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CC - Item 7B - Fiscal Year 2017/18 Mid-Year Budget Review E M E e 0s T- © 9 0 ROSEMEAD CITY COUNCIL ....I\ aoE STAFF REPORT TO: THE HONORABLE MAYOR AND CITY COUNCIL FROM: GLORIA MOLLEDA, CITY MANAGER IV DATE: FEBRUARY 27, 2018 SUBJECT: FISCAL YEAR 2017/18 MID-YEAR BUDGET REVIEW SUMMARY The City Council will consider adjustments to the Fiscal Year (FY) 2017/18 Adopted Budget. During the fiscal year, unforeseen financial needs and opportunities typically arise, which require Council approval of recommended adjustments to projected revenues and expenditures. At this time, there are several items that require appropriations as well as projected revenue adjustments. STAFF RECOMMENDATION It is recommended that the City Council: 1. Receive and file the Mid-Year Budget Review and related reports; and 2. Approve Resolution No. 2018-15, approving various appropriations and revise revenue estimates. BACKGROUND 1. On June 27, 2017, the City Council approved the FY 2017/18 Operating and Capital Improvement Budget. 2. On July 11. 2017, the City Council approved $400,000 for the Duff School joint usage agreement and site development should the City not receive the California Natural Resource Agency's Urban Greening Grant. 3. On August 8, 2017, the City Council approved the following: $3,800 for CivicLive website design and hosting; $5,506 for crossing guard services near Arlene Bitely Elementary; $48,200 for the additional cost of the Garvey Avenue Specific Plan with Moore lacofano Goltsman, Inc. (MIG), and $54,000 for public affairs advocacy services with David Turch & Associates. 7 I I LM NUMBER: 143 City Council Meeting February 27,2018 Page 2 of 5 4. On October 24, 2017, the City Council approved $4.252 for crossing guard services near Emma W. Shuey Elementary School and $57,000 for the Maintenance of Efforts requirement set by Senate Bill SBI in order for the City to receive the Road Maintenance and Rehabilitation Account (RMRA) funding. 5. On December 6. 2017, the City Council approved $5M00 for membership fees to join Revitalize California Cities. 6. On December 12, 2017, the City Council approved $266,100 from the Measure R Fund to add landscaping costs to the Rosemead Boulevard Highway Safety Improvement (HSIP) project. The City Council approved $50,000 to continue Human Resource services with HR Dynamics &Performance Management, Inc. 7. On January 23, 2018, the City Council approved$580,750 for the Dog Park. Council Approval Amount Projects 7/11/2017 $ 400,000 * Duff School Joint Usage Agreement&Site Development 8/8/2017 3,800 Website Redesign, Hosting and Maint 8/8/2017 5,506 Crossing Guard Services 8/8/2017 48,200 MIG Contract- Garvey Ave Specific Plan 8/8/2017 54,000 David Turch- Federal Public Affiis Advocacy and Grant Services 1024/2017 4,252 Crossing Guard Services 10/24/2017 57,000 SBI MOE Requirements 12/6/2017 5,000 California Cities Membership 12/12/2017 50,000 Additional kinds for HR Services 1/23/2018 580,750 * Dog Park General Fund $ 1,208,508 12/12/2017 266,100 Rosemead Boulevard Highway Safety Improvement(HSIP) Measure R Fund $ 266,100 *The following are the City Council's approval to apply for the grants. However, the actual budget appropriations will not occur until the grants are awarded If the grants are not awarded, then staff needs to present a staff report to the City Council Jim approval to proceed with the project and present the fiscal impact. General fund The City has drawn down $1,208,508 or 5.5% of the unassigned fund balance. We began the fiscal year with a projected fund balance of$18,082,483 or 80.7% per the FY 2017/18 Adopted Budget. However, the City received a surplus of $357,727 during FY 2016/17 as a result of City Council Meeting February 27,2018 Page 3 of 5 more revenues received than budgeted. The adjusted FY 2017/18 General Fund fund balance is at $18,261,620 or 82.4%. After the City Council's approved appropriations, the fund balance is 76.9%. The fund balance is made up of two components 1) 31% is committed to maintain an amount equal to 31% of the General Fund operating revenues per the City's reserve policy and 2) 45.9% constitutes unassigned fund balance, which is available for spending at the government's discretion. Measure R Fund The City has drawn down $266,100 or 41.7% of Measure R fund balance. We began the fiscal year with a projected fund balance of$440,601 or 69.1% per the FY 2017/18 Adopted Budget. However, the City received a surplus of $93280 during FY 2016/17 as a result of less expenditures spent than budgeted. The