. It typically takes several months to hire a replacement, during which time other employees temporarily absorb the workload and /or temporary replacements are brought on at a lower rate than the employee who left. In addition, it is quite common for long -term employees, who are at the top of their salary range, to be replaced by promoted or newly -hired employees at the entry level of the salary range. The result of this natural movement and replacement process is salary and benefits savings. Over the past four years, this has averaged 3.42% of budgeted allocations. In order to provide for a more fully transparent document, the proposed Budget has ADOPTION OF FY 2013 -14 OPERATING BUDGET & 5 -YEAR CAPITAL IMPROVEMENT AND EQUIPMENT PLAN June 4, 2013 Page 5 of 15 incorporated a citywide vacancy factor of 2% to try to account for this reality, while still remaining conservative in the first year of its use. The vacancy factor of 2% will reduce the overall budget by $772,340. FY 2013 -14 Proposed Revenues GENERAL FUND REVENUE SOURCE BY CATEGORY FY13 -14 BUDGET Recreation ] Charge Current 2% '1 Other Revenue ❑ Revenue Other Services 1% Transfer -In Agency 10% ■ Use Mc Prop 4`. ❑ Fines Penaltl 1% ■ L ❑ Taxes 58% While revenue forecasts continue to be cautious, the outlook is more optimistic than in recent years. For FY 2013 -14, total General Fund revenues are expected to increase 3.54 %. When removing one -time revenues from the current year's budget, revenues are expected to increase by 6.9 %. This is largely due to the increase in utility users tax discussed later in this report. The key revenue areas of Property Tax, Sales Tax, Transient Occupancy Tax, and Motor Vehicle License Fees are shown in the table below. FY 2012 -13 Description FY 2013 -14 YE Estimate Difference % Change Property Tax $10,085,400 $ 9,697,535 $ 387,865 3.85% Sales Tax $ 9,762,800 $ 9,432,630 $ 330,170 3.38% Transient Occupancy Tax $ 2,859,700 $ 2,736,600 $ 123,100 4.30% Motor Vehicle License Fees $ 5,072,500 $ 4,990,990 $ 171,510 3.50% ADOPTION OF FY 2013 -14 OPERATING BUDGET & 5 -YEAR CAPITAL IMPROVEMENT AND EQUIPMENT PLAN June 4, 2013 Page 6 of 15 Other major revenue categories such as Franchise Tax and Licenses and Permits are projected to have little change as compared to FY 2012 -13. Although Building and Plan Check fees are not expected to increase, the trend for significant single family residential development is expected to continue. All other revenue categories for the General Fund are expected to have modest growth for the coming Fiscal Year. FY 2013 -14 Proposed Expenses GENERAL FUND EXPENDITURE BY DEPARTMENT FY13 -14 Budget Development Public Worl<s Services Services / 7% Fir 26` Police 36% Services 5% reation & nmunity ervices 6% -y & Museum Services 6% ty Manager 1% City Clerk 1% ;ity Attorney 1% Seneral City 3% The overall expenditure budget in the General Fund is proposed to increase 2.04 %. This year's budget continues to be a challenge as increases result from medical premiums, CalPERS pension rates, and obligations of contractual labor agreements. These personnel line items have increased 3.7% as compared to the previous year's budget. FY 2013 -14 will be the last year of this three year labor agreement and the year in which all City employees will be paying 100% of their share of retirement costs. All other expenditure categories were further reviewed and refined with an eye toward reducing costs where possible without negatively impacting services to the community. Through this process, overall controllable expense line items have been reduced. As an example, the Contract Services line item was reduced by $361,000 citywide when compared to the prior fiscal year. ADOPTION OF FY 2013 -14 OPERATING BUDGET & 5 -YEAR CAPITAL IMPROVEMENT AND EQUIPMENT PLAN June 4, 2013 Page 7 of 15 Baseline Budget When including the factors described above, before adding any new programs, the proposed Budget would have a small surplus of $2,400. FY 2013 -14 Baseline Budget Base Revenues $ 50,102,900 Base Expenditures (including Vacancy Factor) (50,100,500) Net Baseline Budget $ 2,400 Proposed New Programs Added to the proposed