Proposed Budget
Fiscal Year
2024/25
PRESENTED BY:
DAMIEN O’BID, CITY MANAGER
ANGELA COURTER, DIRECTOR OF ADMIN
SERVICES
1 City of Cotati
City Council Session June 25, 2024
2 Annual Budget Cycle
November-December
City Management
Budget Planning
Meetings
January
Mid-Year Financial
Performance Review
March
Budget Strategic
Planning Meetings with
Budget Guidelines
Internal Budget Review
April
Draft Budget Creation
and Review
Public Budget
Workshops
May/June
Budget Adoption
July-December
Financial Evaluations,
Budget Adjustments as
Approved by Council
Budget Study Session Overview
3 Strategic Planning Session
•Developed City Objectives/Goals
20 Feb. 2024
Budget Study Session
•General Fund
•City Goals Finalization
2 Apr. 2024
Budget Study Session
•Enterprise Funds
•Special Revenues
•Capital Projects
•Transfers In and Outs
13 May 2024
Budget Adoption
Salary Schedule Adoption
Financial Policy Update Adoption
Appropriations Limit Adoption
25 June 2024
Long Term Vitality
•Balanced Budget
•Economic Development
•Affordable & Appropriate Development
•Infrastructure Preservation
•Pursue Grant Opportunities
Climate Change
•Implementing the local goals in the adopted
Climate Action 2020 and Beyond
•Community Outreach and Communication to
Adapt to Climate Change
Community Engagement
•Promote programs or processes to improve
community awareness and participation
•Explore opportunities for neighborhood level
programs
Equitable, Compassionate & Healthy
Community
•Diversity is a Source of Strength
•Equity in Hiring/ Promoting/ Contracting
•Advance Equity & Health Partnerships
Best in Class Community Services
•Prioritize Community Safety
•Support High Quality Core Services
•Emergency Preparedness
•Update Regulations to Advance Priorities
•Responsive Development Services
•Participate Regionally to Benefit City
•Continually Improve Service Delivery
4 Quick Economic Recap
UNEMPLOYMENT RATE*
The U.S. economic outlook is slow
growth1
◦ GDP for 2024 est. 2.4% vs. 2.5% growth 2023
◦ 4.2% increase in Real Personal Income in
2023
California economy same slowing2
◦ Unemployment slow rise to 5.3% but
number of jobs continued to increase
◦ 3.1% increase in Real Personal Income
SUMMARY
Unemployment
Rate April 2023 April 2024 Change
US 3.4% 3.9% 0.5%
California 4.4% 5.3% 0.9%
Sonoma* 3.6% 3.8% 0.2%
1. HTTPS://WWW.BLS.GOV/CPS/
2. HTTPS://EDD.CA.GOV/EN/ABOUT_EDD/NEWS_RELEASES_AND_ANNOUNCEMENTS/UNEMPLOYMENT-APRIL2024/#:~:TEXT=THE%20CALIFORNIA%20UNEMPLOYMENT%20RATE%20WAS%205.3%20PERCENT,APRIL%202024%2C%20WHICH%20IS%20THE%20SAME%20AS. 5 Economic Uncertainty
Federal Funds Rate Increases
Impacts on Investments in Development
Legislative Impacts from Federal, State & Regional Government Budgetary Assumptions
Revenues:
Slowing in Sales Tax
Slow growth in Cannabis Business Tax
Excludes Uncertain Development Revenues
Decreased Water Consumption Continuing
Expenditures
Project Cost based on Engineering Estimates
Increased Insurance, Unknown Final Increase
Utility Costs Increases of 20%
Full Employment
Continued Full Lump Sum CalPERS payment plus ADP of $335K 6 GENERAL
FUND A GENERAL FUND IS THE
PRIMARY FUND USED BY A GOVERNMENT
E N T I T Y.
USED TO RECORD ALL RESOURCE INFLOWS
AND OUTFLOWS THAT ARE NOT ASSOCIATED
WITH SPECIAL - PURPOSE FUNDS.
ACTIVITIES BEING PAID CONSTITUTE THE
CORE ADMINISTRATIVE AND OPERATIONAL
TA S KS O F T H E G OV E R N M E N T E N T I T Y.
7 General Fund Highlights
Increase Operating Revenues of Approximately $163K for fiscal year 2024/25 Balanced Budget - Net Operating Surplus - $469 K
Total Operating Revenue - $10.4 M
Total Operating Expense - $10.0 M
General Fund is Funding $4.4M in Capital Projects
Leveraging an Additional $1.3M in Grants Matching ($5.5M total) Ending General Fund Balance of $4.2M
Budget reflects a total operating reserve of 42% exceeding the 25% requirement. 8 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 $469K in the FY 24/25 budget.
Planned mid-year discussion on CalPERS losses and associated UAL strategies that require prefunding to minimize interest costs.
Energy Costs are continuing to increase and increases in consumption could dramatically increase costs as well.
