Administrative
Report
L.1., File # 23-6149 Meeting Date: 5/30/2023
To: MAYOR AND CITY COUNCIL
From: WENDY COLLAZO, FINANCE DIRECTOR
TITLE
PUBLIC HEARING TO CONSIDER THE FISCAL YEAR 2023-2024 CITY MANAGER’S PROPOSED
BUDGET AND FIVE-YEAR CAPITAL IMPROVEMENT PROGRAM
PROCEDURES:
a. Open Public Hearing, take testimony; and
b. Continue Public Hearing to June 6, 2023; and
c. Receive and file Budget Response Reports.
EXECUTIVE SUMMARY
On May 16, 2023, the City Council received a presentation on the Proposed Budget for Fiscal Year 2023-24 and the Proposed Five-Year Capital Improvement Program (CIP) and set May 30, 2023 as the date to continue the Public Hearing on the Budget.
BACKGROUND
The Proposed Budget (found on the City’s website at www.redondo.org/budget <http://www.redondo.org/budget>) describes how the City carries out its mission through a work program for the coming year and the associated resources required for achieving the City Council’s goals. It is designed to be consistent with the City Council’s Strategic Plan as well as the City’s adopted Financial Principles. The budget emphasizes core services that are basic to the City’s mission.
The City Manager’s budget message describes the projected financial outlook for the upcoming fiscal year, the budget development process and a summary of the budget’s proposed revenues and expenditures. Decision Packages are recommended as additions or reductions to the base budget that are not contractually obligated or the result of annual personnel allocation updates. The departmental sections discuss core service activities, key projects and assignments, and customer service work measures. Financial Summary (mini-financial) reports spotlight important business units. The CIP identifies capital investment required to meet the City’s general plan and other policy goals and to ensure good stewardship of the community’s existing infrastructure. The CIP identifies the projects, their estimated costs and the financing methods needed to implement the City’s capital investment goals and the maintenance of new or existing infrastructure.
In summary:
· The total annual budget including all funds is $174.8 million (before Decision Packages).
L.1., File # 23-6149 Meeting Date: 5/30/2023
· The total General Fund budget is $104.5 million (before Decision Packages). · $21.7 million of new capital appropriations are recommended in FY 23-24 for a total CIP of $89.1M and 130 projects.
· Funding is included for the payroll of 440 full-time employees (before Decision Packages). · The amount set aside for the General Fund’s contingency reserve is $8.6 million. · 77 Decision Packages are proposed for consideration.
· The General Fund’s unallocated balance, if all of the Decision Packages are approved is $1,702,643.
· The Budget is structurally balanced. If approved as proposed, ongoing revenues will exceed ongoing expenditures by approximately $1.2M.
· The City is expected to see other General Fund revenues come on-line in future years that could support increased staffing costs and/or new capital debt service expenses.
The delta in balancing the FY 2023-24 year lies between the projected growth in nearly all General Fund revenue categories and expected increases in core expenses attributed to labor contract commitments and Internal Service Fund adjustments. The prior year budget benefited from significant one-time funding due to residual bond proceeds from the City’s refinancing of its CalPERS Pension Obligation debt and COVID Relief funds provided by the Federal Government. These onetime funds allowed for a number of budget initiatives that staff continue to work through and execute.
The expenses have been removed from the FY 2023-24 core budget and will be carried over, where appropriate, as part of the FY 2022-23 Year-End discussion in November/December.
The proposed Budget does not need to rely as heavily on one-time funds to remain balanced as it did in previous years. Structural revenues continue to show steady growth (General Fund revenues are projected to increase by $2.5 million, or 2.1%, in Fiscal Year 2023-24) and are projected to outpace core expenditure increases.
It is under these conditions that the proposed budget for Fiscal Year 2023-24 was developed.
The following provides details of the components of the estimated ending fund balances as shown in the Fiscal Year 2023-24 Proposed Budget that are likely to arise during the budget adoption process.
In the Fiscal Year 2023-24 Proposed Budget, what items adjust beginning fund balances to their estimated ending fund balances?
