Item No.
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: OFFICE OF THE CITY MANAGER
BY: STEPHEN W. HANNAH, DIRECTOR OF FINANCE
DATE: JUNE 25, 2024
SUBJECT: ADOPTION OF THE PROPOSED BUDGET FOR THE 2024-2025 FISCAL YEAR
EXECUTIVE SUMMARY
The City Council will hold a public hearing and, after concluding the hearing, adopt the Fiscal Year (FY) 2024-2025 Annual Budget, GANN Limit, and personnel additions and changes as specified in the attached Resolution No. 24-8245 and Exhibit A of the Resolution.
RECOMMENDATION
That the City Council:
1.Conduct a Public Hearing considering the adoption of the City’s Fiscal Year 2024-2025 Annual Budget and Appropriations Limit (GANN Limit), and
2. Adopt Resolution No. 24-8245, adopting the Fiscal Year 2024-2025 Budget and Annual Appropriations Limit (GANN Limit).
BACKGROUND
The Charter of the City of Downey requires adoption of the annual budget on or before June 30 of each fiscal year. In accordance with the annual budget cycle, the City’s budget process began in in the beginning of the calendar year with the annual City Council goals- setting workshop. In keeping with the City Council five-overarching priorities and fiscal year budget goals, the process was continued with the development of the budget through budget meetings between department heads and executive leadership, City Council Budget Subcommittee, City Council Budget Workshop, and publishing of public notice of a hearing to adopt the budget for the upcoming fiscal year. The City Council Goal Setting Workshop was held on February 15, 2024, and provided valuable input to inform priorities for the upcoming budget preparation. Additionally, the City launched the Downey Discussion in April 2024 as part of this year’s budget process as a follow up to the Downey Forward, 2030 Strategic Plan efforts. The Downey Discussion gathered input from the community to hear their priorities as the City prepares its budget. Key areas of focus were related to public safety.
APPROVED BY
CITY MANAGER
RESOLUTION ADOPTING 2024-2025 ANNUAL BUDGET
JUNE 25, 2024
PAGE 2
The City conducted a budget study session on May 20, 2024. During the study session, the overall budget, General Fund budget, and the addition of eleven fulltime and one part time positions were discussed. These additions were offset by the deletion of three fulltime and one part time positions for a net change of eight fulltime positions.
Additionally, each department presented details about their budget, their accomplishments, and their upcoming fiscal year’s goals.
ANALYSIS
The total proposed annual operating budget is $284,936,760 and includes the cost of personnel, operations, materials, supplies, capital equipment, capital improvement projects, and transfers to other funds. The proposed General Fund portion of the budget is $124,215,608 in operating expenditures and based upon estimated General Fund revenues of $125,580,565. The City’s basic services, including police, fire, public works, parks and recreation, library services, community development, and administrative services (such as executive leadership, human resources, and financial services), are all funded from the General Fund.
The City Council’s five strategic priorities were integral in the development of the annual budget goals and objectives. These goals and objectives became the foundation for the budgetary proposals. The attached budget transmittal letter provides a more detailed overview of the proposed FY 2024-2025 budget.
The Fiscal Year 2024-2025 budget contains a number of organizational changes. The Changes include the movement of Information Technology to the City Manager Office from Finance.
Consistent with the priorities of the City Council and/or operating needs of the City a number of new positions and position changes have been included within the proposed budget. The specifics of those personnel changes are listed within the attached resolution. The attached resolution also contains the GANN limit information required to adopt the City’s annual budget.
Economic factors that influenced the preparation of this year’s budget
Elevated interest rates to address inflation levels continue to impact consumer confidence and buying behavior. The impact of this extended period of above average interest rates has been particularly heavy on the housing market where year-over-year sales of single-family homes for the 12-month periods ending December 31, 2022 and 2023 have fallen by 21.2 percent. Alternatively, the market has seen an increase in the overall sale price of homes, as the median sales price on Los Angeles increased 12.1 percent from the previous year. Despite the slowdown in home sales, the market is expected to sustain moderate growth in property tax revenue for the City, driven in part by increases in median sales prices.
RESOLUTION ADOPTING 2024-2025 ANNUAL BUDGET
JUNE 25, 2024
PAGE 3
With the fairly unfavorable view for economic growth during the upcoming fiscal year, the risk that consumer spending will slow is heightened. This could have negative impact on Downey’s sales tax revenues and other transaction-based revenue sources.
The elevated cost for goods and services used for all City operations continues to cause concern. Whether it is for construction materials for a public works project, labor costs for a subcontractor, or contract related costs for professional services, all have seen increases in pricing as a result of these rate increases over the last year.
The proposed budget
The City of Downey proposed FY 2024-2025 budget is structurally balanced for operations. The revenues and expenditures for all other services for which the City receives restricted use funding, as well as for the City’s utility operations, are also included in the proposed budget document.
The summary of estimated Revenues, Transfers, and Appropriations for all City fund is:
The decrease in Special Revenue Funds reflects the use of special funding sources for multiple-year capital and capital-like projects. The decrease in enterprise fund balance reflects the expected use of grant resources during the upcoming fiscal year.
The General Fund Reserve is projected to be $36,587,000 at the conclusion of FY 2024- 2025, which is line with the City’s General Fund Reserve Policy.
The attached Resolution adopts the City’s proposed annual budget and sets the City’s annual appropriations limit (GANN Limit) as required by the City Charter and by State law.
Estimated Revenues,Appropriations Projected
Beginning Transfers In And Ending
Fund and Other Transfers Fund
Fund Type Balance Resources Out Balance
General Fund 52.4$ 125.6$ 124.2$ 53.7$ Reserve Funds (0.3) 6.5 6.1 0.1 Special revenue Funds 39.7 42.2 56.5 25.5 Capital Project Funds 13.6 27.9 37.8 3.7 Debt Service Funds 11.5 13.9 12.2 13.2 Enterprise Funds 17.7 24.5 39.4 2.9 Successor Agency Fund - 1.3 0.8 0.5 Internal Service Funds 5.9 6.8 8.0 4.8 Total 140.4$ 248.7$ 284.9$ 104.2$
RESOLUTION ADOPTING 2024-2025 ANNUAL BUDGET
JUNE 25, 2024
PAGE 4
CITY COUNCIL PRIORITIES
Fiscal Responsibility
Public Engagement
FISCAL IMPACT
Approval of the adoption of today’s public hearing and resolution will satisfy Article 12, Section 1204 of the City Charter of the City of Downey which requires that on or before June 30, the City Council shall adopt the budget by majority vote.
