CITY COUNCIL Staff Report
Meeting: June 6, 2023
Subject
Consider the Recommended Operating and Capital Improvement Program Budgets for Fiscal Year (FY) 2023-24, adoption of the Operating and Capital Improvement Program Budgets for FY 2023-24, establishment of the Appropriation Limit, and related actions.
Recommended Action
Adopt Resolution No. 23-XXX establishing an Operating Budget of $117,645,365 for FY 2023-24, which includes the following changes to the FY 2023-24 Proposed Budget, published on May 5, 2023:
Approve the operating budget of $117,762,980 outlined in the FY 2023-24 Proposed Budget.
Approve additional appropriations of $8,000 for the Community Funding Grant Program as included in Attachment D.
Approve additional appropriations of $8,380 for Movies in the Park as included in Attachment D.
Approve additional appropriations of $28,784 for the reclassification of the Emergency Services Coordinator as included in Attachment D.
Approve additional appropriations of $4,720 and additional revenue of $175 for County of Santa Clara Environmental Health Permit Fees as included in Attachment D.
Approve additional appropriations of $146,650 for Golf Course Turf Management as included in Attachment D.
Approve a reduction of $154,149 in appropriations resulting from the prepayment of the CalPERS pension plan’s Unfunded Accrued Liability as included in Attachment D.
Approve a reduction of $160,000 in appropriations resulting from the elimination of library extra hours funding as included in Attachment D.
Approve additional estimated revenue of $84,218 resulting from the elimination of festival fee waivers as included in Attachment D.
Approve additional revenue of $313,218 resulting from an updated SB 1 (Gas Tax) revenue estimate as included in Attachment D.
Approve Community Funding Grants for the following organizations, allocating a total of $32,500:
Cupertino Symphonic Band: $4,000
No Time to Waste: $5,000
West Valley Community Services: $10,000
STEMBoost Corporation: $4,000
AINAK: $2,500
Omniware Networks: $4,000
Asian American Parents Association: $3,000
Adopt Resolution No. 23-XXX establishing a Capital Improvement Program Budget of $4,054,000 for FY 2023-24 Approve appropriations of $420,000 in the Capital Improvement Program Capital Projects Fund for the Stevens Creek Blvd./Calabazas Creek Storm Drain Repair (infrastructure) Approve appropriations of $172,000 in the Capital Improvement Program Capital Projects Fund for the Stevens Creek Bridge Repair (infrastructure) Approve appropriations of $35,000 in the Capital Improvement Program Capital Projects Fund for the Street Light Installation – Annual Infill (infrastructure) Approve appropriations of $300,000 in the Capital Improvement Program Capital Projects Fund for the Annual Playground Replacement (parks) Approve appropriations of $100,000 in the Capital Improvement Program Capital Projects Fund for the ADA Improvements (facilities) Approve appropriations of $1,000,000 in the Capital Improvement Program Capital Projects Fund for the Citywide Building Condition Assessment Implementation (facilities) Approve $2,027,000 of transfers from the Capital Reserve Capital Projects Fund to fund the Capital Improvement Program Adopt Resolution No. 23-XXX establishing an Appropriation Limit of $127,886,394 for FY 2023-24 Reasons for Recommendation
The staff report shows the Proposed Budget, which consists of the initial version printed on May 5, 2023, as well as any subsequent modifications made to the budget. These modifications include items recommended by the City Council during the Proposed Budget Study Session on May 17, as well as unforeseen adjustments to expenditures and revenues that have emerged since the publication of the Proposed Budget on May 5. For staff’s responses to the City Council's questions during the Proposed Budget Study Session, please refer to Attachment G.
The Proposed Budget for the upcoming fiscal year highlights a decrease in both expenditures and revenues compared to the previous year's Adopted Budget. Total expenditures are proposed at $121.7 million, a $8.9 million or 6.8%, reduction from the previous year. Similarly, total revenues are anticipated to be $110.3 million, a $20.0 million or 15.3%, decrease from last year.
