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DISCUSSION
City of San Bernardino
Request for Council Action
Date: June 5, 2024
To: Honorable Mayor and City Council Members
From: Rochelle Clayton, Acting City Manager;
Suzie Soren, Deputy City Manager;
Jeannie Fortune, Interim Director of Finance & Management Services
Department: Finance & Management Services
Subject: Approval of the City Manager's FY 2025 & FY 2026 Operating Budget & CIP 2025-2029 (All Wards)
Recommendation:
It is recommended that the Mayor and City Council of the City of San Bernardino, California:
1. Adopt Resolution No. 2024-139 of the Mayor and City Council of the City of San Bernardino, California, approving the City of San Bernardino’s Fiscal Years 2024/25 and 2025/26 Operating Budget and Capital Improvement Plan;
2. Adopt annual budgets for Fiscal Years 2024/25 and Fiscal Year 2025/26 with any City Council approved modifications made during the Public Hearing to be incorporated into the City of San Bernardino’s Fiscal Years 2024/25 and 2025/26 Operating Budget and Capital Improvement Plan and included as part of the final adopted budgets;
3. Establish the City’s Appropriations Limit as required by Article XII of the California State Constitution; and
4. Adopt Resolution No. 2024-140 of the Mayor and City Council of the City of San Bernardino, California, approving an amendment to the city-wide salary schedule for full-time, part-time, temporary, and seasonal positions.
Executive Summary
The City Manager’s Proposed Budget provides the Mayor and City Council with a budget for the Fiscal Years 2024/25 and 2025/26. The presentation will provide an overview of the City Manager’s proposed operating and capital budgets. 2 1
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Background
Section 701 of the City Charter provides that the City Manager shall prepare and submit a proposed budget to the Mayor and City Council for the ensuing fiscal year. Article VII in Section 703 further states that the Council shall publish a general summary of the budget and CIP and hold one (1) or more public hearings. After the public hearing(s), the Budget and CIP shall be adopted, as they may be amended, by the Council before the beginning of each fiscal year.
The budget process kicked off in early 2023, where departments were directed to submit proposed budgets for review. Meetings with Departments, the Finance Department, and the City Manager’s Office occurred to review departmental submittals. On May 15, 2024, the Mayor and City Council held a Public Hearing to review and discuss the proposed Fiscal Years 2024/25 and 2025/26 Operating Budget and Capital Improvement Plan 2025-2029. The direction was provided to staff to continue the Public Hearing to June 5, 2024, which was held earlier this evening.
Discussion
The Fiscal Years 2024/25 and 2025/26 Operating and Capital Improvement Budget recommendations were guided by the Mayor and City Council’s Strategic Targets and Goals for the City of San Bernardino. The four overarching categories of these Targets and Goals are:
•Improved Operational and Financial Stability
•Focused, Aligned Leadership and Unified Community
•Improved Quality of Life
Economic Growth & Development
The discussion aims to review and adopt the proposed operating budgets for Fiscal Years 2024/25 and 2025/26 and adopt the 2025-2029 Capital Improvement Program (CIP). The attached budget document presents an in-depth look at the programs and services provided by the City and supports the Mayor & City Council in allocating resources in a way that best serves the community. The full proposed budget that will become the adopted budget for Fiscal Years 2024/25 and 2025/26 is fully available in a digital format.
Proposed Fiscal Year 2025 & 2026 Budget
<https://stories.opengov.com/sanbernardinoca/published/RcJljI4Ai >. This site allows members of the public to explore the proposed budget by department fully, learn more about the components of the budget, and view visual representations of the breakdowns of expenditures.
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General Fund Revenue
The proposed General Fund revenue for Fiscal Year 2024/25 is $236,603,800, and for Fiscal Year 2025/26 is $253,166,066, representing a 13.6% increase from FY 2023/24 Adopted Budget. Measure S (transaction and use tax) and Sales and Use Tax remain the main revenue sources within the General Fund. These revenue sources have stabilized from the levels seen during the pandemic; the forecast includes a 1-5% increase in FY 2024/25 and FY 2025/26 over the FY 2023/24 Adopted Budget.