ATTACHMENTS
Attachment A – City Manager’s Transmittal Letter
Attachment B – Resolution No. 24-8245, adopting the FY 2024-2025 Budget and Annual Appropriations Limit.
2024-2025 FISCAL
YEAR
City Manager’s Transmittal Letter
City of Downey | FY 2024-2025 Proposed Annual Operating Budget | 1
TABLE OF CONTENTS
CITY COUNCIL PRIORITIES, GOALS, AND PERFORMANCE INDICATORS .................................................................... 3 FISCAL YEAR 2023-2024 BUDGET GOAL SUCCESSES ................................................................................................ 3 FISCAL YEAR 2024-2025 KEY BUDGET GOALS ........................................................................................................... 4 Performance Indicators ........................................................................................................................................ 4 ECONOMIC OUTLOOK ............................................................................................................................................... 5 Housing ................................................................................................................................................................. 5 Unemployment and Consumer Confidence ......................................................................................................... 5 BUDGET PROCESS ..................................................................................................................................................... 6 Basis of Budgeting ................................................................................................................................................ 6 Budget Controls .................................................................................................................................................... 7 BUDGET HIGHLIGHTS ................................................................................................................................................ 7 Revenues and Projections .................................................................................................................................... 7 Expenditures and Projections .............................................................................................................................. 8 Capital Projects ..................................................................................................................................................... 8 Employee Service Costs ........................................................................................................................................ 8 BUDGET CHALLENGES ............................................................................................................................................... 9 Retirement Costs ................................................................................................................................................ 10 Health Care Premiums ....................................................................................................................................... 10 Minimum Wage Increases .................................................................................................................................. 10 Inflation .............................................................................................................................................................. 11 Staffing Levels ..................................................................................................................................................... 11 Infrastructure Investment .................................................................................................................................. 11 Community Aspirations ...................................................................................................................................... 11 LOOKING BEYOND FISCAL YEAR 2024-2025 ........................................................................................................... 12 Additional Revenue Measure ............................................................................................................................. 12 CONCLUSION .......................................................................................................................................................... 13
City Manager’s Transmittal Letter
City of Downey | FY 2024-2025 Proposed Annual Operating Budget | 2
June 20, 2024
Dear Mayor Trujillo and Members of the City Council:
In accordance with the City Charter, I’m pleased to present a structurally balanced operating budget of $284 million for Fiscal Year (FY) 2024-2025 for the City Council’s consideration. Staff has worked diligently to construct a budget that provides high-quality services to the City of Downey, and which contributes to the quality of life of residents, businesses, and visitors to our community. It's important to acknowledge the dedication of our staff in assembling the budget.
Our team's commitment is truly commendable!
The budget is comprised of an operating plan, a five-year capital improvement program, and appropriations for debt service and other uses. This document continues the City’s strong record of prudent fiscal stewardship, and ability to adapt to fiscal pressures amidst some uncertainty in the economic outlook. It also demonstrates the City’s commitment to high-quality customer service, while experiencing a period of organizational change and transition. The budget conservatively estimates the City’s revenues, maximizes available resources, maintains fiscal reserves, and prudently recommends expenditures to work toward achieving the priorities and objectives of the City Council.
Further, the budget establishes a framework to meet the needs of the community, while also seeking ways to fund and enhance programs and services under the guidance of the City Council’s five overarching priorities of:
• Fiscal Responsibility;
• Economic Vibrancy;
• Efficiency & Adaptability:
• Quality of Life, Safety & Infrastructure; and
• Public Engagement.
Several objectives have been identified for each of the above priorities, which were discussed with the City Council at its Strategic Planning and Goal Setting Workshop this spring. Outreach was also done through the City’s Downey Discussion Initiative to gather input from the public regarding City priorities.
These objectives are discussed in the immediate section below. The remainder of this budget message will provide a greater overview of the City’s financial program for the next year and, the major priorities and challenges that shaped the budget.
Figure 1: Roger
Bradley, City Manager
City Manager’s Transmittal Letter
City of Downey | FY 2024-2025 Proposed Annual Operating Budget | 3
CITY COUNCIL PRIORITIES, GOALS, AND PERFORMANCE INDICATORS
The City Council’s five overarching priorities drive the development of the annual budget goals and objectives, which are the basis for the budgetary proposals. The individual department goals described in each department section was confirmed during the City Council’s annual goal-setting workshop as supporting the City Council’s five priority areas.
FISCAL YEAR 2023-2024 BUDGET GOAL SUCCESSES
Notable successes from Fiscal Year 2023-2024 goals include:
• Continued to filled key vacancies and returned organizational stability to the City
• Received budget awards from GFOA and CSMFO
• Initiated and developed the Downey Forward, 2030 Strategic Plan • Record attendance at the City of STEM event held at the LA Historic State Park (25,000-30,000)
• Enhanced the Plan Check Process by adding key personnel and launching the plan check submittal portal, Accela Citizens Access. • Continued fostering growth and investment in Downtown Downey with the Downey Farmers Market, approval to install bollards, procurement of design services for the gateway sign, painting of the parking structure, and enhanced security coverage and police detail. • New Community Garden site selected with design underway. • Held the 2nd annual Special Needs Resources Fair.
• Hired Additional Code Enforcement Staff to enhance effectiveness and efficiency, and allow for the implementation of a proactive enforcement program.
• Continued homeless assistance efforts, conducting outreach and clean-ups on alternating weeks.
• Held 3rd annual Touch-a-Truck Event
• Introduced Police facility dog, Howdy.
• Approved funding for the Downey Rose Float Association to guarantee their success and effective representation of the City. • 2024 John S. Todd Award from Contract Cities for the Downey Police Department with LA County for its Mental Health Unit • 2024 Sustainability Award from the Southern California Association of Governments for the Solar Improvement Project.