General Fund expenditures are proposed at $86.0 million, which is a decrease of $9.2 million or 9.6%, from the previous year's Adopted Budget. General Fund revenues are anticipated to be $80.4 million, which is a $14.3 million or 15.1%, decrease from the previous year's Adopted Budget. The General Fund is projected to end FY 2023-24 with approximately $44.3 million in unassigned fund balance.
The following table shows the Operating and Capital Improvement Program (CIP) Budgets by fund type.
General Fund
The General Fund is the City's primary operating fund. It accounts for basic services such as public safety, public works, community development, park maintenance, code enforcement, and the administrative services required to support them. The fund generates revenue from the City's discretionary funding sources (e.g., sales tax, property tax, transient occupancy tax, and utility tax). As a rule, General Fund resources are used only to fund operations that do not have other dedicated (restricted) funding sources. Operations that rely heavily upon non-General Fund resources, such as street maintenance, solid waste collection, and recreation, are accounted for in other funds. Information on these funds may be found in the Other Funds section of this document.
As illustrated in the following chart, most of the General Fund supports costs for Public Works, Law Enforcement, and Community Development.
General Fund Expenditures
FY 2023-24 expenditures are estimated at $86.0 million, which represents a $9.2 million or 9.6% decrease compared to the adopted budget from the previous year. This decrease is primarily attributed to expenditure-reduction strategies that include:
Eliminating 14 vacant positions.
Decreasing expenditure on materials and contract services.
Reducing spending on special projects and capital outlays.
Reducing the City Manager's Contingency Fund by $25,000 and contingencies by 50%.
Reducing transfers and General Fund subsidies to other funds.
General Fund expenditures decreased by $0.3 million from the $86.3 million in the Proposed Budget printed on May 5, 2023, due to:
Restoration of Community Grant Funding as recommended by the City Council: $8,000 Restoration of Movies in the Park as recommended by the City Council: $8,380 Reclassification of the Emergency Services Coordinator: $28,784 County of Santa Clara Environmental Health Permit Fees: $4,720 Savings from Prepaying CalPERS Pension Plan’s Unfunded Accrued Liability: $(126,581) Elimination of Library Extra Hours Funding: $(160,000)
Transfer of Golf Course Turf Management to Blackberry Farm Fund: $(78,350) General Fund Revenue
The City's General Fund revenues for the upcoming fiscal year are projected to be $80.4 million, representing a significant decrease of $14.3 million or 15.1% from the FY 2022-23 Adopted Budget. This decline is due to a California Department of Tax and Fee Administration (CDTFA) audit of one of the City's taxpayers, which is expected to result in a substantial reduction in sales tax revenue. The City is expected to experience a $30 million, or 73%, decrease in sales tax revenue from the original FY 2023-24 projections provided by its sales tax consultant, HdL. This corresponds to a decrease of $30 million, or 28%, in General Fund revenue.
General Fund – Fund Balance
Unassigned fund balance is fund balance that has not been earmarked for a specific purpose. FY 2023-24 unassigned fund balance is projected to be $44.3 million, a decrease of $5.3 million, or 10.7%, from the FY 2022-23 Amended Budget. FY 2023-24 total fund balance is estimated to be $104.7 million, a decrease of $5.6 million, or 5.1%, from the FY 2022-23 Amended Budget.
The following table shows changes to fund balance for the General Fund since the close of FY 2020-21:
General Fund Forecast
FY 2022-23 is projected to end with revenues exceeding expenditures; however, starting in FY 2023-24, expenditures are expected to surpass revenues.
Currently, the CDTFA is conducting an audit on a taxpayer within the City, which is anticipated to have a significant impact on the City's financial situation. The projected decline in sales tax revenues for FY 2023-24 is estimated to be approximately $30 million from the initial forecast provided by HdL, the City's sales tax consultant.
The City's forecast model assumes recessionary periods every four years, during which revenues show no growth. Additionally, the forecast does not account for ongoing revenues from potential new development projects or hotels until they are constructed and occupied.
The primary driver of expenditure growth in the General Fund is the increasing costs of law enforcement. By FY 2029-30, the City's annual debt service payment for the Civic Center will be fully repaid, resulting in an annual savings of $2.7 million.
The provided chart illustrates the City's ten-year forecast for revenues and expenditures.