Several revenue categories within the General Fund are expected to continue to increase, such as investment income, use of money and property, utility user tax, other taxes, and licenses and permits. These revenues cover public safety, parks, and community services, development services, and other activities and programs.
Below is a table with the forecast revenues for FY 2024/25 & FY 2025/26.
Charges for services 9,087,250$ 10,319,801$ 11,042,187$ Fines and forfeitures 1,397,000$ 1,593,262$ 1,704,790$ Franchise Tax 13,280,000$ 14,939,265$ 15,985,014$ Intergovernmental 5,348,374$ 2,949,650$ 3,156,126$ Investment income 900,000$ 999,900$ 1,069,893$ Licenses & permits 14,378,500$ 16,989,167$ 18,178,409$ Measure S Sales Tax 50,528,000$ 53,550,000$ 57,298,500$ Miscellaneous 3,844,697$ 4,238,231$ 4,534,907$ Other Taxes 9,550,000$ 11,599,680$ 12,411,658$ Cannabis Tax 2,800,000$ 3,460,800$ 3,703,056$ Property Tax In Lieu VLF 23,000,000$ 25,806,000$ 27,612,420$ Sales and Use Tax 57,088,000$ 58,623,667$ 62,727,324$ Use of Money and Property 2,357,000$ 2,640,627$ 2,825,471$ Utility Users Tax 25,000,000$ 28,893,750$ 30,916,313$ Total General Fund Revenues: $ 218,558,821 $ 236,603,800 $ 253,166,066
CITY OF SAN BERNARDINO REVENUE ESTIMATES
FY 2024/25 & FY 2025/26
Account Type FY 2023/24
Projected Year-End
FY 2024/25
Proposed
FY 2025/26
Proposed
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General Fund Expenditures
The chart below summarizes the total General Fund expenditures in the Operating Budget. The proposed General Fund expenditures for Fiscal Year 2024/25 are $237,733,763, and for Fiscal Year 2025/26 are $252,961,302. In both Fiscal Years 2024/25 and 2025/26, approximately 63% of total expenditures are related to personnel costs alone, and the remaining 37% are other non-personnel expenses such as programs, services, and capital expenditures.
The following table summarizes the estimated expenditures for the General Fund FY 2023/24 year-end and the proposed expenditures for FY 2024/25 and 2025/26 by department. Further information detailing each departments’ expenditure levels can be found within the budget book linked above.
Department FY 2023/24 Projected Year-End FY 2024/25 Proposed FY 2025/26 Proposed Mayor 305,812$ 403,756$ 425,651$ City Council 1,092,321$ 1,243,619$ 1,300,847$ City Clerk 1,748,820$ 1,942,869$ 1,994,357$ Legal Services 5,304,826$ 5,181,587$ 5,536,580$ General Government 11,734,400$ 10,420,266$ 13,194,135$ City Manager's Office 3,440,261$ 5,243,556$ 5,805,481$ Human Resource & Risk Management 2,975,837$ 2,784,522$ 3,042,376$ Finance & Management Services 5,580,156$ 6,612,496$ 7,241,806$ Economic Development -$ 1,785,363$ 2,002,329$ Community Development & Housing 12,092,145$ 15,004,584$ 16,413,508$ Police 116,734,761$ 132,847,479$ 138,329,846$ Parks Recreation & Community Services 5,224,619$ 6,000,401$ 6,389,934$ Public Works 31,164,575$ 35,591,030$ 37,647,120$ Library Services 2,924,322$ 4,975,030$ 4,952,282$ Special Assessment District 114,321$ 150,000$ 150,000$ Capital Improvement Operating Contribution 2,000,000$ -$ -$ Transfer out to Animal Services 4,269,976$ 7,547,205$ 8,535,050$ Total General Fund Expenditures 206,707,152$ 237,733,763$ 252,961,302$ CITY OF SAN BERNARDINO PROPOSED EXPENDITURESFY 2024/25 & FY 2025/26 2 1
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General Fund Balances
The General Fund is the primary governmental fund for delivering programs and services for the City of San Bernardino. In 2018, the Mayor and City Council adopted a General Fund Reserve Policy (Attachment 5) that requires the City to hold available General Fund Balance in reserves. These amounts are based on the adopted budget expenditure allocations: 10% for the Economic Contingency Reserve, and 15% is for the Emergency Reserve.