• Hosted the 24th Police Citizens Academy and 3rd Youth Academy • Approved Pets for Fur-st Responders Program, a no-cost pet adoption partnership with SEAACA for Downey first responders.
Figure 2: City of STEM
Figure 3: 2024 Sustainability Award
Figure 5: Facility Dog, Howdy
Figure 4: 2024 Downey Rose Float
City Manager’s Transmittal Letter
City of Downey | FY 2024-2025 Proposed Annual Operating Budget | 4 FISCAL YEAR 2024-2025 KEY BUDGET GOALS
The following are the key budget goals for Fiscal Year 2024-2025. A more comprehensive list is shown within each department's budget section.
Performance Indicators
In alignment with the City Council’s five overarching priorities; the City has devised a variety of Performance Indicators to track Department efficiencies and effectiveness. These indicators are noted in each of the Department sections and compare annual targets to actual data and projections.
City Manager’s Transmittal Letter
City of Downey | FY 2024-2025 Proposed Annual Operating Budget | 5
ECONOMIC OUTLOOK
Housing
Rising interest rates to address historic inflation levels have impacted the housing market, in terms of sales
volume and median sales prices. In March 2024,
statewide median sales prices increased by 7.7 percent, while home sales decreased by 4.4 percent. In Los
Angeles County, the median sales price increased 12.1
percent from the previous year, while the number of
sales dropped by 10.2 percent.
A decline in home sales in Downey affects the turnover
rate of homeownership in the City, which is usually
driven by home sales. This slowdown may moderate the
growth in property tax revenue received by the City, as properties under California State Proposition 13 cannot be reassessed at market values until a change in ownership occurs. However, assessment values, even if below market, still undergo an annual inflationary adjustment determined by the County Assessor, capped at a maximum of two percent per year. Despite the anticipated ongoing slowdown in home sales in the coming year, the market is expected to sustain moderate growth in property tax revenue for the City, driven in part by increases in median sales prices.
Unemployment and Consumer Confidence
As of March 2024, California's unemployment rate remained at 5.3 percent as the State's employers added 28,300 nonfarm payroll jobs to the economy, according to data released by the California Employment Development Department. In Los Angeles County, the rate was at 5.2 percent. In Downey, the unemployment rate was listed at 4.9 percent as of March 2024.
While the unemployment rate has returned to pre-COVID-19 levels, consumer confidence is at its lowest since July 2022 as a result of persistent high inflation and increasing cost of everyday items such as food and gas. This is compounded by growing concerns about future business conditions, jobs, and income. With a pessimistic view of the economy growing, and particularly among those on a fixed income, consumer spending is anticipated to slow with consumers anticipating a cautious approach to spending. This could have negative impacts on Downey’s sales tax revenues and the Figure 6: Downey Neighborhood
City Manager’s Transmittal Letter
City of Downey | FY 2024-2025 Proposed Annual Operating Budget | 6 overall economic growth of the business community. Additionally, this reduction in sales tax revenue could impact the City's ability to fund essential services, infrastructure projects, and other initiatives.
As a result, this budget represents an increase in investment in economic development to not only recruit and expand the economic base of the community, but to increase business retention activities to help current businesses thrive within Downey.
BUDGET PROCESS
The City’s budget is developed by the following framework and timeline:
1. Focusing on the long-term fiscal health of the City.
2. Building a prudent reserve;
3. Developing long-term strategies to reduce unfunded liabilities;
4. Controlling labor costs while minimizing impacts to staff;
5. Allocating one-time revenue for one-time expenses;
6. Requiring enterprise and grant funds to balance revenues with expenses and new programs to pay for themselves; and
7. Any new expenditure requiring either additional revenue or expenditure reductions.
Basis of Budgeting
The budgeting (accounting and reporting) policies of the City conform to Generally Accepted Accounting Principles (GAAP) applicable to state and local governments. These principles include standards prescribed by the Governmental Accounting Standards Board (GASB) which includes the statements and interpretations of the National Council on Governmental Accounting and the principles prescribed by the American Institute of Certified Public Accountants in the publication entitled Audits of State and Local Governments. The budget differs from the annual financial reports issued by the City in two ways: The budget does not show depreciation expense, and it does not show the value of employee leave balances, in keeping with traditional municipal budgetary conventions. These expenses are, however, reported in the Annual Comprehensive Financial Report (ACFR).
City Manager’s Transmittal Letter
City of Downey | FY 2024-2025 Proposed Annual Operating Budget | 7
Budget Controls
Supplemental appropriations can be approved through minute action or a resolution approved by a simple majority vote of the Council. With the exception of transfers between personnel costs and operations/services costs, the City Manager is authorized to transfer amounts between or within departments or programs within any fund. The Council must approve any transfer which alters the total appropriations on any fund.
Departments monitor reports that are issued on the 15th working day of each month for the preceding month to ensure expenditures are properly charged and to ensure there are appropriate funds for future expenditures.
At any time during the fiscal year, Departments report to the City Manager and Finance Director of any significant budget variance that cannot be reconciled with the division/department responsible for incurring the variance. Additionally, upon review by the department Directors, purchase orders are transmitted to the Finance Department for verification of budget compliance.
BUDGET HIGHLIGHTS
The proposed overall City-wide Fiscal Year 2024-2025 Budget for all funds is $284,937,000. Overall, this budget is an increase of roughly $12,649,000, or 4.6 percent compared to Fiscal Year 2023- 2024.
The Fiscal Year 2024-2025 General Fund expenditure budget of $124,216,000 is funded with Fiscal Year 2024-2025 estimated revenues of $125,581,000, with a surplus of $1,365,000.
Revenues and Projections
Overall, Fiscal Year 2024-2025 General Fund Revenue is projected to be $125,581,000, which is 6.3% percent higher than Fiscal Year 2023- 2024.
The City’s Fiscal Year 2024-2025 revenue projections, which extend five years into the future, are done on an annual basis to responsibly inform operations and planning.
