DISCUSSION:
The City Manager’s Fiscal Year 2023-24 Draft Budget
With the passage of the general sales tax, Measure H, the City’s budget has begun to take on a new outlook. The City Manager’s Draft Budget for Fiscal Year 2023-24 now looks beyond the downturn of the COVID-19 pandemic and begins to look towards transforming Modesto into a safer and more vibrant community with the proposed usage of Measure H funds in the Measure H Spending Plan.
The Measure H one-cent sales tax for general city services, was approved by the voters on November 8, 2022. It is estimated to generate $41.8 million annually in sales tax revenue for the City of Modesto. These funds will be critical in improving the services and infrastructure for the residents of Modesto. As part of addressing those needs, the Draft Proposed Budget has included a Measure H Spending Plan that works towards achieving those goals and improving the quality of life for residents of Modesto.
The Measure H Spending Plan for Fiscal Year 2023-24 looks to appropriate $27.1 million in Measure H funds across various categories to address the types of expenditures that were included with the Measure H ballot language. Expenditures to support the following:
Addressing homelessness.
Supporting neighborhood police patrols, gang, drug, and crime prevention. Supporting fire protection and paramedic/911 emergency response. Fixing and maintaining roads and sidewalks.
Keeping parks, recreation facilities, and public areas safe and clear of trash and litter.
The following chart provides a breakdown of the proposed funding for Measure H in Fiscal Year 2023-24 in its various categories:
Category Measure H Spending Plan
Parks Improvements $ 9,408,424
Public Safety $ 5,751,547
Fire/EMS $ 4,107,920
Forestry $ 2,345,127
Equipment $ 2,213,405
Sidewalk $ 1,800,000
Blight $ 151,656
Homelessness $ 595,290
Measure H Admin Support $ 385,037
Deferred Maintenance $ 358,037
Totals $ 27,116,443
The specific program improvements for each of the amounts referenced in the chart above can be found in the FY 2023-24 Proposed Budget book.
The Fiscal Year 2023-24 General Fund Operating Budget contains a structural deficit figure (expenditures exceeding revenues) in the amount of $6.2 million. The amount is proposed to be offset by revenues that will be received through the Measure H Sales Tax in the upcoming fiscal year. The cause of the structural deficit continues to be caused by the rate of growth of #18..
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Mayor’s Final Budget Modifications and Fiscal Year 2023-24 Proposed Budget
expenditures outpacing the growth of revenues. While revenues are rising from the current budgeted amounts, the pace at which they are increasing (2%) is lower than the pace of growth for expenditures (4%). For example, pension costs continue to rise and other costs for discretionary related expenditures are rising as well due to the increases in inflation.
Below is a chart that shows the breakdown of the major funds that make up the total operating expenditure budget of $526 million for the City Manager’s Draft Budget for Fiscal Year 2023-24:
Fund Name Amount
General Fund $ 184,289,630
Internal Service Funds $ 93,956,124
Water Enterprise Funds $ 67,378,280
Wastewater Enterprise Funds $ 48,786,777
Other Funds $ 31,228,273
Measure H Fund $ 27,116,443
Insurance Funds $ 23,167,660
Solid Waste Fund $ 16,711,353
Surface Transportation Funds $ 15,368,774
Storm Drainage Fund $ 8,423,088
Golf Fund $ 3,809,332
Parking Fund $ 2,471,686
Centre Plaza Fund $ 1,842,734
Aiport Fund $ 1,423,620
TOTAL ALL FUNDS $ 525,973,774
The General Fund continues to be the largest portion of the City’s total expenditure budget at 35% with the Internal Services Funds (18%) and Water (13%) and Wastewater (9%) Enterprise Funds following behind.
Mayor’s Final Budget Modifications
As required by the City’s Charter (Article XIII Section 1303 and Section 1304), the Mayor shall prepare and deliver to Council the Mayor’s Final Budget Modifications on the Draft Budget.
Following the receipt of the Mayor’s Final Budget Modifications, the Council shall then consider and review the draft budget as submitted by the City Manager together with the Mayor’s Final Budget Modifications and may make such revisions as the Council may deem advisable. The document that results from this process shall be deemed the “Proposed Budget” and shall be considered for approval at a hearing prior to June 30th for adoption of the Final Budget.
