City Council Study Session
May 14, 2024
FY 2024-25
PROPOSED OPERATING AND
CAPITAL IMPROVEMENT BUDGET
1 “WHEN WE ALL
PULL TOGETHER”
2 FY 2024-25 PROPOSED BUDGET OVERVIEW
• FY 2024-25 Proposed Budget Guiding Principles
• FY 2024-25 Revenue Highlights
• FY 2024-25 Proposed Expenditures Overview
• Status of General Fund Reserves
• Budget Calendar
3 FY 2024-25 Proposed Budget was inspired by the five
Strategic Plan Goals:
• Strengthen Public Safety And Improve The Quality Of Life • Diversify, Stabilize, and Increase Housing To Reflect Community Needs
• Advance Environmental Sustainability And Climate Resiliency • Recruit And Retain High Quality Staff
• Achieve Long-Term Fiscal Sustainability
GUIDING PRINCIPLES
*New Strategic Plan goals will be presented to the City Council at an upcoming Study Session, and will be formally adopted thereafter
4 FY 2024-25
Proposed Operating and
Capital Improvement
Budget Overview
5 FISCAL YEAR 2024-25 PROPOSED BUDGET
ALL FUNDS OVERVIEW
Highlights:
• Structurally balanced General Fund budget without the use of reserves or ARPA Funds;
• Designating $99.7M, or 52%, in General Fund resources to public safety;
• Investing $27.9M into the City’s parks, streets, active transportation network, facilities, and other infrastructure; • Fully annualizes recently negotiated labor contract; and • Funds $2.5M into the Housing Trust Fund.
6 General Fund – general operating fund of the City, unrestricted; Special Revenue Funds – grants (Federal, State and/or County), restricted funding sources
E.g. American Rescue Plan Fund, Measure M, Gas Tax, RMRA, etc.; Internal Service Funds –used to finance and account for activities involved in rendering equipment replacement, self-insurance services, and information technology replacement to departments within the City. Costs of materials, equipment, and services used are accumulated in these funds and charged to the user departments.
Equipment Replacement Fund
Self-Insurance Fund
Information Technology Replacement Fund
ALL FUNDS DESCRIPTION
7 FY 2024-25 ALL FUNDS APPROPRIATIONS
$240.1M
Appropriations Adopted Proposed Increase (Decrease)
All Funds FY 2023-24 FY 2024-25 Amount Percent
Operating Budget 188,349,065 199,582,608 11,233,543 6%
Transfers Out 14,582,902 12,631,498 (1,951,404) -13%
Capital Budget 31,081,719 27,901,236 (3,180,483) -10%
Total $234,013,686 $240,115,342 $6,101,656 3%
8 ALL FUNDS
• Transfer of $2.5M from ARPA funds towards a Housing Trust Fund to help address housing affordability;
• Continue funding for the City’s homeless outreach and bridge shelter programs and operations of $1.3M;
• Transfer of $222,469 from ARPA funds to support again Tenant Eviction Protection Program;
• Transfer of $231,839 from ARPA funds to support Housing Authority Fund for Homeless Program Funding; and
• Funds 15 beds at the permanent Bridge Shelter for Behavioral Health Bridge Housing funded by a $972,000 reimbursable grant from County of Orange Healthcare Agency (OCHCA).
HOUSING AUTHORITY
9 INTERNAL SERVICE
FUNDS
• Information Technology Replacement Fund
Investment for Year 5 of the Information Technology
Strategic Plan (ITSP) for $1.9M, including:
$1.5M for year two of the CAD RMS Public Safety System replacement; $250K Desktop Replacement Program; and
$130K for a new project to upgrade the City’s website. • Self Insurance Internal Service Fund
$50k in additional funding for ongoing administrative costs.
