TO:
Placentia City Council
CITY COUNCIL
PLACENTIA PUBLIC FINANCING AUTHORITY
VIA: CITY ADMINISTRATOR
FROM: DIRECTOR OF FINANCE
DATE: JUNE 7, 2022
AGENDA REPORT
SUBJECT: PRESENTATION OF THE DRAFT FISCAL YEAR 2022-23 PROPOSED
OPERATING BUDGET INCLUDING GENERAL FUND, SPECIAL REVENUE,
DEBT SERVICE, ENTERPRISE, INTERNAL SERVICE, CAPITAL IMPROVEMENT
PROGRAM, AND FIDUCIARY FUNDS BUDGETS
FISCAL
IMPACT:
SUMMARY:
General Fund
Special Revenue
Debt Service
Enterprise
Internal Service
Fiduciary
Totals
$45,482,968 $45,429,130
20,636,805 18,095,453
404,450 404,450
6,599,550 7,000,265
3,286,900 3,286,900
5,503,447 5,610,139
$81,914,120 $79,826,337
In accordance with City Charter Section 1203, the City Administrator must present the Proposed General Fund Operating Budget to City Council for consideration at least 35 days prior to the beginning of each fiscal year. This item being presented for the City Council's review and consideration of the Fiscal Year 2022-23 Proposed Operating Budget and includes the General Fund, Special Revenue, Debt Service, Enterprise, Internal Service, and Fiduciary Funds. The public hearing is scheduled for the June 21, 2022 City Council meeting for final budget adoption.
RECOMMENDATION:
It is recommended that the City Council take the following actions:
1. Review and discuss the Draft Fiscal Year 2022-23 Proposed Budget and Capital Improvement Program (CIP); and
2. Provide input and direction for final budget adoption at the City Council Meeting of June 21, 2022. 3.a.
June 7, 2022
City Council Agenda
June 7, 2022
It is recommended that the Placentia Public Financing Authority take the following actions:
1. Review and discuss the Draft Fiscal Year 2022-23 Proposed Budget; and
2. Provide input and direction for final budget adoption at the City Council Meeting of June 21, 2022.
DISCUSSION:
The proposed FY 2022-23 citywide operating budget is $79.8 million, an increase of 7% over the Adopted FY 2021-22 budget. These expenses are supported by $81.9 million in revenue, an increase of 7% from the current fiscal year's adopted budget. These total figures reflect revenues and expenses for all funds citywide including the General Fund, Enterprise Funds, Debt Service Funds and Special Revenue Funds and are broken down in the table below.
Fund T se
Revenues &
Transfers In
Expenditures &
Transfers Out
Net Incr/(Decr)
General Fund
Special Revenue
Debt Service
Enterprise
Internal Service
Fiduciary
Totals
GENERAL FUND
$45,482,968
20,636,805
404,450
6,599,550
3,286,900
5,503,447
$81,914,120
$45,429,130
18,255,453
404,450
7,000,265
3,286,900
5,610,139
$79,826,337
$53,838
2,381,352
0 (400,715)
0 (106,692)
$1,927,783
The General Fund is the primary operating fund of the City and supports fundamental services including Police, Fire & Life Safety, Development Services, Community Services and General Administration. Revenue for this fund comes from general taxes such as property tax, sales tax, transfers from Measure U, transient occupancy taxes as well as a variety of user and permit fees and other smaller sources. The Proposed Budget for FY 2022-23 for the General Fund is $45.4 million in operating expenses supported by $45.5 million in operating revenue. The projected net increase to fund balance on June 30, 2023 is $53,838.
General Fund Revenue
The Proposed FY 2022-23 General Fund Operating Budget includes revenues of $45.5 million, which reflects a decrease of $5.9 million or 12% from the Amended FY 2021-22 budget. This decrease is due to the one-time transfer in of American Rescue Plan Act (ARPA) funds into the
General Fund in FY 2021-22. Excluding the transfers, the Proposed FY 2022-23 Budget represents an increase of $3.0 million, or 8% in operating revenue.
