PRELIMINARY (DRAFT)
BIENNIAL BUDGET
(FY 2024-25 & FY 2025-26)
Budget and Fiscal Standing Committee
Review – April 29, 2024
City Council Public Hearing – May 1, 2024
FISCAL YEARS
2024 -25 AND 2025 -26
Agenda • Overview of the Budget Process
• Long-term Financial Forecast Review/Economic Outlook
• Biennial Budget Overview
• Revenues
• Expenses
⚬ Budget Balancing Measures
⚬ Personnel Costs
⚬ FTE Vacancies (Hiring Freeze & Turnover Impacts)
⚬ Services & Supplies
• Revised City Fiscal Resiliency Policy (FY 2024-25 Only) ⚬ New Internal Services (Funds 130, 140 & 190)
• City Manager Financial Guidelines (FY 2025 -2026)
• Staff Recommendations
Budget Process
Schedule Personnel Budget
Service and Supplies
Budgets
• November 2023 – Staff kickoff budget process
⚬ Zero Based Budgeting Model
⚬ Personnel Budget – HR and Finance
⚬ Service and Supplies Budgets –
Department Heads and Fi nance
• January 2024 – T argeted Budget Scenarios
• April 1 – Community Survey Launched
• April 29 – Preliminary DRAFT Budget
presented to BFLSC
• Ma y 1 - City Council Public Budget Hearing
• May 20 - City Council Budget Adoption
• July 1st - Budget goes into ef fect
• 5-year Employee Labor MOUs (2022- 2027)
• Heal th i nsurance premi ums (+1 1% i ncrease)
• Anticipated FTE Cost -Savings, Turnover &
Non-budgeted V acancies
• Zero -base budgeting model implemented
• At l east (-5%) reduction per Department
Long-term
Forecast
and
Economic
Outlook
PFM Long-
T erm Forecast
CalPERS
UAL
Interest
Rates
I nsurance
Costs
• Strengths:
⚬ Strong General Fund Reserves
⚬ Leadership
⚬ Utilization of State and Federal
funding opportunities
• Weaknesses:
⚬ Casino Revenue Dependence
⚬ Lack of Revenue Diversification
⚬ Expense increases outpacing
revenue growth
BIENNIAL BUDGET OVERVIEW
ALL FUNDS
BUDGET SUMMARY
FY 2023-24
Adopted
(Combined)
FY 2024-25 PROPOSED
General Funds Special Revenue
Funds Total FY24 to FY25 Delta % Change
Baseline Revenue 58,589,329 51,695,872 6,600,686 58,296,558 (292,771) 0% Transfers In 6,319,036 710,711 5,735,885 6,446,596 127,560 2% From Available Special Revenue Fund Balance 986,448 2,125,909 2,125,909 1,139,461 0% Total Revenue Sources 65,894,813 54,532,492 12,336,571 66,869,063 974,250 1% Personnel (including UAL) 35,969,157 33,044,054 4,601,022 37,645,076 1,675,919 5% Services and Supplies 22,545,720 14,551,776 6,509,711 21,061,487 (1,484,234) -7% Transfers Out
General Funds 157,560 - 160,711 160,711 3,151 0%
Other Fund Subsidies 3,447,705 3,229,591 3,229,591 (218,114) 0% Debt Service 2,713,771 2,707,070 2,707,070 (6,701) 0%
CIP 1,060,900 1,000,000 - 1,000,000 (60,900) -6%
Total Uses of Resources 65,894,811 54,532,491 11,271,444 65,803,935 (90,879) 0% Surplus/(Shortfall) (0) 0 1,065,127 1,065,127
BIENNIAL BUDGET OVERVIEW, c o n t.