Figure 8: CSMFO Budget Excellence
Award
Figure 7: GFOA Distinguished Budget
Presentation Award
City Manager’s Transmittal Letter
City of Downey | FY 2024-2025 Proposed Annual Operating Budget | 8 Property taxes provide 29.8 percent of
the City’s General Fund revenue, while
Sales Tax revenues, including Measure
S, account for 32.8 percent of the City’s
revenue stream. Property Tax and
Sales Tax are projected to have low to
moderate growth. The City’s Utility
Users Tax, which the City’s voters
adjusted in 2014, will continue its stable
growth.
Overall, economic indicators are
suggesting a 0.3 percent annual growth
in the job market with unemployment
levels expected to remain relatively
stable in the near future. However,
growing pessimistic views continue to
impact consumer confidence, and
overall consumer spending resulting in
impacts to City Sales and Use Tax
revenue estimates.
Expenditures and Projections
Proposed General Fund expenditures are
$124,216,000, which is a 7.9 percent increase
over last year’s adopted General Fund budget.
In addition to the Goals mentioned earlier under “City Council Priorities, Goals, And Performance Indicators”, the budget proposes continued funding for ongoing public safety services and annual public events, increased revitalization of commercial corridors, second dog park, City service request app, and for the development of a new website.
Capital Projects
Capital improvements are required to maintain the City’s physical infrastructure. The City’s FY 2024-2025 CIP
appropriates $93,352,000 for street, sewer, light, stormwater, water, traffic and public facility improvements. Capital improvement projects are funded by Measure S, Proposition C, Measure R, Measure M, 2017 Road Maintenance Rehabilitation Act (SB 1), and other revenues sources.
Employee Service Costs
The primary source of service to the public is through employees, and as such, the Employee Service Costs (consisting of salaries, wages and employee benefits) make up the largest component of the General Fund expenditures. There are seven represented employee groups in the City: Downey City Figure 9: Street repairs
Property Taxes (29.8%)Sales and Use Taxes (22.2%)
Measure S Sales (10.6%)Licenses, Permits & Fees (9.9%)
Utility Users Tax (6.8%)Other Revenue (7.1%)
Other Taxes (3.6%)Charges for Services (3.0%)
Operating Transfers (3.9%)Franchise Fees (3.0%)
FY 24-25 General fund Estimated Revenue
City Manager’s Transmittal Letter
City of Downey | FY 2024-2025 Proposed Annual Operating Budget | 9 Employee’s Association-Maintenance, Downey City Employee’s Association-Miscellaneous, Downey Fire Management Association, Downey Firemen’s Association, Downey Police Management Association, Downey Police Officer’s Association, and Downey Public Safety Auxiliary Association.
Executive and Management positions remain unrepresented.
The City strives to provide sufficient staffing levels within its limited resources, with a focus of providing services, public safety, and an overall quality of life that surpasses surrounding cities.
In FY 2023-2024, the City completed labor negotiations with the Downey City Employees’ Association- Maintenance Unit providing a 12% percent total salary increase over the next two years with Classic employees contributing an additional 3% percent towards their CalPERS pension costs.
Although there have been increases in personnel in recent years, the City’s full-time budgeted staffing continues to be less than what it was over a decade ago. From FY 2008-2009 to FY 2024-2025, full- time budgeted staffing has reduced from 481 to 449, a 7.1 percent decrease to address budget challenges and improve organizational alignment. Over the 15 years since the reduction in staffing in 2008, the community has continued to grow and has increased its needs for high quality service provision. Staff has worked diligently to meet those demands with less manpower than has been available in the past. Over the next few years, the City will be challenged to prudently grow its staffing levels to meet the needs of a thriving community and continue to ensure high quality services are available here in Downey.
For the FY 2024-2025 budget, a total of 8 positions were added to the budget to improve service levels and department efficiencies. These positions will assist in streamlining services and increasing response times to the public. Utilizing Measure S Funding, the Police Department is adding two Community Service Officers, a Police Records Specialist, and a Public Safety Dispatcher and Parks and Recreation is adding a Program Coordinator. To more appropriately support City operations, Finance added a Budget Analyst, Payroll Specialist, Revenue Supervisor, and Senior Accountant while eliminating two Principal Accountants and an Accountant position. Funding for these positions will be offset by reductions in contract services and anticipated increases in City revenues.
While the City’s revenues have increased marginally as the result of intensive business development and retention efforts, these revenues are only enough to meet the ever-increasing costs of CalPERS pensions, and so while staff’s continued outstanding performance and dedication are what has made this organization so successful, there have been modest increases to compensation in the past.
BUDGET CHALLENGES
City Manager’s Transmittal Letter
City of Downey | FY 2024-2025 Proposed Annual Operating Budget | 10 While the City is making progress to meet its financial obligations, there continues to be major challenges that need to be made that impact City finances. The City is continuing to review strategies to address these challenges to ensure they become manageable.
Retirement Costs
The City contracts with the California Public Employees retirement System (CalPERS), to provide retirement benefits to full-time employees. On January 1, 2013, the State adopted California Public Employee’s Pension Reform Act (PEPRA) in an effort to control rising pension costs. Members who became CalPERS members on or after January 1, 2013 or have been separated from service for longer than six months, are considered “new” members”, and are required to pay half of the normal cost towards their pension contribution.
In recent years, CalPERS has made changes that will continue to increase employer retirement costs.
These changes include: 1) new CalPERS amortization periods and smoothing methods for employer contributions, 2) changes to actuarial assumptions including projecting longer life expectancies and demographic assumptions, and 3) reducing the discount rate of return on investments from 7.5 percent to 7.0 percent. These changes continue to significantly increase the City’s retirement costs over the next several years.
In order to control rising retirement costs, the City implemented a new tier on January 11, 2012 where each new staff member in the City enters under either a second-tier or pension reform (PEPRA) retirement formula, which will continue the slow reduction of the City’s unfunded pension liability in the next twenty to thirty years.
However, despite these efforts, like many cities, the City’s contribution rates to CalPERS continued to increase as PERS adjusts its discount rate (the rate of return that CalPERS predicts it will achieve on its investments of public pension funds). Fortunately, the City had the foresight to take a proactive measure of refinancing its CalPERS Unfunded Actuarial Liability (UAL) in early 2021 resulting in a projected gross savings of $65 million to the City and increasing the City’s Pension Funding Level from 67.1 percent to 80.7 percent as of June 30, 2023.
