CITY OF POMONA
COUNCIL REPORT
March 20, 2023
To: Honorable Mayor and Members of the City Council
From: James Makshanoff, City Manager
Submitted By: Andrew Mowbray, Finance Director/City Treasurer SUBJECT: Fiscal Year 2022-23 General Fund Mid-Year Budget Review RECOMMENDATION:
It is recommended that the City Council take the following actions:
Review the Fiscal Year (FY) 2022-23 General Fund Mid-Year Budget Report Adopt the following resolutions:
RESOLUTION NO. 2023-40 – A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF POMONA, CALIFORNIA, Amending the Fiscal Year 2022-23 Operating Budget, AMENDING THE FiSCAL YEAR 2022-23 CAPITAL IMPROVEMENT PROGRAM (CIP) BUDGET AND AMENDING THE FY 2022-23 AUTHORIZING STAFFING LEVELS RESOLUTION NO. 2023-45 - A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF POMONA, CALIFORNIA, AMENDING APPENDIX A OF THE COMPENSATION PLAN FOR EXECUTIVE MANAGEMENT GROUP A AND B EMPLOYEES BY ADDING THE DEPUTY DIRECTOR OF LIBRARY SERVICES AND NEIGHBORHOOD SERVICES ASSISTANT DIRECTOR CLASSIFICATIONS AND AMENDING THE AUTHORIZED STAFFING LEVELS IN THE LIBRARY SERVICES AND NEIGHBORHOOD SERVICES DEPARTMENTS FOR THE FISCAL YEAR 2022-23 OPERATING BUDGET BY THE ACTIONS LISTED HEREIN RESOLUTION NO. 2023-46 - A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF POMONA, CALIFORNIA, AMENDING THE CITY OF POMONA’S SALARY SCHEDULE FOR FISCAL YEAR 2022-23 TO MEET THE REQUIREMENTS OF THE CALIFORNIA CODE OF REGULATIONS TITLE 2, SECTIONS 570.5 AND 571 TO ADD THE CLASSIFICATIONS OF DEPUTY DIRECTOR OF LIBRARY SERVICES AND THE NEIGHBORHOOD SERVICES ASSISTANT DIRECTOR EXECUTIVE SUMMARY: This report summarizes the City’s General Fund overall financial position for the current fiscal year through December 2022. The General Fund is the largest operating fund in the City and is used to account for all of the City’s general revenues such as Taxes, Charge for Services, Permit Revenue, Investment Income, and Intergovernmental Revenues, which are mostly revenues from the County and State. General Fund expenditures are related to the rendering of general services, including but not limited to Public Safety, Parks and Recreation services, Public Works, Administration and Legislative services for the City. This report will cover the following areas:
General Fund Overview
General Fund Summary of Revenue
General Fund Expenditure Detail By Category and Detail By Department General Fund Recommended Mid-Year Budget Amendments
General Fund Fiscal Year 2022-23
Updated Projected Fund Balance Based On Budget
Recommended Staffing Changes
FISCAL IMPACT: The adoption of Resolution 2023-40 (Attachment No.1) will increase the FY 2022-23 Operating Budget as reflected in Table 1. The FY 2022-23 Capital Improvement Program (CIP) Budget will increase $1.3M from transfers from City Operating Funds.
Table 1 - Fiscal Year 2022-23 Mid-Year Requests
PREVIOUS RELATED ACTION: City Council approved the Budget Preparation Calendar, Guiding Principles and Process for FY 2022-23 on January 10, 2022, City Council adopted the FY 2022-23 Operating Budget, Housing Authority Budget, and the Five-Year Capital Improvement Program on June 6, 2022, with amendments to the General Fund operating budget approved on August 15, 2022, October 3, 2022, October 17, 2022, November 21, 2022 (Fiscal Year 2022-23 General Fund 1st Quarter Budget Review), December 19, 2022 and January 23, 2023.