Budget this year are a number of new programs totaling $326,000. They consist of purchases for automation and increasing staffing levels slightly to meet service demands. They are as follows: • Development Services Staff Reorganization ($106,800). The Development Services Department is requesting to redistribute current staff and add a new Assistant Planner position to assist with design review, public counter assistance, and provide staffing to reduce project response times. This would return the department staffing to pre -2006 levels. Design review submittals are at their highest levels ever. In addition, the new neighborhood noticing policy coupled with the size and complexity of the projects currently being proposed are requiring more staff time than is currently available. This has resulted in three to four month delays in the review process. The addition will reduce those processing times considerably. • Reorganize Arcadia Zoning Code ($80,000). This would allow for a comprehensive reorganization of the Arcadia Zoning Code. Zoning standards are currently found in several locations in the City Code, are frequently outdated and counter - intuitive, and are somewhat contradictory. The revision would make it easier for staff and applicants to implement the vision of the General Plan for the community and would provide a better legal standing for implementation and enforcement. • Automated Web -based Recruitment System ($10,000). Purchase of this software system will help automate and allow the Human Resources Division to accept job applications through the City's web page and also track applicants throughout the recruitment process. This will reduce overall staff time and speed up the recruitment process. ADOPTION OF FY 2013 -14 OPERATING BUDGET & 5 -YEAR CAPITAL IMPROVEMENT AND EQUIPMENT PLAN June 4, 2013 Page 8 of 15 • Upgrade Fire Administrative Assistant Position ($20,400). This would enhance the current position in the Fire Department from a 3/4 time employee to a full -time employee. This is also related to the high levels of business and development activity experienced in recent years and would allow for timelier processing of applications for development and other revenue generating activities in the Department. • Electronic Patient Care Reporting ($28,800). While not currently compulsory, electronic reporting in hospitals is quickly becoming the industry standard. This program would allow all medical transport units in the Fire Department to obtain handheld devices and software necessary to provide patient records electronically. This will speed up processing times at the hospitals, decrease turnaround times for staff, and increase accuracy. There is a small revenue offset for this program, which is included in the baseline revenue projection in the Budget. • Public Access Defibrillation Program ($15,000). This program will be led by the Fire Department. The goal is provide public access to an automated external defibrillator (AED) in all public facilities. An AED is an electronic device that can be used by anyone to assist someone who is having a heart attack prior to the arrival of safety personnel. • Chamber of Commerce Increase ($50,000). This would provide $10,000 in additional compensation to the Chamber of Commerce for services provided on behalf of the City's economic development efforts and would also provide $40,000 per year for the next three years for capital improvements to the Chamber of Commerce building, which the City owns. • City Hall Basement Storage Renovation ($15,000). This would provide for funds necessary to refurbish and enhance the storage space for building and planning files beneath City Hall. While the City is moving toward electronic storage of records in general, a significant number of documents and items must be physically maintained. This project would ensure that there is proper space for those records. Future Budget Pressures At the first Budget Study Session, through the 5 -Year Financial outlook model, staff raised concerns of near- and long -term budget pressures on the General Fund that are caused by annual inflationary costs, CalPERS policy