HomeMy WebLinkAboutItem 09a - Adopting Operating Budget and CIP and Equipment PlansAdoption of the Operating Budget and CIP and Equipment Plans
June 7, 2022
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DATE: June 7, 2022
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
2022-23 OPERATING BUDGET AND THE FISCAL YEARS 2022-23
THROUGH 2026-27 CAPITAL IMPROVEMENT AND EQUIPMENT PLAN.
RESOLUTION NO. 7443 ADOPTING A BUDGET FOR FISCAL YEAR
2022-23 AND APPROPRIATING THE AMOUNTS SPECIFIED THEREIN
AS EXPENDITURES FROM THE FUNDS
Recommendation: Adopt
RESOLUTION NO. 7444 ADOPTING A CAPITAL IMPROVEMENT AND
EQUIPMENT PLAN FOR FISCAL YEARS 2022-23 THROUGH 2026-27
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 is required to be adopted by July 1. The
recommended actions are necessary to implement the Budget for Fiscal Year 2022-23.
This year’s budget process included one Budget Study Session with the City Council on
May 3, 2022. Copies of the proposed Operating Budget were 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 and Equipment Replacement Fund budgets in a
separate document. All funds total $146.7 million in expenditures, of which the General
Fund’s budget is $77.9 million (including Transfers Out noted below).
As Special Revenues, Enterprise, and Debt Service funds are restricted to specific
purposes and are generally self-sustaining, this report will primarily focus on the General
Fund’s Operating Budget.
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June 7, 2022
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The proposed Fiscal Year 2022-23 Operating Budget forecasts a return to the pre-
pandemic period with hints of concern for inflation, supply chain issues, and continuing
COVID conditions. While the latest economic indicators are signaling a recession, there
are no clear predictors to offer certainty as to when a recession will happen. The key
categories that would be at risk, should a recession occur, are sales tax, transient
occupancy tax, and business license fees. However, recent actual economic data shows
continuing strength and growth. For example, a low unemployment rate, stronger retail
spending, and higher percentages of personal savings would suggest that an economic
slowdown is not imminent. This leads to the view that consumers will be able to endure
inflation and other current macroeconomic concerns. Projected for the near term, inflation
would initially generate higher tax receipts since purchasing has not slowed. The outlook
for Fiscal Year 2022-23 is hopeful; however, caution is recommended for Fiscal Year
2023-24 and beyond, since sustained inflationary impacts could eventually cause
recessive behaviors in the marketplace.
The proposed Fiscal Year 2022-23 General Fund Operating Budget anticipates Total
Operating Revenues of $74.4 million and Expenditures of $72.1 million. Collectively, the
net of revenue to expenditures, inclusive of all Fund Transfers In and Out, is projected to
provide a surplus of $2.5 million at the end of the Fiscal Year. After total revenue and
expenditures are considered, the ending Fund Balance of the Operating General Fund is
expected to increase to $14,748,500. The projected General Fund Operating Fund
Balance would maintain a certain balance to provide cash flow needs of daily operations
during the Fiscal Year; however, it is also suitable to make a transfer to the Emergency
Reserve Fund balance to bring it to the 20% goal level established in the City’s Financial
Policies. Currently, it has a balance of $12.8 million. The Emergency Reserve Fund is
suggested to hold a sum equaling 20% of the annual operating expenditure, which would
be equivalent to $14.5 million based on the current proposed Fiscal Year 2022-23
Operating Budget. Currently, all combined unrestricted fund balances: General Fund
Operating, Emergency Reserve, Capital Improvement, and Equipment Replacement
totals approximately $38.8 million.
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June 7, 2022
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The General Fund Operating Budget is summarized in the table below:
Fiscal Year 2022-23 General Fund Budget Summary
FY 22-23
Budget
Beginning Fund Balance 12,297,400$
Estimated Revenues 74,428,400
Transfers In 5,898,400
Expenses & Uses (71,689,000)
New Programs (409,500)
Revenue over Expenses 8,228,300$
Transfer to Equipment Replacement (2,400,000)
Transfer to Capital Improvement Fund (2,400,000)
Transfer to Local Law Enforcement Prgm (116,700)
Transfer to Lighting Assessment District (810,500)
Total Transfer Out (5,727,200)
Subtotal Operating Balance 2,501,100
Ending Fund Balance 14,798,500$
The proposed Budget transfer of funds are itemized as follows:
• Lighting District $ 810,500
• Local Law Enforcement $ 116,700
• Capital Improvement Fund $2,400,000
• Equipment Replacement Fund $2,400,000
Total: $5,727,200
Annually, a goal of $2.4 million is set for transfers to the Capital Improvement Fund to
create a balance sufficient to meet annual maintenance and replacement needs. The
Capital Improvement Fund provides most of the funding for essential maintenance such
as pavement rehabilitation, building repairs, and parks maintenance. Some of the key
projects in the coming Fiscal Year budgeted in the Capital Improvement Fund are the
Compressed Natural Gas Fuel Station at the Public Works Service Yard, Pavement
Rehabilitation Program, Bonita Park Concession Building, and the Baseball Field
Bleachers at various locations. Total proposed projects funded by the Capital
Improvement Fund will be $3.4 million. Citywide, the combined capital projects for all
funds have been budgeted at $16.5 million.