Information Technology Replacement &
Self Insurance Funds
10 SPECIAL
REVENUE FUND
• Allocates ½ percent of the seven percent Cannabis Retail and Delivery Tax (Measure Q) funding for Year Four of the goals outlined in the Arts and Culture Master Plan ($393,494);
• Proposed Budget reflects essentially flat funding year over year; • Fund is approximately $115K insufficient to fully support the City’s arts programs and goals; based on $2.9M in cannabis revenues; and • Staff is proposing to utilize available fund balance in the Cultural Arts Master Plan Fund (130) from prior years to offset the FY 2024-25 Proposed Budget.
Arts and Culture Master Plan Fund
11 • Allocate $300,000 for a water quality program to monitor the City’s compliance with the National Pollutant Discharge Elimination System (NPDES);
• Tree Planting and Small Tree Care Program ($150K);
• Placentia Ave, Stormwater Quality Trash Full-Capture
System ($115K); and
• Clean Mobility Options Program: On-Demand Transit
Services ($500K).
GENERAL
FUND
ENERGY AND SUSTAINABILITY
12 REQUESTED NEW POSITIONS
Department Classification FTE Justification
Other Funds
City Manager Community Outreach Worker (Homeless Services) 3.00 Community Outreach Workers to support case management for Homeless Services.
City Manager Community Outreach Worker (Tenant Protection) (1.00) Community Outreach Worker will be reduced in Tenant Eviction Protection Program and increased in Homeless Services.
Development Services Code Enforcement Officer (Tenant Protection) (1.00) Positions for the program will now all be in the City Manager’s Department.
Other Funds Total 1.00
General Fund
Finance Accounting Specialist II (Part Time) 0.75
Account Specialist II to support with processing invoices for payments in Accounts Payable.
Police Accounting Specialist II (Convert to Full Time) 0.37 Account Specialist II to support with processing higher volume of P- card transactions.
Public Works Maintenance Worker (Part Time) 0.50 Maintenance Worker to support the Signs and Marking.
GF total 1.62
All Funds Total 2.62
REQUESTED NEW POSITIONS
13 ALL FUNDS
CIP FUNDING SOURCES
FUND AMOUNT
Capital Improvement Fund (GF) $8,955,010
Gas Tax (HUTA) $1,870,000
Gas Tax (RMRA) $3,500,000
CDBG $350,000
Park Development Fees $75,000
Drainage Fees $125,000
Traffic Impact Fees $965,000
Cannabis Traffic Impact Fee $150,000
Measure M2 Regional $115,000
Measure M2 Competitive and Fair share $4,580,000
Jack Hammett $400,000
Lions Park CIP Bond $334,136
CMHA James/18th St. Property $140,000
Grant Funds* $6,342,090
ALL FUNDS SUBTOTAL $27,901,236
Estimated Future Bond Financing $20,000,000
TOTAL $47,901,236
*Projects funded by grants: Signal Modernization ($3,906,090); Bicycle Facility Project ($1,760,000); Clean Mobility Program ($500,000); and Fairview Road Improvement Project ($176,000). 14 ALL FUNDS
Proposed CIP ($27.9M). Some of the key projects include:
Emergency Communications Facility Remodel;
Senior Center - HVAC Replacement;
Harbor Blvd., 17th St., and Gisler Ave. Rehabilitation Project; Adams Avenue Undergrounding Project; and
Signal Modernization for Systemic Multi-Modal Safety Improvements.
Capital Improvement Fund includes $2.3M in unallocated funding for several major projects, such as the: Senior Center HVAC Replacement for $725,000; and Citywide Street Improvements for $800,000.
CIP HIGHLIGHTS
15 • Repairs, upgrades, reconstruction at Fire Stations 2 and 4 for $18.15M, of which $18M is in potential Bond financing:
Fire Station 2 – Reconstruction ($10M);
Fire Station 4 – Living quarters reconstruction ($8M); • Additional Proposed Public Safety CIP of $2.5M:
Various Fire Stations CIP ($150K);
Police Emergency Communication Facility remodel ($900K); Police Locker room remodel ($400K);
Weather proofing the Police Department’s main building ($400K); Sewage liner replacement for the Police Communications and Westside Sub-Station ($300K); Police Westside Sub-Station renovation seed money ($300K).