The following chart displays a ten-year forecast of the General Fund's annual operating surpluses or deficits. If deficits materialize, they will be financed by the unassigned fund balance, the Capital Projects Reserve, and the Section 115 Pension Trust.
Recognizing the significance of fiscal prudence and responsible financial management, the City is taking immediate action to address the potential shortfall resulting from the CDTFA audit. City staff has updated the financial forecast and is actively exploring various strategies to balance the budget. Unfortunately, these strategies will inevitably lead to reductions in service levels throughout the community, impacting all areas. Simultaneously, the City is evaluating different revenue-generating options to mitigate the budget shortfalls caused by the audit.
To address the underlying issue of recurring expenditures consistently exceeding recurring revenues, the City has implemented cost-cutting measures while ensuring that essential services continue to be provided to the community.
With a proactive approach, the City aims to minimize the adverse effects on its staff and residents. City staff will maintain open communication with the Council, keeping them informed of any new developments related to the audit and its impact on the City's finances. It is crucial to note that the CDTFA audit has resulted in a structural deficit, requiring the City to implement long-term solutions to address this ongoing challenge.
Other Funds
Special Revenue Funds
Special Revenue Funds are established to account for the proceeds of specific revenue sources that are legally restricted for expenditures for particular purposes. The largest Special Revenue Fund is allocated to streets, roads, and transportation, while other funds are designated for storm drain management, affordable housing programs, and park development.
For FY 2023-24, the Proposed Budget for Special Revenue Funds is $10.4 million, which represents a decrease of $0.8 million or 7.5% compared to the FY 2022-23 Adopted Budget. This reduction is attributed to a decrease in pavement expenditures.
The Special Revenue Funds receive funding from two sources: $10.5 million in restricted department revenue and $2.5 million in transfers, resulting in a total funding of $13.0 million. The Special Revenue Funds are expected to end the year with a fund balance of $31.9 million, reflecting an increase of $2.6 million from the previous year. This increase in fund balance is mainly due to the housing mitigation revenue in the BMR Housing Fund.
Capital Projects Funds
Capital Projects Funds are used for the acquisition or construction of major capital facilities and infrastructure. Capital Projects Funds include the Capital Improvement Projects Fund, Stevens Creek Corridor Park Fund, and Capital Reserve Fund. These funds are used to finance the implementation of projects identified in the City's five-year Capital Improvement Program (CIP).
For FY 2023-24, the Proposed Budget for Capital Projects Funds is $4.2 million, which represents an increase of $0.6 million, or 16.4%, from the FY 2022-23 Adopted Budget. This increase is due to transfers from the Capital Reserve Fund to the Capital Improvement Projects Fund.
The Capital Projects Funds are primarily funded through a combination of transfers from the General Fund, grants, donations, development impact fees, and other dedicated revenue sources. As projects are completed, any remaining funds are typically rolled over into the Capital Reserve Fund to be used for future projects.
Enterprise Funds
Enterprise Funds are designed to support services that are funded directly by fees charged for goods or services. The City's Enterprise Funds include the Resource Recovery Fund for the solid waste collection franchise, Blackberry Farm Fund for the City-owned golf course, Sports Center Fund for the Cupertino Sports Center, and Recreation Programs Fund for cultural, youth, teen, sports, and physical recreation programs.
For FY 2023-24, the Proposed Budget for Enterprise Funds is $9.7 million, which represents an increase of $0.7 million or 7.4%, from the FY 2022-23 Adopted Budget. The Enterprise Funds are funded by $6.7 million in program revenue and $2.9 million in reserves. The Enterprise Funds are projected to end the year with $3.5 million in reserves, a decrease of $2.9 million. This decrease is due to the use of reserves, which were accumulated in previous years. During the pandemic, the Parks and Recreation funds accumulated reserves as revenues were higher than expenditures.
Internal Service Funds
Internal Service Funds are for goods or services provided to other City departments or governments on a cost-reimbursement basis. These funds include programs for innovation and technology, workers’ compensation, equipment, compensated absences, long-term disability, and retiree medical insurance.