Fund Balance amounts originally proposed are subject to change, and the actual ending Fund Balance will be presented to the Mayor and City Council once the Annual Comprehensive Financial Report (ACFR) has been composed.
Capital Improvement Plan
The City will invest $13,236,500 in Fiscal Year 2024/25 and $17,481,000 in Fiscal Year 2025/26 into critical infrastructure needs. These are all new funds assigned to new CIP projects or additional funds added to existing projects. A considerable amount of funds will be carried over from Fiscal Year 2023/24 to the existing projects to which those funds have previously been committed. Any reassigning and possible project surpluses will be brought forward to the Mayor and City Council as a joint effort between the Public Works and Finance departments.
ACFR 2022-23
Category FUND BALANCE 06-30-2023 FUND BALANCE 06-30-2024 FUND BALANCE 06-30-2025 FUND BALANCE 06-30-2026 Nonspendable 41,421,536 40,000,000 40,000,000 40,000,000Restricted 2,086,366 2,000,000 1,800,000 1,800,000CommittedAnimal Services 68,387 10,000,000General Plan Update 142,877 2,400,000Measure S - Capital Projects 81,762,949 73,512,719 64,561,199 54,637,14815% Emergency Reserve 28,788,264 31,006,073 35,413,498 37,666,23910% Economic Contingency Reserve 19,192,176 20,670,715 23,608,999 25,110,826Unassigned - 5,724,718 9,364,343 7,091,633TOTAL FUND BALANCE 173,462,555 185,314,225 174,748,039 166,305,846Positions Added April 17 (Proposed Use of Fund Balance) - - (1,382,264) (1,560,865)Additional Administrative Positions (Proposed Use of Fund Balance) - - (261,513) (292,182)Additional Prior Year (FY 2024/25) Use of Fund Balance - - - (1,643,777)REVISED FUND BALANCE 173,462,555 185,314,225 173,104,262 162,809,022 FY 2024/25 Proposed FY2025-26 Proposed
CIP Categories General Fund Other Funds TOTAL General Fund Other Funds TOTAL Building 2,000,000$ 600,000$ 2,600,000$ -$ 100,000$ 100,000$ Environmental -$ 250,000$ 250,000$ -$ 250,000$ 250,000$ Others -$ -$ -$ -$ -$ -$ Parks 1,325,000$ 2,200,000$ 3,525,000$ -$ 2,850,000$ 2,850,000$ Police -$ 50,000$ 50,000$ -$ -$ -$ Storm Drain -$ 750,000$ 750,000$ -$ 500,000$ 500,000$ Streets -$ 4,500,000$ 4,500,000$ -$ 13,120,000$ 13,120,000$ Traffic 240,500$ 1,321,000$ 1,561,500$ 395,000$ 266,000$ 661,000$ Grand Total $ 3,565,500 $ 9,671,000 $ 13,236,500 $ 395,000 $ 17,086,000 $ 17,481,000 2 1
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FY 2024-25 Appropriations Limit Calculation
Article XIIIB of the California Constitution (enacted with the passage of Proposition 4 in 1979 and modified with the passage of Proposition 111 in 1990) restricts the appropriations growth rate for cities and other local jurisdictions. The growth rate is tied to changes in the population and the change in California Per Capita Personal Income.
