BACKGROUND:
After 5 months of review and discussions, we are pleased to present the proposed Biennial Budget for Fiscal Years (FY) 2023/2024 and FY 2024/2025 for the City of Cathedral City, the Capital Improvement Project (CIP) Plan, the Parks Improvement Project (PIP) Plan, the Housing Successor Agency (“Successor Agency”), and the Cathedral City Public Financing Authority.
This biennial budget is a spending plan that provides an overview and detailed information on each City department and describes the activities and programs included in the budget. This budget was developed to align with the goals and objectives outlined in the Five-Year Strategic Plan adopted by the City Council on April 12, 2023.
The Strategic Plan was a comprehensive effort which was informed by input from City staff, the City Council, and the community to develop priorities. In preparing the budget, departments reviewed their past accomplishments and developed strategies focusing on achieving the overarching Strategic Plan goals of:
•Serving the Community with Pride and Dedication
•Community Investment
•Fiscal Stability and Sustainability
•Innovation
•Safety
•Embracing, Inclusive City
Within each department budget there are work plans and performance measures focused on creating the desired future for Cathedral City.
Over the past twelve years, balancing the budget had previously been challenging for the City. From FY 2009/2010 through FY 2011/2012, the City adopted general fund budgets with structural deficits requiring City Management to make difficult employee- related decisions, including layoffs and employee salary concessions. In the next ten successive years, FY 2012/2013 through FY 2021/2022, the City was able to stabilize and achieve not only balanced budgets, but was also able to grow Fund Balance, or “savings account”.
In the January 2023 Community Survey conducted by Fairbank, Maslin, Maullin, Metz & Associates (FM3) Research, the top three issues identified by residents for City government to address were:
•homelessness,
•crime and safety, and
•roads and infrastructure.
This proposed Biennial Budget uses fund balance to make significant one-time investments with improvements in not only roads, but also parks and facilities; maintains funding levels for Fire and Police, including funding for the Homeless Liaison Officer (HLO); and makes additional investments in managing the City’s CalPERS and OPEB liabilities,
DISCUSSION:
To achieve time and cost efficiencies over a traditional annual budget, the City of Cathedral City prepares and adopts two one-year budgets. Under this cycle, the second year does not require formal adoption by City Council. Each year is separate and distinct. Unencumbered funds from the first year do not automatically carry over into the second year.
The City’s 6-month budget preparation cycle began in December as the Finance Division prepared a draft budget of operating expenditures for each of the six departments (City Management, Financial Services, Development Services, Engineering and Public Works, Fire and Police) based on historical data and trends.
The Finance Division started preparing the baseline budget infrastructure in December and then built and distributed the budget calendar, instructions, forms, and budget worksheets to each department in January. Individual departments were then directly responsible for reviewing the draft operating budgets and proposing any adjustments.
The Development Services Department, Engineering and Public Works Department, Fire Department and Police Department determined and coordinated their departmental needs and requests (changes). In addition, the Finance staff incorporated the Engineering and Public Works Department capital improvement project requests.
Departments submitted their revised budget worksheets and supplemental data to the Finance Division in February. Based on departmental feedback, the Finance Division compiled the returned data and calculated the total expenditures requested, in addition to the estimated revenues and projected fund balances. The City Manager then held individual budget meetings for each Department to brief City Council on their current profile and additional funding needs. Based on the results of those meetings, the Finance Division continued to update the preliminary budget workbook. Financial Services distributed the Budget Workbook to City Council for review in mid-March. Once distributed, City Council members were asked to provide questions, comments, and recommendations by the end of March. During April, Financial Services reviewed and presented the proposed budget to City Council during two public study sessions – the first session being dedicated to the General Fund and the second to the special revenue funds, proprietary funds and the 5-year Capital Improvement Project (CIP) Plan and Parks Improvement Project (PIP) Plan.
Once the budget is adopted, staff will then integrate the budgetary data into the City’s accounting system and publish the adopted budget document. Financial Services will then submit the adopted budget document to the GFOA budget awards program. The City has received the GFOA budget award for the last seven budget cycles.
FISCAL IMPACT:
The attached Proposed Biennial Budget for FY 2023/2024 and FY 2024/2025 includes adjustments to the Budget Workbook reviewed by City Council in mid-March. The adjustments and corresponding explanation are attached and will be reviewed during the City Council meeting/presentation. With these adjustments included in the proposed budget:
•For FY 2023/2024, the City’s General Fund forecasted budget has $67,007,499 in revenues and $69,679,551 in expenditures, The net deficit is $2,672,052, which includes $6,742,656 in discretionary expenditures, resulting in a structurally balanced proposed budget.
•For FY 2024/2025, the City’s General Fund forecasted budgeted has $64,600,726 in revenues and $70,425,395 in expenditures. The net deficit is $5,824,669, which includes $5,849,030 in discretionary expenditures, resulting in a structurally balanced budget.
Through this proposed budget, the City has prioritized essential services and continues to invest in our City while monitoring our discretionary expenditures. This budget ensures the City continues to proactively pay long-term liabilities and continue capital investments in our most critical infrastructure.