Item #7A
City Council
May 17, 2022
1 CITY OF SAN JUAN BAUTISTA
CITY COUNCIL REPORT
AGENDA TITLE: CITY MANAGER BUDGET MESSAGE FOR FISCAL
YEAR 2022/23
MEETING DATE: May17, 2022
DEPARTMENT HEAD: Don Reynolds, City Manager
SUMMARY
Last year the City adopted a budget of “recovery.” Financially, the City has recovered. What was treated as a one-time general fund surplus of $300,000 last year, has evolved into a sustainable growth and a sustainable operational surplus moving forward. That $300,000 was committed to three critical initiatives that are summarized in the budget narrative attached “Priorities and Issues for Fiscal Year 22/33.” The status of the City’s various revenue sources (or “funds”) is described in the second attachment “Fund Summaries.”
After accounting for inflation in the City’s operational costs of between 6% (salaries and benefits) and 10% increases (major contracts- public safety, water and wastewater), the City’s General Fund still has room to grow. The City successfully changed its law enforcement service methodology last year reestablishing the dedicated Deputy. The City can afford two dedicated officers working 80-hours per week. This budget recommends the addition of a second dedicated Sheriff Deputy at an annual cost of $150,000 per year. Private security can be reduced in patrol, but increased to support parking enforcement and writing administrative citations. A part-time community services coordinator position is in the budget as well. This position will help the City more fully utilize its assets and newly to be formed joint-use of San Juan school facilities. These ideas are described in more detail in the attached “Priorities and Issues” narrative.
Capital Improvement budget is still being refined, but it will for the most part, bring forward the unfinished work of the last year, plus the two water and wastewater compliance projects.
The City is able to maintain a General Fund Reserve of more the $2 million. The City’s Reserve Policy requires 3-months of operational expenses, and this is equal to 9-months.
RECOMMENDED ACTION(S):
It is recommended that the City Council receive this draft Budget for Fiscal Year 2022/23, staff’s summary and narratives of the policies behind it, and take public comment and concerns, and schedule a public workshop May 24, and possibly May 31st, with a scheduled adoption June 14, 2022.
Item #7A
City Council
May 17, 2022
2 BACKGROUND INFORMATION:
Municipal Code Chapter 2, Section 2-115 describes the duties of the City Manager, and subsection “G” states this position will provide an “Annual Budget and Capital Program for each ensuing fiscal year, based upon estimates of financial needs and resources of the City.” The Budget cadence continues on schedule. The Audit was approved as presented without cause for concern in December 2021. In January the Mid-Year budget reported a strong positive balance with an influx of federal assistance for COVID relief. The City allocated $250,000 of the American Rescue Plan funds for business and non-profit relief efforts, homeless, COVID tests, and one large project that will open the school playground to the public during off-hours; while the Aromas-San Juan Bautista Unified School District prepares a joint use agreement. the City explored the possibility of buying fencing to protect school buildings while providing access to the public to the recreational assets. Of the $175,000 budgeted only $100,000 will be needed to install 1,000 linear feet of fencing and 6 gates to make this happen.
In February, the City considered its third Strategic Plan, updating the original approved in 2020.
Quality of life was again an important piece of the five strategies. To that end, a lot of progress has been made by the newly hired Assistant City Manager, moving the sphere of influence and “urban growth committee” forward. The City is invested in the preservation of its historic, smalltown environment. A lot of work has been done by the Public Safety Ad-Hoc Committee. The recommendation to hire a dedicated Deputy, research camera security systems, and strengthening the relationship between the various safety agencies are examples. Most recently, the City’s Economic Development Citizen’s Advisory Committee has started moving forward with its discussion of the future of Third Street. The attached “Priorities and Issues” document describes all of these efforts in detail.
The City’s capital improvements suffered a bit this year with turn-over in the City Engineer position. In the fall the City Engineer took an extended leave, returned in December to retire in March. The City was able to start the Community Park at Franklin Circle, and the Verutti Park restrooms this year. And although it is not a City project, completing the round-about at First and Lavagnino was a huge accomplishment. The money for street projects remains in the bank, and these projects will be top on this list in July. Before the May 24 budget Town Hall meeting, the City will have a draft CIP to consider.
DISCUSSION:
At the April 19, 2022 City Council meeting, staff presented a preview of the City’s Budget to the Council. Since then, the second installment of property taxes was received – and this is very good news. In the attached “Fund Summaries” the City’s General Fund is analyzed in detail.
Item #7A
City Council
May 17, 2022
3 GENERAL FUND REVENUE
The heart of the City’s $2.7 million General Fund is Property Tax, Sales Tax and Transient Occupancy Tax (TOT). Sales tax is half of the General Fund. It is projected to be 10% higher this next year than it was before the pandemic. The City was able to recover a large debt owed to its TOT last fall. Property values increased in FY 21/22, helping this revenue source to grow. In 2021, the General Fund had grown 13%, and this year it is estimated in the General Fund to grow 20%. All of the details are in the attached “Fund Summaries” narrative.