changes, the continued decline of ADOPTION OF FY 2013 -14 OPERATING BUDGET & 5 -YEAR CAPITAL IMPROVEMENT AND EQUIPMENT PLAN June 4, 2013 Page 9 of 15 pari - mutuel revenues, and declining balances in the Equipment Replacement Fund. The discussion below provides a background to these pressing issues. CaIPERS Policy Change CalPERS announced a policy change to the employer pension contribution formula in March 19, 2013, with a long range goal of minimizing large jumps in employer contribution rates during extreme market conditions and achieving full funding of retirement plans. Unfortunately, to accomplish these goals, significant increases in employer contributions will be necessary. Starting in FY 2015 -16, CalPERS plans to phase in cost increases of 6 -10% of employee salaries over a five year period. Additionally, in April 2014, CalPERS expects to make further modifications to the formulas, which would add an additional 4 -6% per year if adopted. In total, these changes would equate to $2.3 to $3.7 million in additional costs to the City per year once fully implemented. Capital Improvement Fund Balance The 5 -Year Financial outlook as proposed in the Capital Improvement Fund shows that the fund will retain a $2 million Reserve balance through FY 2017 -18. However, it should be noted that this is largely due to very few capital projects being budgeted in the out years. At the budget study session, staff presented a list of unfunded one -time capital improvement projects that have a present -day cost of $11.9 million. In addition, a list of needed ongoing maintenance projects was presented with a cost of up to $4 million annually. Over the years, the City has relied on pari - mutuel revenues received from the Santa Anita Park to fund various City infrastructure improvements. The City has a policy of depositing all such revenues in its Capital Improvement Fund. At its peak in the late 1980's, revenue receipts reached $2.5 million annually and supplemental General Fund dollars were not needed. Today, pari - mutuel receipts are approximately $750,000. This leaves significantly less funding for maintenance of an aging infrastructure, which has required staff to change project specifications to stretch available dollars. While this can be an effective approach in the short -term, over time the deferred maintenance can result in significant repair and replacement costs. With declining revenues and increasing costs, it is essential that a form of funding other than the current pari - mutuel revenues be pursued. ADOPTION OF FY 2013 -14 OPERATING BUDGET & 5 -YEAR CAPITAL IMPROVEMENT AND EQUIPMENT PLAN June 4, 2013 Page 10 of 15 Equipment Replacement Fund Balance The Equipment Replacement Fund funds annual procurements of major equipment and vehicles for daily operational functions. At various points in time, monies were transferred from the General Fund whenever surpluses were available. As the General Fund has been challenged to balance its operating budget since the 2007 recession, there have not been consistent transfers to build up the Equipment Replacement Fund Balance. This Fund has no other dedicated funding mechanism other than the support of General Fund Reserves. As the table below illustrates, with each year's proposed spending on essentials such as police patrol vehicles, paramedic ambulances, and the like, the Equipment Replacement Fund is projected to run into a deficit fund balance as early as FY 2015 -16 without additional revenues. 4,000,000 2,000,000 0 (2,000,000) (4,000,000) (6,000,000) Equipment Replacement Fund 5 Year Fund Balance Projection Revenue Enhancement As noted, future budget pressures will significantly impact the General Fund. Without addressing these pressures, service levels to the community may be compromised. At the study sessions, staff presented several alternatives to enhance revenue streams in order to address and manage these ensuing pressures. Based on the available options, it was the consensus of the City Council to pursue the reinstatement of the utility tax rate (UUT) to its original tax rate of 7% in the budget. The UUT rate of 7% was set by Ordinance No. 1645 on