City Council Agenda Report
June 4, 2024
TO: Honorable City Council
FROM: Jesus M. Gomez, City Manager
BY: Jana Stuard, Director of Finance/City Treasurer
SUBJECT: PUBLIC HEARING - RESOLUTION NO. 24-24 - ESTABLISHING AND ADOPTING THE CITY'S ANNUAL BUDGET FOR FISCAL YEAR 2024/25; AND RESOLUTION NO. 24-25 - AMENDING AND ADOPTING THE FISCAL YEAR 2024/25 SALARY SCHEDULE FOR GENERAL AND HOURLY UNIT
EMPLOYEES AND EXECUTIVE MANAGEMENT AND MID-MANAGEMENT
EMPLOYEES
Background:
On May 28, 2024, City Council discussed the proposed Fiscal Year (FY) 2024/25 budget. The presentation covered the Revenues, Operations, and Capital Projects. During budget deliberations, the City Council made comments and inquiries about the programs and activities included in the proposed financial plan, and added $5,000 to reestablish activities of the International Friendship Commission. If there are any further modifications from City Council at this meeting they will be incorporated into the final budget document.
Summary of Proposed Budget
The proposed budget represents the City’s financial plan for the upcoming fiscal year. It incorporates four goals set by City Council in its 2023-2025 Strategic Plan:
1. Provide High Quality Customer Service to the Community
2. Partnership with the Community to Achieve Safe and Livable Neighborhoods
3. Create and Sustain a Resilient and Economically Prosperous City
4. Support Sustainability and Climate Resilience throughout the Community The FY 2024/25 operating budget is balanced using the available resources. This report represents a summary of the proposed budget, exclusive of any City Council revisions made during the course of this public hearing.
City Council June 4, 2024
Annual Budget for FY 2024/25 and Salary Schedule Page No. 2 8 6
7 As summarized in the following table, the City’s FY 2024/25 budget includes all funds and totals $301 million in expenditures.
FY 2025 GENERAL FUND RESTRICTED FUNDS CITY TOTAL BUDGET PERSONNEL COST 36,314,222 21,912,532 58,226,754OPERATIONS 38,842,566 42,755,214 81,597,780DEBT SERVICE 1,476,394 2,627,952 4,104,346CAPITAL OUTLAYS 273,604 13,792,692 14,066,296COST OFFSET to/(from) OTHER FUNDS (1,181,217) 2,462,564 1,281,347TOTAL OPERATIONS & CAPITAL OUTLAYS 75,725,569 83,550,955 159,276,524CAPITAL PROJECTS - 134,715,833 134,715,833TRANSFER TO CAPITAL RESERVE FUNDS 7,100,000 - 7,100,000TOTAL PROPOSED BUDGET 82,825,569 218,266,788 301,092,357 The City’s operating budget reaches $159.3 million, and it covers: $58.2 million in personnel cost funding for 303 full-time positions and 370,414 part-time hours; $4.1 million of this amount is spent on debt service. The City plans to spend $14.1 million on capital outlays. These purchases are addressing the replacement of tools, equipment, buses, vehicles, computers, and upgrades of software and information technology. The financial plan also includes an allocation of $134.7 million for 79 capital improvement projects, 76 carry-over, and 3 new.
PROJECT TYPE CARRY-OVER AMOUNT NEW AMOUNT Street Projects 21 36,385,131Traffic Improvements 14 16,115,916Park Improvements 13 15,960,170Water 5 9,166,399 1 1,049,000Sewer 6 2,177,536Storm Water & Environmental 2 20,254,513Facilities & Miscellaneous Improvements 15 20,867,169 2 12,740,000TOTAL 76 120,926,834$ 3 13,789,000$ The City continues to invest in the street and traffic improvement projects, which are primarily funded from federal, state grants or local special revenue transportation funding. The City will use a combined total of $29.2 million from its capital reserve funds to complete various capital projects, upgrade technology, replace vehicles equipment, install solar photovoltaic systems at six sites, implement energy saving measures at city facilities, and continue undertaking parks renovation projects citywide.
