5/9/23 Item #2
City Council Meeting
Item # 2 - RTC 23-142
Study Session: Review of the
CITY OF Proposed FY 2023/24 &
FY 2024/25 Biennial Operating
Budget and FY 2023/24 Capital
1852 Budget Changes
THE MISSION CIT
May 9, 2023
Agenda
• Overview
• Economic Conditions / Ten-Year Financial Forecast Update • FY 2023/24 and 2024/25 Proposed Operating Budget
• FY 2023/24 Capital Budget Amendments
• Council Priorities / Initiatives
• Council Options to Consider - Potential November 2024 Measures • Budget Calendar
City of
Santa Clara
The Center of Whits Bor te
POST MEFTING MATERIAL
1 Overview
City of
Santa Clara
Overview
Budget Provides Stability for Community Services
• FY 2023/24 and FY 2024/25 Proposed Biennial Operating Budget - Reflects improved 10-Year General Fund Forecast ($27M to $9M) - General Fund structural deficit significantly reduced - Preserves services with fewer reductions necessary
- Strategic support reductions vs. direct services
- Multiple Study Sessions / Public Hearing - Budget adoption June 27th • FY 2023/24 Capital Budget
- Limited adjustments for FY 2023/24
- Future revenue measure direction needed
City of
Santa Clara
2 Overview
Where We Have Been
• Significant operational and financial upheaval
triggered by COVID-19
• High vacancies and continued cost controls
• Used approx. $80 million in one-time reserves and
federal stimulus funding to help address shortfalls and allow time for recovery
• Successful ballot measures (TOT, Business Tax, SORRY dueLs COVID-19 Utilities Transfer)
CLOSED
• Balanced approach to addressing deficit with focus on preserving community services
City of
Santa Clara
The Center of What's Pessible
Overview
Where We Are Now
• With lifting of COVID restrictions, organization is aligning to a new normal • Cost control measures allows time for successful COVID recovery • High vacancies continue with impacts to service delivery • Saved $10 million last year
• Current 16.7% vacancy rate as of May 3rd; excludes frozen positions (37.5 FTE) • Department vacancies in select areas remain high with competitive recruitment environment (e.g., SVP @ 24% vacancies)
• 8% - 10% annual turnover rate (retirements, resignations, dismissal, other) • While General Fund forecast has improved significantly, uncertainty remains as witnessed by the recent events in the banking industry
• Collaborate with all departments to address deficit
City of
Santa Clara
The Center of Whuts Port be
3 Overview
Where We Are Going
• Improved financial forecast reduces need for
significant reductions
• Reduce structural deficit and replenish reserves
• Budget that protects critical services including
public safety - avoids layoffs
• Address 21% loss of capacity to due vacancies and
frozen/eliminated positions
• Pursue financial revenue options to create capacity
to address unmet needs and Council priorities
• Economic uncertainty and risk of recession persist
- Budget Stabilization Reserve down by nearly half
City of
Santa Clara
The Conter of What's Poss ble
Proposed Budget Overview
• Balanced budget of $1.5 billion for FY 2023/24 and $1.2 billion budget for FY 2024/25; General Fund approx. one-fifth of budget • Multi-pronged approach to solve the General Fund deficit: new revenues, one-time & ongoing expenditure savings, use of reserves • Limit direct service impacts; strategic support reductions • City continues to fill vacant positions - result in overall improvement City of Santa Clara
to services (still below pre-pandemic levels)
• Set General Fund Budget Stabilization Reserve at minimum of 15% of expenditures
• City's utilities represent the majority of the budget and the resources are aligned with expected activity
• Collaboration with all City departments
City of
Santa Clara
The Cantere Whats Possib
4 Proposed Budget Overview
FY 2023/24 and FY 2024/25 Proposed Budget
FY 2022/23 FY 2023/24 FY 2024/25
Fund Type Adopted Budget Proposed Budget Proposed Budget General Fund $272,355,000 $280,774,000 $287,459,000
Special Revenue Funds 28,469,000 38,412,000 37,111,000
Enterprise Funds 815,865,000 872,344,000 968,036,000
