CITY OF COMMERCEAGENDA REPORTCITY OF COMMERCEAGENDA REPORT
CITY OF COMMERCE
AGENDA REPORT
CITY OF COMMERCE
AGENDA REPORT
Item No. Item No.
Item No.
Item No.
TO: Honorable City Council
FROM: City Manager
SUBJECT: Mid-Year Budget Review – A Resolution Amending the Annual Operating and Capital Budgets for Fiscal Year 2022-23 Meeting Date: March 14, 2023
RECOMMENDATION:
The City Council will consider for adoption a Resolution amending the annual operating and capital budgets for fiscal year 2022-2023, and assign the number next in order.
BACKGROUND/ANALYSIS:
This year’s Mid-Year budget process involved working with each department to review their existing budgetary appropriations to determine whether any changes need to be made because of unanticipated costs. Additionally, staff also focused on the desire to restore services to the community that were reduced or eliminated during the Pandemic. The reopening process has been and will continue to be a balancing act between the needs of the community, funding availability and the changing dynamics of the COVID pandemic. Maintaining fiscal discipline as we restore some of our programs is still vital. The City used approximately $15 million or 38% of its cash reserves to navigate the economic crisis caused by the COVID pandemic. The restoration of these reserves is essential as a healthy reserve balance will be needed to help navigate future challenges.
At the June 14th 2022, the City Council agreed with staff’s recommendation of adopting a status quo budget. A number of reasons were the catalyst for the City Council decision:
Because the City held elections in June, there was a possibility that the composition of the council would change. The election did provide for 2 new members, so adopting a status quo budget (and returning at a later date) would allow for new council members to familiarize themselves with the City’s budget and programs so they can make an informed decision when voting on adopting the City’s budget that will govern spending during the next fiscal year and the first year of their term.
Another reason to adopt a status quo budget was the various economic challenges and uncertainties that are manifesting on the horizon. While the economic impact of the COVID-19 pandemic has mostly subsided, new issues had arisen that posed potential future challenges. Inflation has been running at record highs not seen in over 40 years. Additionally, we were keeping a close eye on the conflict in Ukraine, not knowing what potential ramifications it may have on inflation and commodity prices such as food and fuel.
Many in the world of finance and business were anticipating a recession sometime in 2023.
Lastly, the City Council reiterated their desire to restore programing at a measured and pragmatic pace while continuing a wait and see approach.
Subsequent to June, staff scheduled a number of informative meetings, providing additional clarity on the items to be included as part of the City Manager’s recommendation for the September 13, 2022 Budget Adoption agenda item. Meetings with each councilmember provided for open dialogue, positive engagement / feedback, and acted as a platform to vet through each item (in detail) that was being requested.
On September 13th 2022, the City Council approved a number of recommended items that totaled $1,743,244. A breakdown of the items is as follows:
Personnel $1,294,923
Operations & Maintenance $ 199,321
Capital Outlay $ 249,000
As a result of the decision, the projected surplus decreased from $7,948,740 to $6,205,496.
Before moving onto the potential impact from the mid-year departmental requests, a summary of Council actions that have transpired since are listed below:
Surplus available $6,205,496
Utilization of Surplus:
Restoration of PERs Pickup / PT Salary Increase $ 761,250 Purchase of a Unitrends Recovery Appliance $ 68,830 Tree Maintenance Services Extension $ 14,294
City of Bell / Salvation Army Shelter $ 54,724
Residential Refuse Contract Amendment $ 90,530
Balance of Surplus Available for Mid-Year $5,215,868
Below is a summary list of the General Fund Mid-Year budget requests made by function:
General Fund Requests by Department
Parks & Recreation $267,453
Public Works $111,950
Planning and Economic Development $ 77,000
Human Resources $ 50,700
Library Services $ 32,157
Total General Fund Requests $539,260 Additionally, the following table summarizes Mid-Year requests that are being requested for other funds:
Storm Water Management Fund $ 42,784
Transportation Fund $ 58,403
Total Other Funds Requests $101,187
Staff will provide a presentation that will include the line item detail and programmatic impact of the proposed budget adjustments. During the presentation each department will have staff available to provide further detail for the City Council if requested.
ALTERNATIVES:
Approve staff recommendation
Provide staff with further direction
FISCAL IMPACT:
As presented the proposed FY 2022-23 mid-year budget general fund adjustments total $539,260. This leaves $4,676,608 of the projected general fund surplus for the remainder of the fiscal year. The City Council can utilize the remaining surplus for unforeseen items during the fiscal year or allow the surplus to return to the City’s reserves. Additionally, the proposed adjustments would provide funding of $42,784 from the Storm Water Management Fund and $58,403 from the Transportation Fund.
RELATIONSHIP TO STRATEGIC GOALS:
This report before the Council is not applicable to any specific 2016 Strategic Plan goal; however, it is related to the following: Fiscal Sustainability – The City of Commerce will implement innovative and responsible policies and business practices to effectively manage its fiscal and human resources. The City will maintain a stable financial environment that is transparent and supports an outstanding quality of life for our community. City business practices will be efficient, business friendly and ensure exceptional customer service.
Respectfully submitted: Edgar Cisneros, City Manager
Recommended by: Vilko Domic, Assistant City Manager
Approved as to form: Noel Tapia, City Attorney
ATTACHMENT:
List of Department Requests
Resolution