Property Tax revenue in FY 2022-23 is projected to be $18,392,934, an increase of $847,234 over FY 2021-22. Increases in property tax are due to a combination of property turnover and resulting reassessments and the two (2) percent per year inflation factor for property assessments allowable under Proposition 13.
Sales Tax, excluding the transfer into the General Fund from Measure U, is projected to increase by approximately 6.5% in FY 2022-23 from the Amended FY 2021-22 budget and totals approximately $8.7 million. This increase is attributable to a combination of sales derived from new businesses within the community, inflation and the impact of the South Dakota vs. Wayfair case. The Wayfair case was decided by the Supreme Court in 2018 and was implemented in California in April 2019. The case, and subsequent state legislation requires online retail sellers to collect and remit sales tax on taxable sales shipped into the state. Revenue from the tax is then allocated to a countywide pool based on the point of delivery of the product purchased. As online shopping has surged in popularity both before and during the pandemic, the City's portion of the countywide pool has increased dramatically and accounted for 18% of the City's total sales tax as of the quarter ending December 2021, down from a high of 21% for the quarter ending December 2020.
Compared to FY 2021-22 year-end estimates, the Proposed Budget represents a decrease in sales tax of 8%. This figure, developed in partnership with our sales tax consultant, reflects a cautious forecast as the potential impact of inflation, consumer confidence and the overall state of the economy could result in lower sales tax in the upcoming fiscal year. This revenue source will continue to be closely monitored and projections updated throughout FY 2022-23.
Transient Occupancy Tax (TOT), otherwise known as "the bed tax" is tax paid by visitors staying overnight in one of our local hotels. The Proposed Budget assumes $1,370,000 in revenue, 79% higher than the FY 2021-22 Adopted Budget. This large increase is due to a combination of increased travel as the public becomes comfortable travelling post pandemic shutdowns, higher nightly hotel rates as well as a full year of revenue data from the new hotel which opened late spring 2021.
Transfers in are decreasing from the FY 2021-22 Amended Budget due to the one-time transfer of approximately $9 million in American Rescue Plan Act (ARPA) funds from the Covid Relief Fund to the General Fund approved by the City Council at the FY 2021-22 Mid -Year Budget review.
Per City Council Policy No. 460, after the city has reached the 25% funding level for the General Fund Contingency Reserve, 60% of Measure U funds are to be allocated to infrastructure, 30% transferred to the General Fund for employee recruitment and retention with the remaining 10% transferred to the General Fund for OPEB. Transfers in from the Measure U fund total $2,564,700 for employee retention and $854,900 for OPEB for FY 2022-23.
Fines & Forfeitures are projected to decrease 20% from the prior fiscal year due to the current lack of motor officers in the Police Department and subsequent limitations on issuing moving citations. Once the Police Department is able to staff motor positions it is anticipated revenue in this category will increase.
City Council Agenda
June 7, 2022
Revenue
FY 2021/22
Amended
Bud et
FY 2021/22
Year End
Estimates
FY 2022/23
Proposed
Bud et
Variance
to
Amended
Bud•et
Property Taxes
Sales & Use Taxes
Other Taxes
Permits/Licenses
Fines & Forfeitures
Intergovernmental
Charges for Services
Miscellaneous
Total Operating
Revenues
Transfers In
Measure U Transfers -In
Employee Retention
OPEB
Total Transfers In
$17,545,700
8,138,460
5,850,985
1,929,900
444,200
274,000
1,348,200
2,422,146
$17,103,127
9,414,009
6,367,429
2,157,461
370,758
40,964
997,501
1,633,726
$37,953,591 38,071,913
9,996,792 9,938,002
2,604,900
868,300
$13,469,992
$51,423,583
2,604,900
868,300
$13,411,202
$18,392,934
8,663,690
6,715,400
2,455,000
355,000
540,000
1,305,400
2,520,200
$40,947,624
1,115,744
2,564,700
854,900
$4,535,344
5%
7%
15%
27%
(20%)
97%
(3%)
4%
8%
(89%)
Total Resources $51,483,115 $45,482,968 (12%)
Intergovernmental revenue is increasing due to anticipation of the one-time reimbursement from FEMA for the City's initial response to the COVID-19 pandemic.