ALL FUNDS
BUDGET SUMMARY
FY 2024-25
Proposed
(Combined)
FY 2025-26 PROPOSED
General Funds Special Revenue
Funds Total FY25 to FY26 Delta % Change
Baseline Revenue 58,296,558 52,191,318 6,702,875 58,894,193 597,635 1% Transfers In 6,446,596 713,925 5,895,316 6,609,242 162,646 3% From Available Special Revenue Fund Balance 2,125,909 3,584,660 3,584,660 1,458,751 69% Total Revenue Sources 66,869,063 56,489,903 12,598,192 69,088,095 2,219,032 3% Personnel (including UAL) 37,645,076 34,352,960 4,766,107 39,119,067 1,473,991 4% Services and Supplies 21,061,487 15,065,656 6,561,112 21,626,768 565,282 3% Transfers Out -
General Funds 160,711 163,925 163,925 3,214 2%
Other Fund Subsidies 3,229,591 3,365,416 3,365,416 135,825 4% Debt Service 2,707,070 2,705,870 2,705,870 (1,200) 0%
CIP 1,000,000 1,000,000 - 1,000,000 - 0%
Total Uses of Resources 65,803,935 56,489,902 11,491,145 67,981,047 2,177,112 3% Surplus/(Shortfall) 1,065,126 (0) 1,107,047 1,107,047
BIENNIAL BUDGET SHORTFALLS
FY 2024-25 FY 2025-26
Budget (Surplus/Shortfall): (-$2,125,909) (-$3,584,660) FY 2023-24 GFDR Fund Balance: $2,125,909 $2,874,091
Budget Stabilization Fund (Fund 170): - $710,569
- -
Biennial Budget Shortfall Balancing:
• Use of One-Time Funding from FY 2023-24 GFDR Fund Balance ($5M) No replenishment of GFDR Fund Balance required
• Use of Budget Stabilization Reserve Fund (Fund 170)
Must be replenished by FY 2026-27 (before June 30, 2027) per Fiscal Resiliency Reserve Policy Revenues
BASELINE REVENUE DETAILS
FY 2023-24
Adopted
(Combined)
FY 2024-25 PROPOSED
General Funds Special Revenue Funds Total FY24 to FY25 Delta % Change Casino Pilot 2,228,920 2,225,000 - 2,225,000 (3,920) 0% Casino Revenue 31,500,000 31,689,000 - 31,689,000 189,000 1% Fines and Fees 402,018 350,000 350,000 (52,018) -13%
Grants 2,840,219 250,000 825,000 1,075,000 (1,765,219) -62% Intergovernmental 1,909,263 266,000 1,629,475 1,895,475 (13,788) -1% Licenses and Permits 334,323 67,500 300,000 367,500 33,177 10% Miscellaneous Revenue 121,500 - 450,000 450,000 328,500 270% Other Taxes (incl. Franchise Fees) 1,860,300 1,450,000 1,450,000 (410,300) -22% Property Taxes (incl. RPTTF) 2,247,537 1,773,000 1,295,000 3,068,000 820,463 37% Sales Tax (incl. Meas Q/S/Bradley Burns) 6,230,844 5,065,000 1,210,711 6,275,711 44,867 1% Use of Property and Money 1,180,720 1,359,000 58,000 1,417,000 236,280 20% Utility Users Tax 2,706,000 3,075,000 3,075,000 369,000 14% Property Taxes in Lieu of VLF 3,405,592 3,575,872 3,575,872 170,280 5% Charges for Services 1,622,093 550,500 832,500 1,383,000 (239,093) -15% Total 58,589,329 51,695,872 6,600,686 58,296,558 (292,771) 0% Revenues, cont.
BASELINE REVENUE DETAILS
FY 2024-25
Proposed
(Combined)
FY 2025-26 Adopted
General Funds Special Revenue
Funds Total FY25 to FY26 Delta % Change
Casino Pilot 2,225,000 2,318,968 - 2,318,968 93,968 4%
Casino Revenue 31,689,000 31,879,134 - 31,879,134 190,134 1% Fines and Fees 350,000 350,000 350,000 - 0%
Grants 1,075,000 250,000 841,500 1,091,500 16,500 2%
Intergovernmental 1,895,475 266,000 1,710,950 1,976,950 81,475 4% Licenses and Permits 367,500 67,500 300,000 367,500 - 0% Miscellaneous Revenue 450,000 - 440,000 440,000 (10,000) -2% Other Taxes (incl. Franchise Fees) 1,450,000 1,463,750 1,463,750 13,750 1% Property Taxes (incl. RPTTF) 3,068,000 1,790,500 1,295,000 3,085,500 17,500 1% Sales Tax (incl. Meas Q/S/Bradley Burns) 6,275,711 5,166,300 1,234,925 6,401,225 125,514 2% Use of Property and Money 1,417,000 1,259,000 48,000 1,307,000 (110,000) -8% Utility Users Tax 3,075,000 3,075,000 3,075,000 - 0%
Property Taxes in Lieu of VLF 3,575,872 3,754,665 3,754,665 178,794 5% Charges for Services 1,383,000 550,500 832,500 1,383,000 - 0% Total 58,296,558 52,191,318 6,702,875 58,894,193 597,635 1% Revenue
by T ype
Historical Revenue
T rends
- 10,000,000.00 20,000,000.00 30,000,000.00 40,000,000.00 50,000,000.00 60,000,000.00 2015
2016
2017
2018
2019
2020
2021
2022
2023
2024 Budget
2025 Budget
Casino Property Sales UUT Other VLF
Casino Revenue
Overview
Expenses
FY 2023-24
