TO:
Placentia City Council
CITY COUNCIL
PLACENTIA PUBLIC FINANCING AUTHORITY
VIA: CITY ADMINISTRATOR
FROM: DIRECTOR OF FINANCE
DATE: JUNE 21, 2022
AGENDA REPORT
SUBJECT: CITY OF PLACENTIA FISCAL YEAR 2022-23 ANNUAL OPERATING BUDGET,
POSITION ALLOCATION PLAN, ANNUAL GANN APPROPRIATIONS, CAPITAL
IMPROVEMENT PROGRAM, AND PLACENTIA PUBLIC FINANCING
AUTHORITY ANNUAL BUDGET
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
The City's budget is an important policy document, serving as the annual financial plan that identifies the spending priorities for the organization. The budget is used to balance available resources with community needs, as determined by the City Council. The City's fiscal priorities include keeping the City safe, clean, and well maintained, in addition to protecting the quality of life and property values.
The budget also serves as a tool for communicating the City's financial strategies and for ensuring accountability.
The City is required to adopt a budget by July 1 of each year which establishes appropriations and estimated revenues for the fiscal year. In compliance with the City Charter Section 1203, the Proposed Budget for Fiscal Year 2022-23 was presented for City Council review on May 17, 2022, and again on June 7, 2022. The June 7, 2022 City Council meeting also included an overview of the Capital Improvement Program (CIP). Since the June 7 meeting, there have been no revisions made to the FY 2022-23 budget.
2-a.
June 21, 2022
City Council Agenda
June 21, 2022
In addition to budget adoption, Article XIII B of the State Constitution requires that each California local government adopt an Annual Appropriations Limit each year. This action will approve the use of the County's population growth and California per capita income growth in calculating the FY 2022-23 Annual Appropriations Limit and the resolution adopting the City's FY 2022-23 Annual Appropriations Limit, as required by law.
RECOMMENDATION:
It is recommended that the City Council take the following actions:
1. Open the Public Hearing concerning the City of Placentia Budget for Fiscal Year 2022-23 and Capital Improvement Program (CIP) for Fiscal Year 2022-23, consider all public testimony, ask questions of Staff, and close the public hearing; and
2. Adopt Resolution No. R-2022-43, a Resolution of the City Council of the City of Placentia, California, taking actions necessary to adopt the Fiscal Year 2022-23 Annual Budget; and taking actions necessary to adopt the Fiscal Year 2022-23 Capital Improvement Program (CIP) Budget with an appropriation of $11,036,911; and authorizing the Position Allocation Plan and Compensation Plan for Fiscal Year 2022-23; and
3. Authorize the City Administrator to release appropriation controls for the General Government Department and Risk Management fund outside of the normal quarterly process, as necessary; and
4. Approve the use of the County's population growth and California per capita income growth as determined by the State Department of Finance for the calculation of the Fiscal Year 2022-23 Annual Appropriation Limit; and
5. Adopt Resolution R-2022-44, a Resolution of the City Council of the City of Placentia, California, approving and adopting the Annual Appropriations Limit for the Fiscal Year 2022-23 in the amount of $108,567,534.
It is recommended that the Placentia Public Financing Authority take the following actions:
1. Conduct the Public Hearing concerning the Placentia Public Financing Authority Budget for Fiscal Year 2022-23; and
2. Adopt Resolution No. PPFA-2022-01, a Resolution of the Placentia Public Financing Authority (PPFA) Board of Directors of the City of Placentia, California, taking actions necessary to adopt the PPFA's Fiscal Year 2022-23 Annual Budget.
DISCUSSION:
The proposed FY 2022-23 citywide operating budget is $80.0 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
City Council Agenda
June 21, 2022
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
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
$79,986,337
$53,838
2,381,352
0 (400,715)
0 (106,692)
$1$27,783
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
City Council Agenda
June 21, 2022
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.
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.