June 30, 1978, for natural gas, electricity, and water. Following this Ordinance, on May 15, 1979, the City fully suspended the UUT on water. On June 3, 1980, the City reduced the gas and electricity UUT rate to 5 %. This 2012 -13 2013 -14 2014 -15 2015 -16 2016 -17 2017 -18 • Revenue 116,600 65,700 61,400 53,900 50,000 50,000 • Expenditures 1,609,000 923,625 1,566,342 1,989,207 1,758,022 2,156,055 --i Ending Fund Balance 3,144,900 2,286,975 782,033 (1,153,274) (2,861,296) (4,967,351) Revenue Enhancement As noted, future budget pressures will significantly impact the General Fund. Without addressing these pressures, service levels to the community may be compromised. At the study sessions, staff presented several alternatives to enhance revenue streams in order to address and manage these ensuing pressures. Based on the available options, it was the consensus of the City Council to pursue the reinstatement of the utility tax rate (UUT) to its original tax rate of 7% in the budget. The UUT rate of 7% was set by Ordinance No. 1645 on June 30, 1978, for natural gas, electricity, and water. Following this Ordinance, on May 15, 1979, the City fully suspended the UUT on water. On June 3, 1980, the City reduced the gas and electricity UUT rate to 5 %. This ADOPTION OF FY 2013 -14 OPERATING BUDGET & 5 -YEAR CAPITAL IMPROVEMENT AND EQUIPMENT PLAN June 4, 2013 Page 11 of 15 proposed UUT reinstatement would apply to natural gas, electricity, and water utilities. Telecommunications are exempt from the increase as that 5% rate was set by Measure A when it was approved by the voters in June 2009. Once the reinstatement becomes effective, a full year's annual revenue is projected to provide approximately $2 million to General Fund operations and allow for additional funding support to the Capital Improvement and Equipment Replacement Funds. As there will be a phasing in of the UUT rates, the projected revenues for FY 2013 -14 are set at $1.675 million. Net Budget Summary As shown in the table below, when all factors are included, there is expected to be a surplus of $1,351,400 at the end of FY 2013 -14. This amount is proposed to be transferred into the Equipment Replacement Fund to begin replenishment of this depleted account. FY 2013 -14 General Fund Budget Summary Base Revenues Additional UUT Funds Total Revenues Base Expenditures (including Vacancy Factor) New Programs Total Expenditures $ 50,102,900 1,675,000 51,777,900 (50,100,500) (326,000) (50,426,500) Net Available to Transfer to Equipment $ 1,351,400 Replacement Fund Capital Improvement and Equipment Plan Expenditures The FY 2013 -14 Capital Improvement Plan proposes 42 separate projects totaling $7.23 million in expenditures, of which $1.19 million would be paid for from the Capital Outlay Fund balance. The remaining $6.04 million would come from grants, state subventions, and local special funds such as the Parks & Recreation Fund. The table below summarizes some of the major proposed projects. ADOPTION OF FY 2013 -14 OPERATING BUDGET & 5 -YEAR CAPITAL IMPROVEMENT AND EQUIPMENT PLAN June 4, 2013 Page 12 of 15 FISCAL YEAR 2013 -14 MAJOR CAPITAL IMPROVEMENT PROJECTS Project Description Project Budget Funding Source Annual Slurry Seal Program $500,000 Capital Improvement & Gas Tax Annual Meter Replacement Program $500,000 Water Fund Sixth Avenue Sewer Capacity Improvement $600,000 Sewer Fund Project - Construction Civic Center Parking Lot Improvements $435,000 Capital Improvement Fund Foothill Boulevard Concrete Repairs $500,000 PROP C Fund Intersection Widening Project $667,400 Transportation Fund & MTA Grant Pavement Rehabilitation @ 1st Ave. & 10th Ave. $550,000 Gas Tax, Water, and STP -L Grant Gold Line Facilities Betterments $323,000 PROP C Reserve Recreation & Parks Master Plan $200,000 Park & Recreation Facilities Fund In the Equipment Replacement Fund, there are 29 separate acquisitions totaling $1.3 million. Of that, $903,000 will come from the exiting fund balance. The most significant expenditures come from vehicle replacements in various departments, computer upgrades throughout the City, and safety radio equipment replacements. Additional