Fremont City Council Meeting: 05/14/24 07:00 PM
3300 Capitol Avenue Div/Dept: Finance Department
Fremont, CA 94538 Category: Budget
SCHEDULED
Sponsors:
COUNCIL STAFF REPORT (ID # 5149) DOC ID: 5149
Updated: 5/9/2024 4:44 PM by Dina Lewis Page 1
FY 2024/25 PROPOSED OPERATING BUDGET - Presentation of Fiscal Year 2024/25 Proposed Operating Budget for the City of Fremont Contact Persons:
Name: David Persselin
Title: Finance Director
Div/Dept: Finance Department
Phone: 510-494-4631
E-Mail: [email protected]
Executive Summary: The FY 2024/25 Proposed Operating Budget has been developed and is presented for the City Council’s review and comment. Public hearings on the proposed budget are scheduled for June 4, 2024, and June 11, 2024, with adoption anticipated at the conclusion of the second public hearing.
BACKGROUND:
This proposed budget addresses a near-term revenue shortfall brought about by the State’s overpayment of sales tax revenue to the City during FY 2022/23. We expect the State to reallocate approximately $19.5 million of revenue over the last quarter of FY 2023/24 and the first quarter of FY 2024/25. Combined with reduced ongoing sales tax revenue estimates, those reallocations will require the use of one-time funds to maintain the current level of services to the community in FY 2024/25.
The City Council’s prudent decisions to set aside the General Fund unreserved ending fund balance from FY 2022/23, to increase the General Fund Budget Uncertainty Reserve at the beginning of FY 2023/24, and to further augment the Budget Uncertainty Reserve at mid- year, provide the resources needed to offset the near-term revenue shortfall. The General Fund forecast indicates that ongoing revenues will again be sufficient to cover ongoing expenditures, without the further use of reserves, beginning in FY 2025/26.
DISCUSSION/ANALYSIS:
Fiscal Year 2024/25 Proposed Operating Budget
Combined with $15.1 million from the Budget Uncertainty Reserve, General Fund budgeted resources of $261.2 million will support total budgeted expenditures of $276.3 million.
As the City will be experiencing a revenue shortfall, the proposed budget includes very few General Fund service enhancements. One of the highlights of FY 2024/25 will be the activation of the City’s new fire truck company in early 2025. Additional service proposals include increased spending for business district activation, higher funding for the special event sponsorship program to accommodate expanded events and higher fees, and a new police lieutenant position to focus on public accountability, enhanced policing standards, emergency preparedness, and support for community field operations.
Council Staff Report (ID # 5149) Meeting of May 14, 2024 Updated: 5/9/2024 4:44 PM by Dina Lewis Page 2
Outside the General Fund, integrated waste management fees will fund more frequent homeless encampment cleanups, and contracts with the County will pay for additional staff to serve youth and family services clients at the Fremont Family Resource Center.
These proposed additions to the operating budget respond to City Council and community priorities by funding fiscally-sustainable initiatives designed to enhance public safety, address homelessness, and increase the vitality of our business districts.
The proposed operating budget also incorporates a cost-neutral shift of the City’s Environmental Services Division from the Community Services Department to the Community Development Department, which currently houses the City’s environmental sustainability function. The combined resources will better position the organization to pursue the City Council’s goal of prioritizing environmental sustainability.
General Fund Reserves
The FY 2024/25 Proposed Operating Budget maintains the General Fund Contingency Reserve at 16.7% of budgeted expenditures and transfers out, or $46.1 million, a level consistent with City Council policy and the recommended practice of the Government Finance Officers Association of the United States and Canada.
The proposed budget anticipates that the $30.0 million Budget Uncertainty Reserve will be drawn down in the current year, leaving a balance of $24.4 million at the beginning of FY 2024/25.
FISCAL IMPACT: The City Council is not being asked to take action tonight on the FY 2024/25 Proposed Operating Budget other than to provide comments to staff. An initial public hearing will be held on June 4, 2024, with a second public hearing and adoption of the budget scheduled for June 11, 2024.
ENVIRONMENTAL REVIEW: This agenda item is not subject to the requirements of the California Environmental Quality Act (CEQA) per CEQA Guidelines Section 15378 as it is not defined as a “project.”
LINK: The FY 2024/25 Proposed Operating Budget is posted on the City’s website at https://www.fremont.gov/government/departments/finance/financial-reports.
RECOMMENDATION: Accept staff’s budget presentation and provide comments.