This year, the City Councilmembers were able to attend and participate in the Finance Committee Budget Workshops that were held on April 17th, April 18th, and April 19th. The Draft Budget that is being presented to City Council is largely, a collaborative effort.
As part of this item, the Mayor has submitted her Final Budget Modifications Message. The message describes the Mayor’s position that no changes are being recommended to the budget at this time and that Draft Budget be moved forward for consideration by the Council as the Proposed Budget in June.
FISCAL IMPACT:
The Fiscal Year 2023-24 Proposed Operating Expenditure Budget (inclusive of Transfers Out) is approximately $526 million of which the General Fund budget is $184.3 million. Public Safety #18..
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Mayor’s Final Budget Modifications and Fiscal Year 2023-24 Proposed Budget
continues to be the largest portion of the General Fund expenditure budget at $143.9 million.
This represents 78% of the total General Fund operating expenditure budget.
This year’s budget also includes the first year of the Measure H Spending Plan which includes proposed expenditures of $27.1 million. A breakdown of the one-time vs ongoing spending has been provided for the Fiscal Year 2023-24 Measure H Spending Plan below:
Description Amount
Measure H Spending Plan
One-Time $ 18,759,427
Ongoing $ 8,357,016
Total Measure H Spending Plan $ 27,116,443
The strategy is for one-time spending to be higher in the initial years to address infrastructure improvements, deferred maintenance and to make equipment purchases while ongoing type programmatic expenditures and personnel increases will be increased in later years. This will allow a reserve level to be built up, over time, in the Measure H fund to pay for ongoing maintenance of the infrastructure improvements.
All other active funds of the City are shown to be solvent and include adjustments to expenditures to maintain reasonable reserve levels.
The Proposed Budget can be found on the City’s website at the following link:
https://www.modestogov.com/ArchiveCenter/ViewFile/Item/3809 COMMITTEE RECOMMENDATION:
This Finance Committee approved and recommended forwarding the City Manager’s Draft Budget for Fiscal Year 2023-24 to Council for final review and adoption by a 3-0 vote on April 19, 2023, at the Finance Committee Budget Workshops.
As other financial impacts develop throughout Fiscal Year 2023-24, staff will report back to Finance Committee and City Council for recommendation and approval of modifications to the adopted budget within the first quarter of the new fiscal year.
RECOMMENDED COUNCIL ACTION:
Staff Recommendations:
Resolution combining the City Manager’s Draft Budget and the Mayor’s Final Budget Modifications into the Proposed Budget for Fiscal Year 2023-24 and noticing a Public Hearing to be held on June 6, 2023 for Council’s consideration and adoption of the Fiscal Year 2023-24 Proposed Budget and related actions.
Approved by:
Joseph P. Lopez, City Manager
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City Council, May 23, 2023
Mayor’s Final Budget Modifications and Fiscal Year 2023-24 Proposed Budget
Attachments:
1. Resolution Mayor’s Final Budget Modifications
2. FY 2023-24 Mayor’s Final Budget Modifications
3. Fiscal Year 2023-24 Propose Budget -
https://www.modestogov.com/ArchiveCenter/ViewFile/Item/3809 #18..
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1 MODESTO CITY COUNCIL
RESOLUTION NO. 2023-
RESOLUTION COMBINING THE CITY MANAGER’S DRAFT
BUDGET AND THE MAYOR’S FINAL BUDGET MODIFICATIONS
INTO THE PROPOSED BUDGET FOR FISCAL YEAR 2023-24, AND
NOTICING A PUBLIC HEARING TO BE HELD JUNE 6, 2023 FOR
COUNCIL’S CONSIDERATION AND ADOPTION OF THE FISCAL
YEAR 2023-24 PROPOSED BUDGET AND RELATED ACTIONS
WHEREAS, the Finance Committee heard the City Manager’s Draft Budget on April 17th, April 18th, and April 19th through a series of Budget Workshops, and WHEREAS, the Finance Committee approved the City Manager’s Draft Budget with a 3- 0 vote and approved the budget to be moved on to Council for final review and adoption, and WHEREAS, the City’s Charter, Article XIII Section 1303 and Section 1304 requires that the Mayor has the opportunity to make any final budget modifications to the City Manager’s Draft Budget at least 45 days prior to the end of the fiscal year and adoption by City Council, and WHEREAS, the Mayor has presented her Final Budget Modifications Message to the City Manager’s Draft Budget to City Council and has presented no changes and recommended that the Draft Budget be moved forward to Council as the City of Modesto’s Fiscal Year 2023-24 Proposed Budget for adoption consideration, and
WHEREAS, the City of Modesto’s Fiscal Year 2023-24 Proposed Budget will be inclusive of the City Manager’s Draft Budget and the Mayor’s Final Budget Modifications and will be heard at a public hearing scheduled to be held on June 6, 2023.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby approves the combination of the City Manager’s Draft Budget as well as the Mayor’s Final Budget Modifications into the City of Modesto’s Fiscal Year 2023-24 Proposed Budget and that a public hearing will be held on June 6, 2023 for the adoption of the Fiscal Year 2023- 24 Proposed Budget.