Considerations Water Fund Additional Appropriation Subsequent to finalizing the proposed FY 2013 -14 Budget, it became apparent that the City will require an additional funding appropriation of $1 million to the Water Operating Fund Budget for Fiscal Year 2013 -14. Due to decreasing groundwater levels in the area, the City will need to purchase additional replacement water from the Main San Gabriel Basin Watermaster in the coming year. Specifically, members in the Raymond Groundwater Basin will be subjected to a decrease of approximately 34% annually in the amount of water that can be pumped from the basin. Typically, the City purchases approximately 2,500 to 3,000 acre feet of replacement water every year. However, due to the pumping restrictions, the City will have to purchase an additional 1,000 to 1,500 acre feet of groundwater from the Main San Gabriel Basin. It is anticipated that this will cost approximately $1 million in FY 2013 -14. The currently - proposed rate adjustment and reserve levels in the Water Fund will be sufficient to manage the additional expenditure in replacement water costs; however an appropriation is necessary for the expenditures. Reallocation of General Fund Reserves In October 2012, when the City Council held an all -day planning session, direction was provided to establish as a policy goal maintaining an Emergency Reserve Fund of 20% of ongoing operating revenues. At the end of the Fiscal Year, based on FY 2013 -14 ADOPTION OF FY 2013 -14 OPERATING BUDGET & 5 -YEAR CAPITAL IMPROVEMENT AND EQUIPMENT PLAN June 4, 2013 Page 13 of 15 revenue projections, the fund will be at approximately 14.1 % of revenues. Funds will be available in the General Fund Operating account to make the transfer to reach the established goal. Over the past several years, the General Fund has accumulated surplus balances at the end of each Fiscal Year, yet no transfers were made into the various General Fund sub accounts, which have annual expenditures and no established revenue sources beyond the General Fund. These would include the Liability/Worker's Compensation Fund, Capital Improvement Fund, and Equipment Replacement Fund. As noted in the Equipment Replacement and Capital Improvement Fund discussions above, these funds are generally diminishing. The table below recommends transfers to be made during the Fiscal Year to replenish the various General Fund accounts. Should the City Council approve these transfers as proposed, the General Fund Operating budget will retain approximately $4.9 million, or 9.48% of its annual budget, which will be sufficient to manage cash flow needs during the Fiscal Year and respond to any unanticipated needs that may occur; the Emergency Reserve Fund will fully meet its established policy goal; the Liability/Workers Compensation Fund will be considered fully funded; and the Equipment Replacement and Capital Projects funds will be better funded. Proposed Transfer of Funds for FY 2013 -14 Fund Description Projected FY 2013 -14 Ending Fund Transfer Balance From Transfer To Ending Fund Balance After Fund Transfers % General Fund Operating Budget General Fund (Operating) $11,380,910 $(6,473,780) - $4,907,130 9.48% Emergency Reserve Fund 7,280,200 - 3,075,380 10,355,580 20.00% Liability /Worker's 601,600 - 1,398,400 2,000,000 3.86% Compensation Self - Insurance Fund Capital Improvement Fund Equipment Replacement Fund Net Total State Budget 2,039,510 - 1,000,000 3,039,510 5.87% 3,664,875 - 1,000,000 4,664,875 9.01% $ 24,967,095 $(6,473,780) $6,473,780 $24,967,095 At this time of year, the City Budget is prepared without knowing what actions the State may take that could impact local government finances. In the Governor's May Revision ADOPTION OF FY 2013 -14 OPERATING BUDGET & 5 -YEAR CAPITAL IMPROVEMENT AND EQUIPMENT PLAN June 4, 2013 Page 14 of 15 of his FY 2013 -14 proposed budget package, the administration projected a surplus of approximately $800 million based on an ongoing economic recovery and voter - approved temporary tax increases. The budget remains to be reviewed, revised, and adopted by the Legislature, which is expected in mid -June. Based on the Governor's