General Fund Expenditure Highlights
General Fund expenditures are broken into three distinct types- operating, debt service and capital. Operating expenses are those required to support the day-to-day operations of the City including personnel expenses, professional services, maintenance expenses and the purchase of needed equipment and are supported by revenue generated in same the fiscal year the expenses occur. Debt service supports the principal and interest payments on loans and bonds the City has used to finance capital projects. Capital expenses are one-time expenditures for large purchases such as vehicles, technology upgrades and other equipment that has a useful life exceeding one year and are typically funded with one-time funding sources such as reimbursements or development agreements.
The Proposed FY 2022-23 General Fund Budget includes $39.3 Million in department expenses, $5.2 million for debt service and transfers and $863,746 in capital expenditures, for a total of $45.4 million. This represents a decrease of 11% for the General Fund from the current fiscal year's amended budget. As with revenues, expenses are decreasing compared to the FY 2021-22 Amended Budget due to the one-time appropriations relating to the ARPA funded projects.
Without these appropriations, the budget is increasing by 8%, or $3.4 million. As presented, the Proposed Budget is balanced, maintains or enhances city service levels while fully funding the General Fund contingency reserve at 42%.
Proposed General Fund budgets for the respective departments are listed below:
De Jartments
FY 2021/22
Amended
Budget
FY 2022/23
Pro osed Bud et
1 Variance
Legislative
Administration
Finance
Development Services
Police
Fire & Life Safety
Public Works
Community Services
General Government
Total Department Expenses
Capital Improvement Program
Transfers Out
Debt Service
GF Debt Service (Public Safety Bldg)
Total Expenditures
Significant Changes
$1,139,783
5,369,029
1,291,895
1,519,947
11,925,425
4,011,794
4,366,885
2,509,660
4,388,382
$36,522,800
$9,369,120
53,000
4,752,300
428,800
$51,126,020
$1,106,000
6,181,121
1,242,700
1,835,200
12,752,393
4,131,200
4,449,440
2,646,380
5,004,200
$39,348,634
863,746
37,500
5,179,250
0 $45,429,130
($33,783)
812,092
(49,195)
315,253
826,968
119,406
82,555
136,720
615,818
$2,825,834
($8,505,374)
(15,500)
426,950
(428,800)
($5,696,890)
City Council Agenda
June 7, 2022
Administration expenses are increasing due to the funding of new positions approved mid -year FY 2021-22. Those positions were not fully funded in FY 2021-22 due to the time needed to conduct recruitments but are completely funded in the proposed budget driving part of the increase. Additional increases relate to citywide staff training and development in line with the City's Strategic Plan.
Finance expenses are decreasing due to the shifting in appropriations for the property tax administrative fee from Finance to the General Government department.
Development Services increases are caused by the recently approved Resident Rebate Program ($120,000) for residents who purchase vehicles from a car dealership within the City as well as increases in contract plan review services and are offset by revenue generated by these activities.
Like the positions in Administration, a new GIS Technician was approved mid -year FY 2021-22 without funding. Funding for that position is included in the proposed budget contributing to the increase in the Development Services department.
General Government is increasing due to increases in our insurance premiums including general liability, cyber and worker's compensation and the aforementioned movement of the property tax administrative fee.
