May 3, 2022
Finance Department
DATE: May 3, 2022
TO: Mayor Butt and Members of the City Council
FROM: Shasa Curl, City Manager
Anil Comelo, Interim Deputy City Manager,
Delmy Cuellar, Interim Director of Finance
Mubeen Qader, Budget Administrator
Antonio Banuelos, Revenue Manager
Subject:
Acknowledge receipt of Fiscal Year 2022-2023 Proposed
First Draft Budget
FINANCIAL IMPACT: There is no financial impact because of this agenda item.
Based on the information provided, the General Fund
reflects an operating budget gap of approximately $1.9
million for FY 2022-23, which City staff is working to
reduce to a point where the budget will be balanced prior to adoption on or before June 30, 2022.
PREVIOUS COUNCIL
ACTION:
April 19, 2022, April 26, 2022.
STATEMENT OF THE
ISSUE:
In accordance with Richmond Municipal Code Section
2.61.010, the City Manager is submitting the first draft of the Fiscal Year 2022-2023 Annual Operating Budget and
Capital Improvement Budget. The purpose of this item is to provide the City Council an overview of the budget
documents, and for City Council to establish and approve the review process and schedule for the annual budget
adoption.
AGENDA
REPORT
May 3, 2022
RECOMMENDED ACTION:
ACKNOWLEDGE receipt of the first draft of the Fiscal
Year 2022-2023 Annual Operating Budget and Fiscal
Year 2022-2027 Five-Year Capital Improvement Plan
Budget and establish the review process and schedule
for their review and adoption – City Manager’s
Office/Finance Department (Shasa Curl/Delmy Cuellar
510-620-6740).
DISCUSSION:
This budget item is not intended to be a substantive review of Fiscal Year (FY) 2022- 2023 Annual Operating Budget or the Five-Year Capital Improvement Plan Budget; rather, it is an opportunity for City staff to provide an overview of both budgets as they are currently being submitted.
Budget Process
Historically, the annual budget development process began in February. However, the Finance Department initiated the Fiscal Year (FY) 2022-2023 budget development process on December 9, 2021, with the annual budget kick-off meeting. Finance staff provided all departments with budget instructions and timelines for document submission related to the budget entry window (December 9, 2021, through January 7, 2022), proposed staffing plans, and proposed organizational changes.
Following the submittal of the departmental budget requests, and preparation of the revenue estimate, the City Manager, select members of their staff, and the Finance Budget Division held budget hearings with Department Heads and their divisions.
Budget hearings allowed City staff to clarify budget requests, review the proposed departmental organization charts, review performance measures, and understand the level of cost recovery, as appropriate. Finance also held four (4) community budget meetings in March and April 2022.
At the conclusion of budget hearings, the Finance Department compiled a preliminary draft budget based on their initial revenue estimates and the departmental operating budgets as submitted. This preliminary draft provided City staff with a projected budget gap, which will require some combination of increasing revenues or reducing the requested departmental expenditures. From this preliminary draft, the City Manager’s Office and Finance staff worked collectively with departments, to prepare a draft budget that is appropriate to begin the review process at the City Council level.
City staff is now submitting the first draft of the Fiscal Year 2022-2023 Annual Operating Budget and Fiscal Year 2022-2027 Five-Year Capital Improvement Plan to initiate the City Council’s review and approval process. At this point, the operating budget gap is approximately $1.9 million, which staff believes can be reduced in the context of the City Council’s policy review and yield a balanced budget at adoption. The $1.9 million gap is
May 3, 2022
based on approximately $204.9 million in revenues and $206.8 million in expenditures (Attachments 1 and 2).
For example, approximately $13 million in department requests are not included in the draft FY 2022-2023 budget
GF Equipment Replacement Requests: $1,690,000 New Position Requests: $3,627,385
New Funding (non-personnel) Requests: $7,728,323 $13,045,708
These requests will go through a review process with the City Manager, Finance, Human Resources, and departments before bringing forth items to City Council for consideration and inclusion into the budget.
There is also a need to keep in mind that other key items such as implementation of the classification and compensation study, facility and infrastructure improvements, and contributions to the General Fund reserve to increase it to 15 percent policy level, have not been included in the proposed FY 2022-2023 budget.
This gap is not reflective of additional personnel requests submitted by departments and may not include all additional non-personnel expenditure requests. At a subsequent meeting, City staff will compile and present all additional personnel and non-personnel expenditure requests to City Council for review and consideration. Staff will also continue to review revenue projections and seek opportunities for revenue enhancements.
In addition to the draft FY 2022-2023 Annual Operating budget, City staff is also presenting the Non-General Fund Revenue and Expenditures by Fund report (Attachment 3), the Capital Improvement Projects (Attachment 4), and Multi-Year Comparative Position Listing (Attachment 5) for consideration and review. All these documents are drafts and include staff’s best budget estimates based on current projections and information.
City staff is proposing the process and schedule outlined in Table 1 for the City Council’s review and adoption of the Fiscal Year 2022-2023 Annual Operating Budget and Fiscal Years 2022-2027 Five-Year Capital Improvement Plan Budget:
May 3, 2022
Table 1: Key Budget Development Dates
Action/Activity Date
Presentation of the Draft Fiscal Year 2022-2023
Annual Operating Budget and Fiscal Year 2022-2023
to 2026-2027 Five-Year Capital Improvement Plan
(OR receive an overview of the first drafts of
operating and capital budgets and establish the
process and schedule for City Council review and
final approval.)
May 3, 2022
City Council Presentation: Community Services &
Community Development May 17, 2022
City Council Presentation: Public Safety (Police, Fire)
Initiate City Council review and discussion of draft
operating and capital budgets
May 24, 2022
City Council to receive Revised Proposed Budget
Continue City Council review and discussion of draft
operating and capital budgets
City Council direction on Budget Checklist and
changes to the proposed budget
June 7, 2022
Council to adopt 2022-2023 Operating Budget,
FY2023- to FY2026-27 Capital Improvement Plan,
and GANN Limit
June 28, 2022
During the review process, City staff will continue to work to develop recommendations that will close the current budget gap. This work is currently in progress, and recommendations will be presented to the City Council as they are developed.
DOCUMENTS ATTACHED:
Attachment 1 – General Fund Revenue and Expenditure Summary Attachment 2 – General Fund Revenue and Expenditures by Department Attachment 3 – Non-General Fund Revenue and Expenditures by Fund Attachment 4 – Capital Improvement Projects
Attachment 5 – Multi-Year Comparative Position Listing