CITY OF SAN PABLO
PRELIMINARY (DRAFT) FY 2022
-
2024 GENERAL FUND BIENNIAL
BUDGET
PUBLIC BUDGET HEARING
–
MONDAY JUNE 6, 2022
BUDGET, FINANCE, LEGISLATIVE STANDING COMMITTEE PRESENTATION MAY 24, 2022
EMPHASIS:
BALANCING THE
BUDGET DURING
UNCERTAIN ECONOMIC
TIMES
This Photo by Unknown Author is licensed under CC BY-NC-ND U.S. Economic Indicators/Issues of Concern:
1) U.S. Recession Looming for 2022
2) U.S. Inflation Increases
3) U.S Interest Rates Fluctuations to counteract U.S.
Inflation concerns
4) Ukraine War
5) Supply Chain Shock/Shortages
GUIDING PRINCIPLES IN THE DEVELOPMENT OF
THE BUDGET
Providing high quality
municipal services
that residents expect
Providing a safe and
secure
neighborhoods
Maintaining a
prosperous, fiscally
sustainable, and
economically viable
city
Restoring budget cuts
made due to the
COVID-19 Pandemic
Addressing Major
Policy Goals
identified in the March
15, 2021, City Council
Priority Workplan
BUDGET DEVELOPMENT TIMELINE
JANUARY
• Source and Use
Projections
• Personnel
Budget
Development
FEBRUARY
• Departmental
Budget
Preparation
MARCH
• Departmental
Budget Final
Review
APRIL
• City Manager
Review
MAY
• BFLSC Review
JUNE
• Public Hearing
City Council
Review
• Budget
Adoption
JULY
• Budget
Implementation
KEY MESSAGES INCLUDED IN THIS
BUDGET
The proposed City GF
Budget is balanced for
FY 2022-23 and FY
2023-24
City continues to
maintain a strong
healthy General Fund
Reserve/Fiscal Reserve
Policy
Growth of revenue
sources including
property tax, sales tax
and casino revenues at
a steady pace
Proposed expenditures
include labor negotiated
terms with additional
funding allocated to key
City Council priorities
Continued funding of
capital improvement
projects and General
Fund subsidies to Other
Funds
ARPA Funds accounted
in a separate Special
Revenue Fund to fund
Community Assessed
Needs
REVENUE
PROJECTIONS
T
RENDS
IN
EXISTING
REVENUE
STREAMS
GENERAL FUND REVENUE BY CATEGORY
Casino Revenue, $31.54 , 65%
Property Taxes, $1.07 , 2%
Sales Tax, $4.67 , 10%
Utility Users Tax, $2.65 , 5%
Property Tax In Lieu, $3.25 ,
7%
Other Revenue, $3.48 , 7%
Other Taxes, $1.78 , 4%
GENERAL FUND REVENUES (IN MILLIONS)
Casino Revenue
Property Taxes
Sales Tax
Utility Users Tax
Property Tax In Lieu
Other Revenue
Other Taxes
CASINO
REVENUE
1.978 2.1 2.185 2.229 2.273 2.319 2.365
22.947
26.596
29.351 30.454
31.827 32.782 33.765
0 5
10 15
20 25
30 35
40 FY 20-21 FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 Casino Revenue
Casino Contract PILOT
T
HE
COMBINED
CASINO
CONTRACT
AND
PILOT
REVENUE
IS
BUDGETED
AT
$
31 .
5 M
IN
FY
2022
/
23 .
T
HIS
COMPRISES
65 %
OF
TOTAL
BUDGETED
REVENUES
.
C
OMPARED
TO
THE
FY
2021
-
22 B
UDGET
OF
$
28 .
7 M,
AN
INCREASE
OF
9 .
9 %
.
A
NNUAL
INCREASES
OF
3 .
0 %
ARE
REALISTICALLY
PROJECTED
IN
Y
EARS
2 ,
3 ,
4 AND
5 SALES
TAX
2.74 2.69
2.90 2.98 3.06 3.12 3.17
0.97 2.43
1.77 2.07 2.12 2.17 2.23
FY 20-21 FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 Sales Tax Revenue
Bradley Burns Measure Q/S
S
ALES
T
AX
REVENUE
WHICH
INCLUDES
THE
B
RADLEY
B
URNS
T
AX
(P
OINT
OF
S
ALE
)
AND
M
EASURE
Q/S
(T
RANSACTION
U
SE
T
AX
–
P
OINT
OF
D
ESTINATION
½
CENT
FOR
FIRST
5 YEARS
,
¼
CENT
ON
LAST
5 YEARS
)
IS
BUDGETED
AT
$
4 .