Health Care Premiums
Healthcare costs for CalPERS-negotiated healthcare plans are expected to increase over the prior year. While the City has not received data from CalPERS regarding upcoming year costs, the City anticipates an increase similar to prior years, approximately 4-5 percent. Anticipating future years’ healthcare cost increases and to help offset rising healthcare premiums, in Fiscal Year 2017-2018 the City negotiated with labor groups to require staff, for the first time ever, to begin contributing toward their employer-provided healthcare costs.
Minimum Wage Increases
In April 2016, Governor Brown signed SB 3 (Leno), which established a state minimum wage phase in requirement that increases the minimum wage to $15 per hour by 2022. Additionality, after the state minimum wage reaches $15 an hour for all employees, the rate is adjusted annually for inflation based on the national CPI for urban earners and clerical workers at a cap of 3.5 percent. The current state
City Manager’s Transmittal Letter
City of Downey | FY 2024-2025 Proposed Annual Operating Budget | 11 minimum wage rate is at $16.00. These rate increases have impacted City Department recruitments, particularly for part-time employees.
Inflation
Inflation is of significant concern for the City. As the cost of materials rises, the City has experienced unexpected increases in contractor bids for capital projects, delays in receiving necessary components for equipment projects, and increases in fuel and labor costs due to a tight and competitive labor market. While inflation has not caused the cancellation of capital projects, the continual high cost may cause the City to re-evaluate the resources it has available for certain projects in the future. The City must continue to monitor inflation trends closely and adapt financial strategies to mitigate its impacts effectively.
Staffing Levels
In the coming years, reaching sufficient staffing levels to meet the demands for public services that Downey has come to expect will remain a significant challenge. Labor market challenges, including issues related to compensation and benefits, will continue to hinder efforts to maintain expected service levels. Additionally, competition for skilled workers across various sectors adds further complexity to recruitment efforts. Low staffing levels not only strain existing staff but also impede the City's ability to deliver essential services efficiently, impacting residents' quality of life and satisfaction with municipal operations. Therefore, addressing these challenges and strategically increasing staffing levels are essential for sustaining Downey's growth and ensuring the continued provision of high-quality services to its residents.
Infrastructure Investment
Investing in infrastructure is crucial to the long-term vitality and sustainability of Downey. Delaying necessary infrastructure investments can lead to a host of issues, including deteriorating roads, bridges, and utilities, which not only pose safety risks but also impede economic growth and quality of life for residents. The City must continue to prioritize timely investments in infrastructure to prevent costly failures and avoid disruptions to essential services. While fiscal responsibility is crucial, neglecting infrastructure needs can ultimately prove more expensive in the long run due to increased repair and replacement costs, as well as potential impacts to the City's reputation and economic competitiveness. Therefore, it is imperative for the City to carefully consider infrastructure investments as part of its fiscal planning and ensure that adequate resources are allocated to address critical infrastructure needs proactively.
Community Aspirations
The City of Downey recently initiated the Downey Discussion campaign, inviting the community to share their service priorities. Community survey responses have underscored the importance of public safety, particularly in relation to Police and Fire services provided by the City. Throughout each community conversation regarding service priorities, it has become evident that residents highly value swift 911 response times, overall public safety, and the preservation of the City's aesthetics and community character. As Downey prides itself on being a full-service city, maintaining robust Police and Fire Departments presents ongoing challenges. Balancing these community values with the fiscal responsibilities of maintaining such services is crucial to meeting the expectations of residents and preserving the unique identity of Downey.
City Manager’s Transmittal Letter
City of Downey | FY 2024-2025 Proposed Annual Operating Budget | 12
LOOKING BEYOND FISCAL YEAR 2024-2025
To ensure long-term fiscal viability, the City has made substantial changes to compensation, retirement, and
healthcare structure; sought federal, state, local and private funding for projects to support our parks, library, police, fire, water, and community development needs; and supported
state and federal legislation to increase funding for
infrastructure projects.
Longstanding infrastructure and maintenance projects will update City facilities and ensure viability for the next 20-30 years, thanks to funds from Downey’s Measure S, the
County’s Measure M, and the State’s SB 1. Specifically, the 2017 transportation funds and local sales tax dollars have helped to stabilize infrastructure resources over the next twenty to thirty years.
Additionally, the City’s bond issuance using Measure M and Measure R funds helped accelerate projects and limit future increased construction costs. Over $30,000,000 in street repairs were completed this past year. Additionally, the City maximized one-time federal revenue dollars such as ARPA funds, to advance City infrastructure creating generational impacts.
The city's prudent management of revenue ensures that it can consistently deliver high-quality services, whether during periods of economic growth or in times of uncertainty. The City prepares a five-year capital improvement plan to track projects, costs, funding sources, and potential impacts to the General Fund due to ongoing maintenance of these projects. By forecasting for the next five years, it allows City staff to properly budget and allocate resources to future projects, while also anticipating and minimizing, when possible, effects to the General Fund.
Further, Downey is on a sustainable long-term path in terms of state-of-the art infrastructure repair and regional economic development opportunities that will have tremendous impacts for decades.
These include the redevelopment of the Rancho Los Amigos South Campus, expansion of the Columbia Memorial Space Center, and the development of the Southeast Gateway (formerly West Santa Ana Branch) light rail line and station in Downey.
Incorporating these various projects and future legacy projects, the City completes long-range revenue and expenditure projections to assist with this effort of financial stewardship.
As the City remains focused on long-term infrastructure and economic development efforts, the City is also proactively exploring methods of expanding its revenue base to support and enhance services.