As demonstrated in the table below, at the end of June 2025, the combined ending capital reserves are estimated at $22.1 million, out of which $9.7 million is reserved for future local street and traffic improvement projects.
City Council June 4, 2024
Annual Budget for FY 2024/25 and Salary Schedule Page No. 3 8 6
7 REVENUES TRANSFERS IN FROM GFRESERVE FUNDS 7/1/2024 FY 2025 FY 2025 FY 2025 6/30/2025City General Plan 1,190,257 20,000 - - 1,210,257Parks Equipment & Renovation 10,732,695 50,000 - (7,766,071) 3,016,624NASC Equipment Replacement 461,824 8,000 - (49,500) 420,324Computer & Technology Replacement 3,977,473 50,000 - (248,600) 3,778,873Vehicle & Equipment Replacement 4,223,053 80,000 1,000,000 (2,001,780) 3,301,273Building/Facilities Renovation 7,724,343 100,000 3,800,000 (10,924,249) 700,094Street & Traffic Improvement 15,345,684 230,000 2,300,000 (8,201,481) 9,674,203TOTAL 43,655,330$ 538,000$ 7,100,000$ (29,191,681)$ 22,101,649$
FUND BALANCE EXPENDITURE BUDGET ESTIMATED FUND BALANCE
The General Fund represents 28% of the City’s entire spending plan. As Special Revenue and Enterprise Funds are restricted to special purposes and are generally self-sustained, this report primarily focuses on the General Fund Budget.
General Fund:
The proposed operating budget is balanced with minimal use of operating reserves ($2,913).
The available fund balance is used to replenish the capital reserve funds ($7.1 million). The City anticipates ending the FY 2024/25 with $15.7 million in operating reserves.
Some major components of the FY 2024/25 Budget include:
•The General Fund revenues are projected to decrease 1%, or $1.1 million, to a total amount of $75.7 million. The major revenue categories follow the national and regional trends and are estimated to perform as follows:
oSales Tax – is expected to decrease by a combined total of $0.2 million. Persisting inflation, higher cost of borrowing due to rising interest rates and consequently cost of living are squeezing consumers’ purchasing power and negatively affect discretionally spending.
oProperty Taxes – this important revenue category is growing with increasing real property values and is anticipated to rise by $0.9 million, or 3%. oUtility User Tax (UUT) and Franchise Fees – the City anticipates 4% decline ($0.3 million) in UUT, and practically no growth under franchise fee categories, as local governments are facing new challenges and threats arising out of recent technologies or marketing approaches, changes in state and federal laws, court decisions. oOther revenues include $2 million in interest loan repayment from the Successor Agency to the Redevelopment Agency, however this will be the first fiscal year since Fiscal Year 2020/21 that the General fund will not receive revenue allocation of $2.9 million from the American Rescue Plan Act (ARPA).