In the Equipment Replacement Fund, this year’s transfer has been set at $2.4 million,
meeting the set goal amount to provide sufficient funding for future annual equipment
replacements. The Equipment Replacement Fund provides funding for essential
Adoption of the Operating Budget and CIP and Equipment Plans
June 7, 2022
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equipment such as computers, vehicles, and major office equipment. Total proposed
asset replacement costs funded by the Equipment Replacement Fund will be $4.7 million.
One significant item proposed for Fiscal Year 2022-23 is the replacement of the Fire
Department’s breathing equipment, which is scheduled to reach their expected 15-year
useful life next year. The cost for the replacement has been budgeted at approximately
$1.15 million.
Added to the City’s overall Operating Budget this year are new programs totaling
$409,500 proposed in the General Fund. These new programs and expenditures are
anticipated from various departments to respond to emerging operational needs or to
further improve services.
Additionally, to continue with the City’s adopted pension strategy, the proposed Fiscal
Year 2022-23 budget includes a line item for advance payment of long-term liabilities,
such as the Unfunded Accrual Liabilities (“UAL”) of CalPERS. A line item of $1.0 million
has been budgeted for the advance discretionary prepayment to CalPERS. Should this
line item become unnecessary, as an example, because the pension funding ratio is at
or above a 90% level, this budget line item will be reviewed for consideration of other
means to reduce long-term liabilities. For example, by creating a Section 115 Pension
Trust account, a tool for investing and saving for future pension related costs.
Alternatively, use the budget line item to contribute to the existing retiree medical trust
fund. This idea continues the City Council’s directives to further reduce pension debt via
accelerated payments to CalPERS or creating a financial tool, with the goal of generating
substantial long-term savings.
It is recommended that the City Council adopt the proposed Resolutions to enact the
Fiscal Year 2022-23 Operating Budget as well as the Five-Year Capital and Equipment
Replacement Plans.
DISCUSSION
At the start of the current year’s budget process in mid-February, the general mood for
the short-term financial position was generally optimistic. Specifically, reports of cases
and deaths due to COVID-19 were down significantly and restrictions were lifted, which
helped the economy to come back to life. It is in this context that the proposed Fiscal
Year 2022-23 budget has been developed. The expectation is that receipts of taxes, fees,
and other revenue sources will be better than the current Fiscal Year and will move to a
recovery level, equal to or greater than the pre-pandemic period. One key element from
the revenue trajectory is Measure A, a 0.75% Transaction and Use Tax (Sales Tax) that
was passed overwhelmingly by Arcadia voters in June 2019. This revenue stream has
been critical in keeping afloat the City’s budget by adding $5-$6 million per year during
the COVID period. Without this voter approved measure, the City would have had to
initiate service cuts and/or review other means to bring about an annual balance budget.
In the coming year, Measure A revenues are expected to exceed the annual projections
that were provided at the time of adoption.
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June 7, 2022
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Summarized in the table below is the General Fund Operating Budget for: Fiscal Year
2021-22 Year Ending Estimates, Fiscal Year 2022-23 Proposed Budget for Adoption, and
a Fiscal Year 2023-24 Preliminary Budget Outlook. Please note that Fiscal Year 2023-
24 is not proposed for adoption at this time and is merely presented as a forecasting tool,
since the City adopts its Operating Budget annually.
General Fund Activity
FY 21-22 FY 22-23 FY 23-24
Estimates Budget Budget
Beginning Fund Balance 8,448,700$ 12,297,400$ 14,748,500$
Estimated Revenues 72,277,300$ 74,428,400$ 73,800,900$
Transfers In 4,722,600 5,898,400 4,387,200
Expenses & Uses (68,351,200)(73,075,700)(74,246,900)
Revenue over Expenses 8,648,700$ 7,251,100$ 3,941,200$
Transfer to Equipment Replacement Fund (2,400,000)(2,400,000)(2,400,000)
Transfer to Capital Improvement Fund (2,400,000)(2,400,000)(2,400,000)
Subtotal Operating Balance 3,848,700 2,451,100 (858,800)
Ending Fund Balance 12,297,400$ 14,748,500$ 13,889,700$
As shown in the table above, the City’s General Fund Operating Ending Fund Balance
will increase to $14.7 million because of projected surpluses of $3.85 million in Fiscal
Year 2021-22 and $2.5 million in Fiscal Year 2022-23. Assuming that occurs, a portion
of the Operating Fund Balance will be transferred into the City’s Emergency Reserve to
reach the City’s adopted Reserve Policy level equivalent to 20% of annual operating
expenditures. Currently, that Emergency Reserve balance is at $12.8 million. Given the
annual operating expenditures proposed in the budget, $14.5 million should be held in
the City’s Emergency Reserve Fund; therefore, a transfer of $1.7 million is expected from
the Operating Fund Balance at the conclusion of the Fiscal Year. Inclusive of other
designated fund balances, such as the Self Insurance Medical Fund, Capital
Improvement and Equipment Replacement Fund, the City’s Reserve balances total $43.3
million as of this writing.
