HomeMy WebLinkAboutItem 10a - Adoption of Operating Budget and CIP and Equipment PlanAdoption of the Operating Budget and CIP and Equipment Plan Resolutions
June 18, 2019
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DATE: June 18, 2019
TO: Honorable Mayor and City Council
FROM: Dominic Lazzaretto, City Manager
Hue Quach, Administrative Services Director
SUBJECT: RESOLUTIONS RELATING TO THE ADOPTION OF THE FISCAL YEAR
2019-20 OPERATING BUDGET AND THE FISCAL YEARS 2019-20
THROUGH 2023-24 CAPITAL IMPROVEMENT AND EQUIPMENT PLAN
RESOLUTION NO. 7263 ADOPTING A BUDGET FOR FISCAL YEAR
2019-20 AND APPROPRIATING THE AMOUNTS SPECIFIED THEREIN
AS EXPENDITURES FROM THE FUNDS
Recommendation: Adopt
RESOLUTION NO. 7264 ADOPTING A CAPITAL IMPROVEMENT AND
EQUIPMENT PLAN FOR FISCAL YEARS 2019-20 THROUGH 2023-24
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, which begins on July 1. The recommended actions
are necessary to implement the budget for Fiscal Year (‘FY”) 2019-20.
This year’s budget process began earlier in the year as the City’s financial forecast
projected the General Fund to face a $5.2 million deficit for FY 2019-20. On April 2, 2019,
at the City Council meeting and at the May 7, 2019, Budget Study Session, staff included
materials to discuss various options for balancing the budget based on scenarios of
receiving voter approval of Measure A, a 0.75% sales tax measure, and one that does
not.
Proposed were the following two alternatives for managing the $5.2 million deficit:
Option 1: Without approval of Measure A:
Citywide cost cutting of 5%, equivalent to $3.2 million
Use of reserves, about $2.0 million, to make up the remaining deficit balance
Option 2: With approval of Measure A:
Addition to revenue base from the Measure of $2.2 million would reduce the
deficit to $3.0 million
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June 18, 2019
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Reduction of fund transfer to Capital & Equipment Funds by $2.7 million
Additional operational savings of $480,000 to be found during the Fiscal Year
While the above options were proposed, the City Council opted to wait until after the
special election before acting on either option. On the evening of June 4, 2019, the City
received information that 63.9% (un-official) of Arcadia voters approved Measure A. The
positive result allows the City to proceed with adopting the FY 2019-20 General Fund
Operating Budget using Option 2 outlined above.
The proposed FY 2019-20 General Fund Operating Budget anticipates Total Operating
Revenues of $67.4 million and Operating Expenses at $67.9 million, inclusive of $2.4
million of Transfers Out to Special Revenue Funds for operational programs and Capital
Funds for future critical maintenance and replacement needs. Ideally, the proposed
transfer amount would have been $4.2 million; however, a one-time reduction in the
transfer amount can be accommodated without putting the City’s long-term capital and
equipment replacement plans in jeopardy.
After total revenue and changes to expenditures are considered, the General Fund
Operating Budget is projected to carry a deficit of $482,000, or 0.71% of the total General
Fund Operating Budget. The ending Operating Fund Balance comes to $3,675,515. It
is firmly believed that additional savings can be achieved through the normal course of
operations to eventually eliminate this remaining deficit. As for the projected ending
Operating Fund Balance, it should be noted that this is only the General Fund Operating
Budget Fund Balance used to manage annual operating cash flow activities. The City
continues to meet the need for setting aside an Emergency Reserve Fund, currently with
a balance of $10.1 million, as well as having other designated fund balances for Workers’
Compensation costs, Liability costs, New City Hall Reserve Fund, and Capital
Improvement and Equipment Replacement funds.
FY 19-20
Budget
Beginning Fund Balance: $ 4,157,7300
Total Revenues 67,408,600
Total Expenditures 65,484,015
Subtotal: 1,924,585
Total Fund Transfers (2,406,800)
Net Surplus / (Deficit): ($482,215)
Ending Fund Balance: $ 3,675,515
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June 18, 2019
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The proposed budget transfer of funds are itemized as follows: Lighting District, Local
Law Enforcement (Officer at AUSD), Capital Improvement, and Equipment Replacement
Fund. All transfers total approximately $2.4 million:
Lighting District - $ 754,100
Local Law Enforcement - $ 152,700
Capital Improvement Fund - $ 750,000
Equipment Replacement Fund - $ 750,000
Total: $2,406,800
The Capital Improvement Fund provides the majority of funding for such essential
maintenance such as pavement rehabilitation, building repairs, and parks maintenance.