Adopted
(Combined)
FY 2024-25 PROPOSED
General Funds Special Revenue
Funds Total FY24 to FY25 Delta % Change
Personnel Expenses 35,969,157 33,044,054 4,601,022 37,645,076 1,675,919 5% Service and Supplies 22,545,720 14,551,776 6,509,711 21,061,487 (1,484,234) -7% Transfers Out 7,379,936 6,936,661 160,711 7,097,372 (282,564) -4% Total 65,894,811 54,532,491 11,271,444 65,803,935 (90,879) 0% FY 2024-25
Proposed
(Combined)
FY 2025-26 PROPOSED
General Funds Special Revenue
Funds Total FY24 to FY25 Delta % Change
Personnel Expenses 37,645,076 34,352,960 4,766,107 39,119,067 1,473,991 4% Service and Supplies 21,061,487 15,065,656 6,561,112 21,626,768 565,282 3% Transfers Out 7,097,372 7,071,286 163,925 7,235,212 137,840 2% Total 65,803,935 56,489,902 11,491,145 67,981,047 2,177,122 3% Budget Balancing M easures :
• Adopted on 12/13/23 via CC Reso . #2023- 167
Preliminary FYs 2024-25 and 2025-26 Budget 3
STRATEGIC BUDGET INITIATIVES:
CITY COUNCIL APPROVED ON 12/13/23
(Approved by Resolution #2024-067)
1) Implement a zero-based budget planning model for FY 2025-27 budget planning to optimize city service delivery and generate annual GF operating cost savings for all City Departmental expenses 2) Implement a zero-based budget planning model for FY 2025-27 budget planning to optimize city service delivery and generate annual GF operating cost savings for all City Departmental expenses 3) Identify new GF annual revenue sources
4) Extend FTE hiring freeze on all FTE vacancies during FY 2025-2027 period 5) Re-tool & revise adopted fiscal resiliency policy requirements to reverse forecasted structural deficits as one-time balancing measures (for FY 2025-2027 period only)
6) No (0) FTE increased authorized during FY 2025-27 period (i.e. Zero-growth; status-quo) 7) Explore use of one-time funds from GFDR fund balance to reverse forecasted structural deficits as one-time budget balancing measures (for FY 2025-2027 period only)
8) Explore additional fiscal measures using forecast model to reverse forecasted structural deficits as recommended by the City Manager
(SUBJECT TO CHANGE BY CITY MANAGER)
Ma jo r
Changes
• Transfers Out:
⚬ Lighting and Landscaping District ($1.5M GF Subsidy in FY 25) • Pension UAL:
⚬ $2.95M in FY21 to $4.6M in FY25
⚬ Actuarial Estimate for FY30 $6.57M
• Insurance Costs:
⚬ General Liability - Costs have tripled since 2020 ($932,870 to $3.16M, a +239% increase)
⚬ Health/Dental Costs (+11%)
Expenses by
Department
SERVICE AND SUPPLIES EXPENSE DETAILS
FY 2023-24
Adopted
(Combined)
FY 2024-25 PROPOSED
General Funds Special Revenue
Funds Total FY24 to FY25 Delta % Change
1110 City Council 4,093,388 2,134,392 1,778,112 3,912,504 (180,884) -4% 1210 City Attorney 110,451 112,650 - 112,650 2,199 2%
1310 City Manager 782,822 548,950 - 548,950 (233,872) -30% 1320 City Manager-ED 594,427 123,175 - 123,175 (471,252) -79% 1741 City Manager-Housing Admin. 53,045 - 30,000 30,000 (23,045) -43% 1510 City Manager-I.T. 373,035 335,266 - 335,266 (37,769) -10% 1420 Finance 340,416 289,938 - 289,938 (50,478) -15%
1430 Multi-Dept-Gen. Gov. 3,669,808 4,079,958 - 4,079,958 410,150 11% 7000 Multi-Dept-Debt Serv. 2,799,635 - 2,713,670 2,713,670 (85,965) -3% Multi-Dept-Cap Asset & Equipt 1,003,467 - - (1,003,467) 0% Multi-Dept-EBRCS 77,976 60,000 60,000 (17,976) 0%
1755 Development Services 500,130 - 425,800 425,800 (74,330) -15% 2110 Police 4,101,640 4,458,040 - 4,458,040 356,400 9%
3310 PW Engineering 276,205 314,645 - 314,645 38,440 14% 3410 PW-Building Maintenance 472,568 470,865 - 470,865 (1,703) 0% 3510 PW-Environmental Serv. 151,500 - 113,739 113,739 (37,761) -25% 3610 PW-Street Lighting 852,447 - 839,937 839,937 (12,510) -1% 3710 PW-Street Maintenance 551,448 - 542,480 542,480 (8,968) -2% 5110 CS-YSCP 1,316,554 1,124,297 - 1,124,297 (192,257) -15% 5210 CS-Recreation 370,074 499,600 - 499,600 129,526 35% 5310 CS-Senior Services - - - - - 0%
5410 CS-Paratransit 54,684 - 65,973 65,973 11,289 21%
Total 22,545,720 14,551,776 6,509,711 21,061,487 (1,484,234) -7% Expenses by
Department, cont.