Additional Revenue Augmentation
The City is currently considering the feasibility of placing a revenue measure such as a hotel users’ tax (also known as the Transient Occupancy Tax) or a Transactions and Use Tax (Sales Tax) on the November 2024 ballot to update the rate along with modernizing the City’s municipal code. A hotel users’ tax is not likely to impact development and is not a revenue measure that affects residents. A Figure 10: Residential Streets Pavement
Rehabilitation
City Manager’s Transmittal Letter
City of Downey | FY 2024-2025 Proposed Annual Operating Budget | 13 potential hotel users’ tax update could generate an additional $950,000 to help maintain City services. Additionally, the City is exploring the feasibility of proposing a sales tax measure of ¼ cent on the ballot as an alternative to the hotel users’ tax. This measure aims to supplement the annual revenue base, enabling the City to address increased demand for services and enhance its capacity to meet community needs. The estimated additional revenue of approximately $6 million annually would significantly contribute to the City's financial stability and empower it to fund essential public safety, City projects, programs, and services.
This revenue measure, if executed, would ensure that funds remain solely within the City to benefit the local community.
Leveraging this additional revenue measure would allow Downey to more comprehensively address local needs and support essential services. Failure to pursue a measure could lead outside agencies to compete for this ¼ cent and result in revenue being directed to the County or other agencies that do not directly benefit Downey. Most importantly, over the next several years, the City will need to expand its revenue base to ensure resources are available in order to continue to meet community service expectations and staffing needs.
CONCLUSION
The Fiscal Year 2024-2025 Budget provides the funding needed to meet the City Council’s fiscal year goals driven by the Council’s five overarching priorities. The City will continue to monitor many factors impacting revenues and expenditures, and look at strategic ways to continue achieving balanced budgets.
I would like to thank the City Council for its policy guidance and support, and our dedicated workforce for its efforts in developing this budget. With the continued collaborative efforts of the City Council, staff, and the Downey community, the City is well-positioned to continue providing high-quality services to Downey residents and businesses.
Respectfully Submitted,
CITY OF DOWNEY
Roger Bradley
City Manager
RESOLUTION NO. 24-8245
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DOWNEY
ADOPTING THE FISCAL YEAR 2024-2025 BUDGET AND THE ANNUAL
APPROPRIATIONS LIMIT
WHEREAS, the City Council has considered the proposed budget recommended by the City Manager for the Fiscal Year 2024-2025; and
WHEREAS, two Principal Accountants and one Accountant were removed from the Finance Department; and
WHEREAS, the addition of one Payroll Specialist, one Budget Analyst, one Revenue Supervisor, and one Senior Accountant were included in the Finance Department; and WHEREAS, the addition of one Associate Civil Engineer-Utilities was included in the Public Works Utilities Division; and
WHEREAS, the addition of two Community Service Officers, one Police Records Specialist, and one Public Safety Dispatcher were included in the Police Department; and WHEREAS, the addition of one Paralegal was included in the City Attorney’s Office; and WHEREAS, the addition of one Program Coordinator was included in the Parks and Recreation Department; and
WHEREAS, one Program Coordinator was removed from the Library Department; and WHEREAS, the addition of one Education Coordinator was included in the Columbia Memorial Space Center; and
WHEREAS, the reclassification of one Fire Building Inspector to Fire Inspector I/II to be more reflective of the scope of duties and responsibilities was included; and WHEREAS, the reclassification of Building Permit Technician to Senior Building Permit Technician to be more reflective of the scope of duties and responsibilities was included; and WHEREAS, the reclassification of one Management Analyst to Senior Management Analyst to be more reflective of the scope of duties and responsibilities was included; and WHEREAS, the position title change from City Planner to Deputy Director of Community Development was included; and
WHEREAS, the position title change from Housing Manager to Housing Grants Manager was included; and
WHEREAS, the newly established classifications of Education Coordinator and Fire Inspector I/II are non-exempt classifications and determined to be appropriately represented by the Downey City Employees’ Association – Miscellaneous Unit; and WHEREAS, the newly established classification of Budget Analyst is an exempt Middle Management at-will classification; and
ATTACHMENT B
RESOLUTION NO. 24-8245
PAGE 2
WHEREAS, the newly established classifications of Payroll Specialist and Paralegal are Confidential/ Exempt at-will classifications.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF DOWNEY DOES HEREBY RESOLVE AS FOLLOWS:
SECTION 1. The budget for the City of Downey for fiscal year 2024-2025 is hereby adopted as set forth in the statement of Summary of Resources and Requirements by Fund. The City Manager is hereby authorized to expend, in accordance with the laws of the State of California, the Charter of the City of Downey, and its ordinances, on behalf of the City Council, an amount of $284,936,760 for City operations as detailed in Exhibit “A”.
SECTION 2. City staff is directed to prepare and publish a final budget document incorporating those changes approved by Council.
SECTION 3. In accordance with Article XIIIB of the State Constitution, and using data furnished by the State Department of Finance and the Los Angeles County Assessor, the appropriations limit for Fiscal Year 2024-2025 has been calculated.
The limit has been computed by adjusting the appropriations limit for Fiscal Year 2023- 2024 as multiplied by the product of the percentage change in either California’s per capita personal income from the preceding year (3.62%) or the City’s total assessed valuation from the preceding year due to new non-residential construction (7.49%); and the percentage change in population from the preceding year of either the County of Los Angeles (-0.05%) or the City (-
0.15%). Since the percentage change in total assessed valuation due to new non-residential construction and the percentage change in the County’s population will provide greater benefit to the City, these factors have been selected to compute the fiscal year 2024-2025 appropriations limit. Using these factors, the appropriations limit for 2024-2025 is $306,953,236, which generally means that certain aspects of the budget cannot exceed this amount. The proposed budget for Fiscal Year 2024-2025contains appropriations subject to this limit of $84,435,500.
SECTION 4. The appropriations specified herein shall constitute the maximum amounts authorized for each department in each fund. The City Manager is hereby authorized to make budgetary transfers between departments in a fund if, in his opinion, such transfers are necessary and proper to the effective operation of the City; provided, however, that:
(a) Appropriations for personnel costs cannot be transferred to supply and service accounts.
(b) Any non-budgeted equipment, new or replacement, which costs $75,000 or more requires prior City Council approval.
(c) The City Manager will inform the City Council of the purchase of non-budgeted equipment, new or replacement that costs less than $75,000.