DISCUSSION: As adopted on June 6, 2022, the General Fund budgeted revenues were $141.5M and appropriations were $141.5M, resulting in small surplus of $58k. On November 21, 2022, the 1st Quarter Mid-Year report was approved, and appropriations resulted in an overall estimated surplus of $41k. As noted in Table 2 the General Fund has expended nearly $16M more than it has collected as of December 31, 2022. This negative cash flow is normal due to the timing of tax receipts and is one of the significant reasons that an Economic Reserve Policy (Fund Balance) which was recently updated and approved as part of the Consolidated Financial Polices and Administrative Procedures on February 6, 2023 is necessary. 2022-23 General Fund Mid-Year Overview – At adoption on June 6, 2022, and as shown in Table 2, FY 2022-23 General Fund revenues were $141.5M and appropriations were $141.5M, with an adopted surplus of $58k. The General Fund budget has been amended since adoption; expense appropriations now exceed revenues appropriations by $58k. Regarding actuals for the year, with 50% of the year complete, General Fund revenues are at 34% of projections and expenditures are at 46%. With the disparity of revenue collections versus expenditures, the General Fund has expended $16M more than it has collected in the current fiscal year (as of December 31, 2022). This cash flow is normal due to the timing of tax receipts and is one of the primary reasons the 22% Fund Balance called for within the City’s recently updated Consolidated Fiscal Policies and Administrative Procedures (approved by City Council in February 2023) is necessary. The revised revenue estimates and appropriations proposed within this report will erase the current deficit of $58k to a surplus of $1.4M. Based on year-end estimates, a surplus in the amount of $8.5M could be realized based on current year-end projections. It is important to note that $6.8M in American Rescue Funds (ARP) are accounted for in the budget amount, however removed from the Year End Estimates and a discussion about returning this amount to the ARP fund is worthwhile as this money can be utilized for ARP related projects or utilized again as possible onetime revenue in the FY 2023-24 Proposed Budget. Staff has discussed this with the ARP subcommittee.
Table 2 - Fiscal Year 2022-23 Mid- Year Summary
Revenues
Table 3 - Fiscal Year 2022-23 Mid-Year Revenue Summary
Property Taxes – Typically, property tax revenues are received from November through August. In addition, due to various State actions, the City receives “In Lieu” property tax twice a year in January and June. Property Tax revenues are expected to bring in $4.3M ($2.6M when comparing year end estimates) more than last year which is partially due to the sale of 1,028 SF homes in 2021 which averaged an increase of 78.7% on those parcels sold and added $255.5 million to the 2022-23 tax roll. FY 2022-23 RPTTF Residual revenue was increased from $2.187M to $2.7M due to the continued growth of property tax revenue. For the July to December 2022 allocation period RPTTF property tax revenue increased 19% when compared to the July to December 2021 allocation. The City has increased revenue for the second half of the year to account for the increase in property tax revenue. However, the overall Property Tax category is expected to end the fiscal year approximately $2.6M higher than originally budgeted. A request to increase revenue estimates for this category is included herein.
Sales and Use Tax – The total revenue budget from Sales Tax is derived from three distinct sources; a 1.0% share of local sales (from the State and County Pools), allocations of Public Safety Augmentation Fund (PSAF) sales tax from the County, and the 3/4 cent Transaction and Use Tax (Measure PG) revenues. These three sources were originally budgeted at $40.1M when adopted in June 2022. Based on information provided by the City’s Sales Tax Consultant and the revenues received through December 31, 2022, the total of these three sales tax revenue sources is anticipated to come in $3.1M over the current budget. The Sales and Use Tax is projected to come in at $24.2M which is $2.4M over budget. Sales Tax highlights provided from the Consultant state that receipts from July through September were 20.3% above the third sales period in 2021, though this was inflated by a large state correction of previously misallocated funding from a building and construction taxpayer. Excluding this and other aberrations, actual sales were up 7.8%. Contractors, building material and other construction related suppliers posted strong sales. Service stations soared as the price of petroleum products remained extremely high through the end of the quarter. Auto repair shops also reported higher proceeds. Measure PG revenue also improved, led by growth in local service station receipts. Online sales also continue to increase revenues in this category.