SERVICE AND SUPPLIES EXPENSE DETAILS
FY 2024-25
Proposed
(Combined)
FY 2025-26 PROPOSED
General Funds Special Revenue
Funds Total FY24 to FY25 Delta % Change
1110 City Council 3,912,504 2,195,587 1,831,455 4,027,043 114,539 3% 1210 City Attorney 112,650 112,650 - 112,650 - 0%
1310 City Manager 548,950 554,872 - 554,872 5,923 1%
1320 City Manager-ED 123,175 124,763 - 124,763 1,588 1% 1741 City Manager-Housing Admin. 30,000 - 30,000 30,000 - 0% 1510 City Manager-I.T. 335,266 339,436 - 339,436 4,170 1% 1420 Finance 289,938 299,535 - 299,535 9,597 3%
1430 Multi-Dept-Gen. Gov. 4,079,958 4,321,052 - 4,321,052 241,094 6% 7000 Multi-Dept-Debt Serv. 2,713,670 - 2,712,470 2,712,470 (1,200) 0% Multi-Dept-Cap Asset & Equipt - - - - - 0%
Multi-Dept-EBRCS 60,000 60,000 - 60,000 - 0%
1755 Development Services 425,800 - 427,800 427,800 2,000 0% 2110 Police 4,458,040 4,620,240 - 4,620,240 162,200 4%
3310 PW Engineering 314,645 308,734 - 308,734 (5,911) -2% 3410 PW-Building Maintenance 470,865 503,020 - 503,020 32,155 7% 3510 PW-Environmental Serv. 113,739 - 70,489 70,489 (43,250) -38% 3610 PW-Street Lighting 839,937 - 841,723 841,723 1,786 0% 3710 PW-Street Maintenance 542,480 - 577,381 577,381 34,901 6% 5110 CS-YSCP 1,124,297 1,125,977 - 1,125,977 1,680 0%
5210 CS-Recreation 499,600 499,790 - 499,790 190 0%
5310 CS-Senior Services - - - - - 0%
5410 CS-Paratransit 65,973 - 69,794 69,794 3,821 6%
Total 21,061,487 15,065,656 6,561,112 21,626,768 565,282 3% Personnel
Costs
• Historically average 62% of budgeted expenditures
• 74% Safety costs
33,044,054 , 60%14,551,776 , 27%
6,936,661 , 13%
Personnel (including UAL) Services and Supplies Transfers Out FY2025 Breakout
34,352,960 ,
61%
15,065,656 ,
27%
7,071,286 ,
12%
FY2026 Breakout
FTE Budgeted V acancies : (FY 2024-25 & FY 2025-26)
• RESULTING FROM FY 2023-24 HIRING FREEZE, FAILED HR RECRUITMENTS, ATTRITION & RETIREMENTS Preliminary FYs 2024-25 and 2025-26 Budget 3
FTE VACANCIES
EXISTING/FORECASTED
FY 2025 - 2027
FTE VACANCIES
AUTHORIZED
FOR FY 2025-2027
FTE VACANCIES
DEFERRED
FOR FY 2025 - 2027
1. Assistant City Manager/Personnel
Administrator
2. Administrative Services Director
3. Chief Building Official
4. Community Services Program Coordinator II
5. Engineering Aide
6. Management Analyst (HR)
7. Maintenance Worker (2)
8. Police Admin Clerk (3)
9. Police Services Technician (3)
10.Police Captain*
11.Senior Admin Clerk
12.Senior Building Inspector
1. Administrative Services Director
2. Chief Building Official
3. Engineering Aide
4. Management Analyst (HR)
5. Maintenance Worker (2)
6. Police Admin Clerk (2)
7. Police Services Technician (2)
8. Senior Building Inspector
FTE POSITION:
1. Assistant City Manager/
Personal Administrator
2. Community Services
Program Coordinator II
3. Police Admin Clerk
4. Police Services
Technician
5. Police Captain
6. Senior Admin Clerk
LABOR GROUP:
EXEC MGMT.