The Proposed Budget for Internal Service Funds is $8.7 million, which is a slight decrease of $0.1 million or 1.6%, compared to last year's Adopted Budget. The Internal Service Funds are funded by $4.2 million in program revenue, $1.3 million in transfers from the General Fund, and $3.2 million in reserves. The Internal Service Funds are projected to end the fiscal year with $(0.1) million in reserves, decreasing by $3.2 million. Although the Internal Service Funds show a negative net position, it's important to note that retiree health expenses will be reimbursed by the Section 115 OPEB Trust at the close of each fiscal year.
This decrease in reserves is due to the City's decision to eliminate the General Fund transfer to the Retiree Medical Fund in FY 2022-23. Instead, the City plans to fund Other Post-Employment Benefits (OPEB) costs with the City's Section 115 OPEB Trust, as the City's OPEB plan is over 100% funded. The City will continue to monitor the Internal Service Funds to ensure they remain sustainable and effective in supporting City operations.
Staffing
Personnel Assumptions
FY 2023-24 salaries and benefits reflect the cost-of-living adjustments approved by the City Council in August 2022. The City is currently negotiating with its bargaining groups because the agreements, which expire on June 30, 2025, include a salary and benefits reopener. Full-time salaries are forecasted to increase by the CalPERS payroll growth rate.
Employees who have yet to reach the top step in their classification’s salary range are eligible to receive a step increase on their anniversary date. Typically, classifications have five steps, with each increase equivalent to a 5% increase in salary. Currently, approximately 38% of employees are below Step 5.
Position Eliminations
The FY 2023-24 Proposed Budget proposes funding for a total of 212 positions, representing a reduction of 14 positions from the FY 2022-23 Amended Budget. This reduction is due to revenue shortfalls resulting from the CDTFA sales tax audit of one of the City’s taxpayers. It is important to note that the 14 positions being eliminated are vacant positions that have not been filled for various reasons such as resignation, retirement, or the positions being left unfilled.
To address the City's staffing levels in a responsible and sustainable manner, staff has developed a plan to gradually reduce staffing levels over the next decade through the elimination of vacant positions. The plan aims to eliminate 3-4 vacant positions annually until the City reaches a staffing level of 180 positions, which is consistent with the levels in FY 2015-16.
Note: 1 FTE in the IT department is expected to be eliminated later this year due to an upcoming vacancy.
Summary of Budget Adjustments (Attachment D)
The budget adjustments are presented in two primary groups: operating budget changes and Capital Improvement Program. The operating budget changes primarily include unforeseen expenditure and revenue adjustments that have arisen since the publication of the Proposed Budget on May 5. The Capital Improvement Program also underwent revisions due to reductions resulting from the CDTFA sales tax audit and was not incorporated in the Proposed Budget printed on May 5. The changes are discussed further below and are also detailed in Attachment D. The changes are discussed further below and are also detailed in Attachment D.
Restoration of Community Grant Funding
The Parks and Recreation Commission carried a unanimous motion to recommend to City Council funding for the following organizations at a total of $32,500:
In the FY 2023-24 Proposed Budget, City staff initially proposed a reduction in Community Funding of $8,000, bringing it down to $24,500. However, during the Proposed Budget Study Session on May 17, 2023, the City Council conducted a straw poll and unanimously voted to restore Community Funding to its original amount of $32,500.
Restoration of Movies in the Park
In the FY 2023-24 Proposed Budget, City staff initially recommended the removal of Movies in the Park. However, during the Proposed Budget Study Session on May 17, 2023, the City Council conducted a straw poll and unanimously voted to reinstate Movies in the Park. The budget for Movies in the Park is $8,380 and includes $5,000 for materials and $3,380 for part-time staffing.
Reclassification of the Emergency Services Coordinator
The City Manager’s Office requests to reclassify the Emergency Services Coordinator as Assistant to the City Manager with the working title of Emergency Manager. In addition to overseeing the emergency management functions, the Emergency Manager will supervise the Sheriff's Office contract execution and monitoring, lead the City's Unhoused Taskforce, and serve as the City point of contact for the Fire Department and countywide services to enhance coordination of daily response activities. The organizational changes will support the City Manager’s operational goals to improve service delivery and coordination of public safety.