Fiscal Year 2022-23 Proposed Revenues
For Fiscal Year 2022-23, total General Fund revenues are expected to increase 2.98%
when compared to Fiscal Year 2021-22 Year End Estimates.
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June 7, 2022
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General Fund Revenue Projections
FY 21-22 FY 22-23
Estimates Budget $%
Taxes 49,766,800$ 51,191,700$ 1,424,900$ 2.86%
License & Permits 5,060,400 5,488,000 427,600 8.45%
Fines & Penalties 417,000 413,500 (3,500)-0.84%
Use Money & Property 1,455,900 1,451,300 (4,600)-0.32%
Revenue from Other Agencies 8,357,900 8,667,700 309,800 3.71%
Charge Current Services 3,859,700 3,471,400 (388,300)-10.06%
Library 81,300 84,700 3,400 4.18%
Recreation 1,088,800 1,325,100 236,300 21.70%
Other Revenue 2,189,500 2,335,000 145,500 6.65%
Total Revenue 72,277,300$ 74,428,400$ 2,151,100$ 2.98%
Changes
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.
General Fund Tax Revenue Projections
Description
FY 2021-22 YE
Estimates
FY 2022-23
Proposed Budget Difference
%
Change
Property Tax 18,038,400$ 18,694,800$ 656,400$ 3.64%
Sales Tax 18,899,000 19,277,000 378,000 2.00%
Transient Occupancy Tax 3,304,900 3,503,200 198,300 6.00%
Utility Users ’ Tax 7,360,000 7,433,600 73,600 1.00%
Motor Vehicle License Fees 8,292,900 8,607,700 314,800 3.80%
Property Tax: The City expects to see continued growth in home valuation, a benefit that
can be credited to Arcadia being a desirable community with a top ranked public school
district. Home sales and development activities for high market value areas, such as
Arcadia, have leveled off in comparison to recent years; however, values are holding and
sales continue to be fast-paced. Home sales prices are forecasted to reflect higher price
points in California due scarcity of supply at all price points. However, due to recent rise
in interest rates and other uncertainties that may lead to slowing home sales activities, a
cautious projection is used to give some latitude to respond should the budget reflect a
downward trend during the year. The City expects see a continued growth in Property
Tax receipts in the range of 3.6%, or nearly $656,400, for Fiscal Year 2022-23.
Sales and Transaction Use Tax: Recent economic data may suggest signs of a slowing
economy and possibly a recession. It should be noted that there is no predictor to offer
when a recession will happen with a high degree of certainty. There is a sense that
Adoption of the Operating Budget and CIP and Equipment Plans
June 7, 2022
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inflation is expected to ease as supply chain issues and demands will find its balance by
the end of 2022. Some signs have already suggested that inflation has reached its peak.
Unemployment nationwide is still low, sturdy strength of retail spending continues, and a
recent survey showing higher percentages of savings combined with stronger personal
balance sheet give an indication that the consumer will be able to endure the existing
economic concerns. This perspective suggests that a recession is much further away
than what some analysts have been predicting. In addition, it should be noted that when
economic downturns happen, City revenue shifts lag behind the general economy, which
gives the City time to react to any changes that may be coming.
It is predicted that inflation would initially generate higher sales tax level due to higher
cost for all things. Sales and Transaction Use Tax in total is projected to come in at $19.3
million, a 2.0% increase versus the prior Fiscal Year. The projection is a conservative
estimate as it has factored in the potential for a slower economy just before the end of
Fiscal Year 2022-23. The future forecast in Fiscal Year 2023-24 does anticipate additional
slowing in this area in case a recession does hit during the next calendar year.
Transient Occupancy Tax (“TOT”): The projection for this category in Fiscal Year 2022-
23 is for a 6.0% increase when compared to the prior year, representing expected
revenue of $3.5 million versus the prior year’s ending estimate of $3.3 million. Although
the year-to-year comparison can seem optimistic, it is supported by data showing that
travel and tourism industry have rebounded, set up by the pent-up demands caused by
COVID. These signs include greater air traffic, airlines adding more flights, rental car
shortages, and the City’s transient occupancy tax receipts showing higher local hotel
occupancy levels. The projection of the 6.0% increase in TOT revenue is conservative
given the entrance of a new luxury hotel, Le Meridian, and the expected recovery in travel
and tourism generally.
Utility Users’ Tax: Utility Users’ Tax (“UUT”) is projected to generate $7.4 million, or a
1.0% increase in comparison to the Fiscal Year 2021-22 Year Ending Estimate.