adjusted FY 2017/18 Measure R fund balance is at $533,881 or 83.8%. After the City Council's approved appropriations. the fund balance is 41.7%. ANALYSIS During any fiscal year. unforeseen financial needs and opportunities may arise, which require City Council approval of additional appropriations. Without the additional appropriations. various auditors could have cause to make an adverse finding in the annual audit reports. The needed mid-year adjustments to the current operating budget include the following: • City Council: Serving as an elected official requires frequent communication and interaction with constituents including traveling to advocate on behalf of the City. In the last few years. the cost for traveling and meetings have increased; however, the City has not increased the budget in several years. We need to increase the Travel and Meeting account by $10,000 to cover for travel and meeting expenses for the remainder of the fiscal year. • Commissions/Committees: During the current year, the City awarded four plaques to the following commission/committee members: Jean Hall, Joanne Russell-Chavez, Veronica Pena, and Martha Ruvalcaba for their civic services as they left or retired from their seats. These were unexpected expenses that were not budgeted. We need to increase the General Supplies account by $1,000 to cover the plaque costs. • City Clerk: Passport services have increased and is projected to bring in $30,000 revenues. As revenues increase, the cost of supplies also increase. We need to increase the General Supplies account by $4,000. • General Services: The City Council approved in a Special Meeting held on May 30, 2017 for the City Manager to enter into an agreement with the law firm Blank Rome LLP to analyze legal issues associated with the State Route 710 Project. We need to increase the Legal expense account by $437,000 to cover for legal services costs spent during the fiscal year. City Council Meeting February 27.2018 Page 4 of 5 • General Services: In June 2015, the City amended the original agreement for business license software and services with HDL Software, I,I.0 to include HDL's new Prime Business License software system with web module and related services, and to provide for the purchase of the new system. The City agreed to pay for the new system over a period of 4 years and there will be an annual web cost to use the system. The City did not budget for the 3rd installment cost of$5,239 and annual software use fee of$6,458 in the FY 2017/18 Adopted Budget. We need to increase the Equipment Rental account by $12,000 to cover for the business license software costs. • Public Works: The Sewer System Comprehensive Study was carried over from FY 2015/16 and recently completed in this fiscal year. The sewer system comprehensive study was used to: 1. Update the Sewer model to utilize modernized sewage discharge rates reflective of recent and projected water conservation requirements; 2. Update the Sewer System Master Plan, identifying an optimized sewer system to better serve existing and anticipated future development, inclusive of those specified in the Garvey Avenue Specific Plan and General Plan; 3. Prepare a Sewer System Management Plan for submittal to the Regional Board pursuant to State General Waste Discharge Requirement, Monitoring, and Reporting Program (WDR5); and 4. Conduct a development impact and financial analysis pursuant to AB1600 for establishment of a sewer system development impact fee (DIF). The total cost of the Sewer System Comprehensive Study was $100,000, of which $2,270 was spent in FY 2015/16, $69,860 was spent in FY 2016/17, and $27,870 was spent in FY 2017/18. The City initially budgeted $100,000 for the sewer study in FY 2015/16. Since the majority of the funds were not spent, the City re-budgeted $98,000 in FY 2016/17. The project was carried over and completed in FY 2017/18. The City needs to re-budget $28,000 to FY 2017/18 to account for the costs spent in this fiscal year. • Finance: The City initially budgeted $9,000 for an actuary to prepare the Other Postemployment Benefits (OPEB) Actuarial Valuation study. The accounting standards issued Statement No. 75 (GASB 75) to improve accounting and financial reporting by state and local governments for postemployment benefits other than pensions. It also improves information provided by the state and local government employers about financial support for OPEB. Therefore, GASB 75 requires additional disclosures and reports from the actuary, and these additional reports are required by the auditor for the