State Budget Deficit reducing direct and passthrough County or regional grant availability Increasing mandated programs or reporting required by the City that are unfunded. These mandates either (1) require staff time which reduces availability of said staff for normal operations or (2) require outside contractor's assistance which cost more and removes the funds available for other projects or programs.
Undiversified General Fund Revenues. Over 57% of the proposed budget operating revenues are derived from Sales Tax. Over 77% is Sales Tax and Property Tax combined. 9 Cotati Budget Revenues:
Based on best available information today
Estimates are always conservative
Sales tax and Measure S
Approximately 57% of General Fund Operating Revenues
Tax base is relatively secure – Subject to Consumer Spending Variability Projecting Status Quo due to Weakening Spending offset by increased prices. Primary Industry categories are Building/Construction, Fuel and Service Stations, Food and Drug, and the County Pool.
Property Tax
Approximately 20% of General Fund Operating Revenues
Increasing 3.2% over prior year
Assessor Applied CPI
Transfers
Cannabis Tax slow increasing due to increased business activity in previously inactive businesses 10 11
REVENUES 2023-2024 EST 2024-2025 PROP Incr /(Decr)
601- PROPERTY TAX $ 2,060,765 $ 2,123,996 $63,231 3.07% 603- SALES TAX $ 5,990,807 $ 6,027,000 $36,193 0.60%
604- OTHER TAX $ 740,715 $ 752,500 $11,785 1.59%
606- LICENSE & FRANCHISE $ 652,079 $ 597,400 ($54,679) -8.39% 607- RENTS $ 133,135 $ 114,000 ($19,135) -14.37%
608- REVENUE - OTHER AGENCIES $ 237,415 $ 218,870 ($18,545) -7.81% 609- OTHER REVENUE $ 127,365 $ 97,050 ($30,315) -23.80% 620- CHARGES FOR SVS $ 392,857 $ 356,326 ($36,531) -9.30% 640- CHARGES FOR SVA-PUB SFTY $ 66,560 $ 61,200 ($5,360) -8.05% 660- CONTRIBUTIONS $ 2,780 $ 6,300 $3,520 126.62%
680- SPECIAL REVENUES $ 96,600 $ 98,700 $2,100 2.17%
Total Operating Revenues $ 10,501,078 $ 10,453,342 ($47,736) -0.45% Operating Expenditure
- All Departments -
• 2024-25 - FULL LUMP SUM PAYMENT OF THE PERS UNFUNDED
LIABILITY
• ADDITIONAL DISCRETIONARY PAYMENT OF $335 TO REMOVE
NEGATIVE AMORTIZATION
CALPERS
• ALLOCATED CONTRACT SERVICES
• SHARED INDIRECT COSTS SUCH AS AUDIT FEES, JANITORIAL COSTS, UTILITIES, ETC.
• BASED ON FULL FTE
CONTRACT SERVICES
EVALUATION
• USING ESTIMATES RECEIVED
• INSURANCE ESTIMATE INCREASE 18%
• MARKET UNCERTAINTY
INSURANCE
INCREASES
• ESTIMATES ARE BASED ON EXISTING STAFFING
• INCLUDES ALL NEGOTIATED MOU CHANGES
ALL DEPARTMENTS
ARE BUDGETED AT
FULL STAFFING
12 13
EXPENSES
2023-2024 2023-2024 2024-2025
ADOPTED EST PROP Incr /(Decr)
CITY COUNCIL $170,457 $156,673 $183,606 $26,933 17.2%
CITY MANAGER 741,811 705,992 935,990 229,998 32.6%
ADMINISTRATIVE SERVICES 508,290 486,591 527,880 41,289 8.5% COMMUNITY DEVELOPMENT 1,159,735 1,051,153 942,168 -108,985 -10.4% PUB WORKS-COMBINED 1,400,181 1,510,106 1,738,486 228,380 15.1% POLICE 5,017,822 4,824,814 5,153,304 328,490 6.8%
RECREATION 449,530 416,981 502,432 85,451 20.5%
Total Operating Expenses $9,447,826 $9,152,310 $9,983,866 $831,556 9.1% Department Change Highlights
No significant change from Strategic Planning or Study Sessions - Allocated Costs adjusted to addresses revised Heath Insurance - Police Department - Updated MOU for CPOA
14 General Fund Transfers
Transfer In for:
$170 K from Public Safety Fund
$4.2 K from Veterans Building
$32 K from Comm. Facilities Dist.
$2 K from S. Sonoma Bus. Park
Transfer Out for:
$319 K To Grants Funds
$4,086 K to Capital Projects
$12.5K to Special Revenues
15 16
Parks Capital
Projects
• 2024-25 Park Improvements - $2,536,000
• Putnam Park – Phase 1
• This project includes the perimeter pathway and pedestrian bridge across the Laguna de Santa Rosa, and parking lot lighting.
• Budget $2,471,000
• Sunflower Park – Phase 1
• Design and construction of pathways, a new play structure, picnic area, lighting and landscaping.
• Budget $5,000 (carryover)
• Veronda-Falletti Ranch Barns
• Continued Design of a barn/community program center at the Ranch.