AIE
SPPEA
SPPEA
SPPEA MGMT
OE3
TOTAL FTEs: 17.0 FTEs TOTAL FTEs: 11.0 FTEs TOTAL FTEs: (6.0 FTEs) NOTES:
1. 65% of FTE Vacancies Authorized for FY 2025-
2027
2. (-30%) Reduction in FTE Vacancies for Budget
Cost Savings
3. All FTE vacancies noted above are FY 2023-24
budgeted positions and NOT reflective of all
CITY-WIDE FTE VACANCIES by employer labor
group
ACTIVE RECRUITMENTS (Appointment
by 07/01/24):
1. Administrative Services Director
2. Chief Building Official
3. Engineering Aide
4. Management Analyst
5. Maintenance Worker (2)
6. Police Admin Clerk (2)
7. Police Services Technician (2)
NOTES:
1. All remaining FTE vacancies will be re-
evaluated based on available budget
resources in FY 2024-25
City Fis cal Res iliency Policy :
• Adopted 2016; Revised 04/15/24 via CC Reso. #2024-051 Preliminary FYs 2024-25 and 2025-26 Budget
EXISTING POLICY RESERVES:
• Catastrophic Reserve Fund: (FUND 150: $27,266,246)
⚬ 50% of total Adopted GF Operating Budget
• Budget Stabilization Reserve: (FUND 170: $2,726,625) ⚬ 5% of total Adopted GF Operating Budget
• Casino Revenue Sustainability Reserve: (FUND 180: $0) ⚬ Allocated on an annual basis; up to 50% of unused audited fund balance (not formulaic; discretionary action by Council)
NEW INTERNAL SERVICE FUNDS (Effective July 1, 2024; FY 2024-25 Only):
• Building and Facilities Maintenance Reserve: (FUND 130: $1,635,975) ⚬ 3% of total Adopted GF Operating Budget
• Asset and Vehicle Replacement Reserve: (FUND 140: $1,090,650) ⚬ 2% of total Adopted GF Operating Budget
• City Manager Contingency Account: (FUND 190: $545,325) ⚬ 1% of total Adopted GF Operating Budget (No longer GF Operating Budget Expense) City M anager Financial Guidelines
Preliminary FYs 2024-25 and 2025 -26 Budget
• Guideline #1: Maintain STATUS-QUO on all City program and service delivery until new revenue sources can be identified; and
• Guideline #2: Explore new efficiencies using new emerging technologies to minimize annual GF operating costs; and
• Guideline #3: Promote capital, economic, housing and technology infrastructure, and continued public safety investment to encourage future private investment in the City; and • Guideline #4: Exercise fiscal discipline and spend WITHIN appropriated GF revenue levels; • Guideline #5: Managed restraint on any use of the City’s Unassigned Reserves for covering annual operating expense; and
• Guideline #6: Always strive for long-term employee labor MOU agreements to sustain multi-year budget planning goals; and
• Guideline #7: Eliminate or substantially reduce all GF operating subsidies; and promote full-cost recovery efforts. Avoid creating GF structural deficits/shortfalls; and • Guideline #8: Be prudent and strategic in managing new FTE staffing investments; and • Guideline #9: **CRITICAL POINT** The City must create NEW revenue opportunities over the next 2-year period to generate new fiscal and revenue capacity to meet all City annual operational requirements, all City financial capabilities, and all City debt obligations.
Staff Recommendations :
1) Receive Presentation; and
2) Proceed with Scheduled Public Hearing (5/1); and
3) After Public Hearing conducted, City Council proceeds with Adoption of Enabling Resolutions via Consent Action (5/20/24); and
4) Authorize City Manager to pursue additional fiscal and revenue sources and operational efficiencies during FY
2024-25 and FY 2025-26 periods.
Questions?