County of Santa Clara Environmental Health Permit Fees
Starting from FY 2023-24, the City will be charged permit fees for food facilities and pools from the Santa Clara County Department of Environmental Health. The following locations: Quinlan Community Center, Cupertino Senior Center, Blackberry Farm, and Library, have food or pool permits and due to changes in State Law in 2010, the Department of Environmental Health cannot support permitting and inspecting city food facilities and pools without charging the applicable annual permit fees. These permits are valid for one year and must be renewed annually. $175 in environmental permit fees for the Library is expected to be reimbursed the Santa Clara County Library District.
Revenue from Elimination of Festival Fee Waivers
The Parks and Recreation Department is proposing to charge fees for festival organizers, which were waived by the City in past years. By implementing this change, the Department aims to generate additional revenue of $84,218. City-paid expenses for sheriff costs and materials have also been reduced in the FY 2023-24 Proposed Budget. *Staff recommends cutting the budget for Sheriff costs and having the festival organizers pay those fees ** Staff recommends cutting the budget for the rental of chairs and having the festival organizers pay those fees Savings from Prepaying CalPERS Pension Plan’s Unfunded Accrued Liability As part of a cost-saving initiative, the Administrative Services department requests to make a lump-sum prepayment towards the CalPERS pension plan’s Unfunded Accrued Liability (UAL). By prepaying the UAL before July 31, 2023, the City will save 3.4% in interest, amounting to $154,149.
The annual payment on the UAL is the amortized dollar amount needed to fund past service credit earned (or accrued) for members who are currently receiving benefits, active members, and members entitled to deferred benefits, as of the valuation date. The UAL is billed monthly but can be prepaid in a lump sum for cost savings.
Elimination of Library Extra Hours Funding
As of May 18, 2023, the Financial & Administrative Services Manager for the Santa Clara County Library District confirmed that the City will not be charged for Library extra hours in FY 2023-24.
Initially, the District suggested that there was a possibility that the funds might not be required. They mentioned that the final decision would be discussed and determined during their board meeting in June. Considering this uncertainty, the City decided to budget for the funds, as there was still a chance that they would be needed. However, following the comment made at the recent City Council meeting, City staff promptly followed up with an email seeking clarification. Subsequently, the District confirmed that the additional funds were indeed unnecessary, and this confirmation has been verified.
It is not guaranteed each year that the State will reimburse the District for the funding of extra hours. This budget line item ensures that if the reimbursement is not available, the library can continue to be open for extra hours. Funding in this line item that is unused at the end of the fiscal year is returned to unassigned fund balance.
Increase SB 1 Revenue Estimate
The Public Works department recommends increasing Senate Bill (SB) 1 revenue estimates by $313,218 to $1,496,963 to align with projections from the State. SB 1, also known as the Road Repair and Accountability Act of 2017 or "Gas Tax," provides funding for local streets and roads maintenance. The amount received by the City is tied to overall State gas consumption.
Transfer and Increase Golf Course Turf Management
The Public Works department requests to transfer the budget for golf course turf management to the Blackberry Farm Fund and increase the amount to $225,000.
Capital Improvement Program (CIP)
On March 7, 2023, the City Council conducted a study session to review the Capital Improvement Program (CIP). The original budget proposed for FY 2023-24 during the study session was $5,013,642. However, on May 17, 2023, the Public Works department presented an updated CIP with a reduced budget. The updated CIP proposed a budget of $2,027,000, representing a reduction of $2,986,642.
With the inclusion of new projects that require a funding allocation of $2.0 million and considering the defunding of projects amounting to $3.2 million on May 16, 2023, FY 2023-24 year-end fund balance is projected to be $13.5 million if all recommendations are approved. This fund balance will remain available for future programming purposes.
Interfund transfers, which are transfers between funds, are required to fund CIP projects. A recommended transfer of $2,027,000 from the Capital Reserve to the Capital Improvement Program Fund will provide the necessary funding for these projects.
Ongoing Challenges
Retirement Benefits
Rising retirement costs are driving the increase in employee benefits. Cupertino offers retirement benefits to its employees through the California Public Employee’s Retirement System (CalPERS), which experienced a significant decline in its assets due to poor investment returns during the Great Recession. Moreover, changes in actuarial assumptions and enhanced benefits due to higher life expectancies have further increased the plan's liabilities. Consequently, the City's pension costs have escalated considerably and currently constitute one of the City's largest financial obligations.