Fundamentally, demand for water, electricity, and gas is expected to increase with billings
expected to rise naturally with inflationary elements. While water conservation is expected
to continue, water rates will increase because of rising imported water costs, treatment
and filtration costs, and ongoing repairs of City wells, which will offset any potential
decreases in this area.
Motor Vehicle License Fees (“VLF”): This tax is projected to increase by 3.8%, to $8.6
million. Revenues from this line item are largely tied to annual property assessed
valuation. However, in recent years, the pandemic has driven greater demand for autos,
causing extraordinarily high prices for new and used vehicles. Because of those
contributing factors, the City will continue to benefit from growth in VLF in the next Fiscal
Year.
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June 7, 2022
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Fiscal Year 2022-23 Proposed Expenses
Total operating expenditures for Fiscal Year 2022-23 have been proposed at $71.7
million, an increase of 2.7% versus Fiscal Year 2021-22 Budget of $69.8 million. No
significant changes have been added to the Fiscal Year 2022-23 Operating Budget other
than contractual increases from multi-year service agreements and the second of a three-
year labor agreement.
While some natural inflationary increases have been included and new services have
been added to meet community demands as we begin “normalizing” after the pandemic,
staff has carefully controlled costs in most areas so that the increases are negligible and
have no material effects to the overall operating expenditures. The Budget also includes
transfers of annual set goal amounts of $2.4 million each to the Capital and Equipment
Replacement Funds in order to ensure that funding is available in the future for significant
expenditures in those categories, which are described in greater detail later in this report.
Fiscal Year 2022-23 Expenditures by Department
As shown in the table above, the City continues to place its highest priorities on public
safety, with Police and Fire expenditures totaling 60% of overall General Fund
Expenditures.
City Manager
$2,587,100
4%
Admin Svrcs
$4,068,700
6%Police
$24,581,400
34%
Fire
$18,611,200
26%Public Works
$4,609,600
6%
Dev. Svcs
$5,301,000
7%
Recreation
$3,436,300
5%
Library & Museum
$4,555,500
6%
General City
$3,938,200
6%
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Proposed New Programs
New programs and expenditures are anticipated from various departments to respond to
emerging operational needs, as well as to respond to direction received at the City Council
Study Session and City Council meetings. New programs proposed for the Fiscal Year
2022-23 total $409,500. These programs include the following:
Fire Department:
Fire Training Captain ($97,200): Assign one Fire Captain to a 40-hour schedule to
assist the Arcadia Fire Department's (“AFD”) Training Program. Due to vacancies in the
Firefighter and Fire Engineer ranks, AFD will have numerous probationary members
during Fiscal Year 2022-23. The 40-hour Fire Training Captain will allow for consistent
training and evaluation of newly-hired and promoted members. This position will also
assist in scheduling in-service training and administering three multi-company training
sessions for each 24-hour work shift. This is a temporary Program with an expected
duration of five months. The effectiveness of the Program will be evaluated at the three
and five-month period.
Fire Prevention Specialist ($5,600): This will be a two-year phased in program to
augment current Fire Department staffing. Since 2004, the City has seen an
unprecedented level of activity in development and construction. Due to this increase, the
Fire Prevention Bureau has seen its scope of services evolve throughout the years. This
evolution has presented challenges for the Bureau to maintain acceptable levels of
service, especially in light of more complex Fire Codes and an increasing variety of risks
facing the community. The Fire Department will address the new challenges caused by
development by renaming the Fire Prevention Bureau to Community Risk Reduction
(CRR). This renamed division will be tasked with implementing proactive measures that
will reduce the community’s risks, with will be identified by an internally performed
Community Risk Assessment. Natural hazards, emergency preparedness, hazardous
materials, and quality of life issues will be addressed by the assessment.
To maintain adequate service levels and achieve this expanded mission, CRR will need
to augment its current staffing. This will be achieved in two phases over Fiscal Year 2022-
23 and 2023-24. In Fiscal Year 2022-23, a new promotional position will be created. This
new position will aid in supervisory responsibilities, staff development, and succession
planning. This new position will be titled Senior Fire Prevention Specialist. In Fiscal Year
2023-24, the vacated full-time Fire Prevention Specialist position will also be filled.
Medical Director ($32,000): A Medical Director for the Arcadia Fire Department is critical
for a successful Emergency Medical Services (“EMS”) program. The Los Angeles County
Department of Health Services Policy Number 411 recommends and will soon require a
Medical Director as part of a participating EMS agency such as the Arcadia Fire
Department.
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June 7, 2022
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In addition to enhancing its emergency medical services to the City, there are several
benefits in hiring a full-time Medical Director for the AFD, which includes: providing
continuing education requirements to AFD's Emergency Medical Technicians (“EMT”)
and Paramedics; with a Medical Director's approval, AFD will have the opportunity to sign
up for various medical trial programs, where the Los Angeles Department of Health
Services is at the forefront; and it will also make it easier for AFD's Paramedics to
transition from Fireline EMT's to Fireline Paramedics, who could perform more complex
lifesaving procedures with the direct oversight of a Medical Director in the AFD's narcotics
program. While the Medical Director will be available to the City “full-time”, it will be
achieved through contracting with a local medical professional, who will provide the
service to the community as part of their other activities.