The foregoing resolution was introduced at a regular meeting of the Council of the City #18..
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2 of Modesto held on the 23rd day of May 2023, by Councilmember _________, who moved its adoption, which motion being duly seconded by Councilmember ______, was upon roll call carried and the resolution adopted by the following votes:
AYES: Councilmembers:
NOES: Councilmembers:
ABSENT: Councilmembers:
ATTEST: ________________________________
DIANE NAYARES-PEREZ, City Clerk
(SEAL)
APPROVED AS TO FORM:
BY: _____________________________________
JOSE M. SANCHEZ, City Attorney
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5/23/2023 4:00:00 PM
MODESTO CITY COUNCIL
www.modestogov.com
OFFICE OF THE CITY CLERK
NOTICE OF SPECIAL MEETING
Please take notice that a special Closed Session meeting of the Council of the City of Modesto has been called pursuant to Section 2-1.02 of the Modesto Municipal Code to be convened on
TUESDAY, MAY 23, 2023 AT 4:00 PM
and after the regularly scheduled meeting in the Tenth Street Place, Chambers Conference Room, Basement Level, 1010 Tenth Street, Modesto, California.
Any and all of the following agenda items are subject to action being taken by the Modesto City Council.
The business to be considered at said City Council meeting shall consist of a Closed Session concerning the following:
CLOSED SESSION
PUBLIC EMPLOYEE PERFORMANCE EVALUATION
(Pursuant to Section 54957 of the Government Code)
Title: City Clerk
CONFERENCE WITH LEGAL COUNSEL – EXISTING LITIGATION
One Case (Pursuant to Section 54956.9(d)(1) of the Government Code) Name of Case: Stephanie Lopez v. City of Modesto, et al.
Superior Court of California, County of Stanislaus
Stanislaus County Case No.: CV-21-00925
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CONFERENCE WITH LABOR NEGOTIATOR:
(Pursuant to Section 54957.6 of the Government Code) – MCEA Negotiator: Christina Alger
Employee Organization: Modesto City Employees Association CONFERENCE WITH LABOR NEGOTIATOR:
(Pursuant to Section 54957.6 of the Government Code) – MCMA Negotiator: Christina Alger
Employee Organization: Modesto Confidential & Management Association CONFERENCE WITH LABOR NEGOTIATOR:
(Pursuant to Section 54957.6 of the Government Code) – MPOA Negotiator: Christina Alger
Employee Organization: Modesto Police Officers’ Association CONFERENCE WITH LABOR NEGOTIATOR:
(Pursuant to Section 54957.6 of the Government Code) – MPNSA Negotiator: Christina Alger
Employee Organization: Modesto Police Non-Sworn Association CONFERENCE WITH LABOR NEGOTIATOR:
(Pursuant to Section 54957.6 of the Government Code) –MPMA Negotiator: Christina Alger
Employee Organization: Modesto Police Management Association CONFERENCE WITH LABOR NEGOTIATOR:
(Pursuant to Section 54957.6 of the Government Code) – MCFFA Negotiator: Christina Alger
Employee Organization: Modesto City Firefighters Association CONFERENCE WITH LABOR NEGOTIATOR:
(Pursuant to Section 54957.6 of the Government Code) – Unrepresented Negotiator: Christina Alger
Employee Organization: Unrepresented Management and Confidential Employees
BY ORDER OF THE CHAIR
/S
Diane Nayares-Perez, City Clerk
Posted pursuant to Government Code Section 54956 on the bulletin board at Tenth Street Place on at by
date time signature
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