upcoming FY 2018/19 audit. We need to increase the Other Professional Services by $4,000 to account for the additional required disclosures and reports to prepare for the FY 2018/19 Comprehensive Annual Financial Report. In summary, the total appropriations requested from the General Fund is $496,000. City Council Meeting February 27,2018 Page 5 of 5 The needed mid-year adjustments to the current revenue budget include the following: • Passport services have increased and is projected to bring in $30,000 revenues. We need to increase the Passport Services revenue account by $25,000. • Transient Occupancy Tax (TOT) were projected to be $2,100,000 in the FY 2017/18 Adopted Budget. Based on the actual revenues collected for the first two quarters, we are anticipating an additional $100,000 and will increase the TOT revenue account by $100,000. • Grants of$943,300 were projected in the FY 2017/18 Adopted Budget. The High Intensity Activated Crosswalk (HAWK) Grant will be completed in September 2018 and Safe Route to School project will be completed in April 2018; therefore, the projected grant reimbursements of$241,300 and $702,000, respectively, should be decreased from the Gas Tax Fund grant revenue account. In summary, revenue estimates should be revised to reflect an increase of $125,000 in General Fund revenue accounts and a decrease of$943,300 in the Gas Tax revenue account. FISCAL IMPACT The total General Fund Additional Appropriation is $496,000 and the total General Fund Additional Revenues is $125,000, which results in a negative net impact of $371,000 to the General Fund's operating budget. There will be a negative impact of$943,300 in the Gas Tax Fund. STRATEGIC PLAN IMPACT—None PUBLIC NOTICE PROCESS This item has been noticed through the regular agenda notification process. Prepared by: lCi �, �. ( I LAO() •e'1 Lieu, Finance Director Attachment A: Revenue and Expenditure Budget Summary Report Attachment B: Resolution No. 2018-15 r-, E M f civic ~Riot • \\,,,,_ N,oRpp54 OR Attachment A Revenue and Expenditure Budget Summary Report City of Rosemead, California Revenue Summary by Fund Adopted Proposed Revised 17/18 Adjustment Estimate General Fund Sales Tax $ 5,524,000 $ 5,524.000 Property Tax 8.902,000 8,902,000 Franchise Fees 1.125.000 1,125,000 Transient Occupancy Tax 2.100.000 100,000 2,200,000 Interest Earnings 75,000 75,000 Building Permits and Plan Checks 1,470,000 1470,000 Permits 430,000 430,000 Traffic Fines&Impounds 215,000 215.000 Parking Citations 400,000 400,000 Real Estate punsfer lax 100,000 100.000 Facility Rentals 457.300 457.300 Recreation Fees 576,100 576,100 Reimbursements 141,500 141,500 Crams 218,100 218,100 Business Licenses 200.00 200,000 Other Revenue 239,900 25,000 264,900 Total General Fund 22,173,900 125,000 22,298,900 Special Revenue Funds Slate Gas Tax Fund State Gasoline Tax 1.544.700 1,544,700 Street Sweeping Reimbursement 8,000 8,000 Grants 943.300 1943,300) - Interest Earnings - - Total Gas Tax Fund 2,496,000 (943,300) 1,552,700 Local Transportation/Sidewalk Grant Grants 35,800 35.800 Total Local Transportation/Sidewalk Grant Fund 35,800 - 35,800 Proposition A Fund Local Return 1,050,600 1,050,600 Grants 76,000 76,000 Interest Earnings _ Total Proposition A Fund 1,126,600 - 1,126,600 1 Proposition C Fund Local Return 890,900 890.900 Grants _ Interest Earnings Total Proposition C Fund 890,900 - 890,900 Measure R-Los Angeles County Local Return 637.400 637,400 Interest Earnings - - Total Measure R Fund 637,400 - 637,400 Measure M-Los Angeles County Local Return 650,700 650,700 Interest Earnings - - Total Measure R Fund 650,700 - 650,700 Air Quality Management District(AQMD)Fund Clean Air Fees 71,600 71.600 Interest Earnings - - Total AQMD Fund 71,600 - 71,600 Street Lighting District Property Tax 875,000 875.000 Interest Earnings - - Total Street Lighting District Fund 875,000 - 875,000 Development Impact Fee Funds Development Impact Fee 129,000 129,000 Total Development Impact Fee Funds 129,000 - 129,000 Community Development Block Grant(CMG)Fund Grants 617000 617.000 T(dal CURE Fund 617,000 - 617,000 HOME Fund Grants 207.400 207.400 Total 11061E Fund 207,400 - 207,400 Total Special Revenue Funds 29,911,300 (818,300) 29,093,000 2 Internal Service Funds Equipment Replacement Fund 125,000 125.000 Technology Replacement Fund 154.200 154.200 Total Internal Service Funds 279,200 - 279,200 (IP Funding Sources Grants - Transfers In 2.200 000 2.200.000 Total ClP Funding Sources 2,200,000 - 2,200,000 Rosemead(lousing Development Corporation(RIIDC) Senior Housing Fund Rental Income 444,000 