CIP HIGHLIGHTS
16 IMPROVEMENT AREAS BY CATEGORY
17 FY 2024-25
Proposed General Fund
Budget Overview
18 General Fund Overview
^ Realigns the transfer out for the Equipment Replacement Fund to an Internal Rent category for consistency with GAAP.
Category
Adopted vs. Proposed
Adopted Amended Proposed Increase/(Decrease)
FY 23/24 FY 23/24 FY 24/25 Amount Percent
Estimated Revenues $180.32 $181.11 $189.90 $9.58 5%
Transfers In - - - - -%
Use of Fund Balance - - - - -%
Total Sources of Funds $180.32 $181.11 $189.90 $9.58 5% Operating Budget $167.22 $170.60 $180.20 $12.98 8%
Transfers Out 13.1 10.5 9.7 -3.4^ -26%
Total Expenditures $180.32 $181.11 $189.90 $9.58 5%
Total Surplus/(Deficit) - - -
19 FISCAL YEAR 2024-25 PROPOSED
GENERAL FUND REVENUES BUDGET
Revenue Sources
Adopted Proposed Increase/(Decrease) FY 2024-25
FY 2023-24 FY 2024-25 Amount Percent % of Total
Property Tax 54.5 60.5 5.9 11% 32%
Sales Tax 82.5 81.6 (0.9) -1% 43%
Transient Occupancy Tax 9.6 10.1 0.6 6% 5%
Miscellaneous Revenues 30.4 34.9 4.5 15% 18%
Subtotal Revenues 177.0 187.1 10.1 6% 99%
Measure Q: Cannabis 2.5 2.8 0.3 12% 1%
Transfers In 0.9 - (0.9) -100% 0%
Total 180.3 189.9 9.6 5% 100%
(IN MILLIONS)
20 • General Fund revenue is projected at $189.9M, reflecting an increase of $9.5M or 5% from the FY 2023-24 Adopted Budget;
• Reduction of Sales Tax is estimated at $81.5M, a decrease of $900K or 1% from FY 2023-24 due to lower sales of consumer goods and building supplies; • Property Taxes are estimated at $60.4M, reflecting a 10% growth over the current fiscal year, due to the reallocation of Successor Agency funds to property taxes and a steady increase in assessed valuations and home sales;
• Fees and Charges are estimated at $13.1M due to the statutory change in the ambulance revenues reflecting a $3.4M or 35% growth over the current year; • Cannabis taxes and permits are estimated at $3.4M, an increased by $350k, or 11% from the current year budget; and
• Increase of Transient Occupancy Tax, estimated at $10.1M, a $600K increase from the current year’s adopted budget of $9.5M, as a result of increased travel.
GENERAL FUND REVENUE HIGHLIGHTS
21 FY 2024-25 PROPOSED
GENERAL FUND REVENUE
22 GENERAL FUND SALES TAX AND PROPERTY TAX HISTORY
(IN MILLIONS)
66.0 56.9
64.9 78.8
81.2 82.4 81.5
42.8 45.2
47.5 49.1
53.4 54.5
60.4 $40
$45
$50
$55
$60
$65
$70
$75
$80
$85
FY 2018-19
Actuals
FY 2019-20
Actuals
FY 2020-21
Actuals
FY 2021-22
Actuals
FY 2022-23
Actuals
FY 2023-24
Amended
FY 2024-25
Proposed
Sales Tax Property Tax
23 24
GOVERNOR’S MAY REVISE BUDGET UPDATE
• FY 2024-25 All Funds budget of $288.1 billion, General Fund budget of $201 billion;
• Balance the estimated deficit over the next two fiscal years: $27.6 billion in FY 2024-25 and $28.4 billion in FY 2025-26;
• Steady, but slowing, economic growth;
• Reduces $132.5 billion in FY 2024-25 and $207.5 billion in FY 2025-26 for the Behavioral Health Bridge Housing Program;
• Revenues from the “Big Three” are projected to be lower by $10.5 billion: personal income tax is down by $2.4 billion, corporation tax is down by $5.8 billion, and sales tax forecast from January’s estimate is downgraded by $2.3 billion but is still higher than the current year; • Use of the Budget Stabilization Account by $12.2 billion; and • Eliminate 10,000 vacant positions.