Development Services Department:
Document Scanning and Electronic Retention Project ($30,000): For many years,
Development Services Department has retained paper copies of files and projects. The
City is required to retain all commercial and multi-family plans and, over time, these files
have filled our basement and storage areas. These documents are difficult to locate and
access, sustain damage over time, and can be extremely time intensive to access and
copy when needed. The City has a system to scan current building permits and plans, but
a very large backlog of older plans and documents exists for documents needing to be
scanned into a searchable index. This would be the beginning of a multi-year project to
establish a cloud-based document storage system (likely Laserfiche) with an easy-to-
understand index and scanning protocol for these historic records before they deteriorate
any further.
Inclusionary Housing/Economic Feasibility Study ($95,000): As part of the Housing
Element Update efforts, the City will be required to adopt a policy or ordinance to mandate
affordable housing units as part of any new multi-unit housing project. Preparing such a
policy or ordinance requires significant technical analysis, including an economic
evaluation of regional housing trends, the cost to produce affordable housing vs. market
rate housing, the existing demand for affordable and market rate housing, and the current
housing options available. The study will include examining current market conditions,
completing an economic feasibility study, and making recommendations prior to
developing the ordinance. Additionally, the consultants would conduct an initial
environmental review of the project, determine the appropriate environmental process per
CEQA, and prepare the environmental analysis. This project would be a collaborative
effort between the Planning Division and the consultants. However, due to the complexity
of the requirements, professional experience is needed. Staff impact would be minimal
and focused on guiding and monitoring the work of a consultant.
Library & Museum Services Department:
Full time Museum Coordinator ($19,300): This is a request for a classification change
for the existing Museum Education Coordinator position from 30 hours per week to 40
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hours per week. The Museum Education Coordinator's workload has increased as this
position has continued to engage with the schools, volunteers, and the community, even
under pandemic conditions. With the expansion of duties, an increase in hours is
warranted in order to remain effective and meet the desires of the community.
Public Works Services Department:
Building Maintenance Technician ($93,000): Facility maintenance is imperative to
ensure the safety of both City employees and residents. It is evident that proper and
regular maintenance can save money and avoid having to contract out for work. The
Public Works Services Department currently has one Building Maintenance Crew
Supervisor and one Building Maintenance Technician to oversee maintenance of dozens
of City buildings and facilities. With buildings aging and many major renovations done
over 20 years ago at this point, there are times when the crew cannot respond as quickly
as needed to service requests. In addition, with an increasingly competitive labor market,
contracting out for the minor, routine maintenance work is becoming prohibitively
expensive or nearly impossible, with contractors focusing on larger and more lucrative
jobs. Adding another Building Maintenance Technician would be more cost-effective than
contracting and would allow for a quicker response to work orders. Consistency and an
ability for regular upkeep of building maintenance would also mitigate unpredictable
repairs.
Recreation & Community Services Department:
Office Assistant ($37,400): The Recreation & Community Services Department is
requesting to add 1.0 full-time equivalent for an Office Assistant position for the
department. This position will work half of the day at the Community Center and half the
day at the Recreation Office to support the front desks during the busiest times of the day
and will assist with answering phones, registering for classes and programs, and
miscellaneous clerical duties. This new full-time position will be created by adding
additional hours from the currently budgeted part-time recreation leader position. The
current budget for the part-time position, inclusive of benefits, is approximately $46,400.
To transition to a full-time position, an additional budget appropriation of $37,400 is
needed.
Capital Improvement and Equipment Replacement Funds
Over the past several years, the City to has been able to transfer a sizeable amount of
funds into the Capital Improvement and Equipment Replacement Funds through
disciplined savings as well as transferring any excess funds at the end of each year. It is
still important for the City to continue a steady deposit into these funds, which had
previously reached dangerously low levels due to a lack of regular deposits into these
funds. The Fiscal Year 2022-23 Budget proposes a transfer of $4.8 million from the
General Fund, $2.4 million to Capital Improvement and $2.4 million to Equipment
Replacement to establish a sustaining fund balance for future purchases and projects.
The $2.4 million deposit into these funds is the recommended annual minimum deposit
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in these funds to maintain sufficient balances over time based on 10-year historical
spending patterns and known expenditures in the coming years.
Capital Improvement Fund:
The Fiscal Year 2022-23 Capital Improvement Plan proposes 45 projects totaling $16.5
million in expenditures, of which $3.4 million would be paid from the Capital Improvement
Fund. The Capital Improvement Fund provides most of the funding for such essential
maintenance activities such as pavement rehabilitation, building repairs, and parks
maintenance. The table below summarizes some of the major proposed projects planned
for the year.