444 000 Miscellaneous Revenue 2,500 2,500 Total RHDC Fund 446,500 - 446,500 HOME Program Administration Fund Grants 698,600 698 600 Total RIIDC Funds 1,145,100 - 1,145,100 Grand Total S 33 535,600 S (818,300) $ 32,717,300 3 City of Rosemead, California Fiscal Year 2017-2018 Budget Expenditure Summary Worksheet Adopted Proposed Adopted 17/18 Adjustment 17/18 Departments General Government $ 933,500 20.000 $ 953,500 City Manager 640,500 - 640,500 Support Services 2,694,900 560,800 3.255,700 Community Development 2,443.100 48.200 2,491,300 Parks& Recreation 2,531,800 - 2.531,800 Public Safety 9,530.500 9.758 9,540,258 Public Works 7,658,300 28,000 7.686,300 Capital Projects 4.400.000 1,303,850 5,703.850 Total City Budget 30,832,600 1,970,608 32,803,208 Rosemead Housing Development Corporation 1.553,100 - 1,553,100 Total Rosemead Budget $ 32,385,700 $ 1,970,608 $ 34,356,308 4 City of Rosemead, California Fiscal Year 2017-2018 Budget Summary of Expenditures by Fund Adopted Proposed Revised 17/18 Adjustment Budget General Fund $ 22,352400 S 1,704,508 S 24.056,908 Special Revenue Funds State Gas Tax 798,200 798,200 Local Transportaion - - Proposition A 1.008,000 1,008,000 Proposition C 1,007,200 1,007,200 Measure R 864,900 266,100 1,131,000 Measure M 350,000 350,000 Air Quality Management District(AQMD) 50,000 50,000 Narcotics Forfeiture&Seizure Street Lighting District 862,800 862,800 Development Impact Fees 38,000 38,000 Community Development Block Grant 759,200 759,200 HOME 151300 151.300 Capital Projects 2356,400 2,356,400 Total Special Revenue Funds 8,246,000 266,100 8,512.100 Internal Service Funds Equipment Replacement 80,000 80,000 Technology Replacement 154,200 154,200 Total Internal Service Funds 234.200 - 234,200 Rosemead Housing Development Corporation 1.553.100 - 1.553,100 Grand Total Rosemead Budget $ 32,385,700 $ 1,970,608 $ 34,356,308 5 AAP CIVIC Pfl.D7 •MEM'/ 0RPOgLiEO ,Gy9 Attachment B Resolution No. 2018-15 RESOLUTION NO. 2018-15 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ROSEMEAD, CALIFORNIA, APPROVING VARIOUS APPROPRIATIONS WHEREAS, appropriations are the legal authority for a City to spend its funds; and WHEREAS, from time to time it is necessary to amend the budget with additional appropriations; and WHEREAS, purchases charged to the line items requiring additional appropriations have received prior City Council approval. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF ROSEMEAD, DOES HEREBY RESOLVE, DECLARE, DETERMINE, AND ORDER AS FOLLOWS: SECTION 1. $496,000 is appropriated for General Fund Expenditures, $125,000 additional General Fund Revenues, and $943,300 reduction of Gas Tax Revenues as defined below: Expenditures —General Fund $ 10,000 101-1105-5435 City Council Travel & Meeting $ 1,000 101-1110-5605 Commissions/Committees General Supplies $ 4.000 101-1115-5605 City Clerk General Supplies $ 437,000 101-1325-5205 General Services Legal Fees $ 12.000 101-1325-5390 General Services Business License Software $ 28,000 101-3035-5235 Public Works Special Studies - Sewer Project $ 4,000 101-1305-5220 Finance OPEB Actuarial Valuation Report $ 496,000 Total General Fund Revenues —General Fund $ 100,000 101-0000-4035 Transient Occupancy Tax $ 25,000 101-0000-4499 Building Permits/Plan Checks $ 125,000 Total General Fund Revenues—General Fund ($ 943,300) 201-0000-4205 Federal Government Grants ($943,3001 Total Gas Tax Fund The additional appropriation is made a part of the approved FY 2017-18 Budget as though it were a part of the initial approved budget fully set forth and the City Manager is authorized and empowered to expend such sum for the purpose of such account, but with no expenditure by any office or department for any item within an account shall exceed the amount budgeted therefore without prior written approval of the City Manager. SECTION 2. The City Clerk shall certify to the adoption of this resolution and hereafter the same shall be in full force and effect. PASSED,APPROVED, AND ADOPTED this 27th day of February, 2018. Polly I.ow, Mayor APPROVED AS TO FORM: ATTEST: Rachel Richman, City Attorney Marc Donohue, City Clerk STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) § CITY OF ROSEMEAD 1, Marc Donohue. City Clerk of the City Council of the City of Rosemead, California, do hereby certify that the foregoing City Council Resolution, No. 2018-15, was duly adopted by the City Council of the City of Rosemead, California, at a regular meeting thereof held on the 27th day of February, 2018, by the following vote, to wit: AYES: NOES: ABSENT: ABSTAIN: Marc Donohue, City Clerk