The table below illustrates the City's CalPERS costs over the next few years.
In December 2016, the CalPERS Board of Administration implemented a three-year phase-in beginning in FY 2018-19 to lower the discount rate from 7.5% to 7.0%, resulting in significant increases in retirement costs. In FY 2021-22, the discount rate was further reduced to 6.8% due to the FY 2020-21 investment gain of 21.3%, which triggered the Funding Risk Mitigation Policy.
To mitigate the impact of pension rate volatility on the City's budget, the City established a Section 115 Trust in May 2018. The Section 115 Pension Trust had a balance of $17.2 million as of June 30, 2022, which can be utilized to fund pension costs.
Revenue Volatility
The City of Cupertino heavily relies on business-to-business (B2B) sales taxes for its sales tax revenue, making it highly sensitive to economic fluctuations. The City experienced the impact of this volatility during the dot-com crash from 2000 to 2004. The heavy reliance on the high-tech industry makes the City vulnerable, and the loss of one of the top three sales tax producers in FY 2013-14 made the City more dependent on a single tax producer, further increasing its vulnerability to business volatility.
The COVID-19 outbreak in 2020 significantly impacted the City's revenues from sales and transient occupancy taxes. Although certain sectors, such as restaurants and hotels, brick-and-mortar retail and restaurants, were severely affected, the City experienced an increase in business-to-business sales tax revenues and County pool allocation. The increase in sales tax revenue was attributed to the rise in online sales due to statewide shelter-in-place mandates and the higher demand for computer and electronics equipment due to increased remote work. While the City's sales tax revenues reached historic highs in FY 2020-21 and FY 2021-22, the City considers it a one-time event, and the recovery of the restaurant and hotel, general consumer goods, and automotive industry groups did not offset the declines in business-to-business sales tax and County pool allocation as online sales decreased from their recent historic highs. Transient occupancy tax revenue decreased due to reduced business travel during the pandemic but has begun to recover in FY 2022-23.
In December 2021, the CDTFA informed the City that an audit would be conducted on one of its taxpayers. The CDTFA verbally notified the City in March 2023 of its preliminary determination that tax dollars had been misallocated to the City and the potential impacts on the City. The CDTFA is expected to issue a formal letter to the City within the next four to six months, providing the final audit results and the actual amount of money lost. As a result of the audit, the City's sales tax revenue is expected to significantly decrease.
Appropriations Limit
Article XIII B of the California Constitution established appropriations limits on government agencies within California. Originally established by Proposition 4 in 1979, the appropriations limit places a maximum limit on the appropriations of tax proceeds by the State, school districts, and local governments in California.
The City’s FY 2023-24 appropriations limit is $127,886,394, an increase of $5,129,872, or 4.2%, from the FY 2022-23 limit of $122,756,522. Please refer to Attachment E for the calculation of the appropriations limit, and Attachment F for the corresponding price and population factors utilized in the calculation of the appropriations limit.
Budget Study Session
On May 17, 2023, City Council conducted a study session to review the FY 2023-24 Proposed Budget. During the session, City staff presented General Fund revenues, expenditures, and forecasts. City Council offered input, sought clarifications, and provided recommendations. For detailed staff responses to City Council's questions, please refer to Attachment G.
During the study session, Councilmembers made the following recommendations:
Moore: remove the City Manager’s contingency fund; remove the 1.25% material and contract contingency.
Chao: continue Art in Unexpected Places, Public Safety Forum, Bobateeno, and Movies in the Park events.
Mohan: supports increasing funding for community grants.
Wei: revisit options to keep community grant funding, including Shakespeare in the Park; supports not filling the current 14 vacancies; use unassigned budget to preserve more community events and programs.
