Cotati City Council
Agenda Staff Report
Item type: REGULAR AGENDA (ACTION)
To: City Council/Successor Agency to the Former Cotati Community Redevelopment Agency
Subject: Adoption of Resolutions Approving the Fiscal Year 2023/24 Budget Date: May 23, 2023
Written by: Angela Courter, Director of Administrative Services Recommendation
It is recommended that the City Council Adopt a Resolution Approving the City of Cotati Budget for Fiscal Year 2023/24.
Background
The City Council held a Strategic Planning Study Session on March 7, 2023, where the City Council, the public, and staff reviewed and updated the goals and objectives, as well as the project priorities for Fiscal Year 2023/2024.
Subsequently, the City Council held two Budget Study Sessions, on April 4th and 18th 2023, to review the draft proposed Fiscal Year 2023/24 budget, take public comment, and provide direction to staff.
City Staff have been continuing work to improve the City’s third online budget book that is available to the public at:
https://city-cotati-ca-budget-book.cleargov.com/7090/introduction/transmittal-letter Analysis/Discussion
Budget Summary
Following the review of the Draft Budget presented to the City Council, there were only minor corrections and updates made to the projections.
Council Goals and Objectives:
During the strategic planning sessions, the City Council provided feedback on the goals and objectives for the City. Key Goals were also then summarized for linking departmental goals and objectives. The final version of these goals is incorporated within the final budget documents presented and attached herein for approval.
Highlights of the overall FY Budget are;
• Conservative 2022/23 budget outlook as the economy continues to have a lot of financial uncertainty and local impacts due to national and global events including bank closures, interest rate increases to offset inflation, as well as the continued Russian/Ukraine War.
Across the state and locally we are currently impacted by housing stock shortage with continued price increases and lower unemployment rates causing increased competition for staffing and increased turnover. Consumers continue the long term trend of shifting purchases to more non-taxable services and experiences. City staff are dedicated to continuing close monitoring of key revenue sources and expenditure management. • Balanced budget maintaining prudent fund balances.
• Continue to prioritize council goals of economic development, infrastructure, and community, while integrating equity and climate resilience in our daily operations and planning.
General Fund Highlights:
• Balanced Operating Budget for the 15th straight year. • The General Fund Operating Revenue exceeds Operating Expenditures by approximately $0.9M.
• Some key operating expenditures include (1) funding of $136,000 in vehicle repairs and replacements, (2) funding $809,000 in debt service for the unfunded pension liability and Streets Lease Bond Funds, (3) $654,000 in insurance, (4) over $68,000 in administrative fees to other districts (State, County, etc.). • The General Fund maintained a reserve of 25% of operating expenses, per Resolution No. 2009-50.
• The General Fund has an additional reserve of $1.4M for a total reserve of 40% of the proposed operating expenditures.
• General Fund Ending Fund Balance of $3.7M
General Fund Risks:
• Annual net operating surplus must be $1.5M or more to support basic maintenance/grant matching capital programs in future fiscal years. Surplus currently estimated at $0.888M in the FY 23/24 budget.
• Planned mid-year discussion on CalPERS losses and associated UAL strategies that require prefunding to minimize interest costs
• Park and Ride Replacement Project estimated $1.65M higher than available funding – bidding to confirm now.
Capital Projects Highlights:
The proposed City budget includes General Fund funding of $3.7M, for a total of $14.0M in capital projects (All funds) to improve the community, including:
• 2024 St. Improvements
• Bike/Ped Safety Projects
• ORH Traffic Flow Impr.
• Gateway Signage Marquee
• Cator Field Improvements
• Redwood Dr. & Cypress
• Sunflower Park Improvements
• Putnam Park Design
• Landscaping Improvements
• Civic Center Parking
• Sidewalk Gap Closures
• Design Hwy 116/W. Cotati Ave
• Design- Falletti Ranch Barns
Since the strategic planning session two additional projects were added, specifically the allocation for landscape refurbishment ($35,000) and the Cator Field Improvements ($100,000).
Internal Service Funds Highlights:
Vehicle Maintenance and Replacement
• $337,000 in funding across City Funds based on fleet usage. • Purchase of replacement police vehicles and various public works equipment and vehicles as needed.
• Evaluation of all-electric vehicles for replacements going forward, as applicable.
Compensated Absences Fund
• $163,710 funding provided by City wide allocation costing.
Enterprise Fund Highlights:
• The Enterprise Funds budget includes a combined $1.3 Million in various water and sewer capital projects including:
• SCADA Water/Sewer Server Replacement and Relocation
• Cypress Ave. Sewer Replacement
• Water ATM
• Well 1A Treatment
The Budget document attached to the resolution contains narrative summaries for each department, the City Managers message, and some of the graphics from the budget presentations.
Financial Considerations
Despite the economic uncertainty, the City has continued strategic projects and has not significantly reduced the reserve funds. The recommended budget includes a General Fund that is balanced with the estimated annual operating revenues exceeding the budget operating expenditures. However, as previously mentioned under General Fund Risks, the City must work to increase its’ net surplus operating revenue to perform future infrastructure maintenance, grant matching and re-build reserves. Due the expense associated with reconstruction work currently underway, infrastructure in the general fund is supported with reserves from FY 22/23.
The overall fund total reserve is estimated to be $3.7M, or 40% of operating expenditures. This is a decrease over prior years adopted budget which was estimated at $4.6M or 53% of operating expenses, but still higher than the required reserve of 25%.
Environmental Issues
The creation of an Annual Budget is not a project under the California Environmental Quality Act (CEQA), per the definition of a project identified in Section 15378 of CEQA in that there will be no direct, or reasonably foreseeable indirect physical change in the environment.
Attachments:
Presentation for Fiscal Year 2023/24 Proposed Budget (PPTX) Council Goals FY 2023-2024 (DOCX)
FY 2023-24 Departmental Projects (PDF)