Fiscal Year 2022-23 MAJOR CAPITAL IMPROVEMENT PROJECTS
Project Description
Project
Budget Funding Source
Annual Slurry Seal Program $800,000 Capital Improvement
Fund
Advanced Metering Infrastructure (AMI)/
Meter Replacement Program $800,000 ARPA Fund
Bonita Park Concession Building
Improvement Project $710,000
Park & Recreation
Facilities Fund
Community Center Facility
Improvements $325,000
Capital Improvement
Fund
Pavement Rehabilitation Program $2,050,000
Capital Improvement &
RMRP (SB1) - $1.2Mil
Measure W - $150k
Sewer Main Replacement Program $750,000 Sewer Fund
Water Main Replacement Program
$400,000 ARPA Fund
Compressed Natural Gas Fueling
Station
$2,000,000 Measure M - $400k
FTA Sec. 5307 - $1.6 mil
Baseball Field Bleacher Project
$950,000
Capital Improvement
Fund $430k
Park & Rec Fund $520k
Arterial Pavement Rehabilitation: 1st &
2nd Aves from Huntington Dr. to Duarte
Rd.
$2,000,000 Prop C $300k & Prop C
Grant $1.7 mil
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Equipment Replacement Fund:
The Equipment Replacement Fund was originally estimated to require an annual transfer
of $1.8 million on average from the General Fund to ensure sustainability. However, with
yearly rising costs from inflation and new equipment demands in the areas of technology
investments specifically, a yearly transfer of $2.4 million would now be the appropriate
number to deposit annually to meet future year needs. The Equipment Replacement Fund
provides funding for essential equipment such as computers, vehicles, and major office
equipment.
New proposals for this year include a larger than usual number of vehicle replacements,
including heavy duty vehicles from Public Works, Fire, and Police Departments. The City
has a practice of extending the life of vehicles past their typical commercial vehicle life
expectancy. Mileage and annual maintenance cost are weighed against their benefit as
determinant factors for their replacement. This year, more vehicles are budgeted for
replacement due to COVID related manufacturing back-logs. This is because many
vehicles currently have up to a 12 month waiting period. Specifically, Police Patrol
vehicles and other sedans with long wait times will be pre-ordered in anticipation of the
delay so that the vehicles are available when they are needed.
Public Works will need to replace a heavy-duty valve truck in the Water Division and a
Sewer CCTV Truck will be purchased to transition from contracting for an annual CCTV
video service to being able to do it in-house. Having a CCTV camera vehicle will eliminate
the need for an annual contract of $50,000 for CCTV services, as well as the Engineering
staff time required to generate, advertise, execute, and coordinate the CCTV contract –
time that can then be spent on other projects. City field staff will eliminate up to 160 hours
of time spent annually on traffic control and inspection services, which are requested by
the CCTV contractor while performing video services. Most importantly, it will allow staff
to respond immediately when issues are found during regular cleaning by videoing the
sewer line of concern.
In total, the Equipment Replacement Fund proposes 37 different equipment purchases
totaling $4.7 million, of which $3.9 million is funded by the Equipment Replacement Fund.
The table below summarizes some of the major proposed equipment purchases.
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June 7, 2022
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Fiscal Year 2022-23 MAJOR EQUIPMENT REPLACEMENT PURCHASES
Equipment Replacement
Description
Replacement
Budget Funding Source
Enterprise Resource Planning
(ERP) Financial Software
$500,000 Equipment Replacement
Vehicle Replacement /
Water/Sewer: Valve Truck, Sewer
CCTV Truck, & Sedans (2)
$616,000 Water & Sewer Funds
Vehicle Replacement/Police:
Patrol Vehicles (6);
Communication & Lighting
Equipment
$408,000 Equipment Replacement
Vehicle Replacement/Fire:
Rescue Ambulance
w/Communication & Lighting
Equipment
$385,000 Equipment Replacement
Fire Dept. - Communication &
Technology Equipment
Replacement
$80,000 Equipment Replacement
Fire Dept. – Replacement of all
Self-Contained Breathing
Apparatus (SCBA) & Annual
Maintenance Program
$1,148,800 Equipment Replacement
Library - Complete Facility
Furniture Replacement: Study
Carrels; Tables & Chairs;
$227,700 Equipment Replacement
It is imperative that the City find a means for depositing funds into these essential
accounts at or above the minimum required contributions in the coming years to help
them approach 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.
ECONOMIC OUTLOOK
The General Fund Fiscal Year 2022-23 Operating Budget outlook presents a cautious
recovery from the economic damages suffered during the COVID-19 pandemic. Through
Adoption of the Operating Budget and CIP and Equipment Plans
June 7, 2022
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strong management with fiscal restraint practices, and thankfully, the passage of a
Transaction Use Tax in 2019, the City has weathered significant reductions of major tax
revenues and business-related fees. Collectively, those pieces have placed the City in a
position to project a strong surplus for Fiscal Year 2022-23. However, the recent rise of
inflation data, supply chain issues, continuing COVID impacts, and unknown affects from
the Russia/Ukraine War have provided arguments to be cautious and aware of where the
economy may be headed.