In April 2024, the State Department of Finance notified each city of the population changes and per capita personal income factor to be used in determining appropriation limits. Effective January 1, 2023, the change in the California Per Capita Personal Income is 3.62%, and the change in the County of San Bernardino’s Population is
0.39%. Using the population and per capita personal income data provided by the California Department of Finance, the City’s Fiscal Year 2024-2025 appropriation limit is $481,445,743. Appropriations subject to the limitation in the 2024-25 budget total $193,780,697, of which $192,480,697 is from proceeds from taxes and $1,300,000 from State Subventions pursuant to Government Code Section 7903. The appropriations subject to limitations combined amount to $287,665,046 which is less than the computed allowable limit.
Personnel Compensation
In conjunction with the budget adoption, the annual adoption of a resolution approving the salary ranges effective July 1, 2024, is attached for the Mayor and City Council’s review and approval. The annual adoption of the salary ranges is a requirement of the California Public Employees’ Retirement System (CalPERS) that is set forth in Government Code Section 20636, defining “Compensation Earnable” and the California Code of Regulations (CCR) Section 570.5. Attachment 7 provides the City of San Bernardino’s city-wide FY 2024/25 Salary Schedule. This salary schedule reflects all salary rates effective July 1, 2024, honors all negotiated cost-of-living adjustments for all bargaining units, and is a Publicly Available Pay schedule. 2021-2025 Strategic Targets and Goals
The proposed budget review aligns with all key targets of the City Council’s Strategic Plan. Funding projects and programs at every level of the organization ensures that the City can achieve the goals and priorities established by the Mayor and City Council. 2 1
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Fiscal Impact
The adoption of the budget allocates the available resources to programs, services, and departments for the upcoming fiscal years.
Conclusion
It is recommended that the Mayor and City Council of the City of San Bernardino, California:
1. Adopt Resolution No. 2024-139 of the Mayor and City Council of the City of San Bernardino, California, approving the City of San Bernardino’s Fiscal Years 2024/25 and 2025/26 Operating Budget and Capital Improvement Plan;
2. Adopt annual budgets for Fiscal Years 2024/25 and Fiscal Year 2025/26 with any City Council approved modifications made during the Public Hearing to be incorporated into the City of San Bernardino’s Fiscal Years 2024/25 and 2025/26 Operating Budget and Capital Improvement Plan and included as part of the final adopted budgets;
3. Establish the City’s Appropriations Limit as required by Article XII of the California State Constitution;
4. Adopt Resolution No. 2024-140 of the Mayor and City Council of the City of San Bernardino, California, approving an amendment to the city-wide salary schedule for full-time, part-time, temporary, and seasonal positions; Attachments
1. Attachment 1 – Resolution 2024-139
2. Attachment 2 – GANN Limit – 2025
3. Attachment 3 – Capital Improvement Plan 2025-2029
4. Attachment 4 – General Fund Policy Reserve
5. Attachment 5 – Resolution 2024-140
6. Attachment 6 – City of San Bernardino 2024-25 Salary Schedule
7. Attachment 7 – City of San Bernardino SBPD Salary Table Fund FY 2024-25 FY 2025-26
Revenues
General Fund Revenues 236,603,800$ 253,166,066$ Other Fund Revenues 95,076,919$ 97,268,983$ Total Proposed Revenues 331,680,719$ 350,435,049$ Expenditures
General Fund Expenditures 237,733,763$ 252,961,302$ Other Fund Expenditures 74,988,484$ 77,164,377$ Total Proposed Expenditures 312,722,247$ 330,125,679$ 2 1
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Ward:
All Wards
Synopsis of Previous Council Actions:
May 15, 2024 Mayor and City Council held a Public Hearing for the presentation of the City Manager’s Fiscal Years 2024/25 and 2025/26 Proposed Operating Budget and Capital Improvement Plan.
April 17, 2024 Mayor and City Council received and filed the Fiscal Years 2024/25 and 2025/26 City Manager’s Proposed Operating Budget and Capital Improvement Plan.