Key projects in the coming year will be the City’s annual slurry seal and pavement
rehabilitation programs to ensure longevity of streets. Both programs reduce
deterioration along with improving the aesthetic quality of neighborhoods. In all, street
maintenance projects combine for a total $4.9 million in the Fiscal Year. Other major
projects proposed for the year are annual water meter replacement programs, feasibility
studies for the stormwater watershed management plan, and facility maintenance
improvements. Total proposed projects funded by the Capital Improvement Fund will cost
$2.5 million. Citywide, the combined capital projects in all funds will cost $1 0.9 million.
The Equipment Replacement Fund provides funding for essential equipment such as
computers, vehicles, and major office equipment. The Equipment Plan proposes 30
different equipment purchases totaling $3.9 million in expenditures, of which $2.2 million
would be paid from the Equipment Replacement Fund. Some of the proposed major
purchases are: replacements of a Fire Pump Truck and Crew cab truck ($984,000), CNG
Sewer Cleaner ($565,800); Replacement of Patrol (3) and Detective (3) vehicles
($297,600); and Street Division’s CNG Dump Truck and ¾ Ton Pickup Truck ($263,000).
Without properly ensuring funds are available to replace or improve upon existing
infrastructures, effectively running the City would be impossible over time.
At the end of the May 7 Budget Study Session, a copy of the draft proposed budget was
provided for the City Council’s review. Inclusive in the draft budget were all operating
funds including General, Special Revenues, Enterprise, and the Successor Agency.
Additionally, the City Council received the Capital Improvement a nd Equipment
Replacement Fund budgets in a separate document. All funds total $120.2 million in
expenditures, of which the General Fund’s budget is $65.5 million (excluding Transfers
Out noted below).
The proposed Budget has been prepared with emphasis of keeping controllable cost
down and with an eye towards maintaining the high level of services that Arcadians have
been accustomed to. Operational efficiencies have been identified wherever possible to
create additional capacity. Although the community has approved an additional 0.75%
sales tax measure for coping with future projected deficits, the current Fiscal Year will
only see one-quarter of the overall projected sales tax revenue. Nevertheless, the
additional tax in combination with one-time reductions of transfers will place the General
Adoption of the Operating Budget and CIP and Equipment Plan Resolutions
June 18, 2019
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Fund on a firmer position to counter unexpected challenges as we transition into the next
Fiscal Year.
As Special Revenues, Enterprise, and Debt Service funds are restricted to specific
purposes and are generally self-sustaining, this staff report primarily focuses on the
General Fund’s Operating Budget.
It is recommended that the City Council adopt the proposed resolutions to enact the Fiscal
Year 2019-20 Operating Budget as well as the Capital and Equipment Replacement
Plans.
BACKGROUND
The beginning of the FY 2019-20 budget preparation was expected to be difficult as
forecasting indicators signaled for a structural deficit in the upcoming fiscal year and
continuing for the foreseeable future. While staff started earlier in the year to come up
with a plan for managing the anticipated deficit, one of the alternatives to address the
deficit would also depend on the result of a sales tax measure that would be decided by
the voters on June 4, 2019.
The sales tax measure originated from the discussion and recommendations of an
independent citizen financial advisory committee. Beginning in June 2018, staff worked
with the City Council-appointed Citizen Financial Advisory Committee (“CFAC”) to review
the City’s finances and identify savings and/or mechanisms for generating additional
revenue streams to help with the projected long-term structural deficit. At the conclusion
of the Committee’s undertaking in December 2018, 10 recommendations were presented
and adopted by the City Council. The most significant of those recommendations was to
declare a fiscal emergency and call for a sales tax measure as quickly as possible. In
February 2019, the City Council placed Measure A, a 0.75% sales tax measure, on the
ballot for voter’s consideration on June 4, 2019.
Due to the sizable deficit and uncertainty of Measure A’s result, the budgeting process
started earlier to allow time to develop and plan solutions for the two possible outcomes.
A special Study Session was held on April 2, 2019, to specifically identify the magnitude
of cuts that would be needed to balance the budget should Measure A fail. It was
recommended that the cuts be phased in over three years in order to lessen the impact
to the community as well as to allow time for existing employees to transition out of the
organization as humanely as possible.