Utility Users Tax (UUT) – Currently budgeted at $16M, utility tax revenue represents 11% of General Fund revenues. Based on recent rate increases for electricity and the increased cost of natural gas, these categories are estimated to end the fiscal year $2.8M higher than originally budgeted. Southern California Edison implemented a rate increase in January of 2023 and per SoCalGas, the natural gas procurement rate is about 6.7% higher than what it was effective March 2022. There are additional rate increases proposed in the coming months and are under review with the Public Utilities Commission. Staff will monitor and revise future revenue estimates based on any approved and implemented increases.
Other Taxes – This category includes Business Licenses, Transient Occupancy Tax, Property Transfer Tax, Cannabis Business Tax, and Franchise Fees, which represent 11% of total General Fund revenues. These sources, collectively, are budgeted at $16.2M. Receipts for Cannabis Business Tax and Property Transfer Tax are coming in strong therefore the Other Taxes category is estimated to end the fiscal year $2.1M higher than originally budgeted. The unexpected continuation of increased property deed transfers following the rise in interest rates is estimated to increase the Property Transfer Tax revenues by $1.6M for FY 2022-23. Cannabis Business Tax revenues continue to remain positive in FY 2022-23. With the scheduled opening of the remaining two cannabis-based businesses this Spring, the year-end estimate for this tax is expected to end the fiscal year approximately $300k higher than originally budgeted.
Other Sources – All Other Sources include Fees, Licenses, Permits, and Revenue from Use and Property categories and make up 18% of General Fund Revenues. Currently the permits category is estimated to come in $800k higher than the FY 2022-23 budget due to an increase in permits being processed through the building and safety division. The fees category is expected to realize an increase of $1.6M from increased new construction and plan check fees that have been processed for several multi-family residential projects throughout the City. The American Rescue Plan Revenue (ARP) that was budgeted in FY 2021-22 and not utilized, and then re-budgeted in FY 2022-23 will not be needed again based on current year end projections. Staff has discussed this matter with the ARP subcommittee and is recommending that this revenue not be budgeted as a onetime source in FY 2023-24 and instead can be utilized for ARP expenditures spending plan needs. Using this $6.8M on the various respective designated buckets could also require less restrictive uses as this can be categorized under the “General Government Services” definition that allows all municipalities to use $10M of their ARP funds with less constraints per the US Treasury reporting guidelines. Overall, the Other Sources category is expected to receive $2M less than the Adopted budget for FY 2022-23 mainly due to ARP funds that will not be realized.
Revenue Summary – In summary, the budgeted revenues from tax related items discussed above represent 82% of the City’s General Fund and is projected to come in $10.4M higher than originally budgeted for FY 2022-23 and $8.3M higher when comparing the new revised mid year revenue estimates. The Other Sources category represents 18% of the City’s General Fund and is projected to come in under budget by $2.0M of the amended Mid-Year budget, mostly related to the $6.8M of ARP funds that are not planned to be received. Although at this time, the City is experiencing an undeterminable economic upswing in several categories, various forecasts continue to warn that the economy and sudden inflation will flatten in the coming year(s) resulting in a less positive situation for many cities in California. This will be covered in more detail in the conclusion section.
Expenditures
At the halfway point of the Fiscal Year, as of December 31, 2022 overall General Fund appropriations are 46% expended. Most Departments are within budget at Mid-Year. All categories are within an acceptable range of year-to-date expenditures in relation to the total appropriations for the year. The following provides a breakdown of the FY 2022-23 appropriations, and Mid-Year Expenditures by Category (Table 4) and then by Department (Table 5).
Table 4 - Fiscal Year 2022-23 Mid-Year Expenditure Summary As reflected in Table 4, expenditures are closely aligned with the amended budget, with as much as $2.3M in savings compared to the FY 2022-23 Mid-Year budget primarily due to vacancies in many Departments, but also with personnel offsets increases in some area. All other categories are aligned with utilities going over by a minimal amount. Overall, the expenses are anticipated to achieve a $2.3M savings by year-end. Staff is requesting the City Council to approve additional appropriations in the amount of $2.0M which are covered in detail within the next section, which includes two personnel items which will be discussed on page 9, and expense appropriation items that are offset with a corresponding revenue estimate. Two additional items are contributions to two respective CIP projects that need funding.