budget priorities and current outlook, it appears that no State takeaways will occur for cities. However, any actions by the State that are a major departure from the presently proposed Budget will be brought to the City Council for discussion and resolution at that time. CONCLUSIONS As presented, the FY 2013 -14 General Fund Operating Budget is projected to end the Fiscal Year with a surplus of $1,351,400, which is recommended to be transferred to the Equipment Replacement Fund to address future equipment needs of the organization. This surplus budget is largely attributed to the new budgeting methodology of instituting a vacancy rate factor, identifying cost savings measures where possible, and the inclusion of additional UUT revenue. The proposed budget reflects modest revenue growth after adjusting for the new revenue stream. The proposed budget will allow the organization to continue providing a high level of service to the community while addressing necessary infrastructure improvements over time. Staff will continue to operate in the same fiscally responsible manner it has throughout the economic downturn while also maintaining a commitment to the exceptional service that Arcadians have come to expect. Enclosed with this staff report are Exhibits A and B summarizing all City Funds with their respective Operating Budget and the proposed Five -Year Capital Improvement and Equipment Replacement Plan. • Exhibit "A" is the summary of Sources and Uses of Funds for All Funds reflecting the proposed Operating Budget presented to Council for adoption. • Exhibit "B" summarizes the proposed Five -year Capital Improvement and Equipment Replacement Plan. EXHIBIT A ALL FUNDS OPERATING BUDGET SUMMARY FY 2013 -14 SOURCES OF FUNDS USES OF FUNDS Ending Fund Fund Beginning Outside Transfer Total Appropriation Transfer Total Balance Fund FY13 -14 Sources In Out FY13 -14 General Fund 11,380,910 47,148,700 4,629,200 63,158,810 49,603,300 2,174,600 51,777,900 11,380,910 Narcotic Seizure Federal 388,470 11,900 0 400,370 115,600 0 115,600 284,770 COPS 234,070 100,000 0 334,070 87,800 0 87,800 246,270 Local Law Enforcement 0 50,000 118,200 168,200 168,200 0 168,200 0 Medical /Dental 72,900 0 3,556,600 3,629,500 3,556,600 0 3,556,600 72,900 IRS Task Force 34,600 10,000 0 44,600 10,000 0 10,000 34,600 Worker Compensation /Liability 598,600 3,000 2,188,800 2,790,400 2,188,800 0 2,188,800 601,600 Homeland Security 0 111,000 0 111,000 111,000 0 111,000 0 State Library Grant 72,000 400 0 72,400 30,000 0 30,000 42,400 Misc. P.E.R.S. Employee Retirement Fund 2,703,300 0 0 2,703,300 0 0 0 2,703,300 Emergency Reserve 7,280,200 0 0 7,280,200 0 0 0 7,280,200 Parks & Recreation 2,190,900 1,211,000 0 3,401,900 203,600 0 203,600 3,198,300 Traffic Safety 0 270,000 0 270,000 270,000 0 270,000 0 Solid Waste 676,950 450,000 0 1,126,950 381,800 300,000 681,800 445,150 State Gas Tax 193,820 2,091,250 0 2,285,070 2,124,900 0 2,124,900 160,170 Air Quality Management District 121,920 68,400 0 190,320 107,200 0 107,200 83,120 Community Development Block Grant 0 290,000 0 290,000 290,000 0 290,000 0 Santa Anita Grade Separation 6,473,210 350,770 0 6,823,980 0 0 0 6,823,980 Transit 0 755,140 1,046,760 1,801,900 1,801,900 0 1,801,900 0 Proposition A 465,150 964,800 0 1,429,950 902,260 0 902,260 527,690 Measure R 1,076,760 604,100 0 1,680,860 472,900 0 472,900 1,207,960 Proposition C 0 912,090 0 912,090 791,250 0 791,250 120,840 TDA Article 3 Bikeway 0 72,750 0 72,750 72,750 0 72,750 0 STPL & ITS Special Fund 0 0 0 0 0 0 0 0 Transportation Impact Fund (76,200) 833,700 0 757,500 757,400 0 757,400 100 Capital Outlay 2,637,900 763,200 0 3,401,100 1,361,590 0 1,361,590 2,039,510 Lighting Maintenance 43,600 470,000 705,000 1,218,600 1,175,000 0 1,175,000 43,600 Parking Districts 35,750 200 0 35,950 18,200 0 18,200 17,750 Kaitlyn Place Landscaping District 0 2,560 0 2,560 2,560 0 2,560 0 Water Fund 30,300,480 10,740,280 0 41,040,760 12,231,905 0 12,231,905 28,808,855 Sewer Fund 2,674,000 1,288,000 0 3,962,000 1,891,700 0 1,891,700 2,070,300 Equipment Replacement 3,144,900 1,437,100 0 4,582,000 917,125 0 917,125 3,664,875 Redevelopment Successor Agency 