CITY OF POMONA
COUNCIL REPORT
March 25, 2024
To: Honorable Mayor and Members of the City Council
From: Anita D. Gutierrez, City Manager
Submitted By: Andrew Mowbray, Finance Director/City Treasurer SUBJECT: Fiscal Year 2024-25 General Fund Preview
RECOMMENDATION
It is recommended that the City Council take the following action:
Review the preview presentation of the FY 2024-25 Preliminary General Fund Budget and receive community feedback on the Proposed FY 2024-25 General Fund Budget
DISCUSSION
Fiscal Year 2024-25 General Fund Preview
This Fiscal Year 2024-25 General Fund Budget Preview provides the community a current “snapshot” of the City’s forthcoming General Fund budget based on early projections of all revenues, and anticipated expenditures for all General Fund Departments, including personnel costs estimated to date. By sharing this information, the hope is presenting this financial picture will assist in determining prioritization of ongoing and future services to constituents and the City Council. In this preview, staff will present a financial picture to allow the City Council to give any direction on goals and priorities they would like included in the forthcoming budget, as well as insure the continuation of operational and capital expenditures is included, and attempt to find what resources can be appropriately allocated to accomplish these initiatives. Another preview will occur on April 3, 2024 at 3:00 pm and will cover the same presentation given on March 25, 2024 with the ultimate goal to hear feedback from as many residents and businesses during both study sessions. Both presentations will take place in the City Council Chambers.
After receiving feedback from the City Council on public priorities and objectives, the Finance Department will work in cooperation with all City Departments to formulate further in-depth revenue and expenditures projections for the upcoming fiscal year. From this, the individual Departments will use the projected revenues to prioritize and recommend the next fiscal year’s priorities, while considering the constraints of the City’s committed General Fund reserve balance, inflation, and a conservative fiscal approach.
The City Manager and the Finance Department are in the process of reviewing each budget proposal, revenue assumptions, and all current financial obligations before preparing the proposed document for the City Council which will be presented via a study session on May 13, 2024. The City Council reviews the proposed budget at a public hearing scheduled for the final adoption to occur at the first City Council meeting scheduled for June 3, 2024.
Currently a preliminary FY 2024-25 General Fund Budget is listed as follows:
The preliminary FY 2024-25 General Fund budget displays a projected deficit of $5M. The overall financial picture shows General Fund revenues are higher overall by only $631k, while expenditures are projected to increase $2.7M compared to FY 2023-24 amended budget at this time. What is important to note while revenues are anticipated to increase by a small amount overall as was not the case the last few fiscal years. The categories of Property Tax and Sales Tax making up 60% of General Fund revenues are projected to increase by $1.5M when comparing the two fiscal years. Utility Tax (represents 14% of General Fund revenues) will increase $212k, and Other Taxes category makes up another 13% of General Fund revenues is projected to decrease $521k. Of this $631k overall increase, the key revenues contributing to this include:
$1.1M Secured Property Tax/Prop Tax In Lieu of VLF/SB211/RPTTF $540k Transaction & Use Tax-Measure PG
Offset with $140k reduction to Sales Tax
$200k Utility User Tax – Electricity
$400k Business License and Transient Occupancy Tax
$1M Franchise Fees
Offset with $1.8M reduction to Property Transfer Tax
$1M Investment Earnings
Offset with $1.7M reduction in Fees (Plan Check, Construction Tax, etc.) In total, these first three major categories described above represent an increase to the General Fund of $1.7M. The significant offset to these increases is a net reduction of $521k in the Other Taxes category, which includes the $1.8M of Property Transfer Tax budgeted in FY 2023-24, and a net reduction of $579k in the Other Sources Category related to a $1.7M reduction to fees.