Table 5 - Fiscal Year 2022-23 Mid-Year Department Summary Table 5 displays that all Departments have expended 50% or less of their budget at Mid-Year. Under current budgetary allocations, Public Safety represents 74% of all General Fund expenditures. Most Departments are projected to come in or under budget. The Police Department is estimated to be about $2M under budget mainly due to vacancies including 18 sworn positions as of this writing. Overall Expenditures are projected to come in $2.3M less than the Mid-Year budget.
FY 2022-23 Recommended General Fund Budget Amendments
Appropriations Amendments
Technical Specialist (Administration) - Funding of $11k for the remainder of this fiscal year will be used to hire a part-time Technical Specialist to work in the City Manager’s Office under the joint guidance and supervision of the Deputy City Manager and the Public Information Specialist within the Police Department. This position will enhance the City’s social media outreach and community story telling efforts. If approved, this position will be included in the FY 2023-24 proposed budget.
Controllable Contract Services (Development Services - Planning Division) – Staff is requesting an increase in appropriations of $15K (101-1712-52285-00000) due to expense recovery for hiring a consultant to prepare an industrial infrastructure and Parcel Tax Analysis for the City to support a City Council requested ballot measure. Staff anticipates that the overall impact to the General Fund will be significantly offset by additional revenues actualized within the Department by year-end.
Abate Hazardous Building (Development Services - Code Compliance) - Staff is requesting an appropriation of $20K (101-1740-52940-00000) for the Abatement line item in the Code Compliance Division. Staff anticipates that the overall impact to the General Fund will be significantly offset by additional revenues actualized within the Department by year-end.
All Overtime – Non-Sworn (Development Services - Code Compliance) – Staff is requesting an appropriation of $4K (101-1740-51030-00000) for the Overtime line item in response to ongoing after-hour vendor details conducted with the LA County Health Department. Staff anticipates that the overall impact on the General Fund will be significantly offset by additional revenues actualized within the Department by year-end.
Contract –Building & Safety (Development Services - Building & Safety Division) – Staff is requesting an increase in appropriations of $585K for the contract for Building and Safety services. This contract will need to increase by this amount as result of the building permit and plan check revenues increasing overall in the current fiscal year. The City contract with Interwest results in the company receiving a 65% share of Building and Safety Division revenues collected. With a $900k increase in Building permit revenue projected; the current appropriation needs to increase by $585k to fund the monthly contract (101-2521-52930-0000) with a revised revenue estimate needed in the amount of $900K (101-2521-40050-00000).
Sales Tax Audit Services (Finance) - The HdL Sales Tax Contract 3rd quarter Billing reflected sales tax audit returns ($526k), based on misfiled tax receipts by businesses which have been higher than average causing contracted percentage (15%) paid back to HdL for identifying and reporting the errors to increase above what was originally budgeted. General Fund Sales Tax revenue estimates for FY 2022-23 have also been increased based on the findings. Staff is requesting $110k in appropriations for this HdL contract (101-0101-52274-00000).
Hourly Payroll Support (Finance) – The Finance Department had two long time Payroll Coordinators recently end their employment with the City. The two employees processed the City’s payroll with 20 years and 10 years’ experience respectively during their tenure. With these two unexpected departures, over the last few months, the Finance Department had to utilize other Finance Department employees. In addition, two CalPers retired annuitants were hired to assist with this comprehensive transition. Staff is requesting $47k in appropriations (101-1120-51040-00000) to assist the payroll division in training new staff, as well as awaiting the hiring of full time positions by the end of the fiscal year.