City Council June 4, 2024
Annual Budget for FY 2024/25 and Salary Schedule Page No. 4 8 6
7 The table below summarizes the General Fund estimated Revenues. % AMOUNT PROP TAX-S.E. REC & PARK AREA 4,027,900 4,084,400 4,206,900 4% 179,000PROPERTY TAX IN-LIEU/VLF 15,258,170 15,258,170 15,715,900 3% 457,730NO/LOW PROPERTY TAX - COUNTY 5,417,100 5,484,100 5,648,600 4% 231,500SA RDAs - AB 1484 ALLOCATIONS 920,000 920,000 947,600 3% 27,600REAL-PROPERTY VALUE DERIVED REVENUES: 25,623,170 25,746,670 26,519,000 3% 895,830 SALES & USE TAXES (STATE) 15,294,000 15,136,000 15,291,000 0% (3,000)SALES & USE TAXES (MEASURE P) 10,994,000 10,895,000 10,797,000 -2% (197,000)UTILITY USER TAX 5,995,000 5,995,000 5,726,000 -4% (269,000)TRANSIENT OCCUPANCY TAX 1,651,300 1,651,300 1,678,300 2% 27,000FRANCHISE FEES 3,399,500 3,399,500 3,467,500 2% 68,000FRANCHISE - CABLE TV 510,000 510,000 494,700 -3% (15,300)BUSINESS LICENSE 930,000 930,000 940,000 1% 10,000REAL PROPERTY TRANSFER TAX 240,000 225,000 227,000 -5% (13,000)OTHER TAXES & FRANCHISES: 39,013,800 38,741,800 38,621,500 -1% (392,300)OTHER GENERAL REVENUES 5,195,230 5,306,970 6,252,200 20% 1,056,970PUBLIC SAFETY REVENUES 1,209,360 1,240,360 1,333,500 10% 124,140PUBLIC SERVICES REVENUES 309,115 311,235 277,596 -10% (31,519)SOCIAL SERVICES REVENUES 11,700 23,700 24,000 105% 12,300RECREATION & PARKS REVENUES 827,760 815,130 857,460 4% 29,700COMMUNITY DEVELOPMENT REVENUES 1,784,900 1,751,300 1,837,400 3% 52,500ARPA LOSS OF REVENUES 2,888,292 2,888,292 - -100% (2,888,292)TOTAL - GENERAL FUND REVENUES 76,863,327$ 76,825,457$ 75,722,656$ -1% (1,140,671) REVENUE DESCRIPTION FY 23-24ADOPTEDBUDGET
FY 23-24ESTIMATED ACTUAL
FY 2025PROPOSEDBUDGET
BUDGET VARIANCE FY 2025 vs FY2024
•The FY 2024/25 proposed General Fund operating and capital outlay expenditures total $75.7 million and are practically equal to the total amount of operating revenues. The City will provide the same level of service and programming as in the prior fiscal year, with enhancements in staffing levels in the Recreation, Public Safety and City Clerk departments. The City will continue caring for its vulnerable population and, in addition to the Social Service department’s services, provide contributions to the agencies assisting Norwalk residents, implement mentoring programs for young women and men 15-25 years of age. In FY 2024/25, funding for homeless outreach provided by HOPE team will be paid from ARPA funding through December 2024, and the remainder of the fiscal year will be funded from General Fund.
The overall General Fund operating budget increases by $2.5 million, or 3%. Major contributors to this increase are:
oPersonnel Expenditures will increase by 3%, or $1 million, to a total cost of $36.3 million that covers funding for 179 full-time positions and 259,006 part-time hours. However, this City Council June 4, 2024
Annual Budget for FY 2024/25 and Salary Schedule Page No. 5 8 6
7 year’s proposed budget does not include any additional contribution to pay down unfunded pension liabilities.
oLos Angeles County Sheriff’s Department Contract – maintains the same level of service for a total of 35.77 units, and continues the Quadrant patrolling model that works in tandem with the City’s Public Safety Officers in all four Public Safety quadrants. The FY 2024/25 contract rate will increase by 3.44% and the Liability Trust fund by 0.5% to a
12.5% rate.
oOther contractual agreements funded from the General Fund will increase by a combined total of $1.3 million.
The table below summarizes the General Fund spending plan for FY2024/25.