(d) Authorized manpower levels as specified in the Budget document are neither increased nor transferred without prior approval of the City Council. However, the City Manager may exceed authorized manpower levels on a temporary basis to provide for the effective training and orientation of new employees.
SECTION 5. For the fiscal year ending June 30, 2024, the amount of unassigned Fund Balance shall be deposited into Assigned General Fund balance accounts to (1) ensure the Emergency Reserve and the Stability Reserve are appropriately funded and (2) provide future resources for other significant City projects or needs.
RESOLUTION NO. 24-8245
PAGE 3
SECTION 6. The number and classification of employees as specified in the Budget and any amendments or revisions authorized by the City Council are hereby authorized for the fiscal year.
SECTION 7. The following pay ranges shall take effect to coincide with the pay period that includes July 1, 2024 as follows:
Classification Title Grade Pay Range
Payroll Specialist 01-227 $5,315.31 to $6,584.70 per month Budget Analyst 04-004 $6,656.92 to $8,246.73 per month Revenue Supervisor 04-004 $6,656.92 to $8,246.73 per month Education Coordinator 01-232 $5,772.79 to $7,151.44 per month Fire Inspector I 01-224 $5,464.51 to $6,767.67 per month Fire Inspector II 01-226 $6,010.96 to $7,446.64 per month Senior Building Permit Technician 01-171 $4,438.16 to $5,498.17 per month
SECTION 8. The City Manager, or designee, is hereby authorized to make all classification specification revisions in accordance with the FY 2024-2025 Budget.
SECTION 9. The City Clerk shall certify to the adoption of this Resolution.
APPROVED AND ADOPTED this 25th day of June, 2024.
_________________________________
MARIO TRUJILLO, Mayor
ATTEST:
______________________________
MARIA ALICIA DUARTE, CMC
City Clerk
APPROVED AS TO FORM:
______________________________
JOHN M. FUNK
City Attorney
RESOLUTION NO. 24-8245
PAGE 4
I HEREBY CERTIFY that the foregoing Resolution was adopted by the City Council of the City of Downey at a Regular meeting held on the 25th day of June, 2024, by the following vote, to wit:
AYES: Council Members:
NOES: Council Members:
ABSENT: Council Members:
ABSTAIN: Council Members:
MARIA ALICIA DUARTE, CMC
City Clerk
RESOLUTION NO. 24-8245
PAGE 5
EXHIBIT A
Exhibit A
Fund No.Fund
Estimated
Beginning
Balance
July 1, 2024
Estimated
Revenues
Transfers
from Other Funds
Total
Resources
Available
Operating
Expenditures Equipment Capital
Projects
Transfers to
Other Funds
Total
Requirements
Projected
Ending Fund
Balance
June 30, 2025
Fund
Fund No.General and Reserve Funds
10 General Fund 42,855,128$ 107,379,565$ 4,849,000$ 155,083,693$ 109,912,945$ -$ -$ 1,415,583$ 111,328,528$ 43,755,165$ General Fund 10 17 Measure S Operating 9,520,733 13,352,000 - 22,872,733 5,495,431 - - 7,391,649 12,887,080 9,985,653 Measure S Operating 17 Sub Total 52,375,861 120,731,565 4,849,000 177,956,426 115,408,376 - - 8,807,232 124,215,608 53,740,818 Sub Total 65 Civic Center 25,160 119,811 1,975,830 2,120,801 2,120,801 - - - 2,120,801 - Civic Center 65 73 Special Deposit Fund 67,600 - - 67,600 - - - - - 67,600 Special Deposit Fund 73 76 Liability Insurance (431,120) 4,385,631 - 3,954,511 3,954,511 - - - 3,954,511 - Liability Insurance 76 Sub Total (338,360) 4,505,442 1,975,830 6,142,912 6,075,312 - - - 6,075,312 67,600 Sub Total Total 52,037,501 125,237,007 6,824,830 184,099,338 121,483,688 - - 8,807,232 130,290,920 53,808,418 Total Special Revenue Funds
11 Federal Police Grant (231,516) 156,550 - (74,966) 116,577 - - - 116,577 (191,543) Police Grants 11 13 Fire Dept. Haz Material (72,788) 165,000 - 92,212 260,260 - - - 260,260 (168,048) Fire Dept. Haz Material 13 14 Federal Fire Grant 15,582 246,000 - 261,582 94,173 - - - 94,173 167,409 Federal Fire Grant 14 19 Federal Emergency Grants 495,287 1,100,000 - 1,595,287 160,000 - - 900,000 1,060,000 535,287 Federal Emergency Grant 19 20 Waste Reduction (299,334) 726,174 - 426,840 930,288 - - - 930,288 (503,448) Waste Management 20 22 Air Quality 320,077 150,000 - 470,077 187,464 - 149,000 - 336,464 133,613 Air Quality 22 23 Street Lighting 2,095,072 3,201,000 - 5,296,072 2,489,760 - 360,000 - 2,849,760 2,446,312 Street Lighting 23 24 Learning Center 681,145 288,000 1,117,884 2,087,029 2,087,029 - - - 2,087,029 - Learning Center 24 25 TDA Article III (54,524) - - (54,524) 170 - 181,000 - 181,170 (235,694) TDA Article III 25 27 Grants-In-Aid - 1,329,000 - 1,329,000 146,428 - - - 146,428 1,182,572 Grants-In-Aid 27 28 CDBG 716,587 1,269,000 - 1,985,587 1,224,448 - - - 1,224,448 761,139 CDBG 28 29 Federal Home Program 352,409 2,070,000 - 2,422,409 1,739,175 - - - 1,739,175 683,234 Federal Home Program 29 30 Gas Tax - 3,124,000 - 3,124,000 141,010 - - 