The deficit budget scenario would have implemented a 5% citywide cost cutting,
equivalent to $3.2 million, in FY 2019-20, with additional 5% cuts the following year, and
an additional 3% in cuts thereafter, to reduce the overall size of the organization by 13%
going forward. These cuts focused on maintaining core services; however, as municipal
government’s business is service oriented, those cuts would have to include numerous
staffing reductions and elimination of services that may be non-essential, but are
nevertheless very popular. The full-time equivalent from the first 5% reduction totaled
Adoption of the Operating Budget and CIP and Equipment Plan Resolutions
June 18, 2019
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18.5 employees. When all three years were included, it would have totaled nearly 60 full
time equivalent positions and countless services to the community.
Phasing in the long-term cuts would have left a deficit of $2.0 million in the budget for FY
2019-20, which would need to be offset by the use of the General Fund Reserve. This
was recommended in order to buy additional time to prioritize service cuts and explore
other alternatives that would provide the least disruption to the City. It is also important
to note that without the passage of a sales tax measure or finding some other form of
ongoing revenue, the General Fund would continue to face an ongoing annual budget
deficit of $8 million.
The City Council also conducted a budget Study Session on May 7, 2019. The Study
Session included updates to the April 2 Study Session as well as a “status quo” budget
alternative, assuming that Measure A was successful. The budget Study Session also
covered key capital projects that were budgeted in the Capital Improvement and
Equipment Replacement Funds.
On June 4, 2019, Arcadia voters approved Measure A, with an approval rate of 63.9%.
At this time, the election is un-official, as it has not been certified by the County.
Nevertheless, the margin of approval beyond the required 50% and the lack of any known
challengers to the results makes it possible to adopt a budget with the safe assumption
that the Measure will be certified and the City will begin receiving the additional sales tax
dollars after January 1, 2020.
Unfortunately, because Measure A would begin being co llected at the mid-point of the
Fiscal Year and because receipts are delayed until after the end of each quarter, it is only
anticipated that the City will benefit from a single quarter of Measure A revenues during
FY 2019-20. As such, a projected deficit of $3 million would remain without some
additional adjustment to the budget. In order to balance the budget, it is recommended
that the City Council reduce the transfers into the Capital and Equipment Funds for this
Fiscal Year, which would save $2.7 million dollars and that the remaining deficit of
$480,000 be balanced either through the use of the General Fund Reserve or through
savings that will be identified throughout the Fiscal Year during the normal course of
operations. If history can be used as a guide, it can be expected that the staff will be able
to underspend their budget allocations in order to fully balance the budget without the use
of reserves. This budget has been prepared with these goals in mind.
DISCUSSION
As proposed, the FY 2019-20 General Fund Operating Budget anticipates Total
Operating Revenues of $67.4 million and Operating Expenses at $67.9 million, inclusive
of $2.4 million of Transfers Out to Special Revenue Funds for operational programs and
Capital Funds for future critical maintenance and replacement needs.
Summarized in the table below is the General Fund Operating Budget for: FY 201 8-19
Year Ending Estimates, FY 2019-20 Proposed Budget for Adoption, and a FY 2020-21
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June 18, 2019
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Preliminary Budget Outlook. Please note that FY 2020-21 is not proposed for adoption
as the City adopts its Operating Budget annually.
GENERAL FUND
FY18-19 FY19-20 FY20-21
Estimates Budget Budget
Beginning Fund Balance 8,292,400 4,157,730 3,675,515
Estimated Revenue 59,632,450 63,282,200 70,681,000
Proposed Expenditures 61,876,620 65,484,015 66,305,310
Revenue over
Expenditure (2,244,170) (2,201,815) 4,375,690
Fund Transfers
Transfers-In from other funds 3,177,000 4,126,400 3,899,700
Transfers-Out to other funds (5,067,500) (2,406,800) (5,134,400)
Net Transfers (1,890,500) 1,719,600 (1,234,700)
Subtotal Operating
Balance (4,134,670) (482,215) 3,140,990
Ending Fund Balance 4,157,730 3,675,515 6,816,505
As shown in the table above, the City’s ending Fund Balance will reduce to $3.7 million
in FY 2019-20, which still allows for adequate cash flows between Fiscal Years. Although
at a preliminary outlook stage, the FY 2020-21 will stand to net $3.1 million from a budget
surplus, bringing the Fund Balance back up to $6.8 million upon receiving the full benefit
of Measure A. Per City Council direction, the City is to maintain an Emergency Reserve
at 20% of annual operating expenditures. Presently, the Emergency Reserve has a
balance of $10.1 million, or 15.5% of the FY 2019-20 Proposed General Fund Operating
Budget. In order to meet the 20% contingency level, a transfer of $2.9 million will be
necessary. Based on the preliminary budget outlook, it is recommended that such
transfer take place in FY 2020-21 when a $3.1 million surplus is expected. However,
prior to such date, if at the end of each Fiscal Year a surplus is produced, staff will transfer
any available funds to reach the 20% contingency level sooner.
