overall assumption used as a baseline:
• Salaries and Benefits
The most significant cost is driven by its
labor. Labor accounts for almost 60% of
total expenditures. Below are significant
assumptions used to estimate the cost of
salaries and benefits:
• Regular Salaries – Personnel services costs
included a 4.5% wage increase and a 3% one-
time retention bonus based on the two-year
labor agreements with the employee groups.
• PERS Miscellaneous and Public Safety
Normal Cost and Unfunded Actuarial
Liability (UAL) rates are projected as follows
based on CalPERS actuarial assumptions:
• Health care costs, including medical, dental
and vision, are projected to increase by 3%
from the FY 22-23 Kaiser rate.
• 1% of employee salaries will be contributed
towards IRS Section 115 Pension Trust per
policy direction established by the City
Council.
• All other expenditures are estimated to
increase by 3%.
As part of the budget process, City
departments requested additional requests
over their baseline budgets to enhance service
delivery, to respond to legislative mandates,
and to implement special and capital projects.
These various funding requests were
presented to the Council as part of the FY
2023-2024 Proposed Budget and summarized
as follows:
The City’s annual budget is a planning
tool that matches the services desired by
the community to the estimated resources
available to provide those services, such as
police, parks and recreation, community
development, public works and administration.
The budget provides a detailed plan for the
next fiscal year and five-year forecast to
anticipate future needs and opportunities.
General Fund Budget
A portion of the All-Funds budget includes
the General Fund. The General Fund
comprises general-purpose revenues, such
as taxes, fines and fees, interest, and other
income that may be used to support general
governmental operations. The FY 2023-
2024 Annual General Fund Budget totals
$18.4 million in revenue and $18 million in
operating expenditures.
The General Fund’s primary revenue sources
are Sales Tax, Utility Users Tax (UUT),
Property Tax (including Motor Vehicle
License Fee in-lieu), Franchise Fees, and
Business License. Together they comprise
83% of total revenues. Overall, General
Fund revenues in FY 23-24 are projected
to increase by approximately 7% compared
to what was projected in FY 22-23. The
revenue increase is substantially driven by
proceeds from sales tax and the program
fees from re-opening the Parks & Recreation
programs. The revenue projections are based
on the staff’s analysis of local conditions and
reflect the information received from several
sources, including the City’s UUT, Sales and
Property Tax consultant, and the County
Assessor’s office.
•Sales Tax is the largest revenue source
for the City’s General Fund is remitted
to the City from the State monthly. Sales
Tax revenues are projected to increase
significantly based on quarter three analysis
generated from the data from the Board of
Equalization (BOE). However, total sales
tax revenues are highly concentrated within
a few major operators and substantially
generated from business-to-business
sources. Its top three producers generate
over 50% of the City’s sales tax revenues.
When one or more of these key revenue
sources deviate from projections, funding
for future programs and services may be
affected. If one or more of these key revenue
sources were to cease local operations
within Hercules, the resulting drop in sales
tax revenue would likely have a significant
negative impact on the provision of programs
and services.
The City continues to benefit from the
ongoing implementation of the Wayfair court
decision that resulted in an increase in local
government’s share of online sales and the
more significant number of purchases made
online. These trends are part of the City’s
share of the County pool. The following
chart depicts the source of the City’s sales tax
revenues by industry group.
•Utility User’s Tax (UUT) are revenues
collected from the consumption of utility
services, including (but not limited to)
electric, gas, water, sewer, telephone
(including cell phone and long-distance),
sanitation, and cable television. The City
determines the tax rate and the use of its
revenues. UUT revenues are estimated at
$3.7 million for FY 23-24. Based on the trend
and its consumption rate, the City continues
to see erosion in Wireless Telecom’s UUT
revenues due to the update in allocations of
the bundled packages from the respective
providers. These updated allocations shifted
a more significant percentage toward data
that is not taxable. On November 8, 2022,
the Hercules voters approved Measure N,
which removed the sunset provision that
would have caused the expiration of the UUT
in January 2025. The City’s UUT revenue
is approximately 20% of the general fund
budget.
