Cotati City Council
Agenda Staff Report
Item type: STUDY SESSION
To: City Council
Subject: Budget Study Session for General Fund for Fiscal Year 2023/24 Date: April 04, 2023
Written by: Angela Courter, Director of Administrative Services Recommendation
Study session on General Fund for Fiscal Year 2023/24.
Executive Summary:
With the guidance provided by the City Council and the community during the strategic planning session held on March 7, 2023, staff has compiled the attached draft budget of the Operating General Fund which includes the following:
· All departments evaluated budget needs based on the City’s priorities when preparing their 2023/24 budgets.
· Estimated General Fund Revenues for the rest of fiscal year 2022/23 (inclusive of Measure S) are approximately 2% higher than the adopted budget. · General Fund Revenues for budget year 2023/24 show a flat 2% increase when compared to the Adopted Budget for FY 2022/23.
· Proposed General Fund expenditures for FY 2022/23 depict increases for continuity of operations with key increases due to:
- Operating Contracts such as Insurance and Legal
- Personnel Costs
o Proposed changes in staff include addition of a Dispatch Records Staff, conversion of a Sergeant to the Lieutenant, and conversion of the Public Works Maintenance II to a Maintenance III.
o In all departments, the budget assumes that all positions are filled for the full year, which is a conservative assumption.
- Continued investment for vehicle replacements, as well as repairs at City Parks, along streets and in City buildings.
• Unique to Community Development and Public Works are professional service agreements that are used primarily 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. While these expenses are budgeted for in the respective departments, they are largely offset by cost recovery revenue that is received in the General Fund. • Lastly, this budget has continuing operating expenses related to the Veronda-Falletti Ranch and the SAFE team. These are currently the largest discretionary operating expenses in the General Fund.
Comparative Year Note - Due to the $6M additional discretionary pension payment (ADP) made to CalPERS at mid-year, 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 was 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 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 April 18, 2023, 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 $1.1M ($10.7M in net revenue and $9.6M in operating expenses). However, this does not include any capital or debt service costs, which will be discussed at the next budget study session. It also does not include any additional discretionary payments to future unfunded pension liability costs.
The total estimated actual General Fund revenues for FY 2022-23 are $10,604,857, of which $6,100,000 or 58% is from Sales Tax (including Measure S sales tax). Estimated operational expenditures for FY 2022-23 total $8,563,266 of which $4,652,725 is to support public safety and $1,399,279 is for public works.
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 actual historical balances for three years, the adopted budget for 2022/23, the estimated budget for 2022/23 and the department proposed budget for 2023/24. 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 annual budget for adoption by the City Council in May.
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:
2022-23 Budget Study Presentation - General Fund (PDF)
General Fund - Proposed Budget Workbooks With Allocated Contract Services and FTE Schedules (PDF)