7 M
FOR
FY
2022
-
23 I
NCLUDING
MEASURE
K
(S
PECIAL
REVENUE
FUND
FOR
CONFIRE
),
TOTAL
SALES
TAX
RATE
IS
9 .
25 %
(
NO
SUNSET
CLAUSE
)
S
ALES
T
AX
IS
THE
2 ND
LARGEST
REVENUE
SOURCE
COMPRISING
10 %
OF
TOTAL
BUDGETED
REVENUES
.
A
NNUAL
INCREASES
OF
3 .
0 %
ARE
REALISTICALLY
PROJECTED
IN
Y
EARS
2 ,
3 ,
4 AND
5 PROPERTY TAX IN
LIEU
2.97 3.03
3.25 3.41
3.56 3.72
3.89 -
0.50 1.00
1.50 2.00
2.50 3.00
3.50 4.00
4.50 FY 20-21 FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 Property Tax In Lieu Revenue
Property Tax In Lieu
C
ITY
RECEIVES
PROPERTY
TAX
REVENUES
IN
LIEU
OF
V
EHICLE
L
ICENSE
F
EES
(VLF)
.
T
HIS
PROPERTY
TAX
IN
LIEU
OF
VLF
ALLOCATION
INCREASES
ANNUALLY
IN
PROPORTION
TO
THE
GROWTH
IN
GROSS
ASSESSED
VALUATION
IN
THE
CITY
.
T
HIS
REVENUE
,
BUDGETED
AT
$
3 .
26 M
IS
THE
3 RD
LARGEST
REVENUE
SOURCE
COMPRISING
7 %
OF
THE
TOTAL
BUDGETED
REVENUE
FOR
THE
G
ENERAL
F
UND
.
•
PROPERTY
TAX
:
B
UDGETED
WITH
MINIMAL
GROWTH
OVER
5 YEARS
•
FRANCHISE
TAX
:
I
MPOSED
ON
VARIOUS
UTILITIES
BASED
ON
LONG
-
STANDING
AGREEMENTS
WITH
UTILITY
PROVIDERS
(
I
.
E
.
,
P
ACIFIC
G
AS
AND
E
LECTRIC
,
C
OMCAST
)
•
UTILITY
USERS
TAX
:
7 %
ON
CABLE
TELEVISION
,
TELEPHONE
,
ELECTRICITY
,
NATURAL
GAS
AND
WATER
SERVICE
.
•
USE
OF
PROPERTY
:
I
NCLUDES
LEASE
OR
RENTAL
REVENUES
AND
THE
REVENUE
FROM
THE
D
IGITAL
LED
S
IGN
OF
$
225
K
EXPENSE
PROJECTIONS
E
STIMATES
OF
THE
FUTURE
COSTS
OF
CURRENT
SERVICES
•
SALARY
AND
BENEFITS
:
B
UDGETED
FOR
FY
2022
-
23 AT
$
29 .
4 M
IN
THE
G
ENERAL
F
UND
AND
$
4 .
5 M
IN
O
THER
F
UNDS
FOR
A
TOTAL
OF
$
33 .
9 M
.
L
ARGEST
,
SINGLE
EXPENDITURE
IN
THE
OPERATING
BUDGET
•
FY
2021
-
22 HAD
A
COMBINED
BUDGET
OF
$
33 M
FOR
S
ALARY
AND
B
ENEFITS
,
AN
INCREASE
OF
$
.
9 M
IN
FY
2022
-
23 •
170
PROJECTED
FTE
IN
FY
2022
-
23 –
E
XCEPT
FOR
2 .
5 P
OLICE
FTE
FUNDED
BY
A
$
2 M
STATE
GRANT
,
THERE
ARE
NO
NEW
FTE
INCLUDED
IN
THE
PROPOSED
BUDGET
•
E
XCEPT
FOR
2 .
5 P
OLICE
FTE
TO
BE
FUNDED
BY
S
TATE
G
RANT
,
NO
NEW
FTE
ARE
BEING
PROPOSED
.
D
EPARTMENT
REQUESTS
FOR
NEW
POSITIONS
ARE
BEING
DEFERRED
FOR
2 YEARS
•
I
NCORPORATES
A
3 %
COLA
FOR
EACH
YEAR
.
COLA
IS
CONTINGENT
UPON
LABOR
AGREEMENT
WHICH
IS
STILL
UNDER
NEGOTIATIONS
.
•
L
ABOR
COST
IS
THE
LARGEST
BUDGETED
EXPENSE
IN
FY
2022
-
23 IS
IN
THE
P
OLICE
D
EPARTMENT
@
52 .