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June 18, 2019
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FY 2019-20 Proposed Revenues
For FY 2019-20, total General Fund revenues are expected to increase 6.1% compared
to FY 2018-19 year ending estimates. This is largely due to the additional Measure A
sales tax of $2.2 million that is expected on top of the annual forecasted figur e. Without
the projected sales tax increase, the fund’s revenue growth rate would have been at 2.5%.
The largest revenue source to the City’s General Fund is from Taxes. The key revenues
under this group are: Property Tax, Sales Tax, Transient Occupancy Tax, Utility Users’
Tax, and Motor Vehicle License Fees. Their projected receipts are shown in the table
below.
Description FY 2018-19
YE Estimates
FY 2019-20
Proposed
Budget
Difference %
Change
Property Tax $ 15,400,000 $ 15,862,000 $ 462,000 3.0%
Sales Tax $ 11,250,000 $ 13,626,500 $ 2,376,500 21.1%
Transient Occupancy
Tax $ 3,398,000 $ 3,466,000 $ 68,000 2.0%
Utility Users’ Tax $ 6,650,000 $ 6,783,000 $ 133,000 2.0%
Motor Vehicle License
Fees $ 7,310,000 $ 7,492,800 $ 182,800 2.5%
Property Taxes
27%
Sales Taxes
22%
Utility Taxes
11%
Transient Taxes
5%
Franchises
1%
License &
Permits
7%
Fines &
Penalties…
Use Money &
Property
2%
Revenue from
Other Agencies
12%
Charge Current
Services
6%Library
0%
Recreation
2%
Other Revenue
4%
GENERAL FUND REVENUE SOURCE BY CATEGORY
FY19-20 BUDGET
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June 18, 2019
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Property Tax: The City expects to continue to benefit from rising real estate prices and a
redevelopment trend in both residential and commercial properties. Although home sales
and housing activities may have leveled off in comparison to the heights seen in previous
years, home sales continue to reflect higher price points with various online real estate
sites forecasting growth for the Los Angeles area to range from 2% to 4%. Arcadia is
expected to be within or greater than the forecasted range based on the City’s historical
valuation trends. The City expects see a continued growth in property tax receipts in the
range of 3.0%, or nearly $462,000, for FY 2019-20.
Sales Tax: Sales tax revenue is expected to see a 2.0% increase over the prior year.
However, the approved Measure A, which increased the City’s sales tax rate by 0.75%,
is projected to generate an additional $2.2 million, bringing the year’s forecast amount to
$13.6 million in total. With the added tax revenue, year over year comparison is an
increase of 21.1%, or $2.4 million. Analysis of this tax category indicates that the auto
and transportation industry is expected to be flat as demands have been met after the
Great Recession. Other industry groups are projected for growth between 1.0% and
2.5%. The strongest area is the Restaurants industry, which correlates to the low
unemployment and consumer spending habits.
Transient Occupancy Tax (“TOT”): The projection for FY 2019-20 is $3.5 million, a 2.0%
increase over the previous year. In general, tax from this category has not shown the
benefit from an improving labor market (low unemployment rate). While business and
vacation travel are up regionally, local hotel bookings have been stagnate. Though not
built into this year’s budget, of positive note is the development of a new luxury hotel, Le
Meridian, on the former Santa Anita Inn site. Once operational, the new hotel will provide
a substantial increase to TOT revenues. Construction is to begin in the Summer of 2019
and may be in operation as soon as December 2020.
Utility Users’ Tax: Utility Users’ Tax (“UUT”) is projected to have a slight increase of 2.0%
when compared to the FY 2018-19 Year Ending Estimate. While water conservation is
expected to continue, water rates will increase as a result of imported water costs rising
and the need to add treatment to City wells. In addition, rates for statewide electricity &
gas utilities are also projected to grow by approximately 2.0%. A continued reduction in
the telephone UUT is predicted as landline telephone use continues to drop and cellular
companies provide lower cost options for consumers. Overall, the FY 2019-20 projected
UUT is approximately $6.8 million, 2.0% greater than FY 2018-19.
Motor Vehicle License Fees (“VLF”): This tax is projected to increase by 2.5%, to $7.5
million. Revenues from this line item are largely tied to annual property assessed
valuation. Because of this, the City has benefitted from many years of generous growth
and will continue to do so in the next Fiscal Year.