City Council Agenda
June 21, 2022
Revenue
FY 2021/22
Amended
Budc et
FY 2021/22
Year End
Estimates
FY 2022/23
Proposed
Bud set
Variance
to
Amended
Bud set
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
Total Resources
$17,545,700
8,138,460
5,850,985
1,979,900
444,200
274,000
1,298,200
2,422,146
$37,953,591
9,996,792
2,604,900
868,300
$13,469,992
$51,423,583
General Fund Expenditure Highlights
$17,103,127
9,414,009
6,367,429
2,157,461
370,758
40,964
997,501
1,620,664
38,071,913
9,938,002
2,604,900
868,300
$13,411,202
$51,483,115
$18,392,934
8,663,690 7%
6,715,400 15%
2,455,000 27%
355,000 (20%)
1,140,000 97%
1,305,400
1,920,200 4%
5%
(3%)
$40,947,624 8%
1,115, 744 (89%)
2,564,700
854,900
$4,535,344
$45,482,968
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 the same 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%.
City Council Agenda
June 21, 2022
Proposed General Fund budgets for the respective departments are listed below:
De artments
FY 2021/22
Amended
Budget
FY 2022/23
Proposed Bud•et
Variance
Legislative
City Administrator
Administrative Services
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
617,231
4,751,798
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
633100
5,548,021
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)
15,869
796,223
(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)
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.
City Council Agenda
June 21, 2022
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.
Estimated Be innin. Fund Balance 7/1/22 $20,445,146
Projected Revenue
Projected Expenses
Change in Fund Balance
Fund Balance Designations
Non -Spendable
Restricted
Section 115 Trust
Contingency Reserve
Unassigned
2022-23 Fund Balance Target
Proposed Budgeted Operating Expenditures
25% FB Target
Projected Ending Balance
General Fund Operating Reserve %
Other Funds
$45,482,968
($45,429,130)
$53,838
$3,262,084
$556,084
$152,100
$9,837,158
$6,691,558
$39,348,634
$9,837,159
$20,498,984
42%
The proposed FY 2022-23 citywide operating budget is $80.0 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.
City Council Agenda
June 21, 2022
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 revenue from the rental of these facilities as well as ensuring the safety and enjoyment of the community.
2. 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.
3. 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 conducted and the needs of the department.
4. 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 to be serve as a liaison with the community and coordinate special events such as National Night Out.
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 conducted and the needs of the department.
City Council Agenda
June 21, 2022
6. One (1.0) new Office Assistant ($68,450 annual cost) in the Fire & Life Safety department.
Currently there is no administrative clerical 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 conducted 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 conducted 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
26 11.35
9 28
FY21/22 Amended
187.0 FTE
28 9
28 FY22/23 Proposed
Admin Svcs Comm Svcs Finance L! Fire ...1 Dev Svcs Police ■ PW City Admin 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
City Council Agenda
June 21, 2022
$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.
Measure
M
$500,000
Misc.
Other
Sources
$886,291
General
Fund
$863,746
Dev. Impact
Fees
$499,000
FV 2022/23 Proposed CIP by Funding Source
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 phase II
Koch Park playground improvement and the
renovation of the playground and surrounding
landscape at Parque Del Arroyo Verde and
Gomez Park.
mount
% Of Total
CIP Funding
Streets & Streetscapes 8 $5,460,000 49%
Traffic and Transportation 3 190,000 2%
Sewer 1 1,200,000 11%
City Buildings & Facilities 15 1,323,291 12%
Technology 2 749,000 7%
Parks 12 1,969,120 18%
Vehicles 2 120,500 1%
Major Studies 1 25,000 0.2%
Total 44 $11,036,911 100%
City Council Agenda
June 21, 2022
Prepared by:
Jennifer (ampman
Director of Finance
Reviewed and approved:
Estez
Director of Public Works
Fo
Reviewed and approved:
Damien RT Frula
City Administrator
Attachments:
1. Proposed FY 2022-23 Operating and CIP Budgets
2. Resolution R-2022-43 - 2022-23 Budget Resolution
3. Resolution R-2022-44 - Annual Gann Appropriations Limit Resolution
4. PowerPoint Presentation for Operating and CIP Budgets
5. Resolution PPFA-2022-01 - Budget Resolution