FY 2024-25
PROPOSED
GENERAL FUND
EXPENDITURES
25 FY 2024-25 PROPOSED GENERAL FUND OVERVIEW
• Structurally balanced budget with no use of General Fund Reserves or ARPA Funds;
• Includes 52% commitment to Public Safety;
• Funds a net of 2.62 FTEs in the All Funds, of which 1.62 is in the General Fund, to achieve Strategic Plan goals, in addition to 3.27 FTEs previously approved at mid-year in April of 2024;
• Funds a total of $6.8M in the General Fund towards capital spending, and a $2.8M for the Lions Park bonds debt service payment, for a total of $9.6M exceeding amount to comply with the Capital Asset Needs (CAN) at $8.9M; • Annualizes labor contractual negotiations of $5.8M;
• Includes $2.3M in CalPERS year-over-year increase as per CalPERS regulations;
• Includes increases in operating contractual obligations of $1.4M; and • Continues the $4.3M vacancy factor (negative appropriation) in the Police Department Budget.
26 General Fund Overview
^ Realigns the transfer out for the Equipment Replacement Fund to an Internal Rent category for consistency with GAAP.
Category
Adopted vs. Proposed
Adopted Amended Proposed Increase/(Decrease)
FY 23/24 FY 23/24 FY 24/25 Amount Percent
Estimated Revenues $180.32 $181.11 $189.90 $9.58 5%
Transfers In - - - - 0%
Use of Fund Balance - - - - 0%
Total Sources of Funds $180.32 $181.11 $189.90 $9.58 5% Operating Budget $167.22 $170.60 $180.20 $12.98 8%
Transfers Out 13.1 10.5 9.7 -3.4^ -26%
Total Expenditures $180.32 $181.11 $189.90 $9.58 5%
Total Surplus/(Deficit) - - -
27 Strengthen the Public’s Safety and
Improve the Quality of Life
“WHEN WE ALL PULL
TOGETHER”
28 STRENGTHEN THE PUBLIC’S SAFETY
Public Safety Represents 52% of General Fund
29 Police Department:
• Sworn staffing levels at 142 positions;
• Highest level of Police sworn staffing since the Great Recession; • Other annualized enhancements include:
Part-time Account Specialist II to full-time Account Specialist II; Salaries and benefits budget increased by a net of $3.1 million to fully fund contractual obligations; and
$1.05 million in funding for new vehicles;
Creation of hiring bonuses and incentives for Police Officers and Dispatchers similar to surrounding agencies.
GENERAL
FUND
STRENGTHEN THE PUBLIC’S SAFETY
30 Police Department
• Reallocation of $730K for body-worn and vehicle cameras system; • $150K to establish a new Wellness Program;
• $120K for contract obligations for Wildlife Wetlands and Animal Services; • Police Department $1.05 million in funding for eight Police interceptor vehicles, a light truck for animal services, and a heavy one-ton truck to haul equipment and support the recently received armored vehicle; and • Annualizes 3.27 positions added at mid-year and adds 2.0 FTEs that were converted from three part-time positions in the Police Department.
GENERAL
FUND
STRENGTHEN THE PUBLIC’S SAFETY
31 Fire and Rescue Department
• Sworn staffing levels at 85 positions;
• Salaries and benefits budget increased by a net of $1.3 million to fund contractual obligations;
• A budget allocation of $702,000 to the Fire Department for the Ambulance Program and emergency medical supplies (net neutral); and • $95,000 funding for a light truck.