Other major revenue categories such as Licenses and Permits are projected to decrease
compared to FY 2018-19. After many years of growth in the housing market, local sales
and remodeling activities have retreated significantly. This revenue category projects a
reduction of 9.6%, or $467,000, in comparison to the prior Fiscal Year. All other revenue
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June 18, 2019
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categories for the General Fund are expected to have modest growth for the coming
Fiscal Year.
FY 2019-20 Proposed Expenses
Total operating expenditures are expected to grow 4.3%, inclusive of the Equipment
Replacement expenditure line item. The Operating Expenditure budget continues to
maintain the same high level of services with no material increases. Where possible, line
items have been reduced to reflect efficiencies that have been implemented over time
and to remove any potential for waste.
The most significant increases relate to the labor agreement contracts (salaries & medical
benefits) and the continuing rise of pension costs in order to make retirement funding
more sustainable.
In December 2016, the CalPERS Board of Administration approved lowering the
CalPERS the expected long-term rate of return, from 7.5% to 7.0%. Lowering the
discount rate means pension plans will see increases in both the normal costs (the cost
of pension benefits accruing in one year for active members) and the already accrued
liabilities. These increases result in higher required employer contributions. The
projected increase for Arcadia is roughly $1.4 million in FY 19-20. As the “phase-in”
period continues to ramp up, it is expected that Arcadia will be affected in the form of $1.7
million in increases annually through FY 2022-23. Once fully phased in, these amplified
levels will flatten out for the foreseeable future.
In February 2018, the City successfully negotiated a two -year labor agreement with all
five-employee associations. The City and associations agreed to a two -year term that
City Manager
2%
City Clerk
1%
City Attorney
1%General City
3%
Administrative
Services
5%
Police
37%
Fire
27%
Public Works
Services
7%
Development
Services
7%
Recreation &
Community Services
5%
Library & Museum
Services
6%
GENERAL FUND
OPERATING
EXPENDITURE
FY19-20
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June 18, 2019
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provided for a 2.0% cost of living adjustment each year. The FY 2019-20 budget reflects
the second year of those contracts.
Overall, the FY 2019-20 budget was developed with the concept of a no growth budget,
finding additional cuts from non-essential line items, and only increases where
contractually obligated. While natural inflationary increases have been included, staff has
carefully controlled costs in most areas so that the increases are negligible and have no
material effects to the overall operating expenditures.
Outlook and Budget Challenges
While the City’s 5-Year Financial Forecast indicates that most revenues and expenditures
will continue to grow modestly, the Forecast also anticipates sharply rising pension costs
– especially those related to public safety services. Despite major reforms put in place by
the City in 2011 and the State in 2013, recent policy changes by the CalPERS Board of
Administration add an additional layer of challenges to the budget.
These increases created an approximate $8 million annual deficit in the General Fund
Budget over the next 15-25 years. Through the passage of Measure A, this deficit should
be accounted for. However, there are two key factors to ensuring that this remains true:
(1) that the PERS Board does not make any further adj ustments to the actuarial
assumptions; and (2) the City is able to control its labor costs over time by not adding
benefits or other costs that would impact pension costs negatively.
In addition, in order to reduce total costs over the long-term, the City should find ways to
pre-pay pension obligations as early as possible so that the growth of investments can
be fully realized. The City will work in the coming year to fully explore all available options
in both of these areas to ensure the long-term health of the organization. Staff has already
begun work with the Citizens Financial Advisory Committee, to look into ways to reduce
0%
10%
20%
30%
40%
50%
60%
70%
80%
0
2
4
6
8
10
12
14
16
MillionsMisc $Safety $
Misc %Safety %
Escalating Retirement Costs
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June 18, 2019
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the CalPERS Unfunded Accrued Liability. Staff has already obtained a proposal from a
Financial Advisory Firm that calls for an in-depth analysis of the City’s CalPERS Unfunded
Accrued Liabilities, comprehensive review of the unique pension variables, as well as
current and future financial challenges in order to determine sound alternatives and
develop a sustainable plan for the City. The evaluation will also involve an extensive
cost/benefit analysis containing considerations of opportunity costs and align the City’s
options and resources to provide potential financial solutions.
Capital Improvement and Equipment Replacement Funds
Unexpectedly strong revenues and the underspending of authorized budgets over the
past several years have allowed the City to transfer a significant amount of funds into the
Capital Improvement and Equipment Replacement Funds. It is still important for the City
to continue a steady deposit into these funds, which were not replenished for many years.
