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: A Resolution Adopting the Annual Operating Budget for Fiscal Year 2023-2024 Meeting Date: June 27, 2023
RECOMMENDATION:
Approve and adopt the proposed Resolution adopting the annual operating budget for Fiscal Year 2023-2024, and assign the number next in order.
BACKGROUND/ANALYSIS:
After years of dealing with various economic challenges and uncertainties as a result of COVID, the City is looking at a healthy projected surplus -- $6.517 million for FY 2023-24. The City’s budget process began in April with meetings between the various City Departments, Finance and City Administration. Because of numerous factors, staff didn’t hold a study session with the City Council until June 22nd to review progress on the budget and get further direction.
Mindful of the organizational and financial impact that a recurring item will have on the base line budget going forward, the City Council continues to make a concerted effort to address operational areas of concern. As presented on June 22nd, staff recommended that the City Council continue to embrace a prudent approach to bringing back the next tier of services / programs to supplement the vital services/programs already in place – meaning, balancing the available revenues with the needs of the community while taking into consideration various items still in the Que. Those various items are as follows:
the impact of labor negotiations
the continued rise of employee retirement and health care costs the continued need to replenish the City’s reserves to ensure the City’s ability to navigate future economic downturns considerable capital outlay and deferred maintenance costs that will be brought back in the near future a number of departmental personnel requests
Another reason to adopt a budget that is as close to status quo is 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 have arisen that pose potential future challenges. One such issue that was discussed with the City Council at the June 22, 2023 is the threat of SB 549 which poses a serious threat to our cardroom as it seeks to limit the types of games that the City relies on for revenue.
Although we are making progress as it relates to Inflation, the progress has been slower than expected. Inflation is somewhat more stubborn than we had hoped. Inflation is expected to slow as the effects of the Federal Reserve’s interest rate hikes continue to ripple through the economy. But that could also mean the United States slips into a recession and more people losing their jobs or have a difficult time finding a new one.
As noted at the beginning of this report. Finance staff will work with the City Council and City staffs over the next few months to develop a budget update report as it relates to additional items that the City Council will entertain the evening of June 27th.
ALTERNATIVES:
Approve staff recommendation
Provide staff with further direction
FISCAL IMPACT:
The FY 2022/23 proposed General Fund budget includes proposed revenue of $75,024,128 and expenditures of $63,962,083 (exclusive of any add-ons that the City Council may render a decision on) leaving a surplus of $6,517,045. The projected remaining amount could be used towards the $1,042,804 of department requests that the City Council have yet to make a determination on, or any actions that would be taken during the course of the fiscal year.
Other funds that the City Council needs to take action on are as follows:
Fund 22 – COPS Grant $ 100,000
Fund 26 – State Gas Tax $ 636,997
Fund 29 – CDBG Fund $ 188,662
Fund 33 – Community Assistance $ 443,016
Fund 34 – Storm Water Management (A)
Fund 42 – Community Ctr. Debt Svc $ 792,363
Fund 45 – Pension Obligation Bonds $ 625,247
Fund 50 – Water Utility Fund (A)
Fund 57 – Transportation $5,640,347
Fund 58 – CNG $3,872,538
Staff will return on July 25, 2023 with a presentation
Additionally, events over the coming months could potentially shed some light as it relates to economic risks that could greatly impact the City’s budget. The potential for a recession and continued inflationary environment could be potential revenue hit to the City’s budget if the aforementioned comes to fruition.
RELATIONSHIP TO STRATEGIC GOALS:
This report is applicable to the following 2016 Strategic Plan Fiscal Sustainability Guiding Principle 1: Demonstrate fiscal responsibility through establishing financial policies, budgeting practices that meet the Financial Standards of Excellence requirements.
Respectfully submitted: Edgar P. Cisneros, City Manger Recommended by: Vilko Domic, Assistant City Manager / Acting Director of Finance Approved as to form: Noel Tapia, City Attorney
ATTACHMENT:
Resolution