Fund Balance
The estimated beginning fund balance for FY 2022-23 is $20.5 million, of which $17.6 million is designated as General Fund contingency reserve/unassigned. As a result of operations in FY 2022-23, it is anticipated that the fund balance will increase by $53,838 for an ending fund balance of $20.5 million of which $16.5 million is designated as General Fund contingency reserve/unassigned. Based upon a 25% funding target for the General Fund reserve, it is forecasted that the reserve will be funded at 42% of General Fund operating expenses by the end of FY 2022-23.
20 445
Projected Revenue
Projected Expenses
Change in Fund Balance
Fund Balance Designations
Non -Spendable
Restricted
Section 115 Trust
Contingency Reserve
Unassigned
2022-23 Fund Balance Taraet
$45,482,968
($45,429,130)
$53,838
$3,262,084
$556,084
$152,100
$9,837,158
$6,691,558
Proposed Budgeted Operating Expenditures
25% FB Target
Projected Ending Balance
General Fund Operating Reserve %
Other Funds
$39,348,634
9.837,159
$20,498,984
42%
The proposed FY 2022-23 citywide operating budget is $79.8 million, an increase of 7% over the Adopted FY 2021-22 budget. These expenses are supported by $81.9 million in revenue, an increase of 7% from the current fiscal year's adopted budget. These total figures reflect revenues and expenses for all funds citywide including the General Fund, Enterprise Funds, Debt Service Funds and Special Revenue Funds.
Enterprise Funds are proprietary funds supported by user fees and charges. The rates charged to customers for these services cover the costs of operation, maintenance and capital and infrastructure improvements. The City maintains two Enterprise Funds including, Sewer and Solid Waste (Refuse). Expenditures for FY 2022-23 for these funds are proposed to be $7.0 Million for both operating and capital expenses with $6.6 million projected for revenue. The difference will be supported by existing fund balance in the Sewer Maintenance fund.
Internal Service Funds, including employee health and welfare, risk management, and equipment replacement account for activities provided to one City department by another City department.
The Proposed FY 2022-23 budget includes $3.3 million in both expense funding and revenue for these funds.
Special Revenue Funds are funds legally restricted to a specific purpose. Examples of Special Revenue Funds include the Gas Tax Fund and the Community Development Block Grant (CDBG). In total, expenses in Special Revenue Funds are proposed at $18.1 million for FY 2022/23 and support the majority of the capital projects included in the CIP. Total revenues for Special Revenue Funds are $20.6 million.
Position Allocation (Staffing)
The FY 2022-23 Proposed Budget includes 187.0 authorized full-time equivalent (FTE) positions,
7.0 elected officials as well as authorization for 5.0 FTE overhires in the Police and Public Safety Communication Departments. The proposed budget incorporates the changes in the Administration Department approved by the City Council at the FY 2021-22 Mid -Year Budget review as well as the addition of 1.0 Management Analyst in Community Services approved in the Third Quarter budget adjustments.
In addition, the following changes are recommended in the 2022-23 budget:
1. One (1.0) new Facilities Maintenance Technician ($83,989 annual cost). This position is needed to keep up with the demand for facility maintenance citywide, particularly for Community Services facilities. Maintaining these facilities is vital to ensuring continued
City Council Agenda
June 7, 2022
revenue from the rental of these facilities as well as ensuring the safety and enjoyment of the community.
2. One (1.0) new Community Services Officer ($77,365 annual cost) in the Police Department. This position was eliminated several years ago and is needed serve as a liaison with the community and coordinate special events such as National Night Out.
3. One (1.0) new Senior Civil Engineer in the Public Works Department ($160,416 annual cost). This position will be funded through a combination of Capital Improvement Projects (CIP) and the Sewer fund and will assist in the management of capital projects and reduce the amount of contract engineering services needed.
4. Reclassification of a Management Analyst to a Senior Management Analyst ($5,900 annual cost) in the Public Works department to better reflect the duties currently being done and the needs of the department.