42 %
,
FOLLOWED
BY
P
UBLIC
W
ORKS
@
10 .
69 %
AND
C
OMMUNITY
S
ERVICES
@
7 .
8 %
.
LABOR
COST BY DEPARTMENT (FY 2022
-
23)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
City
Attorney
City Council City
Manager
Community
Services
Finance Developme
nt Services
Police
Department
Public
Works
Multi-
Department
Percentage 1.38% 0.47% 6.76% 7.83% 2.97% 5.83% 52.42% 10.69% 11.65% Total $467,285 $158,473 $2,290,352 $2,654,685 $1,007,240 $1,976,148 $17,765,115 $3,624,376 $3,949,412 Other Funds 258,238 1,976,148 2,248,278
General Fund 467,285 158,473 2,290,352 2,396,447 1,007,240 - 17,765,115 1,376,098 3,949,412 258,238
1,976,148
2,248,278
$467,285 $158,473 $2,290,352 $2,654,685 $1,007,240 $1,976,148 $17,765,115 $3,624,376 $3,949,412
1.38% 0.47% 6.76% 7.83% 2.97% 5.83% 52.42% 10.69% 11.65% General Fund Other Funds Total Percentage
CALPERS
U.A.L. ISSUES AND CONCERNS:
T
HE
U
NFUNDED
A
CCRUED
L
IABILITY
(UAL)
IS
AN
ANNUAL
ACTUARIAL
ESTIMATE
BASED
ON
A
SERIES
OF
COMPLEX
ECONOMIC
AND
DEMOGRAPHIC
ASSUMPTIONS
ASSOCIATED
WITH
THE
PENSION
PLAN
’
S
MEMBERSHIP
.
•
D
EMOGRAPHIC
ASSUMPTIONS
INCLUDE
MORTALITY
RATES
,
RETIREMENT
RATES
,
AND
EMPLOYMENT
TERMINATION
RATES
AMONG
OTHERS
.
•
E
CONOMIC
ASSUMPTIONS
INCLUDE
FUTURE
INVESTMENT
EARNINGS
,
INFLATION
,
AND
SALARY
GROWTH
RATES
.
•
A
UAL
TYPICALLY
RESULTS
FROM
UNFAVORABLE
INVESTMENT
RETURNS
,
CHANGES
IN
ACTUARIAL
ASSUMPTIONS
,
UNFAVORABLE
DEMOGRAPHIC
SHIFTS
,
AND
OTHER
EXPERIENCES
THAT
DIFFER
FROM
THOSE
ANTICIPATED
BY
THE
ANNUAL
ACTUARIAL
ASSUMPTIONS
.
•
B
ASED
ON
THE
J
ULY
2021
VALUATION
REPORT
,
THE
UAL
INCREASED
BY
+
18 .
05 %
IN
FY
2022
-
23 COMPARED
TO
FY
2021
-
22 .
•
C
ITY
BUDGETED
$
3 .
95 M
FOR
FY
2022
-
23 TO
$
5 .
1 M
IN
FY
2026
-
27 .
FOR
FY
2022
-
23 ,
C
ITY
BUDGETED
USING
THE
AVAILABLE
PREPAYMENT
OPTION
WITH
SAVINGS
OF
$
136
K
.
CALPERS VALUATION REPORT
–
JULY 2021
UAL FY23 FY24 FY25 FY26 FY27 FY28
Misc. Plan 1,615,429 1,731,000 1,851,000 1,929,000 2,003,000 2,052,000 Safety Plan 2,441,392 2,630,000 2,819,000 2,941,000 3,056,000 3,131,000 PEPRA Safety 13,226 17,000 20,000 22,000 23,000 24,000
PEPRA Misc. 15,257 19,000 23,000 25,000 26,000 27,000
PERS UAL 4,085,304* 4,397,000 4,713,000 4,917,000 5,108,000 5,234,000 Normal
Cost %
Misc. Plan 12.21% 12.20% 12.20% 12.20% 12.20% 12.20%
Safety Plan 23.75% 23.80% 23.80% 23.80% 23.80% 23.80%
PEPRA Safety 12.78% 12.80% 12.80% 12.80% 12.80% 12.80%
PEPRA Misc. 7.47% 7.50% 7.50% 7.50% 7.50% 7.50%
Misc. ,
$1,630,68
6 , 40%
Safety,
$2,454,618 ,
60%
FY 2022-23 UAL
Misc.
Safety
*Using the prepayment option, City will budget at $3.95M in FY 22-23 (a savings of $136K) •
HEALTHCARE
COSTS
:
P
REMIUMS
FOR
EMPLOYER
-
SPONSORED
HEALTH
PLANS
INCREASED
BY
+
17 .
