City Council Agenda Report
TO: Mayor Clauzel and Members of the City Council
FROM: Ken Irwin, City Manager
BY: Jennifer Riedeman, Finance Director
MEETING DATE: February 20, 2024
ITEM NO: 8.1
SUBJECT: Adopt Resolution No. 2024- 09 Approving the City of Patterson Mid-Year Adjustments to the Budget for the Fiscal Year 2023/24.
RECOMMENDATION
Motion to Adopt Resolution No. 2024-09 Approving the City of Patterson Mid-Year Adjustments to the Budget for the Fiscal Year 2023/24 and Authorize the Finance Department to make the necessary budget adjustments.
BACKGROUND
Staff is submitting the Mid-Year Budget Review Report and proposed budget adjustments based on the information reviewed as of approximately mid-year. The adjustments include expenditure appropriations as well as increases in revenue estimates. In addition to the new requests from departments, staff identified other items that were omitted from the original FY 2023/24 budget and other items that were not authorized as budget amendments in prior Council actions such as in the case of the previous bond issuance activity.
ANALYSIS
A presentation will be made to the City Council outlining the mid-year budget review for FY 2023/24.
General Fund
Total revenues are estimated for the fiscal year at $35.4 million, approximately $2.6 million more than the recommended adjusted budget of $32.8 million. Revenues are estimated higher due to a one-time adjustment in Sales Tax revenue in the amount of $1.3 million as well as a significant increase in Investment Earnings estimates due to conservative original budget and more favorable interest rates. It should be noted that the originally adopted budget includes grant revenues that are contingent on the activity related to the grant funding and may carryover into future fiscal years until the grant is completed. In addition, the American Rescue Plan Act funds were received in prior years and the expenditures are budgeted in the current year, which is the primary reason that expenditures exceed revenues for FY 2023/24.
Total estimated expenditures end the year at $38 million, approximately $1 million higher than the adjusted budget of $36.9 million. Expenditures are likely to be spent at a lower rate than originally budgeted primarily due to the vacancies of budgeted positions during the fiscal year and the normal underspending of expenditures such as Capital Outlay.
The net adjustments to the General Fund is a positive increase of $1,566,639 and are outlined in the attachments to the Mid-year Budget Review Report (Exhibit A).
Enterprise Funds
The City of Patterson provides residents with Solid Waste, Water and Wastewater services. The charges for these services (user fees), along with the costs for providing the services, are accounted for in individual Enterprise Funds. These funds are self-supporting and do not receive any General Fund support. User fees are set in accordance with Proposition 218, which requires that customers be given the opportunity to challenge proposed rates. Rate studies are conducted periodically to ensure the enterprise rates are sufficient to cover: operating expenses, capital improvements, upgrades and costs associated with meeting both State and Federal guidelines and regulations. FY2023/24 user fee budgets for the Enterprise Utility Funds have been adopted in line with rate study projections.
When creating the FY 2023/24 budget in the financial system, we found that there were several entries in the financial system that were also entered in the reverse pending approval to be included in the proposed budget, but the reversed amounts were not removed in the system and consequently excluded from the adopted budget. These are listed separately in the Recommended Mid-Year Adjustments attachment.
The net adjustments to the Enterprise Funds are outlined in the attachments to the Midyear Budget Review Report (Exhibit A).
Other Funds
Staff recommended Mid-year adjustments are included in the Adjusted Budget, where applicable, and adjustments to all funds are detailed in the attachments to the Mid-Year Budget Review Report (Exhibit A), and are summarized below:
· Fund 190 - CFD 2003-1 Fire Station #2 requires an increase in expenditure budget in the amount of $37,166 for an additional firefighter/paramedic position, departmental supplies, and medical exams.
· Fund 325 - Gas Tax requires an increase in expenditure budget in the amount of $6,000 for lighted LED traffic signs.
· Fund 327 - Street Projects requires an increase in expenditure budget in the amount of $16,000 for safety barricades and lighted LED traffic signs. · Fund 410 - Parkland In -Lieu Fee requires an increase in expenditure budget in the amount of $2,000 for the Parks & Recreation Master Plan Update. · Funds 180, 252 & 254 require increases in expenditure budget to capture bond funded transactions not previously authorized. The total adjustments are listed in the Fiscal Impact table below.
The net adjustments to the General Fund and the Enterprise Funds are outlined in the attachments to the Mid-year Budget Review Report (Exhibit A).
FISCAL IMPACT
The total net budget adjustments for FY 2023/24 City-wide fiscal impacts are as follows:
Net Budget Adjustments by Fund:
General Fund ($1,566,639)
Garbage Fund 7,250
Sewer Fund 214,902
Water Fund 660,290
CFD 2003-1 Fire Station #2 37,166
Gas Tax Fund 6,000
Street Project Fund 16,000
Parkland In-Lieu Fee 2,000
Subtotal of all Departmental Requests ($623,031)
Bond Funded Transactions:
CFD 2018-1 VOP Infrastructure (Bond Issuance 9/1/22) 1,000,000 PPFA Fund (Bond Refunding 9/1/23) (61,512,945)
PPFA 2013A & B Bonds (Refunded 9/1/23) 61,793,232
Grand Total of all Net Adjustments 657,256
Staff will keep the Council informed of any significant economic impacts to the budget as needed throughout the remainder of this fiscal year, and a financial update will be included as a part of the FY 2024/25 Budget workshop in May 2024.