•The City of Hercules has been classified as
a low-to-no property tax jurisdiction. The
LETTER FROM THE CITY MANAGER
CITY OF HERCULES FY 2023-24 ANNUAL BUDGET
Ongoing costs:
Senior Planner 188,000 188,000
Standby and Call back pay 1,700 74,300 76,000
Maintenance Supervisor (36,000) 36,000 -
Contract CIP Engineer 250,000 250,000
Animal Control Services 27,000 27,000
Recreation Specialist 5,750 5,750
Overall Operating Cost 165,000 165,000
Cellebrite 9,000 9,000
Tri-City Consortium 40,000 40,000
Special Event 85,000 85,000
General Liability & Worker's Compensation Insurance 200,000 200,000 Total, Ongoing costs 685,450 360,300 1,045,750
One-Time Costs:
Media Services 24,000 24,000
Regional Government Services (RGS) 65,000 65,000
Grant Writing Services 50,000 50,000
Business Attraction Grant 100,000 100,000
Eat Local Program 50,000 50,000
Total, Ongoing costs 289,000 - 289,000
BUDGET IMPACT
General Fund Other Funds TOTAL
5 CITY OF HERCULES
FY 2023-24 LIST OF ADDITIONAL BUDGET REQUEST
FY 23-24 LIST OF ADDITIONAL BUDGET REQUEST
CITY OF HERCULES FY 2023-24 ANNUAL BUDGET
1 City of Hercules
FY 23-24 List of Additional Budget Request
Title Fund Department Description Justification General Fund Other Funds Total Ongoing costs:
Senior Planner General Fund Community
Development
This request is to create a new, permanent Senior
Planner position in the Community Development
Department, reporting to the Community
Development Director. The Senior Planner would
perform professional land use and urban planning
work, including current and long-range
(advanced) planning, implementing the General
Plan, reviewing complex zoning and
development applications, and coordinating
special projects. Development fees will partially
offset the cost of this position.
This will enable the department to successfully manage the volume of professional work required to respond to inquiries from the public; process the City's planning applications; develop and update the City's long-range plans; maintain and update the Zoning ordinance and other City regulations; staff the Planning Commission, regional advisory committees, and interdepartmental planning efforts; implement new requirements of state law, such as online permitting; and develop and implement new programs, policies, and resources to further fair housing and otherwise implement the City’s 2023-31 Housing Element, once adopted. The Senior Planner would also assist the Director in implementing Council priorities such as business recruitment, additional community engagement, and development of user-friendly handouts explaining common Planning application types and requirements.
$188,000 $188,000
Standby and Call back
pay
All Funds Public Works Currently the Public Works Superintendent is “on- call” 24 hours a day 365 days a year. Hercules is
one of the last remaining agencies in the County
adhering to this practice. With the rotation, each
staff person will be on standby for a 1-week
rotation.
Implementing a rotation will make urgent/emergency coverage during non-working hours more sustainable, provide employees a professional growth opportunity, include cross training, and based upon experience gained be a step forward for succession planning and raise the level of performance of the Maintenance & Operations Division overall.
Additionally, it will be more effective as it will allow the Superintendent to focus on higher level duties, such as management, supervision, and operational planning. Based on the current allocation, the General Fund impact is approximately $1,700/year. $1,700 $74,300 $76,000
Maintenance
Supervisor
All Funds Public Works This request is to promote a Maintenance Worker II to a Maintenance Supervisor.
Efficiency in the Maintenance unit. The savings will offset the total cost by eliminating the intern position and a Maintenance Worker II. Based on the current allocation, this change has no General Fund impact.
