Cotati City Council
Agenda Staff Report
Item type: STUDY SESSION
To: City Council
Subject: Budget Study Session for General Fund and Special Revenues (Fiscal Year 2022/23)
Date: April 19, 2022
Written by: Angela Courter, Director of Administrative Services Recommendation
Study session on General Fund and Special Revenue Funds Planning for Fiscal Year 2022/23 and review and discuss revised City goals and objectives.
Executive Summary:
With the guidance provided by the City Council and the community during the strategic planning session held on February 15, 2022, staff has updated the Goals and Objectives to reflect the elevated priority for climate change measures and wildfire preparation (updated draft attached). In addition, staff has also compiled the attached draft budget of the General Fund and Special Revenue Funds which includes the following:
· All departments evaluated budget needs based on the City’s priorities when preparing their 2022/23 budgets.
· Estimated General Fund Revenues for the rest of fiscal year 2021/22 (inclusive of Measure S) are approximately 7.5% higher than the adopted budget. Note that $1.4M in ARPA funds, originally budgeted in “Other Revenues” was deposited in a special revenue fund to conform with the grant requirements.
· General Fund Revenues for budget year 2022/23 (Adjusting for $1.4M ARPA) show an approximate 7.2% increase when compared to the Adopted Budget for FY 2021/22. · Due to the $6M additional discretionary pension payment (ADP) made to CalPERS at midyear, there is a one time increase in expenditures indicated as departmental expenses in FY 21/22 in accordance with governmental accounting requirements. Approximately $4.8M of the $6M is attributable to the General Fund, which is allocated across the departments. The remainder has been allocated to the Enterprise Funds. In accordance with the plan approved by the City Council, $2M of the $6M is from General Fund reserves with the remaining $4M that was a loan designed to preserve the reserve funds while maximizing avoided interest from future CalPERS unfunded pension liability payments. The $4M loan and associated transfer to the General Fund will be discussed in more detail at the May 17 budget study session as part of the Pension Debt Service Fund. • Proposed General Fund expenditures for FY 2022/23 depict slight increases for continuity of operations with major increases due to operating insurance and employee costs. With regard to staffing, a proposed change is the addition of a position to centralize contracting in Administrative Services and the conversion of a temporary part time planner position to permanent part time. In all departments, the budget assumes that all positions are filled for the full year, which is a conservative assumption. • Unique to Community Development and Public Works are professional service agreements that are used for cost recovery work (development projects that fund staff and consultant time to process applications). These expenses are highly variable, so it is typical that professional services costs vary from budget when looking at estimated year end expenses.
• Lastly, this budget has continuing operating expenses related to the Veronda-Falletti Ranch to create more community access to programming and events at the ranch.
The proposed budget includes a combination of conservative revenue projections and conservative operational expenditure projections. Proposed capital expenditures will be presented to the community and Council on May 17, 2022 when a full detail of the fund balance due to transfers will be provided.
Fiscal Impact
General Fund
The preliminary General Fund budget projects an operating surplus of approximately $1.5M after excluding the ($10.1M in net revenue and $8.6M in operating expenses). However, this does not include any capital and debt service costs, which will be discussed at the next budget study session.
The total estimated General Fund revenues are $10,109,746, of which $6,070,000 or 60% is from Sales Tax (including Measure S sales tax). Proposed operational expenditures total $8,594,554 of which $4,587,399 is to support public safety and $1,386,007 is for public works.
Special Revenue Funds
Special Revenues are expected to contribute more than $164,000 towards reimbursements for the COPS Grants for the Police Department. In total, close to $1,900,000 is proposed to transfer out of restricted special revenue funds to support capital projects. Additional funding from the General Fund and the Street Debt Service Fund (the fund that accounts for the street project borrowing) will be required to fully fund proposed capital projects, including the West Sierra Sewer Main Replacement (loan), the West Sierra/La Plaza street reconstruction (aka Quick Strike) as well as other street preservation and reconstruction work, initiating design on the 116/West Cotati Avenue project, construction of the Kotate Park Improvements, and several other projects. Note also that the City Council has previously committed funds to the Jamie Lane workforce housing project, which is still in construction, so final costs are still pending.
Background/Analysis
The goal of this study session is to supply an overview for the Council Members and other interested parties, and to address comments or questions about proposed budget details. Each department section shows the historical balances for three years: the adopted budget for 2021/22, the estimated budget for 2021/22 and the department proposed budget for 2022/23. The budget format is consistent with how it was presented in prior fiscal years.
While putting together a City Budget, we must take into consideration the limited resources of any budget, the various levels of uncertainty with different resources, and how to best use the resources to meet the community needs. The drafted budget strives to strike a balance of continued delivery of efficient city services to our residents and business owners, continuing development of key capital projects, and continuing to pursue further economic development.
As always, community input is appreciated and necessary to ensure a budget that best meets the needs of the community in the City’s areas of responsibility. For this budget study session, it is the goal to obtain feedback going into the development of our final the annual budget for adoption by the Council in June.
Summary
Overall, the budgets are in line with the best estimates of City revenues at this time, using independent tax forecasting experts who develop estimates based on Cotati’s specific mix of businesses. Based on the best available data at this time, the proposed budget is conservative in both expenditures and revenue forecasts. The City Council has continued to prioritize supporting robust reserves more than the required reserve of 25% of operating expenditures to protect city services against economic disruptions. Therefore, this fiscally conservative approach allows the proposed budget to protect essential operations.
Attachments:
Council Goals FY 2022-2023 REVISED (DOCX)
2022-23 Budget Study Presentation - General Fund, Special Revenues (PDF) General Fund - Proposed Budget Workbooks (PDF)
Special Revenue Funds - Proposed Budget Workbooks (PDF)