The FY 2019-20 Budget proposes a transfer of $750,000 from the General Fund, a
reduced amount from the “sustaining” funding level of $2.4 million. The “deferral” of the
full transfer is in exchange for avoiding service cuts to the General Fund. This can be
accommodated on a one-time basis; however, as a practice, the City should continue to
fully fund deposits annually to ensure there are available resources for future capital
improvements.
Capital Improvement Fund Balance
(in $ millions)
(4)
(2)
0
2
4
6
8
10
12
2011-122012-132013-142014-152015-162016-172017-182018-192019-202020-212021-222022-232023-242024-252025-262026-272027-282028-292029-302030-312031-322032-332033-342034-352035-362036-372037-382038-392039-40Capital Project Costs Additional Funding Capital Improvement Fund Balance
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June 18, 2019
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The FY 2019-20 Capital Improvement Plan proposes 40 projects totaling $10.9 million in
expenditures, of which $2.5 million would be paid from the Capital Improve ment Fund.
The remaining $8.4 million would come from grants, state subventions, and local special
funds such as the Prop C Transportation Fund. The table below summarizes some of the
major proposed projects.
FISCAL YEAR 2019-20 MAJOR CAPITAL IMPROVEMENT PROJECTS
Project Description
Project
Budget Funding Source
Annual Slurry Seal Program $600,000 Capital Improvement
Annual Meter Replacement Program $550,000 Water Fund
New Well Design $250,000 Water Fund
Police Department Facility
Improvements $119,000 Capital Improvement
Pavement Rehab Program $2,455,100 Capital/Other Funds
Baldwin Ave Sewer Capacity
Improvement $750,000 Sewer Fund
Chamber of Commerce Roof
Restoration $150,000 Capital Improvement
Water Main Replacement $700,000 Water Fund
Library Chiller Replacement $150,000 Capital Improvement
Stormwater Watershed Management
Plan – Feasibility Study $600,000 Measure W
Similar to the Capital Improvement Fund, the Equipment Replacement Fund will receive
a reduced transfer of $750,000 during this Fiscal Year from the General Fund in order to
balance the General Fund Budget. The sustaining level for the Fund is closer to annual
deposits of $1.8 million and should be met in future years.
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Equipment Replacement Fund Balance
(in $ millions)
The Equipment Plan proposes 30 different equipment purchases totaling $3.9 million in
expenditures, of which $2.2 million would be paid for from the Equipment Replacement
Fund. The table below summarizes some of the major proposed equipment purchases.
FISCAL YEAR 2019-20 MAJOR EQUIPMENT REPLACEMENT PURCHASES
Equipment Replacement
Description
Replacement
Budget Funding Source
Vehicle Replacement – Sewer:
CNG Sewer Cleaner /
Communication Equip
$565,800 Sewer Fund
Vehicle Replacement – Police:
Patrol Vehicles (3) / Used
Detective Vehicles (3)
$297,600 Equipment Replacement
Vehicle Replacement – Streets:
CNG Dump Truck / ¾ Ton Pickup
Truck/Communication Equip
$263,000 Equipment Replacement /
AQMD Fund
(2.0)
0.0
2.0
4.0
6.0
8.0
10.0
2011-122012-132013-142014-152015-162016-172017-182018-192019-202020-212021-222022-232023-242024-252025-262026-272027-282028-292029-302030-312031-322032-332033-342034-352035-362036-372037-382038-392039-40MillionsEquipment Purchase/Replacement Additional Funding
Equipment Replacement Fund Balance
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June 18, 2019
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FISCAL YEAR 2019-20 MAJOR EQUIPMENT REPLACEMENT PURCHASES
Equipment Replacement
Description
Replacement
Budget Funding Source
Vehicle Replacement – Fire:
Pump Truck / Crew Cab Truck /
Communication Equip
$984,000 Equipment Replacement
Fire – Communication &
Technology Equipment
Replacement
$100,000 Equipment Replacement
Library Furniture Replacement
$62,300 Equipment Replacement
It is imperative that the City find a means for depositing funds into these highly essential
accounts at or above the minimum required contributions to help them reach fully
sustainable levels. Otherwise, the City’s infrastructure will quickly fall into disrepair and
the staff will not have the tools and equipment necessary to do their essential duties.
CONCLUSIONS
The FY 2019-20 General Fund Operating Budget, as proposed, shows a deficit balance
of $480,000. This is based on Total Operating Revenues of $67.4 million, Operating
Expenses of $67.9 million and transfers of $2.4 million that provide funding support to:
Street Lighting District, Local Law Enforcement (Officer at AUSD), Capital Improvement,
and Equipment Replacement Funds. The proposed Budget reflects a continuation of
steady revenue growth seen in recent fiscal years and near-term expenditure growth that
is fairly constrained generally. However, special attention needs to be given to future
years as pension costs – especially those related to public safety services – will grow at
a rate considerably higher than the norm.
