CITY COUNCIL STAFF REPORT
June 4, 2024 {{section.number}}j
RESOLUTIONS ADOPTING AND IMPLEMENTING THE FISCAL YEAR 2024-25 CITY OF
CORONADO BUDGET AND ASSOCIATED POLICIES, AND AUTHORIZE THE CITY
MANAGER TO PURCHASE APPROVED VEHICLES AND EQUIPMENT
RECOMMENDATION:
Adopt Resolutions approving and adopting the Fiscal Year (FY) 2024-25 City of Coronado Budget and Financial Plan, Annual Appropriations Limit, Policy on Fund Balance, and amendments to the Personnel Authorization and Compensation Plan, and authorize the City Manager to purchase vehicles and equipment as approved in the Vehicle and Equipment Replacement Fund.
BACKGROUND:
The City Council conducted its FY 2024-25 Budget Hearing on May 21, 2024, at which time the proposed budget, personnel changes and the capital improvement program for FY 2024-25 were reviewed. The final FY 2024-25 Budget is presented for the City Council’s adoption and approval by resolution. In addition, several policy and implementing resolutions typically accompany the Budget adoption and are recommended for the City Council’s approval, as discussed below.
ANALYSIS:
Budget Appropriations Resolution 2024-36 (Attachment 1): The budget resolution provides the appropriation authority for FY 2024-25. It includes a listing of the appropriations by fund and department and summary budget schedules, attached as exhibits to the resolution. Exhibit D of the resolution shows a listing of funded Capital Improvement Projects, by funding source. The adopted budget document will be available in July 2024.
Along with adopting the budget, the City Council is required to establish the Appropriations Limit for FY 2024-25. Article XIIIB of the California Constitution specifies that appropriations from the proceeds of taxes are subject to limitation.
Appropriations Limit Resolution 2024-37 (Attachment 2): The Appropriations Spending Limit, as set by Article XIIIB of the State Constitution and modified by Proposition 111, commonly referred to as the Gann Limit, is a limitation on tax revenues rather than a direct limitation on appropriations. The limit sets the maximum amount of the government’s spending from the proceeds of taxes.
The annual limit is adjusted by changes in population and either the percentage change in California per capita personal income or the percentage change in the City’s assessed valuation attributable to non-residential new construction. To calculate the adjustment to the annual limit, a city may use either its own change in population or that of the county, whichever change is greater.
In recent years, the City has used the change in the California per capita personal income due to the unavailability of the percentage change in the City’s assessed valuation attributable to nonresidential new construction. Both the population and California per capita personal income changes are provided annually by the State Department of Finance. The calculation of the annual appropriations limit is attached to the resolution. The proceeds of taxes for FY 2024-25 are $6.4 million below the subject limitation.
Also accompanying the adoption of the budget is the annual review of the policy on Fund Balance and the setting of committed and assigned Fund Balance, in compliance with Government Accounting Standards Board (GASB) pronouncement No.54, ”Fund Balance Reporting and Governmental Fund Type Definitions”, which specifies how Fund Balance is reported in a government’s financial statements. The City’s policy requires that the annual review occur at the time of budget adoption.
Fund Balance/Committed Resolution 2024-38 (Attachment 3): In order to comply with standards outlined in GASB 54, the City Council is asked to approve its annually amended policy on Fund Balance and Size and Use of Committed Fund Balance, which is attached as Exhibit A to the Resolution found in Attachment 3. The policy establishes the procedure for identifying and classifying Fund Balance in the governmental funds. The resolution for FY 2024-25 affirms the policy and will guide staff in classifying Fund Balance in the City’s Annual Comprehensive Financial Report for June 30, 2024. The total minimum General Fund committed fund balance is $31,140,000 for June FY 2024-25.
FY 2024-25 Vehicle and Equipment Replacement List (Attachment 4): The annual budget for FY 2024-25 includes a budget of $2,988,853 for the purchase of 13 vehicles and equipment in the Vehicle and Equipment Replacement Fund 135 (Attachment 4). This amount excludes $500,000 which is a set aside for future purchase of the second Fire Engine unit. Similar to the prior year, staff recommends the City Manager be authorized to purchase the approved vehicles and equipment, including outfitting and installation as listed in Attachment 4, in accordance with Coronado Municipal Code 8.04, and execute purchase agreements consistent with the list approved in the Budget. The approval of this request would better position the City to efficiently acquire the outstanding vehicles and equipment and replenish its fleet on time while still complying with the Municipal Code.
Personnel Authorization and Compensation Plan Amendment Resolution 2024-39 (Attachment 5): Last, staff requests the City Council‘s approval of changes to the Personnel Authorization and Compensation Plan (PACP) to encompass the approved changes to existing classifications and positions (additional positions total 1.75 FTE), and the pre-approved 4% base salary increase for the Self-Represented and Executive classifications (excluding the City Manager), effective the first full pay period starting after July 1, 2024. The adjustment was programmed in the Proposed FY 2024-25 Budget and aligns with scheduled base salary increases of the employees covered under the MOUs for the Coronado Police Officers Association (CPOA), Coronado Firefighters Association (CFA), and American Federation of State, County and Municipal Employees (AFSCME), Local 127. The City Council previously approved the adjustment; however, the PACP, in contrast to the MOUs, only contains one year of compensation terms at a time and requires annual adjustment. FY 2024-25 adoption of the resolution to amend the PACP will ensure timely implementation of the base salary adjustments.
FISCAL IMPACT:
The appropriation resolution provides the authority for expenditures. The City’s total appropriation budget for all funds expenditures and transfers to other funds is $118,856,907. Total revenues and transfers from other funds for all funds is estimated at $113,924,988. The fund balance for all funds in total is estimated at $162,827,873 on June 30, 2025, a projected decrease of $4,931,919 from the June 30, 2024 fund balance for all funds in total. The Fund Balance on June 30, 2024 for the General Fund is estimated at $70,524,647 and is $294,420 more than the June 30, 2024 estimated Fund Balance. As stipulated in the Fund Balance Policy (Attachment 3), the June 30, 2025 Fund Balance will be allocated as follows:
1) Committed Reserves of $41,140,000;
2) Unassigned Reserves of $29,384,647.
The June 30, 2025, Fund Committed Balance may only be expended under narrow circumstances, including the following:
1) 5% declines in property tax, sales tax or transient occupancy tax revenues; 2) emergencies; and
3) for unexpected expenditures in an amount which is 5% more than the adopted budget.
Separate resolutions set the required limit on the appropriations from the proceeds of taxes and establish the minimum General Fund reserve requirement (unassigned Fund Balance) for FY 2024-25.
ALTERNATIVE:
The City Council may decline to approve the proposed Resolutions and provide further direction to staff for revisions.
CALIFORNIA ENVIRONMENTAL QUALITY ACT:
Not Applicable.
PUBLIC NOTICE:
No notice required.
ATTACHMENTS:
1. Resolution No. 2024-36, Budget Adoption Resolution
2. Resolution No. 2024-37, Appropriations Limit Resolution (Gann Limit)
3. Resolution No. 2024-38, Fund Balance/Use of Committed Fund Balance Resolution
4. FY 2024-25 Vehicle and Equipment Replacement
5. Resolution No. 2024-39, Amending the Personnel Authorization and Compensation Plan Submitted By: Administrative Services Department / John Kim