CIP Related Amendments
Towne Avenue and Bonita Avenue CIP Project No.68580 (Public Works) - The intersection of Towne Avenue and Bonita Avenue has a history of left turn related accidents. The design phase is underway and is expected to be completed by Spring 2023. This project will upgrade the existing traffic signal from a 4-phase to an 8-phase operation, which includes left turn arrows for all four directions. The improvements include upgrading existing underground conduits, wiring, equipment, controller, and service pedestal. By funding this CIP project with an additional $500k from General Fund reserves staff can proceed with bidding/construction immediately after the design is complete.
Emergency Shelter Annex CIP Project No.71053 (Public Works) – This project allows for the development of 1390 East Mission Boulevard into a parking area for the Year-Round Emergency Shelter, Hope for Home. The Emergency Shelter Annex CIP project currently has $183k (428-2590-XXXXX-71053) available. The Engineer’s estimate for the parking lot at the Emergency Shelter Annex came in at almost $1.0M, leaving a significant funding gap of $800k. The City can look for additional sources of funding, but these would not be guaranteed and would delay the project once again, possibly increasing the cost in the future. Staff is requesting an additional $800k from General Fund reserves so that staff can proceed with bidding/construction immediately after the design is complete.
Revenue Amendments
Property Taxes – Property Tax revenues are expected to bring in $2.6M overall when comparing year end estimates to the FY 2022-23 budget which is partially due to the sale of 1,028 SF homes in 2021 which averaged an increase of 78.7% on those parcels sold and added $255.5M to the 2022-23 tax roll. Secured property taxes are projected to come in over budget by $1.2M. FY 2022-23 RPTTF Residual revenue was increased from $2.2M to $2.7M due to the continued growth of property tax. The City receives “In Lieu” property tax twice a year and anticipates, based on Hdl projections, to bring in $551k more than budgeted. Combined the amendments being requested are based on a year-end increase of $2.2M that will be received this fiscal year and therefore staff are requesting a revised revenue estimate (101-9999-xxxxx-00000) of this same amount.
Los Angeles County Fire Paramedic Pass Through – Los Angeles County Fire Department provided a projection that the City of Pomona total ambulance credits for FY 2022-23 will be $1.0M, which is approximately $400k higher than the original $600k estimate. The reason for the increase is primarily because FY 2021-22 invoices to the ambulance providers were delayed until data issues were resolved. Staff are requesting a revised revenue estimate of $400k (101-2101-40423-00000).
Fund Balance Policy
On June 20, 2011, the City Council adopted Resolution 2011-63A approving the City’s Fund Balance Policy. The objectives of the Policy were to comply with the Governmental Accounting Standards Board (GASB) Statement Number 54 – Fund Balance Reporting and Governmental Fund Type Definitions, establish formal reserve policies, build adequate reserves, and guide the City toward meeting its short and long-term obligations. On February 6, 2023 this Policy was replaced and repealed when staff brought forward the City’s Consolidated Financial Polices and Administrative Procedures via analysis by City staff and the City’s financial advisor Urban Futures Inc. (UFI). The revised policy states that at the end of each fiscal year, the City shall have a Committed Fund Balance equal to 22% of operating expenditures and transfers out in the General Fund. The 22% is to be considered the minimum level. Based on audited FY 2021-22 figures, the General Fund balance is $49.7M, which is about 35% of operating expenditures. However, based on the adopted budget, with additional General Fund budget amendments since July 1, 2022, and the appropriations/revised revenue estimates proposed within the mid-year report, the FY 2022-23 estimated fund balance could equal $51M, which would exceed the Fund Balance Policy ultimate target of 22%. Table 6 shows how the $1.3M increase in budget amendments combined with the anticipated surplus for FY 2022-23, if utilized would still result in a contribution to reserves. Another key factor to note is that if the FY 2022-23 year end estimate of $8.5M surplus did occur the fund could increase significantly bringing the fund balance to a level of 40%. However, as mentioned herein, $6.8M of this FY 2022-23 revenue is from ARP funds and staff recommends that the $6.8M be transferred back to the ARP fund balance to use for other ARP needs.