The City is fortunate to have had a history of conservative spending and has amassed
the savings necessary to have absorbed the increases over the short-term while long-
term plans were identified and are being implemented. While there were contingencies
in place to deal with the described deficit, it is with a special appreciation to Arcadia
Citizens for their support and trust in passing Measure A that the present deficit is highly
manageable and the long-term viability of the organization has returned. This additional
revenue stream serves as a key mechanism to allow for continued high service levels
while meeting the demands of a pension system that has cost more than ever anticipated .
By implementing this Budget, the City’s staff will maintain its commitment to providing the
Arcadia community with unsurpassed service in a fiscally responsible manner.
Adoption of the Operating Budget and CIP and Equipment Plan Resolutions
June 18, 2019
Page 15 of 15
Attached to this staff report are the following:
Exhibit “A”: a summary of Sources and Uses of Funds for All Funds reflecting the
proposed Operating Budget presented to Council for adoption
Exhibit “B”: a summary of the proposed Five-year Capital Improvement and
Equipment Replacement Plan
RECOMMENDATION
It is recommended that the City Council:
1) Adopt Resolution No. 7263 adopting a Budget for Fiscal Year 2019-20 and
appropriating the amounts specified therein as expenditures from the Funds; and
2) Adopt Resolution No. 7264 adopting a Capital Improvement and Equipment Plan
for the Fiscal Years 2019-20 through 2023-24.
Attachments: Exhibit “A” – All Funds Operating Budget Summary
Exhibit “B” – Five-Year Summary of Capital and Equipment Plan
Resolution No. 7263
Resolution No. 7264
Attachment A
Ending Fund
Fund Beginning Outside Transfer Total Appropriation Transfer Total Balance
Fund FY19-20 Sources In Out FY19-20
General Fund 4,157,730 63,282,200 4,126,400 71,566,330 65,484,015 2,406,800 67,890,815 3,675,515
Narcotic Seizure Federal 65,600 105,100 0 170,700 170,700 0 170,700 0
COPS 269,500 165,600 0 435,100 165,800 0 165,800 269,300
Local Law Enforcement 0 80,000 152,700 232,700 232,700 0 232,700 0
Medical/Dental 355,400 0 4,567,900 4,923,300 4,567,900 0 4,567,900 355,400
IRS Task Force 460,000 1,000 0 461,000 0 0 0 461,000
Worker Compensation/Liability 3,609,620 63,200 2,496,200 6,169,020 2,496,400 0 2,496,400 3,672,620
Homeland Security 0 10,000 0 10,000 10,000 0 10,000 0
Office of Traffic Safety Grant 0 106,200 0 106,200 106,200 0 106,200 0
California OES HSGP 0 93,100 0 93,100 93,100 0 93,100 0
Misc. P.E.R.S. Employee Retirement Fund 1,351,601 0 0 1,351,601 0 0 0 1,351,601
Emergency Reserve 10,147,000 0 0 10,147,000 0 0 0 10,147,000
Parks & Recreation 10,741,800 839,800 0 11,581,600 30,600 0 30,600 11,551,000
Traffic Safety 0 220,000 0 220,000 220,000 0 220,000 0
Public, Educational/Governmental Access 762,500 98,300 0 860,800 50,000 0 50,000 810,800
Used Oil Grant 13,300 16,200 0 29,500 15,500 0 15,500 14,000
DOC Beverage Grant 18,400 14,800 0 33,200 15,300 0 15,300 17,900
Solid Waste 1,704,000 696,100 0 2,400,100 430,600 200,000 630,600 1,769,500
Measure W ‐ Safe Clean Water Program 0 1,055,300 0 1,055,300 600,000 0 600,000 455,300
State Gas Tax 179,873 1,505,227 0 1,685,100 1,665,700 0 1,665,700 19,400
Road Maintenance/Rehabilitation Act (20,700) 959,800 0 939,100 955,100 0 955,100 (16,000)
Air Quality Management District 69,500 75,700 0 145,200 132,300 0 132,300 12,900
Community Development Block Grant 0 308,100 0 308,100 308,100 0 308,1000