63 %
IN
FY
2022
-
23 AS
THE
COVID
-
19 PANDEMIC
CAUSED
MASSIVE
PREMIUM
HIKES
.
•
MPA
INSURANCE
:
MPA’
S
WORKERS
’
COMPENSATION
CLAIMS
VOLUME
HAS
INCREASED
ALONG
WITH
THE
SEVERITY
OF
CLAIMS
IN
THE
GENERAL
L
IABILITY
AND
VEHICLE
PROGRAMS
.
T
HE
OVERALL
ESTIMATED
INCREASE
FOR
ALL
PROGRAMS
IN
FY
2022
-
23 IS
APPROXIMATELY
+
29 .
51 %
FOR
PROPERTY
,
GENERAL
LIABILITY
AND
WORKER
’
S
COMP
.
T
HIS
FOLLOWS
A
55 .
28 %
RATE
INCREASE
THAT
OCCURRED
FOR
THE
2021
PLAN
YEAR
.
•
GENERAL
FUND
SUBSIDIES
:
G
ENERAL
F
UND
SUBSIDIZES
THE
COSTS
CHARGED
DIRECTLY
TO
VARIOUS
FUNDS
INCLUDING
G
AS
T
AX
,
D
EVELOPMENT
S
ERVICES
,
NPDES
AND
S
TREET
L
IGHTING
AND
L
ANDSCAPE
FUNDS
.
•
DEBT
SERVICE
:
FY
22 -
23 DEBT
SERVICE
AT
$
2 .
2 M
AND
PROJECTED
TO
REMAIN
STEADY
AT
$
2 .
7 M
ANNUALLY
STARTING
FY
23 -
24 WHICH
INCLUDES
THE
2022
L
EASE
R
EVENUE
BONDS
.
DEBT SERVICE PAYMENT SCHEDULE
THE 2022 LEASE REVENUE BOND WILL INCREASE AN ADDITIONAL DEBT SER VICE PAYMENT OF $400K A YEAR
DEBT FY 2021-22 FY 2022-23 FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27 Fund 315 - LRB -
2015A Tax
Exempt 921,838 132,379 132,441 132,505 132,571 132,639
Fund 317 - LRB-
2015B * 572,627
Fund 469 -
Series 2018 808,213 809,368 806,615 808,056 808,253 807,594 Fund 419 -
Series 2022 - 1,303,430 1,774,715 1,775,206 1,774,703 1,778,106 TOTAL $2,302,678 $2,245,177 $2,713,771 $2,715,767 $2,715,527 $2,718,339
BUDGET COMPARISON
GENERAL FUND BUDGET COMPARISON
ADOPTED FY 21-22 PROPOSED FY 22-23 DOLLAR INCREASE /
(DECREASE)
PERCENTAGE
DIFFERENCE
Baseline Revenue $ 44,338,435 $ 48,437,658 $ 4,099,223 +9.25% Transfers In 542,000 542,000 +100.00%
Total Resources $ 44,338,435 $ 48,979,658 $ 4,641,223 +10.47% Salary and Benefits $ 24,414,616 $ 25,461,010 $ 1,046,394 +4.29% CalPERS UAL 3,496,700 3,949,412 452,712 +12.95%
Services and Supplies 11,428,455 15,466,303 4,037,848 +35.33% CIP 432,194 445,160 12,966 +3.00%
Debt Service 1,803,415 2,245,177 441,762 +24.50%
General Fund Subsidies 2,763,055 3,748,789 985,734 +35.68% Total Uses of Resources $ 44,338,435 $ 51,315,851 $ 6,977,416 +15.74% DIFFERENCE $ - $ 2,336,193 $ 2,336,193 FIVE
-
YEAR PROPOSED GENERAL FUND BUDGET
FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27
Baseline Revenue $48,437,658 $51,300,899 $51,705,602 $53,182,285 $54,702,873 Transfer In 542,000 157,560 159,136 160,727 162,334
Total Revenue $48,979,658 $51,458,459 $51,864,738 $53,343,012 $54,865,207 Salary/Benefits 25,461,010 26,788,710 27,984,059 29,046,768 30,117,577 CalPERS UAL 3,949,412 4,397,000 4,713,000 4,917,000 5,108,000 Services/Supplies 15,466,303 15,813,113 16,220,042 16,605,968 17,109,569 Transfers Out 6,439,126 7,081,861 7,306,960 7,590,781 7,945,273 Total Expenses $51,315,851 54,080,684 56,224,061 58,160,517 60,280,419
SURPLUS
(SHORTFALL)
$(2,336,193) $(2,622,225) $(4,359,323) $(4,817,505) $(5,415,212) BUDGET
BALANCING
MEASURES
FTE increase limited to only 2.5 FTE Police funded by State Grant. No additional FTE increase for each of the Proposed Fiscal Year Budget saving more than $1M
3% COLA for each Proposed Fiscal Year Budget ($663K in FY 23, $683K in FY 24)
Reduce Services and Supplies between -7.4% to -10% (Ranges btwn $1.1M to $1.7M)
Eliminate funding for Multi Dept Capital & Vehicle Equipment Acquisition (-$500K/year)
Reduce Police Overtime by -10% ( -$139K to -$156K)
Reduce Part-Time for Community Services by -20% ( -$181K to - $204K) Postpone the Move of Code Enforcement Program from PD to CD (-$367K to -$584K)
RECOMMENDED BY
THE CITY MANAGER
PROPOSED FY 2022
-
2024 GF BUDGET
Budget Balancing
Measures
FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27
SURPLUS
(SHORTFALL)
$(2,336,193) $(2,622,225) $(4,359,323) $(4,817,505) $(5,415,212) Reduce (-7.4% to -10%)
Services/Supplies
1,149,440 1,306,182 1,622,004 1,660,597 1,710,957
Eliminate Multi-Dept.