$2,402,805 General Fund estimated beginning fund balance 102,708,989 Fiscal Year 2023-24 proposed revenues (as detailed in the “Revenues” section of the Proposed Budget document)
-98,429,483 Fiscal Year 2023-24 proposed appropriations (as detailed in the Proposed Budget document both in the “Expenditures” section and in the “Department Details” section)
1,750,927 Fiscal Year 2023-24 proposed transfers in (a transfer from the Harbor Tidelands Fund for the annual property tax in lieu payment, a transfer from the Successor Agency for the reimbursement of administration costs, and a transfer from the Harbor Uplands Fund for the 2019 lease revenue bond debt service payment)
-2,733,532 Fiscal Year 2023-24 proposed transfers out (subsidy of the Street Landscaping and Lighting Assessment District and a transfer to the Community Financing Authority for the 2019 lease revenue bond debt service payment)
L.1., File # 23-6149 Meeting Date: 5/30/2023
102,708,989 Fiscal Year 2023-24 proposed revenues (as detailed in the “Revenues” section of the Proposed Budget document)
-98,429,483 Fiscal Year 2023-24 proposed appropriations (as detailed in the Proposed Budget document both in the “Expenditures” section and in the “Department Details” section)
1,750,927 Fiscal Year 2023-24 proposed transfers in (a transfer from the Harbor Tidelands Fund for the annual property tax in lieu payment, a transfer from the Successor Agency for the reimbursement of administration costs, and a transfer from the Harbor Uplands Fund for the 2019 lease revenue bond debt service payment)
-2,733,532 Fiscal Year 2023-24 proposed transfers out (subsidy of the Street Landscaping and Lighting Assessment District and a transfer to the Community Financing Authority for the 2019 lease revenue bond debt service payment)
$5,699,706 General Fund estimated ending fund balance (before consideration of the Fiscal Year 2023-24 Decision Packages)
The estimated ending fund balances of the other funds are calculated similarly. The adjustments to the beginning fund balances for all funds are detailed in the “Revenues”, “Expenditures”, and “Department Details” sections of the Proposed Budget document.
What is the resulting impact of funding the recommended Decision Packages to the estimated ending fund balances?
Recommended adjustments to the estimated fund balances are to be considered by the City Council through supplemental requests called Decision Packages. Decision Packages can be related to policy, operational or financial matters. Those impacting the General Fund are categorized below. $5,699,706General
Fund estimated
ending fund
balance (before
consideration of the
Fiscal Year 2023-
24 Decision
Packages)
-3,395,196 Decision Packages that would be needed to comply with CountyState-Federal mandates or fund unavoidable costs to maintain basic services
1,624,840 Decision Packages that would sustain or improve revenue to the City
-721,537 Decision Packages that would be needed to protect the health and safety of the public, employees, or environment
-270,713 Decision Packages that would improve organizational efficiency, economy, or effectiveness
-1,234,456 Decision Packages that would fill gaps in current services or meet new service needs
$1,702,643 General Fund estimated ending fund balance (after consideration of the FY 2023-24 Decision Packages)
L.1., File # 23-6149 Meeting Date: 5/30/2023
safety of the public, employees, or environment
-270,713 Decision Packages that would improve organizational efficiency, economy, or effectiveness
-1,234,456 Decision Packages that would fill gaps in current services or meet new service needs
$1,702,643 General Fund estimated ending fund balance (after consideration of the FY 2023-24 Decision Packages)
Budget Response Reports (BRRs), which will be provided throughout the budget adoption process, give detailed information above and beyond what can be described in the budget document. They help tell the story of significant budget issues to be addressed in the coming year and beyond.
Attached to this report is a listing of the BRRs that are in development. There will be BRRs provided as Blue Folder material on Tuesday, May 30, 2023 and as part of subsequent public hearings on the Budget.
COORDINATION
All City departments participated in the preparation of the Fiscal Year 2023-24 City Manager’s Proposed Budget and Five-Year Capital Improvement Program. The Budget and Finance Commission will review the Proposed Budgets on June 8, 2023. The Harbor Commission will review the Proposed Budgets on June 12, 2023. The Planning Commission is scheduled to review the FiveYear Capital Improvement Program for General Plan conformity on June 15, 2023. Commission feedback on the Budgets will be provided to the City Council as part of a future Budget Response Report.
FISCAL IMPACT
The adopted version of the Fiscal year 2023-24 Budget will create the financial guideline for all City operations. The Five-Year Capital Improvement Program is a planning document only. Only funding for capital projects identified in the first year of the Plan will be appropriated as part of the Fiscal Year 2023-24 Budget.
APPROVED BY:
Mike Witzansky, City Manager
ATTACHMENTS
FY 2023-24 Budget Response Reports - Initial List