EXPENDITURES BY TYPE BUDGETFY 2024 ESTIMATED ACTUAL FY2024 BUDGETFY 2025 VARIANCE BUDGET FY25vs. BUDGET FY24
Variance%
FULL TIME:SALARIES 14,316,375 11,773,099 15,577,834 1,261,459 9%MEDICAL BENEFITS 2,894,879 2,218,359 3,199,646 304,767 11%PENSION (from 39.33% to 36.57% in FY2025) 5,720,047 3,846,899 5,803,365 83,318 1%PENSION - UNFUNDED LIABILITY ADDITIONAL DEPOSIT 1,000,000 1,000,000 - (1,000,000)-100%OTHER POST EMPLOYMENT BENEFITS 1,500,000 1,500,000 1,500,000 - 0%OTHER BENEFITS (MEDICARE, LIFE, LTD, WORKERS COMP) 1,436,265 1,304,062 1,222,069 (214,196) -15%OTHER COMPENSATION & LEAVE PAYOUTS 1,251,449 1,329,029 1,350,417 98,968 8%RETIREE MEDICAL 1,433,600 1,303,989 1,356,200 (77,400) -5%SUBTOTAL FULL TIME EMPLOYEES & RETIREES 29,552,615 24,275,437 30,009,531 456,916 2%PART TIME:SALARIES 5,573,094 4,868,389 6,138,207 565,113 10%MEDICAL BENEFITS 85,720 67,975 77,480 (8,240) -10%MEDICARE 80,810 70,592 89,004 8,194 10%SUBTOTAL PART-TIME EMPLOYEES 5,739,624 5,006,955 6,304,691 565,067 10%SALARIES & BENEFITS 35,292,239 29,282,392 36,314,222 1,021,983 3%LA COUNTY SHERIFF'S CONTRACT 16,470,784 15,382,821 16,526,620 55,836 0%LA COUNTY SHERIFF'S LTF 1,813,705 1,686,864 1,904,810 91,105 5%CONTRACT SERVICES 9,201,200 8,300,411 10,497,113 1,295,913 14%UTILITIES 3,329,900 3,498,200 4,018,800 688,900 21%INSURANCE 914,200 898,244 1,082,360 168,160 18%VEHICLE MAINTENANCE 945,718 905,543 946,698 980 0%DEBT SERVICE 1,613,713 1,615,702 1,476,394 (137,319) -9%TRANSFER OUT TO SR. PROGRAMS 376,549 405,514 383,934 7,385 2%TRANSFER OUT TO PARKING STRUCTURE 427,510 476,014 493,933 66,423 16%OTHER OPERATING COSTS 3,861,109 3,032,576 3,866,165 5,056 0%SUBTOTAL OPERATIONS 38,954,388 36,201,890 41,196,827 2,242,439 6%MINOR CAPITAL OUTLAYS 648,286 626,604 273,604 (374,682) -58% GAS TAX FUNDS (1,975,000) (1,022,183) (2,375,000) (400,000) 20%OTHER SPECIAL REVENUE FUNDS (AQMD & SA Housing) 256,616 256,617 315,916 59,300 23%TOTAL OPERATIONAL TRANSFERS (IN) (1,718,384) (765,566) (2,059,084) (340,700) 20%NET OPERATIONS & CAPITAL OUTLAY BUDGET 73,176,529$ 65,345,320$ 75,725,569$ 2,549,040$ 3% Less Transfers In From Special Revenues Funds To Offset General Fund Street Maintenance Cost:
The General Fund Unassigned Budgetary Fund Balance is projected to be $15.7 million as of June 30, 2025. It is 1% over the City’s reserve policy of 20% of operations and capital outlays total budget amount.
City Council June 4, 2024
Annual Budget for FY 2024/25 and Salary Schedule Page No. 6 8 6
7 The following table summarizes the General Fund 2024/25 Budget. 22,623,294$
FISCAL YEAR 2024-2025
TOTAL OPERATING BUDGET:Estimated Revenues 75,722,656$ TOTAL RESOURCES 75,722,656$ Expenditures - Operations (75,451,965)Capital Outlays (273,604) TOTAL OPERATING & CAPITAL OUTLAY (75,725,569)
Net Operating Surplus/(Deficit) (2,913)$
TOTAL USE OF NON OPERATING RESOURCES:
NON-OPERATING RESOURCES 156,965$
RELEASE OF FUND BALANCE:Water Fund Loan - principal repayment 156,965 LESS TRANSFER TO CAPITAL RESERVE FUNDS (7,100,000)$
Vehicle Equipment Replacement (1,000,000)Building Renovation (3,800,000)Street Renovation (2,300,000) SURPLUS/(USE) OF RESERVE FOR CAPITAL (6,943,035)$
FISCAL YEAR 2025 - TOTAL USE OF AVAILABLE FUND BALANCE (6,945,948)$ Estimated Ending Fund Balance at June 30, 2025 20.70% 15,677,346$ July 1, 2024- Beginning Estimated Fund Balance
The following information summarizes the proposed budgets for the City’s enterprise funds:
Norwalk Municipal Water System (NMWS):
Projected revenues are estimated to increase by 2% to a total amount of $6.8 million, however the budgeted operating expenses are projected to exceed revenues by $0.6 million. Expenses include allocation of $0.4 million for water master plan and rate studies, and three new positions:
Water Service Worker I, Associate Engineer, and Management Analyst. The latter two positions are shared with Sewer and Storm Water funds.
