City Council Agenda Report
February 18, 2025
TO: Honorable City Council
FROM: Jesus M. Gomez, City Manager
BY: Jana Stuard, Director of Finance/City Treasurer
Carina Montes, Director of Human Resources/Risk Manager SUBJECT: RESOLUTION NO. 25-07 – FISCAL YEAR 2024/25 MID-YEAR BUDGET REVIEW AND REVISIONS; AND RESOLUTION NO. 25-08 – AMENDING THE FISCAL YEAR 2024/25 SALARY SCHEDULE FOR GENERAL AND HOURLY UNIT
EMPLOYEES AND EXECUTIVE MANAGEMENT AND MID-MANAGEMENT
EMPLOYEES
Background:
Enclosed are mid-year budget projections for the Fiscal Year (FY) 2024/25 Budget. The projections and recommended budget adjustments are based upon the final Audited Financial Statements for the fiscal year ending June 30, 2024 and six months actual expenses and revenues during the current fiscal year.
General Fund:
FY 2023/24
Based on audited results for fiscal year ending June 31, 2024, net of accounting Governmental Accounting Standards Board (GASB) adjustments; overall revenues reached City’s estimates of $77 million. However, the City’s Major Revenue category, which represents 83% of General Fund total revenues and comprised of sales taxes, real property value derived revenues, other taxes and franchise fees, underperformed the estimates by 1%, or $0.8 million. Departmental revenues made up for the shortfall of Major Revenues and outperformed the budgetary amount by $0.9 million.
Expenditures were $6.9 million, 9% under the budget, due mainly to savings realized under:
Personnel ($4.4 million), Sheriff’s Contract ($1.1 million) and other expenditures ($1.4 million).
The outcome of the above mentioned financial impacts is the General Fund ending available balance of $21.8 million, which is $0.8 million lower than anticipated during the preparation of the FY 2024/25 Budget.
City Council February 18, 2025
Resolution No. 25-07 Budget FY 2024/25
Resolution No. 25-08 Salary Schedule Revision
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Attachment No. 1 provides an overview of the City’s financial results for the fiscal year ending June 30, 2024.
FY 2024/25
The current FY 2024/25 budget year-to-date results indicate that the City is on target with the projections, except for the following:
Revenue Adjustments:
Even though, the overall General Fund revenues are expected to slightly outperform the original budget estimates by a total of $0.8 million, or 1%, and reach $76.5 million, they are still lagging behind the prior fiscal year revenues which were $77 million.
The proposed increase in General Fund revenues estimate encompasses a combination of the following revisions:
Property value derived revenues represent the first most significant portion of General Fund revenues. Projections for all categories combined are proposed to be increased by $624 thousand. The detail of adjustments is as follows:
•Property Tax In Lieu of VLF: This category is estimated to increase by 2% from the original FY 2024/25 projections. The City receives two equal allocations from the State in January and May. Based on the amount received in January, staff estimates this revenue will be $294 thousand higher than projected.
•Property Tax allocated to the City from Successors of the former Redevelopment Agencies is estimated to reach $1.3 million, which is $330 thousand higher than staff’s original estimates.
Sales Taxes – Local Tax & Measure P: The City’s second largest revenue category is $1.0 million under the anticipated revenues and is expected to reach $25.1 million, representing a decrease from the prior year’s actual revenue amount of $25.6 million. Some hardest hit categories affecting the decline are general consumer goods and autos, resulting in sales tax not reaching the projections. This negative adjustment reflects the state of the economy and is in line with regional economy trends.
Utility User Tax (UUT): As the prices of electricity and gas continue to increase, so do the City’s UUT revenues. Staff estimate this year the UUT will generate $5.8 million in revenues, $74 thousand over the original budget estimates.
Transient Occupancy Tax: Year-to-date receipts from local hotels are trending to reach $1.6 million, which is $50 thousand lower than our original estimates.
Business License: The annual revenues are estimated to be $100 thousand under the budgeted amount of $0.9 million.
City Council February 18, 2025
Resolution No. 25-07 Budget FY 2024/25
Resolution No. 25-08 Salary Schedule Revision
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Real Property Transfer Tax: Despite the decline in the number of single-family home sales, receipts generated by real property sales transactions are outperforming projections by $13 thousand.
Revenues in this category remain steady primarily due to the continued increase in the average and median sale prices of single-family homes in Norwalk.
Other General Fund revenues will increase by a net amount of $1.2 million, out of which $0.8 million will be generated from Building & Safety plan check fees related to development projects. About 65% of these plan check fees collected will cover the increased cost of contractual plan check services. Details of revenue budget revisions can be found in Exhibit A attached to Resolution No. 25-07.
Expenditure Adjustments:
The proposed mid-year budget revisions increase the operational spending by a net of $388 thousand. The most significant changes are as follows:
• Various personnel changes under full-time, part-time, overtime and related benefits will add about $331 thousand to additional personnel cost for the remainder of the fiscal year, which include:
oCity Clerk department will eliminate two full-time Office Assistant I positions, which became vacant due to the promotion to Office Assistant II positions. oSocial Services department is requesting to add one new Social Services Worker II position to serve families in crises; two Community Workers will transfer from Social Services to the Public Safety department.
oEngineering requests replacing the vacant Senior Management Analyst position with an Assistant Engineer position.
oVarious part-time hours and overtime wages adjustments are requested by Public Safety, Public Services, and Recreation departments.