($36,000) $36,000 $0
Contract CIP Engineer Capital
Projects Fund
Public Works Limited term to manage assigned CIPs. To manage the CIP projects. The contract will be part of the CIP costs funded by multiple funding sources and will execute the following CIPs: ADA Transition Plan (Parks, Buildings, and Streets); Parks Master Plan; Beechnut Park; and Community Center Repairs. $250,000 $250,000
Animal Control
Services
General Fund Public Works An increase in Animal Control and sheltering services provided through an agreement with the
Contra Costa County Animal Service Department
from $210,000 to $237,000 annually.
Although the City’s costs will increase under the proposed agreement, City staff believes it is beneficial to the City to execute the new agreement with more clarity and commitment from Animal Services on service levels and contributes to the financial sustainability of Animal Service programs.
$27,000 $27,000
Recreation Specialist General Fund Parks & Recreation Increase work hours from 25 to 30 hours a week. These changes will help the Recreation unit continue to deliver a broad range of programmed activities, as well as maximizing the appropriate use of recreation assets, and reserve the use of facilities, courts, fields, and picnic sites. $5,750 $5,750
Overall Operating
Cost
General Fund Parks & Recreation Return to pre-pandemic service level. Returning to pre-pandemic service level will increase the operating cost by $310K and offset by increase in program revenues by $145K.
$165,000 $165,000
Cellebrite General Fund Police Increase to Other Miscellaneous Services Cellebrite is a hardware/software system used to extract data from cell phones for investigative purposes which is only authorized pursuant to a warrant. We currently have a Cellebrite device which is inoperable due to outdated software/ hardware. The additional request is to keep the system functioning to assist detective's investigations with serious violent crimes.
$9,000 $9,000
Tri-City Consortium General Fund Police Increase to Other Government Agency Charges The City of Hercules contracts with the City of San Pablo and the City of Pinole (Tri-City Consortium) for ispatch and record’s management services. Both services are critical for the police department. The cost of these services has increased by an additional $40,000 annually over the next five years.
$40,000 $40,000
Special Event General Fund Parks & Recreation Increase to contractual services for Special Event The past few years the Hercules City Council has authorized money to be spent on special events including events like the Fourth of July celebration, National Night Out, Bayfront Run and Festival, Bottles and Bites and the Cultural Festival. Anticipating the Council’s desire to continue to offer these special events to the community staff is recommending $85,000.00 to be appropriated for special events in FY 2023-24. $85,000 $85,000
General Liability &
Worker's
Compensation
Insurance
General Fund General
Liability/Worker's
Compensation
Increase in Liability Insurance Premium Based on MPA renewal rates for FY 23-24. $200,000 $200,000 Total, Ongoing Costs $685,450 $360,300 $1,045,750
One-Time Costs:
Media Services General Fund Police Increase to professional services for Media Services.
Media services have been an area of concern for quite some time. We have relied heavily on a volunteer Reserve Police Officer for PIO duties, we have supervisors who have never been trained on issuing written press releases, and we have been running a social media program without proper training and oversight which may expose our city to future legal liability issues. For multiple years we have looked for PIO training, but we have not been able to find training anywhere in Northern California.
$24,000 $24,000
Regional Government
Services (RGS)
General Fund Human Resources Increase to professional services for Human Resources Services
To provide the City with HR management services. $65,000 $65,000 Grant Writing Services General Fund City Manager Increase to professional services for Grant Writing Services
To hire a consultant who specialize in grant writing, grants management, and prospect identification. The consultant will assit in identifying grant to fund various projects. $50,000 $50,000
Business Attraction
Grant
General Fund Community
Development
Business attraction grant program Assist certain types of desired new retail businesses with move-in costs associated with occupying a vacant storefront spaces in Hercules. The funding will be used for a pilot Business Attraction matching grant program with a goal of incentivizing small businesses that increase vibrancy and provide amenities to locate in Hercules. $100,000 $100,000
Eat Local Program General Fund Community
Development
Eat Local Bonus Gift Card pilot Program Eat Local Hercules will be an incentive program to use local restaurant catering services. $50,000 $50,000 Total, One-Time Costs $289,000 $0 $289,000
Total $974,450 $360,300 $1,334,750
Budget ImpactBudget Impact
37