2,799,000 2,940,010 183,990 Gas Tax 30 31 LSTA Fund 384 - - 384 - - - - - 384 LSTA GRANT 31 32 State - SB1 6,607,484 2,980,000 - 9,587,484 - - 6,483,000 - 6,483,000 3,104,484 SB1 32 47 Art In Public Places 558,260 95,000 - 653,260 550 - - - 550 652,710 Art in Public Places 47 50 Storm Drain Fund 7,452,254 12,440,803 - 19,893,057 524,888 - 20,423,508 - 20,948,396 (1,055,339) Storm Drain Fund 50 54 Transit - "PROP. C"4,239,704 2,755,000 - 6,994,704 36,287 - 3,717,714 1,000,000 4,754,001 2,240,703 Transit - "PROP. C"54 55 Transit - "PROP. A"5,528,066 3,213,000 1,000,000 9,741,066 3,714,669 - - - 3,714,669 6,026,397 Transit - "PROP. A"55 56 Transit - "MEAS. R"2,545,804 2,113,000 - 4,658,804 15,275 - 2,663,075 838,000 3,516,350 1,142,454 Transit - "MEAS. R"56 57 Transit - "MEAS. M"2,884,889 2,327,000 - 5,211,889 725 - 2,049,276 1,023,000 3,073,001 2,138,888 Transit - "MEAS. M"57 74 State Asset Forfeiture 93,485 36,750 - 130,235 - - - - - 130,235 State Asset Forfeiture 74 77 Public Access 1,290,173 116,000 - 1,406,173 - - - - - 1,406,173 Public Access 77 78 Asset Forfeiture 241,574 21,000 - 262,574 - - - - - 262,574 Asset Forfeiture 78 84 Housing 4,259,301 160,000 - 4,419,301 12,765 - - - 12,765 4,406,536 Housing 84 Sub Total 39,719,375 40,082,277 2,117,884 81,919,536 13,881,941 - 36,026,573 6,560,000 56,468,514 25,451,022 SUB TOTAL Special Revenue Funds
General Fund
SUMMARY OF RESOURCES AND REQUIREMENTS BY FUNDS
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Fund No.Fund
Estimated
Beginning
Balance
July 1, 2024
Estimated
Revenues
Transfers
from Other Funds
Total
Resources
Available
Operating
Expenditures Equipment Capital
Projects
Transfers to
Other Funds
Total
Requirements
Projected
Ending Fund
Balance
June 30, 2025
Fund
Fund No.Capital Project Funds
26 Grants (643,910) 23,713,267 - 23,069,357 21,275 - 23,713,267 - 23,734,542 (665,185) Grants 26 33 Measure S Capital 453,700 - 1,670,352 2,124,052 707,052 - - - 707,052 1,417,000 Measure S 33 34 NASA Infrastructure 256,955 7,000 - 263,955 - - - - - 263,955 NASA Infrastructure 34 36 Capital Project Firestone 517,642 - - 517,642 357 - 20,130 - 20,487 497,155 Capital Project 36 38 Vehicle Impact 6,216,002 2,275,000 - 8,491,002 2,267 - 4,805,000 - 4,807,267 3,683,735 Vehicle Impact 38 40 Capital Projects 6,778,042 3,000 235,166 7,016,208 1,075 - 8,141,697 404,000 8,546,772 (1,530,564) Capital Projects 40 Sub Total 13,578,431 25,998,267 1,905,518 41,482,216 732,026 - 36,680,094 404,000 37,816,120 3,666,096 SUB TOTAL Debt Service Funds
18 Pension Obligation Bonds 7,791,281 8,116,000 - 15,907,281 - - - - - 15,907,281 Pension Obligation Bonds 18 35 Measure S Debt Service 597,268 4,000 3,962,000 4,563,268 4,384,458 - - - 4,384,458 178,810 Measure S Debt Service 35 58 Measure M Bond 2021A 2,375,560 - 1,023,000 3,398,560 1,024,856 - 2,195,229 - 3,220,085 178,475 Measure M Bond 2021A 58 59 Measure R Bond 2021B 689,878 - 838,000 1,527,878 840,131 - 3,733,135 - 4,573,266 (3,045,388) Measure R Bond 2021B 59 Sub Total 11,453,987 8,120,000 5,823,000 25,396,987 6,249,445 - 5,928,364 - 12,177,809 13,219,178 SUB TOTAL Enterprise Funds
51 Water Fund1 11,845,605 17,712,000 - 29,557,605 17,699,046 - 12,917,000 900,000 31,516,046 (1,958,441) Water Fund 51 52 Golf Course Fund1 5,326,516 5,080,000 - 10,406,516 4,413,586 - - - 4,413,586 5,992,930 Golf Course Fund 52 72 Sewer Fund1 538,452 1,745,000 - 2,283,452 1,666,193 - 1,800,000 - 3,466,193 (1,182,741) Sewer & Storm Drain 72 Sub Total 17,710,573 24,537,000 - 42,247,573 23,778,825 - 14,717,000 900,000 39,395,825 2,851,748 SUB TOTAL 1 Only Unrestricted Net Position (Available Resources) are presented Internal Service Funds
91 Red. Oblig. Retirement - - - - 168,994 - - - 168,994 (168,994) Red. Oblig. Retirement 91 93 CRA Debt Service - 1,263,000 - 1,263,000 628,893 - - - 628,893 634,107 CRA Debt Service 93 - 1,263,000 - 1,263,000 797,887 - - - 797,887 465,113 Total Internal Services 134,499,867 225,237,551 16,671,232 376,408,650 166,923,812 - 93,352,031 16,671,232 276,947,075 99,461,575 TOTAL CITY BUDGET Internal Service Funds
61 Employee Benefit Fund 5,928,406 3,132,000 - 9,060,406 4,055,525 - - - 4,055,525 5,004,881 Employee Benefit Fund 61 62 Equipment Fund 20,456 3,665,000 - 3,685,456 - 3,934,160 - - 3,934,160 (248,704) Equipment Fund 62 5,948,862 6,797,000 - 12,745,862 4,055,525 3,934,160 - - 7,989,685 4,756,177 Total Internal Services GRAND TOTAL 140,448,729$ 232,034,551$ 16,671,232$ 389,154,512$ 170,979,337$ 3,934,160$ 93,352,031$ 16,671,232$ 284,936,760$ 104,217,752$ GRAND TOTAL Total Internal Service Funds
TOTAL CITY BUDGET
Enterprise Funds
Internal Service Funds
Successor Agency Funds
Total Successor Agency Funds
Capital Project Funds
Debt Service Funds
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