Additionally, long-term vacancies city-wide will reduce personnel cost by a net savings of $1.2 million. The proposed personnel changes are detailed in Exhibit C to Resolution No. 25-07. • Operations and maintenance budget requests resulting in a $1.4 million budget increase are requested to cover various departmental needs. Among the most significant requests are:
$545 thousand for plan check services that are offset by increased revenues; $580 thousand to fund various contractual services city-wide; $42 thousand for computer software and support costs; and $104 thousand for various smaller expenses. • To ensure compliance with the reserve policy, staff is proposing to increase the operating transfer in from the Highway User Tax Fund (HUT Fund). An additional $700 thousand transferred in from HUT Fund is essential to help offset street maintenance cost without compromising the City’s fund balance, for a total annual amount of $2.6 million.
City Council February 18, 2025
Resolution No. 25-07 Budget FY 2024/25
Resolution No. 25-08 Salary Schedule Revision
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• Additional appropriations to cover the capital outlays total $537 thousand and include two sets of meridian road barriers ($300 thousand) and funding for an electric batteries backup residential program ($200 thousand).
Proposed revisions to the General Fund expenditure budget are detailed in Exhibit B attached to Resolution No. 25-07.
Taking into consideration the proposed budget revisions, the estimated unassigned General Fund balance will be approximately $15.3 million, which is about $112 thousand over the City’s reserve policy, currently set at 20% of operating and minor capital outlays budget. Exhibit D to Resolution No. 25-07 provides more detail of the General Fund balance projections.
Special Revenue Funds:
Based on the actual results, staff also proposes various adjustments to expenditures and revenues from Special Revenue Funds, identified in the Exhibit E attached to Resolution No. 25-07.
Significant budget revisions are proposed in the following funds:
Child Care: City will program additional $580 thousand in federal and state entitlement to provide childcare services to qualified families.
Gateway Cities Council of Governments (GCCOG) - Measure H Pass-Through Grant: Effective January 2025, the City entered into an agreement with GCCOG and secured funding not to exceed $179 thousand, for a new Housing Liaison full-time position, which is proposed to be added to the existing salary schedule.
COPS Grant: Overtime cost for the Los Angeles County Sheriff’s deputies is estimated to increase by $150 thousand.
Equipment Replacement Fund: In addition to the GASB Statement 87 adjustment of $780,000 in both revenues and expenditures, Public Safety is requesting $300 thousand to replace one damaged camera trailer, and purchase two new ones to be used at the California Youth Authority property and at newly remodeled parks.
Exhibit F attached to the Resolution No. 25-07 details proposed revisions to Various Capital Improvement Projects funded from Special Revenue Funds:
Measure W Storm Water Grant: An additional $380 thousand will fund storm drain and catch basin repairs citywide.
The City continues its commitment to rehabilitate local streets investing an additional $20 million from available Special Revenue Funds, primarily from:
Road Maintenance Rehabilitation Fund: State funding earmarked for streets will provide $11 million to pave local streets in Zones 2, 4, 7, 9, 29 and 31.
City Council February 18, 2025
Resolution No. 25-07 Budget FY 2024/25
Resolution No. 25-08 Salary Schedule Revision
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Street Renovation Fund: Staff are requesting an additional appropriation of $6.9 million from the City’s capital reserves earmarked for streets to secure funding for pavement and traffic signal projects in various zones city-wide.
Enterprise Funds:
Transportation: Staff is projecting an increase of approximately $1 million in operating revenues and a $0.3 million net increase in operating expenses. Transportation budget revisions are summarized in Exhibit G attached to Resolution No. 25-07.
Water: Revenue estimates can be increased by $140 thousand, and expenses are requested to be increased by a net of $94 thousand. In addition, staff request funding ($200 thousand) for Cerritos Water System Intertie Upgrade project.
Sewer: No significant budget revisions are requested.
The requested budget revisions for both Water and Sewer funds are detailed in Exhibit H attached to Resolution No. 25-07.
Conclusion:
Staff is confident that the proposed mid-year revisions highlighted above and detailed in the Exhibits attached to Resolution No. 25-07 are reasonable and within the guidance of preparing a financial plan that will maintain required services within the City’s available resources. Personnel changes affecting the Salary Schedule are reflected in Exhibit A attached to Resolution No. 25-08.
Fiscal Impact:
The requested mid-year adjustments to the General Fund estimated revenues total a net increase of $830 thousand. The net increase in appropriations is $387 thousand. The Budgetary Unassigned General Fund balance as of June 30, 2025, is expected to be $15.3 million absent any future budget amendments approved by City Council.
The proposed revisions to the FY 2024/25 budget are subject to City Council review and consideration and any approved modifications will be reflected in the balances of the appropriate funds.
Citizens Advised:
N/A
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.
City Council February 18, 2025
Resolution No. 25-07 Budget FY 2024/25
Resolution No. 25-08 Salary Schedule Revision
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Recommended Action:
Staff recommends City Council adopt:
a. Resolution No. 25-07, A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NORWALK AUTHORIZING AMENDMENTS TO THE FISCAL YEAR 2024/25 BUDGET; and
b. Resolution No. 25-08, A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NORWALK AMENDING THE FISCAL YEAR 2024/25 SALARY SCHEDULE FOR
GENERAL AND HOURLY UNIT EMPLOYEES AND EXECUTIVE MANAGEMENT AND MID-MANAGEMENT EMPLOYEES.
Attachments:
1. Overview of the Fiscal Year 2023-24 Financial Results
2. Resolution No. 25-07 with Exhibits A-H as follows:
A. General Fund – Revenue Revisions
B. General Fund Expenditures – Mid-Year Revisions
C. Personnel Changes – Fiscal Year 2024-25
D. General Fund Unassigned Fund Balance Projection
E. Special Revenue Funds – Revisions
F. Special Revenue Funds – Capital Improvement Projects Revisions G. Transit & Vehicle Maintenance Funds – Revisions
H. Water and Sewer Fund – Revisions
3. Resolution No. 25-08 with Exhibit A