WATER AND SEWER ENTERPRISE FUNDS
The Water Enterprise Fund revenues are budgeted at $1.24 million this year. Expenses are being held in check at $911,660. The difference helps reduce the need to raise rates by 25%. Sewer Revenues are up following the rate increase in February and are budgeted at $1.185 million.
Operational costs next year are estimated to be $575,00. This surplus is paying down the cost of the Hollister Force Main design that is nearly 100% complete.
EXPENDITURES
As previously shared with the City Council, the 2023 expenditure budget is accounting for inflation. The salaries and health care benefits have been increased by 6% after the “Engineering News Record” statistics for calendar year 2021 showed a 5.2% increase with an 8% inflation increase in March 2022. The City’s major contracts for Sheriff, Private Security, Water and Wastewater were all increased by 10%. The Fire Department contract is limited to a 3% increase through 2027. (An analysis of the public safety contracts and costs was shared with the Public Safety Ad Hoc Committee April 26th and copied to the City Council.) These tables do not include the additional $150,000 proposed for a second dedicated Sheriff Deputy.
Item #7A
City Council
May 17, 2022
4 Most cities spend approximately 65% of their budget on public safety. It is time to strengthen the Sheriff contract and move our safety programs forward. Adding a second Deputy increases the percentage from 20% to 33%.
HAZARD PAY
Payroll during COVID became an equity issue for many cities as emergency responders and frontline employees were not allowed to work “remotely.” Many cities in the State answered that concern with COVID “hazard pay,” and one-time payment to employees that worked on-site between March 2020 and June 2021. The Salinas Human Resources Director shared with me that “hazard pay ranged from $400 to $10,000 per employee among the dozen or so cities she surveyed.
On April 22, 2022, Salinas agreed to pay $2,000 per employee, more than $1 million total.
The City has ten such employees and, if offered $2,000 per employee, the total cost is $22,950.
Staff is recommending this cost be added to the budget.
ARP BUDGET
Described in the attached “Priorities and Issues” attachment are the details of the budget request and changes recommended for the use of the $500,000 American Rescue Plan budget FY 22/23.
Two requests have been received to assist with funding for the school track, and to help with historic resources and landscaping at the Jim Jack Cabin in Luck Park. Some of the $75,000 savings from the Mid-Year allocation for the joint-use school project is recommended for these projects.
PUBLIC SAFETY EXPENSES
Actual Actual Budget Budget FY22- FY23
Department Dept # FY 20 FY 21 FY 22 FY 23 % Change
Fire and EMS 20 $ 280,626 $ 309,709 $ 286,000 $ 310,550 8.6% Code Enf 25 $ 6,698 $ 76,424 $ 69,690 $ 76,470 9.70%
Law Enf 30 $ 307,725 $ 342,305 $ 311,230 $ 337,813 8.5% Animal Contr 36 $ 10,000 $ 10,000 $ 10,000 $ 10,000 0%
$ 605,049 $ 738,438 $ 676,920 $ 734,833
% General Fund 30% 39% 32% 20%
Item #7A
City Council
May 17, 2022
5 CAPITAL IMPROVEMENT PROJECTS
New Capital Improvements being considered include:
Force Main to Hollister Construction ($18 million)
New park tables and benches
$100,000 for sidewalk repairs
Telemetric monitoring system for the wells and lift stations known as “SCADA” Adding five additional streets to this list from the CIP 21-22 in FY 21/22.
Below is the list of streets budgeted for $200,000 in repairs last year. This year, the balance has grown to more than $500,000.
AMERICAN RESCUE PLAN BUDGET FY 21/22
Spent by 6.30.22 Balance
MID YEAR BUDGET FY 21/22
COVID Tests $ 5,000 $ - $ 5,000
Business Grants $ 25,000 $ 25,000 $ -
New start-up Businesses $ 20,000 $ 20,000 $ -
Homeless programs $ 10,000 $ - $ 10,000
Non-Profits Grants $ 15,000 $ 15,000 $ -
School/Facility Joint Use Program $ 175,000 $ 100,000 $ 75,000 $ 250,000 $ 160,000 $ 90,000
FY 21/22 FY 22/23 Total
BUDGET FOR FY 22/23
COVID Tests $ - $ - $ -
Business Grants $ 25,000 $ 25,000 $ 50,000
New start-up Businesses $ 20,000 $ 15,000 $ 35,000
Homeless programs $ 10,000 $ - $ 10,000
Non-Profit Grants $ 15,000 $ 10,000 $ 25,000
School/Facility Joint Use Program $ 175,000 $ (75,000) $ 100,000 Third Street Transformation $ - $ 115,000 $ 115,000
Public Safety Initiative $ - $ 100,000 $ 100,000
Track and Field Contribution $ - $ 50,000 $ 50,000
Luck Park Historic Improvements $ - $ 15,000 $ 15,000
$ 245,000 $ 255,000 $ 500,000
Item #7A
City Council
May 17, 2022
6 The City Engineer is looking at sewer and water pipe video before recommending any superficial improvements to the streets.