It is within this setting that a budget stress test was performed to lend clues to where the
City’s future finances may be headed. This stress test assumed a recession taking place
at the beginning of Fiscal Year 2023-24 and all other expenditures remaining unchanged
(see chart below). The results are positive in that ongoing recessionary effects, or yearly
deficits, would range between 1.3% - 2.0%, or roughly between $970k to $1.4 million.
This is positive in that these deficits could reasonably be erased with expenditure savings,
if needed, that would not sacrifice services to the community. Departments have always
been able to find ways of keeping critical services intact by adapting through a tough
economic environment and delivering those things most valued by residents and business
customers. Additionally, many past budgets have yielded net positive results – through
better than predicted revenues and lower than predicted expenditures – well in excess of
these possible deficit figures, meaning that the stress test amounts are well within the
margin of error for the City’s conservative budgeting practices.
Potential Budget Shortfalls In A Recessionary Scenario
CONCLUSION
The Fiscal Year 2022-23 General Fund Operating Budget, as proposed, is balanced with
a projected surplus of $2.5 million. This is based on Total Operating Revenues and
60
65
70
75
80
85
90
FY 2020-21 FY 2021-22 FY 2022-23 FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28
Mi
l
l
i
o
n
s
Revenue & Sources Expenditures & Transfers
Adoption of the Operating Budget and CIP and Equipment Plans
June 7, 2022
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Transfers In of $80.3 million, net of Operating Expenditures and Transfers Out of $77.8
million. The City is fortunate to have had a history of conservative spending and has
amassed the savings necessary to cope with economic uncertainties over a short-term
while allowing time to plan and execute over the long-term. By implementing this Budget,
City staff will continue providing the community with unsurpassed service in a fiscally
responsible manner.
It is recommended that the City Council adopt the proposed Resolutions to enact the
Fiscal Year 2022-23 Operating Budget as well as the Five-Year Capital and Equipment
Replacement Plans.
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. 7443 adopting a Budget for Fiscal Year 2022-23 and
appropriating the amounts specified therein as expenditures from various funds;
and
2) Adopt Resolution No. 7444 adopting a Capital Improvement and Equipment Plan
for the Fiscal Years 2022-23 through 2026-27.
Attachments: Exhibit “A” – All Funds Operating Budget Summary
Exhibit “B” – Five-Year Summary of Capital and Equipment Plan
Resolution No. 7443
Resolution No. 7444
Exhibit "A'
Ending Fund
Fund Beginning Outside Transfer Total Appropriation Transfer Total Balance
Fund FY22-23 Sources In Out FY22-23
General Fund 12,297,400 74,428,400 5,898,400 92,624,200 72,148,500 5,727,200 77,875,700 14,748,500
Narcotic Seizure Federal 135,600 31,400 0 167,000 0 0 0 167,000
COPS 269,700 172,700 0 442,400 175,100 0 175,100 267,300
Medical/Dental 428,000 0 4,751,700 5,179,700 4,750,200 1,500 4,751,700 428,000
Local Law Enforcement 0 110,000 116,700 226,700 226,700 0 226,700 0
IRS Task Force 466,100 4,700 0 470,800 0 0 0 470,800
Worker Compensation/Liability 5,265,900 52,700 2,710,100 8,028,700 2,696,200 0 2,696,200 5,332,500
Homeland Security (3,000)0 0 (3,000)0 0 0 (3,000)
Library State Grant 600 0 0 600 0 0 0 600
Homelessness Plan 0 466,200 0 466,200 466,200 0 466,200 0
Office of Traffic Safety Grant 0 96,500 0 96,500 96,500 0 96,500 0
California OES HSGP 0 0 0 0 0 0 0 0
Autotheft Prevention Taskforce 0 151,400 0 151,400 151,400 0 151,400 0
Emergency Reserve 12,794,700 0 0 12,794,700 0 0 0 12,794,700
America Rescue Plan Act 8,683,800 0 0 8,683,800 6,239,700 0 6,239,700 2,444,100
Public, Educational/Governmental Access 1,041,500 90,400 0 1,131,900 0 0 0 1,131,900
Parks & Recreation 4,374,300 1,443,700 0 5,818,000 1,305,000 32,900 1,337,900 4,480,100