City Council conducted straw polls on the following recommendations:
Recommendation
Result
Restore full community funding to $32,500
5-0 Ayes (Unanimous)
Remove City Manager’s contingency
4-1 Noes (Moore voting yes)
Remove 1.25% material and contract contingency
4-1 Noes (Moore voting yes)
Continue Public Safety Forum Dinner
Withdrawn
Retain Art in Unexpected Places
4-1 Noes (Chao voting yes)
Continue Bobateeno*
4-1 Noes (Chao voting yes)
Continue Movies in the Park
5-0 Ayes (Unanimous)
Reduce staff by an additional 14 FTE
5-0 Noes (Unanimous)
Any additional costs will be funded with:
additional use of fund balance
additional reduction of staff
creative ways for funding
a. 4-1 Ayes (Moore voting no)
b. 5-0 Noes (Unanimous)
c. 4-1 Noes (Moore voting yes)
Bring information on the 30 current vacant positions – their roles and impacts. Bring options for potentially more staffing cuts (1, 2, 4) and their impacts on services and expenditures, either on June 6 or in Q1 as the City staff’s workload permits 3-2 Noes (Moore and Chao voting yes)
*The Council received information that Bobateeno has been ineffective at drawing teens for the expressed purpose of mental health and that staff would focus on other alternative programs.
Community Budget Survey, Outreach, and Town Hall
City staff took proactive measures to gather resident input through the Community Budget Survey, allowing residents to voice their preferences regarding service reductions and revenue generation strategies. By engaging the community directly, the City aimed to ensure that residents' opinions were considered in the decision-making process.
To reach a broader audience, City staff organized a diverse range of budget outreach events at local farmer's markets, Cupertino festivals, and in front of the Cupertino Library. These events provided opportunities for community members to learn about budget-related topics, offer feedback, and gain a deeper understanding of the City's current budget challenges and the strategies being implemented to address them.
Furthermore, City staff hosted a Budget Town Hall event on May 18, 2023. This event served as a platform for residents to actively participate, sharing their insights, concerns, and questions regarding the budget. By facilitating open dialogue, the City aimed to ensure transparency and foster a collaborative approach to budget decision-making.
Through these comprehensive outreach efforts, the community was informed about the budget challenges faced by the City and had the opportunity to contribute their perspectives. The engagement of residents through the Community Budget Survey and various outreach events will play a crucial role in shaping the City's approach to expenditure reduction and revenue generation strategies, emphasizing the importance of resident involvement in the decision-making process.
General Plan Consistency and Environmental Compliance of the Capital Improvement Plan State law and the Cupertino Municipal Code (Section 2.32.070(C)) require the Planning Commission to review the CIP for consistency with the City's General Plan (General Plan: Community Vision 2015 - 2040). The Planning Commission reviewed the FY 2023-24 Proposed CIP Budget on March 28, 2023, and found that the FY 2023-24 Proposed CIP is consistent with the City's General Plan and that this consistency determination is exempt from CEQA (see resolution Attachment H).
Sustainability Impact
No sustainability impact.
Fiscal Impact
City staff recommends establishing an Operating Budget of $117,645,365 and a Capital Improvement Program Budget of $4,054,000 for FY 2023-24.
California Environmental Quality Act
City staff has independently studied the Proposed CIP and determined that the CIP is exempt from environmental review pursuant to the exemption in Title 14-California Code of Regulations, §15061(b)(3), and §15378, in that it can be seen with certainty that there is no possibility that this CIP budget action will have a significant effect on the environment due to the approval of the budget, and does not involve approval of any specific project that may have a significant effect on the environment. Each proposed project will be evaluated to determine if the California Environmental Quality Act (CEQA) applies. As applicable, each project will conduct the appropriate level of environmental analysis.
Prepared by: Thomas Leung, Budget Manager
Reviewed by: Kristina Alfaro, Director of Administrative Services Approved for Submission by: Pamela Wu, City Manager
Attachments:
A – Draft Resolution – Operating Budget for Fiscal Year 2023-24 B – Draft Resolution – Capital Budget for Fiscal Year 2023-24 C – Draft Resolution – Appropriations Limit for Fiscal Year 2023-24 D – Budget Adjustments Summary and Detail
E – Appropriations Limit for Fiscal Year 2023-24
F – Appropriations Limit Price and Population Factors for Fiscal Year 2023-24 G – Responses to Proposed Budget Study Session Questions H – Planning Commission Adopted Resolution
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