Table 6 – Updated Projected Fund Balance Fiscal Year 2022-23 Citywide Staffing Request - FY 2022-23
Library Department – Staff is requesting the reclassification of the Library Manager to Deputy Director of Library Services. If approved, the proposed action would reclassify the existing Library Manager (EB-076) to the Deputy Director of Library Services (EB-082). This proposed change in title and compensation reflects the expansion of duties and responsibilities of the position. The Deputy Director of Library Services will serve on several professional library committees and organizations at the state and regional level, representing the Pomona Public Library and increasing awareness of the organization. The elevation of the position also reflects the current Library Manager’s skillset to enhance programming, increase usage of the Library, connect with the community, and bring in outside funding through grant applications. In addition to overseeing day-to-day operations of the Library, the Deputy Director position will be tasked with staying abreast of current trends and innovations in the realm of public libraries and helping to navigate the Pomona Public Library toward a sustainable and relevant future. The annual increase for this change is $10k, with the requested appropriation of $2.5k (101-4501-51012-00000) to fund this increase for the remainder of FY 2022-23.
Neighborhood Services Department – Staff is requesting the addition of a Neighborhood Services Assistant Director. This proposed action would allocate a new classification of Neighborhood Services Assistant Director to Range Scale A-EA-094. The Neighborhood Services Assistant Director will be responsible for assisting in the direction of the Neighborhood Services Department, including the Pomona Housing Authority, housing services, homeless programs, community services, community engagement and grants administration; manages; assists in overseeing the use of Federal, State, and local housing and grants resources; assists in overseeing the implementation of the City’s Rent Stabilization Ordinance and grants administration of CARES Act and select American Recovery Program funds; coordinate assigned activities with other City departments, divisions, and outside agencies. The annual cost for salaries and benefits for this new position is estimated to be $230k. No appropriation is requested as there are sufficient funds available to fund this position at year end.
Non- General Fund Amendments
National Opioid Class Action Lawsuits – On July 2021, a $26 billion offer to settle was made by opioid manufacturers Janssen Pharmaceuticals, McKesson, AmerisourceBergen and Cardinal Health to resolve their liabilities in over 3,000 opioid-crisis lawsuits nationwide. It is estimated that California will receive approximately $2.05 billion and the majority of this money will be provided to eligible cities and counties. The City of Pomona has elected to receive direct payments of these funds. The payments will be made annually over a period of eighteen years and the amount of the settlement will change from year to year. Funds are to be used according to the settlement agreement such as opioid remediation and interventions to prevent drug addiction in vulnerable youth, among others. The Finance Department will be working with the Police Department and Neighborhood Services Departments to appropriately spend these funds on items stated in the settlement agreement. Staff is requesting to increase revenue estimates (215-2090-40889-51357) and appropriations (215-2090-52285-51357) in the amount of $197k for the Opioid settlements that the City has received to date.
Police Department JAG Grant 2021 - A request from staff to decrease revenue estimates and appropriation in the amount of $67k for the FY 2021 Edward Bryne Memorial Justice Assistance grant (239-2090-xxxxx-58734). This amount was given a revised revenue estimate and an appropriation in the Proposed FY 2022-23 Operating Budget, and when the JAG Grant was accepted in July 2022, the funds were again budgeted which caused duplication of appropriations and revenues in the amount of $67k.
Public Works Unleaded Fuel and Natural Gas - Year end costs are anticipated to be higher than budgeted due to rising fuel costs over the last 6 months of FY 2022-23. It is unknown whether this increase will continue. Public Works staff is requesting additional funding for fuel due to the increase in price of Unleaded fuel and Compressed Natural Gas (CNG). Unleaded fuel prices have gone up considerably from last fiscal year and the CNG cost went up considerably in January 2023. The CNG price was $2.94 a gallon in December, increased to $7.30 a gallon in January and $7.30 in February. The City purchases an average of 12,500 gallons of CNG a month, while the previous average was $36.7k a month, and is now $54.5k more a month, to an average of $91.3k a month. Most of the increase impacts the Refuse Fund for the residential vehicles used. Staff is requesting an appropriation and revised revenue estimate of $235k in the Internal Fleet Services Fund, which will be allocated to the Refuse fund, therefore an appropriation increase of $235k is required in the Refuse Fund as well.