Used Oil Grant 16,000 15,700 0 31,700 7,000 0 7,000 24,700
DOC Beverage Grant 67,200 15,200 0 82,400 0 0 0 82,400
Traffic Safety 0 152,000 0 152,000 0 152,000 152,000 0
Solid Waste 1,916,600 719,200 0 2,635,800 389,100 300,000 689,100 1,946,700
Measure W ‐ Safe Clean Water Program 888,000 1,028,900 0 1,916,900 371,000 0 371,000 1,545,900
State Gas Tax (20,700) 1,667,400 0 1,646,700 0 1,488,600 1,488,600 158,100
Road Maintenance/Rehabilitation Act 445,600 1,318,800 0 1,764,400 1,200,000 0 1,200,000 564,400
Air Quality Management District 95,500 75,500 0 171,000 22,300 0 22,300 148,700
Community Development Block Grant 0 360,600 0 360,600 360,600 0 360,600 0
Santa Anita Grade Separation 00 00 000 0
Transit 3,900 2,878,500 674,300 3,556,700 2,868,500 0 2,868,500 688,200
Proposition A 1,774,900 1,423,700 0 3,198,600 291,500 1,011,300 1,302,800 1,895,800
Transportation Impact Fund (202,400) 300,000 0 97,600 200,000 0 200,000 (102,400)
Proposition C 835,200 2,871,000 0 3,706,200 3,510,600 0 3,510,600 195,600
TDA Article 3 Bikeway 59,600 600 0 60,200 0 0 0 60,200
Measure R 1,065,600 885,700 0 1,951,300 77,000 674,200 751,200 1,200,100
Measure M 1,178,500 1,003,600 0 2,182,100 2,162,000 0 2,162,000 20,100
City Hall Reserve 100 0 0 100 0 0 0 100
Lighting Maintenance 228,200 1,350,900 810,500 2,389,600 1,350,900 0 1,350,900 1,038,700
Water Fund (6,326,000) 16,006,600 0 9,680,600 17,416,900 0 17,416,900 (7,736,300)
Sewer Fund 2,964,300 2,564,600 0 5,528,900 2,792,700 0 2,792,700 2,736,200
Par 3 Golf Course Fund 1,095,500 2,096,500 0 3,192,000 1,305,600 0 1,305,600 1,886,400
Equipment Replacement 6,328,200 88,300 2,400,000 8,816,500 3,899,700 33,200 3,932,900 4,883,600
Redevelopment Successor Agency 0 183,700 0 183,700 183,700 0 183,700 0
General Obligation Bond 2012 415,800 421,200 0 837,000 421,200 0 421,200 415,800
General Obligation Bond 2011 543,600 592,600 0 1,136,200 592,600 0 592,600 543,600
Pension Obligation Bond 2020 0 5,876,800 0 5,876,800 5,876,800 0 5,876,800 0
Total 67,494,300 121,429,100 19,761,700 208,685,100 137,253,800 9,420,900 146,674,700 62,010,400
CITY OF ARCADIA
SUMMARY BY FUND
FISCAL YEAR 2022-2023 PROPOSED BUDGET
SOURCES OF FUNDS USES OF FUNDS
ESTIMATED ESTIMATED PROPOSED ESTIMATED
FUNDS FIVE-YEAR FIVE-YEAR FUNDS
7/01/2022 REVENUE EXPENDITURE 6/30/2027
CAPITAL OUTLAY FUND 10,324,400 14,525,300 (15,220,400)9,629,300
PARK AND RECREATION FUND 8,112,000 6,553,200 (5,217,400)9,447,800
MEASURE W CLEAN, SAFE WATER PROGRAM 1,038,800 5,199,600 (4,376,000)1,862,400
GAS TAX (HUTA) FUND (58,700)8,348,800 (7,701,800)588,300
ROAD MAINTENANCE AND REHABILITATION
PROGRAM 1,545,600 6,617,400 (7,100,000)1,063,000
AQMD 142,600 383,000 (161,500)364,100
PROP C LOCAL RETURN 2,927,200 7,587,700 (9,541,300)973,600
TRANSPORTATION IMPACT FUND 1,547,700 1,517,900 (2,650,000)415,600
MEASURE R LOCAL RETURN 1,482,800 4,475,200 (3,243,200)2,714,800
MEASURE M LOCAL RETURN 3,550,700 6,559,300 (9,310,000)800,000
WATER FACILITY RESERVE 14,829,100 2,188,500 (13,477,500)3,540,100
WATER EQUIPMENT RESERVE 227,000 2,300 (2,192,000) (1,962,700)
SEWER FUND 4,209,700 13,103,800 (15,971,100)1,342,400
EQUIPMENT FUND 8,014,000 12,387,400 (15,512,300)4,889,100
CITY OF ARCADIA
SUMMARY OF PROPOSED FIVE YEAR CAPITAL PROGRAMS
FISCAL YEAR 2022-23 THROUGH 2026-27
Exhibit "B"
RESOLUTION NO. 7444
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
ARCADIA, CALIFORNIA, ADOPTING A CAPITAL IMPROVEMENT
AND EQUIPMENT PLAN FOR FISCAL YEARS 2022,.23
THROUGH 2026-27
WHEREAS, on June 7, 2022, the City Manager submitted to the City Council a
proposed plan entitled, "Capital Improvement and Equipment Plan, Fiscal Years 2022-
2027", 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 19, 2022 and May 23, 2022; and
WHEREAS, the duly noticed public hearing was conducted by the City Council on
June 7, 2022.
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
2022-2027", 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 2022-2023.
SECTION 2. The City Clerk shall certify to the adoption of this Resolution.
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