GENERAL
FUND
STRENGTHEN THE PUBLIC’S SAFETY
32 “WHEN WE ALL
PULL TOGETHER”
Recruit and Retain
High Quality Staff
33 RECRUIT AND RETAIN
Annualizes funding to attract, recruit and retain high quality staff through the recently negotiated labor contracts that aligns employee compensation to average market rate levels ($5.8M); Budget increase of $2.5M in all funds for annual CalPERS payment; Recruitment and retention incentives for public safety to help retain tenured-and-experienced staff in our Police and Fire and Rescue Departments for adequate succession planning ($400K); and
Negotiations in process for CMFMA to be followed by CMDMA, Confidential Management Unit, Executive Team and the City Council. 34
“WHEN WE ALL
PULL TOGETHER”
Achieve Long-Term Fiscal Sustainability
35 • Structurally balanced General Fund Budget without the use of ARPA or General Fund Reserves;
• Maximize the City’s economic recovery through strategic investments in Citywide infrastructure;
• Provides full funding for Capital Fund (CAN) and IT
Replacement Fund; and
• Includes a $1.0M in debt payment for a potential
recommended bond for the reconstruction of Fire Stations #2 and #4.
GENERAL
FUND
ACHIEVE LONG-TERM FISCAL SUSTAINABILITY
36 FUND BALANCE - GENERAL FUND
(IN THOUSANDS)
FY 2020/21 FY 2021/22 FY 2022/23 FY 2023/24
Audited Audited Audited Projected
Committe d
Declared Disasters $14,125 $14,125 $14,125 $14,125
Self-Insurance 2,000 2,000 2,000 2,000
Economic Reserves 9,000 9,000 9,000 9,000
Assigned
Compensated Absences 5,920 5,584 6,210 6,210
Police Retirement 1% Supplemental 2,275 1,885 1,737 1,737 Workers Compensation 1,000 2,000 2,000
Facilities Reserve 2,000 2,000 2,000
Strategic Plan Project 2,000 2,000 2,000
Section 115 Trust - - -
Restricted
Pension and OPEB 1,778 3,061 3,178 3,178
Non-spendable 965 604 459 459
Unassigned 17,429 16,517 16,328 16,328
Total Fund Balance $53,492 $57,776 $59,037 $59,037
Fund Balance Category
37 38
• Strategically utilized remaining ARPA to offset the fiscal impact of the pandemic, including small business grants, rental assistance, Project Homekey, and tenant eviction protection;
• Dedicated 1.5 percent to the I.T. Replacement Fund to address aging technological software and equipment;
• Dedicated 5 percent to the Capital Improvement Fund to address maintenance and repair of facilities and infrastructure; • Achieved and exceeded the City Council Reserve Fund Balance Policy of $55M by $4.0M; and
• Maintained City’s underlying AAA rating and AA rating on its 2017 Lease Revenue Bonds.
FINANCIAL ACHIEVEMENTS
FY 2024-25 Budget Calendar
FY 2024-25 Proposed CIP Budget Study Session Finance and Pension Advisory Committee April 18, 2024
FY 2024-25 Proposed CIP Budget Study Session City Council April 23, 2024 FY 2024-25 Proposed Budget Study Session City Council May 14, 2024 FY 2024-25 Proposed Budget and CIP Review Finance and Pension Advisory Committee May 15, 2024
FY 2024-25 Proposed Operating & CIP Budget Public
Hearing City Council June 4, 2024
FY 2024-25 Proposed Operating & CIP Budget Study
Session #2, if needed City Council June 11, 2024
FY 2024-25 Proposed Budget Adoption, if needed City Council June 18, 2024 39 “WHEN WE ALL
PULL TOGETHER”
QUESTIONS?
40 ARPA FUNDS
TRANCHE 2
REMAINING ALLOTMENT
Description Amount
Transfers
Housing Trust Fund 2,500,000
Housing Authority Fund – Tenant Eviction Protection
Program and Homeless Program 454,308
Grand Total 2,954,308
41