UPDATE - Phillips Ranch Maintenance Assessment District - Since the First Quarter Budget report and the ensuing $410,000 cut in the budget, which affected the budgets for Water, Tree Maintenance, and Landscape Maintenance, the City is conducting a Proposition 218 ballot measure to be finalized at a Public Hearing on April 3, 2023. Property owners will vote to approve an increase to the annual assessment from $277.81 to $511.58 or provide a majority protest of the increase by the close of the Public Hearing. The result of this ballot measure will determine whether the Phillips Ranch budget will have to sustain significant cuts to keep revenues in line with expenditures, or whether a new District will be formed, the Phillips Ranch Landscaping and Lighting Assessment District, with a budget that will allow for increased maintenance of the District. There are no changes in appropriations for the Phillips Ranch Maintenance Assessment District in the Mid-Year Report.
Conclusion (Fiscal Year 2022-23) Mid-Year Report
As stated in the Executive Summary, the purpose of this report is to give the City Council a financial update of the FY 2022-23 Budget at the Mid-Year. Based on this information, staff is recommending the City Council adopt the amendments proposed herein, as well as the requested change to the City’s authorized staffing level.
At the 1st Quarter in November 2022 the budget remained the same for the most part and with amendments that have occurred since then, the current deficit is $58k. With the items included in the mid-year the budget surplus will be increased to a total estimated amount of $1.4M with the various actions requested within this report. Based on year-end estimates a surplus in the amount of $8.5M could be realized if all year end estimates finish as anticipated. If the $8.5M surplus materializes, this would help the General Fund exceed the 22% policy requirement even more than the already anticipated 35% amount. With that said, $6.8M of the total revenue projected to be received and used in FY 2022-23 was to come via the Federal funds provided via the American Rescue Plan (ARP). Staff recommends returning the $6.8M to the ARP fund for other uses.
The national economic situation will be closely monitored and reminds us of the importance of having adequate General Fund reserves that may need to be relied upon in future years. The increase in interest rates and slowdown of the housing market continues to impact the economy. In addition, fuel costs are at an all-time high, and inflation continues to be monitored. These factors all bring attention to the fact that an economic downturn could be forthcoming. However, high levels of consumer savings along with improvement in the health situation and an adequate labor market should continue to provide positive news in a difficult global environment.
In addition to the economic concerns, the FY 2023-24 budget will be prepared in the coming months with many programs and areas that will require or least the consideration to increase funding. With the adoption of the Updated Consolidated Fiscal Policies on February 6, 2023, the City is set to implement strategic policy direction in contributing towards commitments that support the continued financial strength and stability of the City as reflected in its financial goals. These fiscal policies will be presented annually to the City Council as part of the Proposed Budget Process and will require approval via Council Resolution. Likewise, the use of the unassigned fund balance for one-time expenses will also be presented and will require City Council approval.
In closing, the FY 2023-24 budget process is underway, and a Budget study session will be held on March 27, 2023, at 5:30pm with another session held on the afternoon of April 5, 2023 at 3:00pm in an effort to give more City of Pomona residents access to the budget process. Both meetings will be held in the Pomona City Council chambers. All community members are encouraged to attend and fill out a speaker slip to give their input to the City Council and staff. The FY 2023-24 Proposed Budget will be brought forward for discussion on Monday, May 8, 2023, at the annual Proposed Budget Study Session.
ALTERNATIVE(S): None
Prepared by:
____
Andrew Mowbray
Finance Director/City Treasurer
ATTACHMENT(S):
Attachment No. 1 – Resolution No. 2023-40
Attachment No. 2 – Resolution No. 2023-45
Attachment No. 3 – Resolution No. 2023-46
Exhibit A – Salary Schedule
Attachment No. 4 – PowerPoint Presentation – FY 2022-23 Mid-Year Review Fiscal Year 2022-23 General Fund Mid-Year Budget Review