Vehicle Replacement
Funding
500,000 500,000 500,000 500,000 500,000
Reduce PD OT Hours
(-10%)
138,581 142,738 147,020 151,431 155,974
Reduce CS PT Hours
(-20%)
181,310 186,749 192,352 198,122 204,066
Defer Code
Enforcement Move from
PD to CD Dept.
366,862 486,556 527,902 557,698 583,026
SURPLUS
(SHORTFALL)
$0 $0 $(1,370,045) $(1,749,657) $(2,261,189)
ADOPTED
CITY FISCAL RESILIENCY POLICY
•
CATASTROPHIC
RESERVE
(R
ES
.
2013
-
159
)
•
T
O
ASSIST
WITH
EXPENSES
DUE
TO
SEVERE
NATURAL
,
FINANCIAL
OR
LEGAL
CALAMITIES
INCLUDING
EARTHQUAKES
,
FLOOD
,
DISRUPTIONS
IN
CASINO
REVENUE
,
MAJOR
LEGAL
JUDGMENTS
AGAINST
THE
C
ITY
.
•
50 %
OF
THE
A
NNUAL
T
OTAL
O
PERATING
F
UNDS
B
UDGET
•
IF
ALLOCATED,
NEED
TO
REPLENISH
WITHIN
3 FISCAL
YEAR
PERIODS
•
BUDGET
STABILIZATION
RESERVE
(R
ES
.
2013
-
159
)
•
T
O
SERVE
AS
A
BUDGET
BALANCING
TOOL
TO
COUNTERACT
THE
IMPACTS
OF
ECONOMIC
DOWNTURNS
AND
DECLINING
REVENUES
IN
THE
ECONOMIC
CYCLE
AND
THE
FUNDS
WILL
BE
USED
FOR
UNFORESEEN
,
UNPLANNED
,
ONE
-
TIME
EXPENSES
THAT
ASSIST
THE
C
ITY
IN
DEVELOPING
FISCAL
RESILIENCY
•
5 %
OF
THE
A
NNUAL
T
OTAL
O
PERATING
F
UNDS
B
UDGET
•
IF
ALLOCATED,
NEED
TO
REPLENISH
WITHIN
1 FISCAL
YEAR
PERIOD
•
CITY
MANAGER
OPERATING
CONTINGENCY
RESERVE
(RES
.
2013
-
159
)
•
S
ERVES
TO
ADDRESS
ANY
ANNUAL
UNFORESEEN
OPERATING
EXPENSES
DURING
THE
COURSE
OF
THE
FISCAL
YEAR
PERIOD
•
1 %
OF
THE
A
NNUAL
TOTAL
OPERATING
FUNDS
BUDGET
(O
NE
-
T
IME
CM
A
DJUSTMENT
FOR
FY
2022
-
24 )
CITY COUNCIL BUDGET ACTIONS
PER SPMC REQUIREMENTS
Direct the City Manager to proceed with
FINAL RECOMMENDED FY 2022-2024 GF
BUDGET by Minute Action Vote
Final Budget Adoption scheduled for
June 21, 2022 under Consent Enabled
Resolutions
SUSTAINABILITY IN
THE TIME OF
UNCERTAINTY IS
ESSENTIAL FOR
GOOD
GOVERNANCE
QUESTIONS