Business Item 5b
STAFF REPORT
City Council Business Item
DATE: June 3, 2024
TO: Honorable Mayor and Council Members
FROM: Aaron Felmlee, Finance Director
THRU: Merritt Perry, City Manager
SUBJECT: Adoption of Fiscal Year 2024-25 Budget, Resolution 2024-13 STAFF RECOMMENDATION:
1. Conduct a Public Hearing to consider the Fiscal Year 2024-25 Annual Operating Budget.
2. Adopt the City of Fortuna’s Annual Operating Budget for Fiscal Year 2024-25 through the adoption of Resolution 2024-13.
EXECUTIVE SUMMARY:
Staff is pleased to present a balanced budget for Fiscal Year 2024-25. Staff prepared the budget with the intent of providing the maximum amount of services to the community while still presenting a balanced budget. Staff prepared the budget primarily focusing on the following principles:
• Current services will be preserved at existing levels to the highest degree possible. • The budget will comply with State Constitution, City Charter and Municipal Code provisions.
• Working Capital balances will be examined to ensure balances are healthy enough to protect the City from any future uncertainties.
• Staff will strive to balance recurring expenditures with recurring revenues. • Department budgets will be developed to reflect the best estimates possible for the true cost of operations.
The City Council held (2) two public special budget workshops on the proposed fiscal year 2024- 25 Operating Budget. The first workshop was held on May 2 where staff presented the Proposed Budget and reviewed General Fund revenues and expenditures in depth with the City Council. The second workshop, held on May 9, focused on answering outstanding questions from the first workshop as well as reviewing in depth the City’s enterprise funds. An enterprise fund is a selfsupporting governmental fund that sells goods and services to the public for a fee. Monies generated from these funds cannot be used for General Fund purposes. These funds rely more heavily on service charges and less on tax and license revenue resulting in less volatility than the General Fund. The City’s enterprise funds consist of the Water Fund, Wastewater Fund, and Transit Fund.
Business Item 5b
The changes and adjustments discussed with the City Council at both special budget workshop have been incorporated into the Annual Operating Budget that can be found as attachment ‘B’. All changes made during and subsequent to these workshops are displayed in the below Chart.
In summary, the General Fund has a net surplus of $467 after expense rollovers are removed.
Expense or project rollovers are projects that were budgeted in the previous fiscal year’s budget (utilizing previous year revenue to offset) but have not yet been completed so they have been included in this year’s expense budget once again (but not the offsetting revenue since those have already been received). The General Fund projects that are being rolled over are $31,000 for Building Division vehicles and $60,000 for Monday Club Chimney repairs. The Measure E Fund also included project rollovers comprising of $175,000 for Storm Drain Maintenance Projects, $35,000 for General Park and Improvement projects, $50,000 for RCRPD Benefit Assessment project support, $850,000 for Newburg Park Acquisition improvements, $37,500 for a new Boom Mower, $115,000 for Playground Improvements at Newburg Park, and $40,000 for the Police Department Facility project.
Revenues in the General Fund and Measure E Fund are heavily dependent on sales tax, making up over $4 million or 50% of revenue in those funds. Sales tax revenue is monitored quarterly by staff through a consultant, HdL, due to this heavy reliance. HdL is provided not only the City’s sales tax data but also County and Statewide data. This is helpful because it can point to wider trends in the economy in both the local area (County) and Statewide. For instance in 4Q 2023 the City of Fortuna had an increase of 1.6% in quarter over quarter sales tax receipts however, the County as a whole was down 3.2% and the State was down 2.5%. Looking into next fiscal year staff anticipate only about a 1% increase in sales tax revenue as discretionary spending declines from COVID-19 highs.
Summary of line item Changes from Proposed Budget
Presented to Council 05-2-24 & 05-09-24
Related
Account #
Amount
General Fund (100):
Increased Miscellaneous Benefits for Life Flight Benefits 100-5265-1600 $ 6,000 Total: $ 6,000
Measure E Fund (101):
Decreased Training for 2nd Police K-9 (to be funded by donations) 101-7000-2850 $ (6,000) Total: $ (6,000)
FBID Fund (250):
Decreased City Wide Assessment Revenue 250-4050 37,000
Decreased Downtown Assessment Revenue 250-4051 12,000
Decreased Redwood Village Assessment Revenue 250-4052 9,000 Decreased Strong's Creek Plaza Assessment Revenue 250-4053 5,000 Decreased Department Supplies 250-5500-1800 (10,000)
Decreased Special Event Supplies 250-5570-1800 (25,000) Decreased Professional Services 250-6025-1800 (3,000)
Total: $ 25,000
Business Item 5b
Additional information on the Cities fiscal year 2024-25 budget can be found in the attached budget document.
RECOMMENDED CITY COUNCIL ACTIONS:
1. Receive staff presentation and review Council questions with staff
2. Open the public hearing.
3. Motion to close the public hearing. Voice vote.
4. Motion to adopt Resolution 2024-13; read by title only. Roll call vote.
ATTACHMENTS:
A. Resolution 2024-13; A Resolution Of The City Council Of The City Of Fortuna Adopting The City of Fortuna’s Annual Operating Budget for Fiscal Year 2024-25 B. 2024-25 Fiscal Year Budget Document