• Budget $60,000
Streets Capital
Projects
• 2024-25 Streets Improvements $3,249,000
• Street Paving Improvements and Maintenance
• 2025 Street Improvement - $664,000
• 2026 Street Improvement (Design) –$60,000
• Bicycle and Pedestrian Safety Improvements -
$50,000
• Gateway Signage – $61,000
• Park and Ride Replacement - $993,000 (Continued)
• Class 1 Pathway Maintenance - $185,000
• Landscaping Improvements - $35,000
Streets Capital
Projects
• Street Continued – Partially Grant Funded
• Street Paving Improvements and Maintenance
• Redwood Drive & Cypress Completion -
$104,000
• HWY 116/W. Cotati Intersection - $362,000
• Sidewalk Gap Closures - $735,000
Other Capital Projects
Storm Water
◦ Trash Implementation Plan - $231,000
City Buildings
◦ City Hall Public Meeting Streaming System - $306,000
Special Revenue & Other Funds
21 Special Revenue Funds are a group of accounts established by a government for restricted use to ensure that certain revenue sources are used or earmarked only for their specific purpose.
This Special Revenue Fund type may be used to account for the proceeds of specific revenue sources that are legally restricted or restricted by City Council policy for a specified purpose.
Revenue Summary
22 - Other revenues are primarily Development fees for as well as RMRA funds.
By Fund
Revenue Summary
23 - Other revenues are primarily Development fees for as well as RMRA funds.
By Type
Expenditure Summary
24 By Type
- Primarily expenditures are transfers out for capital projects.
Internal Service Funds
Vehicle Maintenance & Replacement
Provides an ongoing funding source for scheduled replacement of City vehicles from billings to other funds who are utilizing the fleet.
Continued Investment of $361K includes
◦ One Police Interceptor SUV’s
◦ Evaluating fuel efficient/environmentally friendly vehicles ◦ Pending Public Works Flatbed Dump Truck Replacement
◦ New Equipment- Various as needed
◦ Repairs & Maintenance of Existing Fleet
Compensated Absences Fund
◦ Funds compensated absences with contributions made based on a proportionate and rational allocation of the total government wide liability. ◦ Balances are increased to address estimated changes in Salaries and Benefits Schedules
25 ENTERPRISE FUNDS
26 Enterprise Funds are used to account for operations that are financed and operated in a similar manner as a private business enterprises, where the intent is that the costs of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges.
Enterprise Budget Highlights
27 Maintains a
reserve of 33% of
operating
expenses
Rate change per
the rate study for
water & sewer
Conservative
Revenue and
Expenditures
Estimates
Strategic focus on
infrastructure
improvements and
preservation
Water Funds Combined Summary
Operating Revenues –Rate Increase – No significant Connection Fees Proposed Capital Project
Improvements:
◦ Water Meter Replacements
◦ SCADA Server Upgrade & Relocation - $82,000
◦ Well 1A/Well 3 Maintenance - $68,000
◦ West Sierra Tank Recoating - $839,000
Changes in Operating Expenditures:
◦ One Time UAL ADP in FY 2024/25
◦ Personnel budgeting full staffing
◦ Allocated Contract Services
◦ Estimated Increasing Insurance
◦ Continued water conservation programs
◦ Cost of Water Procurement -
◦ Water Agency Increased Rate of 10.0%
◦ Consistent Slowed Water Consumption
◦ Repairs & Maintenance include Water
Main Flushing Services and funding Vehicle
Maintenance contributions.
28 $0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0
$4.5
$5.0
2020-2021
Total Activity
2021-2022
Total Activity
2022-2023
Total Activity
2023-2024
Est. Actuals
2024-2025
Proposed
Millions
Combined Sewer Funds
Revenue and Expenses
Revenues Expenses
Sewer Funds Combined Summary
Operating Revenues –Rate
Increase – No significant
Connection Fees
Proposed Capital Project
Improvements:
◦ SCADA Server Upgrade &
Relocation - $81,650
Changes in Operating
Expenditures:
◦ Allocated Expenses Increased
◦ Increased wastewater
treatment costs of
approximately 6.8%
◦ Debt Service back to General
Fund
29 $0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0
$4.5
$5.0
2020-2021
Total Activity
2021-2022
Total Activity
2022-2023
Total Activity
2023-2024
Est. Actuals
2024-2025
Proposed
Millions
Combined Sewer Funds
Revenue and Expenses
Revenues Expenses
Conclusion
The Proposed FY 2024/25 Budget:
Prioritizes Community Engagement, Long Term Vitality, Best in Class Community Service
Initiation of actions towards address Climate Change and Equality Balanced Operating Budget
Operating Expenditures Do Not Exceed Conservatively Estimated Operating Revenues
Continued Significant Investments in Historically Deferred Capital Project Need to improve operating costs/expenses to fund future FY on-gong capital program
Fiscally Prudent
The General Fund Reserves To 42%
City staff are committed to exercise prudence and integrity in the management of public funds and provide transparency and accountability in its use. 30 31