The FY 2024-25 expenditure budget is projected to increase $2.7M, there are several categories that are contributing to this change with offsets to the other categories The $7.6M increase to the Personnel category has key items that make up this increase:
$6.4M Earnings and Benefits (All Authorized Positions Budgeted) $1.6M Unfunded Accrued Liability (UAL)
$2.3M MOU Contract Impacts
$1.5M HEART Team moving from OATH Grant to General Fund $1M Full Time Positions Added during FY 2023-24
$1.3M Vacancy Factor Not Estimated/Budgeted at this time It is important to note that the $6.4M increase to earnings and benefits reflects all authorized full-time positions budgeted. This also includes all impacts related to MOU agreements approved in the fall of 2023 that cover contracts through September 30, 2027. It should be noted the “Personnel” category for FY 2023-24 at Adoption in July 2023 totaled $65.1M and is only about $1.7M higher compared to the current FY 2023-24 budget. Even with the MOU increases and positions added since July 2023, there are salary savings in FY 2023-24 that were transferred to CIP projects and other capital purchases that required additional funding. It should also be noted that the City’s Unfunded Accrued Liability (UAL) to CalPERS increased by $1.6M from last year's budget. The other item to note is a $1.2M increase to the “Required Expenses” category, which includes a placeholder for the annual Fire Contract increase with Los Angeles County. The anticipated increase is related to negotiated LA County Fire personnel increases for contracts, the final amount has not been communicated to staff and could be higher than budgeted. “Allocations and Utilities” increased by $1.2M primarily related to increase of $700k for IT allocation as the internal services Department is centralizing operations, $800k increase for Liability Administration allocation due to higher insurance premium, $615k increase to the City’s fleet allocation, with offsetting reductions of $400k to the General Fund portion of the Pension Obligation Bond (POB) allocation, and $400k for all Utility accounts. There is a $2.5M reduction to the “Controllable Expenses” Category which primarily relates to the distribution from the Department Expense Line Item that is used as a holding account in Youth Commitment Divisions in Library and Community Services, this $1M net reduction represents these funds being redistributed to other accounts that supports these programs, there is also a $1M decrease from the 115 Trust account as part of the annual contribution detailed in the City’s Consolidated Fiscal Polices. The other reduction of the categories reflected is the $3.3M reduction in “Capital Expenses” which is to be expected as no proposed supplemental requests have been approved to date in the FY 2024-25 Proposed Budget. The decrease of $1.5M in the “Transfers to Other Funds” category relates to the amounts allocated for the Capital Improvement Projects to date.
As staff is seeking feedback from both the Mayor and City Council as well as the residents and business owners of Pomona, there are items that will need to be addressed in the FY 2024-25 Preliminary General Fund Budget. Based on some preliminary feedback and consistent with ongoing efforts, items that are included and should be noted thus far include:
Youth Services and Programming - Continued funding for Youth Services and Programing has been stated as a long-term goal that was first included in last year FY 2022-23 budget. Included in this Preliminary FY 2024-25 budget is $1.5M in the Community Services Department Budget, Youth Commitment division for youth programing and $500k in the Library Budget for youth programming, combined these totals $2M. As General Fund appropriations lapse at year end per City Charter, staff will bring forward after the close of the Fiscal Year 2023-24 the remaining Youth Commitment Funds in the Community Services Department and Library to be considered to re-appropriate in FY 2024-25 budget.
Consolidated Financial Policies Goals – On February 6, 2023, the City Council approved the Consolidated Financial Policies and Administrative Procedures which included policies to contribute amounts to respective areas to address the City’s long term obligations and needs. In this budget $300k is included for a Catastrophic Events Reserve, $500k for the now established Pension 115 Trust, $200k for Equipment Replacement Reserve, and $1.0M at this time (amount may change) for CIP Projects funding which is near ¾% of preliminary General Fund revenues.
Vacancy Factor—Over the last several fiscal years, the City has had several vacancies, which equates to as much as $2M in General Fund savings. As of the end of February 2024, the City has 78 full-time and 56 part-time vacancies. In FY 2023-24, a $1.3M vacancy factor was included in the General Fund Budget. Staff will explore a historical average based on vacancies, anticipated retirements, and recruiting timelines to include in the FY 2024-25 proposed budget to reflect anticipated savings.
In closing, the information here is very preliminary, and the goal is to provide the City Council and the residents with a preview. The starting point of a $5M deficit does not leave a lot of room for additional items to be added, unless additional revenue is realized, or reserves are used. Many scenarios to balance the budget will be analyzed in the coming months. It should be noted revenues will continue to be analyzed for any anticipated increases or decreases. A vacancy factor will also be considered.
Staff is seeking feedback on the forthcoming FY 2024-25 proposed budget at both the March 25, 2024, and April 3, 2024 study sessions. In closing, it should be mentioned that Non-General Fund City budgets are not covered in this preview. The City’s Combined Adopted FY 2023-24 Budget totaled $454M and includes Special Revenue, Enterprise, Capital Projects, Debt Service, and Housing Authority Funds besides the largest fund, the General Fund. At this time, all Non-General Fund budgets, are on track to meet their allocated funding for FY 2023-24 and staff is reviewing these funds preliminary FY 2024-25 budgets. Staff will update City Council if significant changes occur during the remainder of the fiscal year.
Prepared by:
Andrew Mowbray
Finance Director/City Treasurer
ATTACHMENT:
Attachment No. 1 – FY 2024-25 Preliminary Budget PowerPoint Fiscal Year 2024-25 General Fund Preview
Attachment No. 1Attachment No. 1
Attachment No. 1
Attachment No. 1