Five carry-over and one new capital improvement projects are budgeted at a total cost of $10.2 million, out of which, one project will be funded from a State Capital Grant in the amount of $2.5 City Council June 4, 2024
Annual Budget for FY 2024/25 and Salary Schedule Page No. 7 8 6
7 million. Water Fund estimated ending working capital as of June 30, 2025, is about $65 thousand.
Sewer System:
The revenues are estimated at $2.5 million, and the operating cost is anticipated to be $2.4 million. Operating budget includes biannual cleaning of the entire sewer system, cleaning of hotspots four times a year, and the carry-over funding for the sewer master plan, and a sewer system management plan update. The total capital improvement budget is $2.2 million and includes appropriations for the 12th year of the 50-year plan to replace the City’s aging Sewer System.
Norwalk Transit System (NTS):
The estimated operating revenues of $19.5 million, comprised of federal, state, and local transportation funding, also include annual transfers from other special revenue funds.
The operational expenses amount to $19.5 million and in addition to the typical operating cost include planning expenses for the 50th anniversary and annual NTS rodeo events, operational analysis study, micro transit project, and the cost of the Federal Transportation Agency (FTA) plan updates.
NTS’s capital purchase plan is $15 million. Among other capital purchases, it includes bus stop improvements, Phase III of Transit Facility improvements, replacement of three zero emission electric buses, and one Dial-A-Ride van. Capital expenses are primarily funded by federal grants and local transportation monies provide the local match.
Summary:
The purpose of this public hearing is to review and adopt the City’s annual Budget for a period starting with July 1, 2024, ending June 30, 2025. Copies of the FY 2024/25 Proposed Budget have been available for public inspection on the City’s web page and in the Office of the City Clerk.
Fiscal Impact:
Establishment of the City’s budget for fiscal year ending June 30. 2025.
Citizens Advised:
FY 2024/25 Proposed Budget document was posted on the City’s website on May 22, 2024, for public review. Notice of Public Hearing regarding FY 2024/25 Budget was published in The Norwalk Patriot on May 24, 2024, and posted at the City’s three designated posting places and the website on May 23, 2024.
City Council June 4, 2024
Annual Budget for FY 2024/25 and Salary Schedule Page No. 8 8 6
7 Strategic Plan 2023 Implementation:
The recommended action will further the City’s Strategic Plan Goal 3: Create and sustain a resilient and economically prosperous City.
Recommended Action:
Staff recommends City Council adopt:
a. RESOLUTION NO. 24-24, A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
NORWALK ESTABLISHING AND ADOPTING THE ANNUAL BUDGET FOR FISCAL YEAR 2024/25; and
b. RESOLUTION NO. 24-25, A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NORWALK AMENDING AND ADOPTING FISCAL YEAR 2024/25 SALARY SCHEDULE
FOR GENERAL AND HOURLY UNIT EMPLOYEES AND EXECUTIVE MANAGEMENT AND MID-MANAGEMENT EMPLOYEES.
Attachments:
1. Resolution No. 24-24
2. Resolution No. 24-25
3. FY 2024-25 Budget in Brief