5. Reclassification of a Management Analyst to a Senior Management Analyst ($2, 800 annual cost) in the Fire & Life Safety department to better reflect the duties currently being done and the needs of the department.
6. One (1.0) new Office Assistant ($68,450 annual cost) in the Fire & Life Safety department.
Currently there is no administrative support for the department, and it is anticipated that once the department is able to bring fire inspections and permits in-house, this position will assist in the administrative duties relating to these tasks as well as assist fire administration in day-to-day operations of the department.
7. Reclassification of an Office Assistant to an Administrative Assistant in the Development Services Department ($5,170 annual cost) to better reflect the duties currently being done and the needs of the department.
8. Reclassification of a Custodian to a Senior Custodian ($7,249 annual cost) in the Public Works department to better reflect the duties currently being done and the needs of the department.
200
180
160
140
120
100
80 60
40 20
FTE Count by Department
(Excludes Overhires)
183.0 FTE
25 FY21/22 Amended
187.0 FTE
FY22/23 Proposed
• Admin. i Comm Svcs Finance ■ Fire M Dev Svcs • Police ■ PW Capital Improvement Program
The City's Capital Improvement Program (CIP) identifies major public improvements to the City's infrastructure over the next several years and includes new projects, upgrades to existing facilities as well as rehabilitation of streets and roadways. Funding for projects scheduled for FY 2022-23 are included in the proposed budget, with the majority of the scheduled projects funded by Measure U, the Sewer Fund, Gas Tax, Development Impact Fees (DIFs), grants and other reimbursements. The proposed CIP for FY 2022-23 includes 44 projects for a combined total of $11 million.
Major projects scheduled include Old Town sewer rehabilitation, residential road rehabilitation, information technology (IT) infrastructure replacement to address aging servers and technology, and the beginning phase of the Golden Avenue bridge replacement.
City Council Agenda
June 7, 2022
Measure
M
$500,000
$1,13C
Sewer
$1,200,000
Misc.
Other
Sources
$886,291
General
Fund
$863,746
Dev. Impact
Fees
$499,000
FY2022/23 Proposed CIP by Funding Source
Project Type
In addition to the projects referenced above,
the proposed budget also includes a
continued investment in the City's parks and
open spaces in accordance with the recently
adopted Parks Initiative approved by the City
Council on March 18, 2021.
Citywide, park amenities such as benches,
BBQs, trash cans, drinking fountains, and
picnic tables are scheduled to be replaced as
many of these have deteriorated beyond
repair. New monument signs and playground
equipment will also be installed with the
largest projects proposed being the
reconstruction of Parque Del Arroyo Verde,
phase II Koch Park playground improvement
and the renovation of the playground and
surrounding landscape at Gomez Park.
Streets & Streetscapes
Traffic and Transportation
Sewer
City Buildings & Facilities
Technology
Parks
Vehicles
Major Studies
Total
Revisions since May 17th Study Session
8 3
1 15
2 12
2 1
44 $5,460,000
190,000
1,200,000
1,323,291
749,000
1,969,120
120,500
25,000
$11,036,911
% Of Total
CIP Funding
49%
2%
11%
12%
7%
18%
1%
0.2%
100%
The following changes were made after the study session presentation on May 17th and were highlighted in the position allocation (staffing) section of this report.
1. Addition of Community Services Officer position in the Police Department.
2. Addition of Office Assistant in the Fire Department.
3. Reclassification of a Management Analyst to a Senior Management Analyst in the Fire Department.
4. Reclassification of an Office Assistant to an Administrative Assistant in the Development Services Department.
5. Reclassification of Custodian to Senior Custodian in the Public Works Department.
Prepared by:
JennifTampman
Director of Finance
Reviewed
roved: Reviewed and approved:
Luis Estevez 1�
Director of Public Works
amen rru a
City Administrator
Attachments:
1. Proposed FY 2022-23 Operating and CIP Budgets
2. PowerPoint Presentation for Operating and CIP Budgets