3,240,700 3,163,900 0 6,404,600 3,163,900 0 3,163,900 3,240,700 General Obligation Bond 2001 276,420 366,900 0 643,320 366,900 0 366,900 276,420 General Obligation Bond 2011 376,630 600,300 0 976,930 600,300 0 600,300 376,630 Total 76,617,940 75,141,440 12,244,560 164,003,940 85,776,440 2,474,600 88,251,040 75,752,900 EXHBIT B CITY OF ARCADIA SUMMARY OF PROPOSED FIVE YEAR CAPITAL PROGRAMS FISCAL YEAR 2013 -14 THROUGH 2017 -18 ESTIMATED FUNDS 7/1/2013 ESTIMATED FIVE -YEAR REVENUE PROPOSED FIVE -YEAR EXPENDITURE ESTIMATED FUNDS 6/30/2018 CAPITAL OUTLAY FUND 2,637,900 3,803,500 (4,233,190) 2,208,210 GAS TAX FUND 193,820 8,700,950 (8,132,800) 761,970 PARKS AND RECREATION FUND 2,190,900 6,111,500 (218,000) 8,084,400 PROP C FUND 0 5,630,200 (5,415,340) 214,860 TRANSPORTATION IMPACT FUND (76,200) 2,120,700 (1,424,800) 619,700 SEWER FUND 2,674,000 6,670,200 (8,786,023) 558,177 EQUIPMENT FUND 3,144,900 1,647,000 (8,440,751) (3,648,851) WATER FACILITY RESERVE 25,100,800 1,255,280 (11,110,730) 15,245,350 WATER EQUIPMENT RESERVE 1,607,400 702,995 (662,395) 1,648,000 RESOLUTION NO. 6972 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ARCADIA, CALIFORNIA, ADOPTING A BUDGET FOR FISCAL YEAR 2013 -14 AND APPROPRIATING THE AMOUNTS SPECIFIED THEREIN AS EXPENDITURES FROM THE FUNDS WHEREAS, on June 4, 2013, the City Manager submitted to the City Council a proposed Budget for Fiscal Year 2013 -14, a copy of which is on file in the Office of the City Clerk; and WHEREAS, Section 1204 of the Arcadia City Charter requires notice and hearing for consideration of a proposed operating budget and its adoption by resolution; and WHEREAS, the aforementioned proposed Budget includes the budget for the ensuing Fiscal Year 2013 -14; and WHEREAS, notice of the public hearing on the proposed Budget and a summary of the proposed Budget were published on May 20, 2013; and WHEREAS, the duly noticed public hearing was conducted by the City Council on June 4, 2013. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF ARCADIA, CALIFORNIA, DOES HEREBY FIND, DETERMINE AND RESOLVE AS FOLLOWS: SECTION 1. That certain "City of Arcadia Budget, Fiscal Year 2013 -14 ", as on file in the office of the City Clerk, together with any approved amendments thereto, is hereby adopted, in pertinent part, as the official budget of the City of Arcadia for the Fiscal Year 2013 -14 and the amounts specified therein as expenditures from the funds indicated are hereby appropriated for the purposes specified therein. 1 SECTION 2. The City Clerk shall certify to the adoption of this Resolution. Passed, approved and adopted this day of , 2013. ATTEST: City Clerk APPROVED AS TO FORM: Steph n P. Deitsch City Attorney r Mayor of the City of Arcadia RESOLUTION NO. 6973 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ARCADIA, CALIFORNIA, ADOPTING A CAPITAL IMPROVEMENT AND EQUIPMENT PLAN FOR FISCAL YEARS 2013 -14 THROUGH 2017 -18 WHEREAS, on June 4, 2013, the City Manager submitted to the City Council a proposed plan entitled, "Capital Improvement and Equipment Plan, Fiscal Years 2013- 18 ", a copy of which is on file in the office of the City Clerk; and WHEREAS, Section 1205 of the Arcadia City Charter requires notice and hearing for the consideration of a capital program and its adoption by resolution of the City Council; and WHEREAS, notice of the public hearing on the proposed Capital Improvement and Equipment Plan was published on May 20, 2013; and WHEREAS, the duly noticed public hearing was conducted by the City Council on June 4, 2013. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF ARCADIA, CALIFORNIA, DOES HEREBY FIND, DETERMINE AND RESOLVE AS FOLLOWS: SECTION 1. That certain "Capital Improvement and Equipment Plan, Fiscal Years 2013 -18 ", as on file in the office of the City Clerk, together with any approved amendments thereto, is hereby adopted, in pertinent part, for Fiscal Year 2013 -14. SECTION 2. The City Clerk shall certify to the adoption of this Resolution. [SIGNATURES ON NEXT PAGE] Passed, approved and adopted this day of , 2013. ATTEST: City Clerk APPROVED AS TO FORM: Stephen P. Deitsch City Attorney 0 Mayor of the City of Arcadia