Santa Anita Grade Separation 1,776,600 35,500 0 1,812,100 0 0 0 1,812,100
Transit 0 2,026,329 1,358,971 3,385,300 3,385,300 0 3,385,300 0
Proposition A 1,650,200 1,194,260 0 2,844,460 1,269,900 0 1,269,900 1,574,560
Transportation Impact Fund 1,464,900 329,300 0 1,794,200 1,050,000 0 1,050,000 744,200
Proposition C 767,900 982,000 0 1,749,900 1,002,300 0 1,002,300 747,600
TDA Article 3 Bikeway 0 50,000 0 50,000 50,000 0 50,000 0
STPL & ITS Special Fund 0 0 0 0 0 0 0 0
Measure R 657,100 738,200 0 1,395,300 611,970 0 611,970 783,330
Measure M 171,850 825,040 0 996,890 760,000 0 760,000 236,890
Capital Improvement 4,848,400 747,700 750,000 6,346,100 2,767,400 0 2,767,400 3,578,700
City Hall Reserve 1,500,000 0 0 1,500,000 0 0 0 1,500,000
Lighting Maintenance 152,200 502,800 754,100 1,409,100 1,256,900 0 1,256,900 152,200
Water Fund 18,782,500 14,192,200 0 32,974,700 18,681,600 0 18,681,600 14,293,100
Sewer Fund 2,049,500 2,461,500 0 4,511,000 2,844,500 0 2,844,500 1,666,500
Equipment Replacement 6,230,800 103,500 750,000 7,084,300 2,256,600 0 2,256,600 4,827,700
Redevelopment Successor Agency 0 2,805,900 0 2,805,900 2,805,900 0 2,805,900 0
General Obligation Bond 2012 371,100 416,900 0 788,000 416,900 0 416,900 371,100
General Obligation Bond 2011 497,400 594,200 0 1,091,600 594,200 0 594,200 497,400
Total 74,805,574 97,701,056 14,956,271 187,462,901 117,503,485 2,606,800 120,110,285 67,352,616
USES OF FUNDSSOURCES OF FUNDS
CITY OF ARCADIA
SUMMARY BY FUND
FISCAL YEAR 2019-2020 PROPOSED BUDGET
ESTIMATED ESTIMATED PROPOSED ESTIMATED
FUNDS FIVE-YEAR FIVE-YEAR FUNDS
7/1/2019 REVENUE EXPENDITURE 6/30/2024
PARK AND RECREATION FUND 10,741,900 3,910,600 (4,705,500) 9,947,000
MEASURE W CLEAN, SAFE WATER PROGRAM 0 5,276,300 (4,950,000) 326,300
GAS TAX (HUTA) FUND 179,873 7,525,335 (7,279,300) 425,908
ROAD MAINTENANCE AND REHABILITATION
PROGRAM (20,700)4,803,800 (4,155,100) 628,000
AQMD 69,500 380,400 (221,500) 228,400
PROP C LOCAL RETURN 767,900 4,903,300 (5,136,200) 535,000
TRANSPORTATION IMPACT FUND 1,464,900 1,599,700 (1,700,000) 1,364,600
MEASURE R LOCAL RETURN 657,100 3,710,600 (3,341,440) 1,026,260
MEASURE M LOCAL RETURN 171,850 5,881,600 (5,530,000) 523,450
CAPITAL OUTLAY FUND 4,848,400 13,921,900 (10,846,900) 7,923,400
WATER FACILITY RESERVE 17,456,800 1,223,100 (16,868,500) 1,811,400
WATER EQUIPMENT RESERVE 926,800 60,800 (895,700) 91,900
SEWER FUND 2,049,500 12,644,000 (13,295,100) 1,398,400
EQUIPMENT FUND 6,230,800 8,396,200 (9,006,600) 5,620,400
SUMMARY OF PROPOSED FIVE YEAR CAPITAL PROGRAMS
FISCAL YEAR 2019-20 THROUGH 2023-24
CITY OF ARCADIA
Attachment B
RESOLUTION NO. 7263
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
ARCADIA, CALIFORNIA, ADOPTING A BUDGET FOR FISCAL
YEAR 2019-20 AND APPROPRIATING THE AMOUNTS SPECIFIED
THEREIN AS EXPENDITURES FROM THE FUNDS
WHEREAS, on June 18, 2019, the City Manager submitted to the City Council a
proposed Budget for Fiscal Year 2019-20, 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 2019-20; and
WHEREAS, notice of the public hearing on the proposed Budget and a summary
of the proposed Budget were published on June 10, 2019 and June 13, 2019; and
WHEREAS, the duly noticed public hearing was conducted by the City Council on
June 18, 2019.
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 2019-20", 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
2019-20 and the amounts specified therein as expenditures from the funds indicated are
hereby appropriated for the purposes specified therein.
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