City of Sacramento
Budget and Audit Committee Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2024-01814 12/10/2024 Discussion Item 3.
Fiscal Year (FY) 2024/25 Budget Recap and FY2025/26 Budget Process File ID: 2024-01814
Location: Citywide
Recommendation: Receive and file.
Contact: Peter Coletto, Director of Finance, (916) 808-5416, [email protected]; Mirthala Santizo, Budget Manager, (916) 808-5078, [email protected]; Department of Finance
Presenter: Peter Coletto, Director of Finance, (916) 808-5416, [email protected]; Mirthala Santizo, Budget Manager, (916) 808-5078, [email protected]; Department of Finance
Attachments:
1-Description/Analysis
Description/Analysis
Issue Detail: As the City begins the FY2025/26 Proposed Budget development process, staff are providing regular updates and any additional information available on the budget development process to the Budget and Audit Committee.
FY2024/25 Approved Budget (Budget) Recap
The 2023/24 Midyear Forecast showed a $66 million funding gap that needed to be closed to balance the FY2024/25 budget. A combination of one-time and ongoing expense reduction and revenue enhancement strategies in the Budget allowed the City to balance the Budget without the elimination of filled positions while minimizing service impacts to our community ($36.6 million in one- time strategies and $30.2 million in ongoing strategies). On June 11, 2024, City Council approved the Budget, which totals approximately $1.6 billion from all funding sources and supports 5,029.70 full- time equivalent (FTE) positions. This includes $847 million for General and Measure U (G/MU) Fund operations and capital projects, and $731 million for the City’s enterprise and other fund activities.
FY2024/25 Approved Forecast
File ID: 2024-01814 12/10/2024 Discussion Item 3.
The General Fund forecast as shown below has been updated to reflect the budget as approved. The five-year forecast provides a multi-year view of revenues and expenditures, allowing an assessment of the fiscal consequences of both prior and current funding decisions in the context of forecasted revenues and expenditures.
The forecast does not
include the potential impact of labor negotiations, State homelessness funding through the Homeless Housing, Assistance and Prevention (HHAP) grant program, HHAP-6, or the compliance costs associated with Advanced Clean Fleet regulations as those amounts are unknown at this time. The City is expected to receive more information regarding the HHAP-6 allocation amount in January.
FY2025/26 Proposed Budget Process
To address the $78 million structural imbalance currently projected in the City’s G/ MU Fund for FY2025/26, the City Manager directed departments under the purview of the City Manager to prepare
File ID: 2024-01814 12/10/2024 Discussion Item 3.
a reduction plan of up to 15 percent of the departments’ net G/MU Fund reliance in the FY2024/25 Approved Budget. The targets are shown in the table below.
Department
Net G/MU*
Costs
15% Reduction
Target
City Manager** $10,507,443 $1,576,116
Community Development 24,089,393 3,613,409
Community Response 25,444,565 3,816,685
Convention and Cultural Services 4,167,868 625,180
Finance** 9,045,573 1,356,836
Fire 155,992,254 23,398,838
Human Resources 6,066,960 910,044
Information Technology 21,699,170 3,254,876
Police 241,234,425 36,185,164
Public Works 1,819,498 272,925
Youth, Parks, and Community Enrichment 44,924,198 6,738,630 G/MU Total $544,991,347 $81,748,702
** Funding for Office of Cannabis Management moved from City Manager to Finance. Reductions include the move.
* Net G/MU Costs is gross expenditures less reimbursements and revenues.
Reduction strategies can include revenue increases, expense reductions or a combination. Similar to the FY2024/25 budget process, departments will need to identify whether the expense reduction is related to a discretionary or mandated program/service. Departments will also need to determine the reduction proposal’s impact to both City services and the community using a scale between one through four (1-4) with 1 being low impact, 2 being moderate impact, 3 being high impact and 4 being severe impact. In addition to reduction strategies provided by departments, overall citywide reduction strategies will be explored. This process will give City leadership a menu of budget balancing options, so that the City can take a strategic approach in defining core services that can be sustainably financed versus pursuing across-the-board cuts.
Finance staff, as part of its mid-year financial update, will refresh revenue and expenditure projections, incorporate new information - including the City’s HHAP-6 allocation, and present an updated five-year forecast, to the Budget and Audit Committee in February. The City Manager will present a balanced budget to Council by the end of April. Council will then hold budget hearings in May and June and adopt an Approved Budget by June 30, 2025 as required by the City Charter.
FY2025/26 Budget Survey
File ID: 2024-01814 12/10/2024 Discussion Item 3.
From September 24, 2024, through November 24, 2024, City staff conducted a community survey to receive input on public budget priorities. The survey consisted of 14 questions regarding budget priorities, general priorities and potential reduction strategies. It was open to the public via the City’s website and was translated into five languages (Spanish, Hmong, Vietnamese, Chinese and Dari).
The survey results are currently being reviewed.
Policy Considerations: This report is consistent with Council’s direction to keep the Council informed on the fiscal condition of the City.
Economic Impacts: Not applicable.
Environmental Considerations:
California Environmental Quality Act (CEQA): This report concerns administrative activities and government fiscal activities that do not constitute a “project” as defined by CEQA Guidelines section 15378 and California Public Resources Code section 21080 and are not subject to the provisions of CEQA (CEQA Guidelines, §15060(c)(3)). CEQA review for any project, which utilizes funds allocated in this report, has been or will be performed in conjunction with planning, design, and approval of each specific project as appropriate.
Sustainability: Not applicable.
Rationale for Recommendation: This report is for informational purposes. It provides the Budget and Audit Committee with additional information on the FY2025/26 Proposed Budget process and timeline.
Financial Considerations: The department and other citywide reduction strategies will be used to close the budget gap and balance the FY2025/26 Proposed Budget.
Local Business Enterprise (LBE): Not applicable.