The 21/22 CIP is provided on the next page with the status of each of the 36 projects. This list needs to be updated to include the School Joint Use project approved at Mid-Year.
Out of 36 projects, 7 will be completed by June 30, 2022 and 15 are underway. These 15 plus the 14 projects not begun yet, will be carried forward to next year. As of March 30th, the City has spent $831,000, and of that amount, $546,000 went toward the design of the Force Main to Hollister (a million-dollar contract.) By year-end, we will have spent more than $1 million on this CIP. Next year’s CIP will include construction of the Sewer Compliance project. The Force Main is estimated to cost $18 million.
Item #7A
City Council
May 17, 2022
7 ATTACHMENTS:
Priorities and Issues for FY 22/23
Fund Summaries for FY 22/23
2-Jul-21
CAPITAL IMPROVEMENT
BUDGET FY 21/22
Projects Project # FY 20/21 Total
FY 21/22
Budget Status June 30, 2022
CARRY
FORWARD
TO FY 22/23
Street Projects
Hwy 156 RTL 20.03 615,015 611,625 90% designed XXXXXXXXXXXX PMP- Slurry Seal (7 streets) 21.22 200,000 275,000 RFP draft- add streets XXXXXXXXXXXX Landscape for Third Street Imps 22.06 - 40,500 No progress XXXXXXXXXXXX Utility projects
* Rancho Vista Lift Station 20.05 50,000 125,000 No progress XXXXXXXXXXXX Transfer Switches for Wells 1 + 5 21.07 15,000 20,500 Well 1 complete XXXXXXXXXXXX Design Force Main to Hollister 21.20 1,066,410 1,004,410 99% comp. design XXXXXXXXXXXX Dias Lift Station Pump Upgrades 22.03 50,000 need to add new pumpXXXXXXXXXXXX Telemetry 22.04 50,000 seeking proposal XXXXXXXXXXXX
* Lift Station Pump- Emergency Repl 22.05 15,000 emergency reserve XXXXXXXXXXXX Parks Projects
Verutti Park Restroom 19-42 164,340 161,039 contract XXXXXXXXXXXX Luck Park Masterplan 20-10 48,565 12,584 done
Franklin Park 21-01 172,690 164,394 done
Trail Plan (ATP) 21-02 250,000 250,000 contract XXXXXXXXXXXX Community Facilities Projects
City Hall & Council Chamber 20-13 100,000 55,000 contract/done Community Hall Accoustics 21.24 45,000 RFP Drafted XXXXXXXXXXXX Corporation Yard 20-15 20,000 20,000 No progress XXXXXXXXXXXX Library AC Unit 21.03 20,000 20,000 done
Fire Station-City Hall Emerg Gen 21.15 125,000 125,000 No progress XXXXXXXXXXXX File Storage 20-04 15,000 15,000 No progress XXXXXXXXXXXX Fire Station Ap Bay Improvements 21.23 - 50,000 No progress XXXXXXXXXXXX Equipment
Power Inverter 6K watts 20.20 2,000 2,000 No progress XXXXXXXXXXXX Pipe Locator 20.22 2,750 7,750 No progress XXXXXXXXXXXX Projector (library) 20.23 1,500 1,500 No progress XXXXXXXXXXXX Smart Screen (library) 20.24 2,000 2,000 No progress XXXXXXXXXXXX Tow behind Valve Excerciser 21.16 7,500 7,500 No progress XXXXXXXXXXXX Pipe Threader 21.18 2,500 2,500 done
Dump Truck Bed 21.19 18,500 18,500 done
Steel Trench Plates 21.25 2,500 6,500 done
Studies
Water/Sewer Rate Study (Prop 218) 21.09 23,465 4,640 done Impact Fee Nexus Study 21.10 35,000 35,000 No progress XXXXXXXXXXXX SB 2 Grant HCD 21.12 160,000 159,087 contract XXXXXXXXXXXX LEAP Grant HCD 21.13 60,000 58,180 contract XXXXXXXXXXXX REAP Grant HCD 21.14 23,450 23,450 contract XXXXXXXXXXXX Special Initiatives
Urban Growth/Sphere of Infl 21.11 50,000 103,619 see budget detail XXXXXXXXXXXX Third Street Master Plan 22.01 100,000 see budget detail XXXXXXXXXXXX Public Safety Committee Initiative 22.02 100,000 see budget detail TOTAL 3,203,185 3,742,278