Internal Service Funds 42,429,000 38,851,000 41,630,000 Debt/Other 19,847,000 374,983.000 40,658.000
Less (Transfers, Contributions,
and Reserves)* (203,143,000) (509,710,000) (247,781,000) Subtotal Operating Budget $975,822,000 $1,095,654,000 $1,127,113,000 Capital Funds $357.381.000 $396,879,000 $108,386,000
Less (Transfers, Contributions,
and Reserves)* (1,454,000) (1,588,000) (1,454,000)
Total Capital Budget $355,927,000 $395,291,000 $106,932,000 Total Budget $1,331,749,000 $1,490,945,000 $1,234,045,000 * Adjusts for transfers, contributions and reserves to avoid double counting of the same funds (e.g., internal services funds are excluded)
City of
Santa Clara
Economic Outlook/
Ten-Year General Fund Forecast
City of
10 Santa Clara
5 Economic Outlook
Real GDP Levels and Trends, $ Trillions
• Significant economic uncertainty
Real GDP Levels, US& Trillions, Chained 2012 Prices, Seasonally Adjusted Annual Rates • March 2023 UCLA Forecast US$ Trillions Forecast →
21.4 presented two scenarios: No-Recession
11.11 21.2 Recession
recession and no recession 21.0
3111
20.8 • Other economists projecting mild 20.6
3945
20.4 ($316B
recession in 2023
20.2 3022
20.0 22821250
• Mixed economic indicators - low
0.0 Q1 02 Q3 04 Q1 02 Q4 Q3 04 Q1 Q2 Q3 Q4
unemployment rates, high 2022 2023 2024 2025
inflation
Source: UCLt Anderson Forecast and U.S. Bureau of Economic Analysis City of
Santa Clara
The Celer of What thin Ha
Economic Outlook City of Santa Clara
Number of Closed Sales
700
600
500
400
• Strong employment; San Jose-Sunnyvale-
300
Santa Clara Metropolitan Statistical Area
200
(MSA) unemployment rate of 2.1% in 100
December 2022 (down from 2.9% in
2012 2013 2014 2015 2016 2017 20182019202020212022
December 2021) • # of Closed Sales
City of Santa Clara
• Home prices in Santa Clara remain high with Single Family Residential Home Sales $2,000,000
a median single home price of $1.8 million in S1.800,000 $1,600,000
2022; the number of closed sales was down $1,400,000
$1,200,000
in 2022 $1,000,000
$800,000
$600,000
• Development activity remains strong but $400,000
$200,000
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
slowing down (tight financing, banking fear)
•Ave. Price a Med. Price
Data Source: Santa Clara County Association of Realtors City of
Santa Clara 12
10-Year General Fund Forecast
• Planning tool Known Risks
/ Potential remains for recession
• Compare ongoing General Fund
revenues and expenditures v State/federal legislative changes and legal challenges
• General Fund accounts for less
than 20% of the total City Budget / Labor costs outside the budget assumptions • Non-discretionary costs / CaPERS actuarial changes or reform actions represent approximately 30% of / Capital/infrastructure - unanticipated and budget deferred critical maintenance needs
City of
Santa Clara
The Conter owhats Possib
10-Year General Fund Forecast
$ in millions
Fiscal Year 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30 2030/31 2031/32 2032/33 2033/34 Sources of Funds $272.6 $284.9 $297.3 $309.0 $321.2 $333.3 $346.5 $359.7 $373.5 $387.8 $402.7 Uses of Funds 280.6 293.8 308.2 320.8 332.7 348.3 360.5 373.9 383.3 396.4 410.2 (Deficit) / Surplus ($8.0) ($8.9) ($10.9) ($11.8) ($11.5) ($15.0) ($14.0) ($14.2) ($9.8) ($8.6) ($7.5) Growth in revenues has improved the General Fund Forecast • Structural deficit remains, however long-term revenue and expenditure growth are in closer alignment • Proposed Budget balances first two years; will need to address imbalance remains in out-years • No existing capacity for restorations, service expansion, deferred capital infrastructure or unmet needs City of
Santa Clara
The Center of Whats Possible
7 10-Year General Fund Forecast
Major Changes from June 2022
Shortfall Impact
Explained
Projected Shortfall (June 2022) ($27 M)
Property Tax Development Growth/RDA - 18 Month Lag $6 M Transfer from City Utilities - Higher Growth/Natural Gas Impact on Rates $6 M Business Tax Ballot Passage / Implementation $5 M
Transient Occupancy Tax Accelerated Recovery $2 M
CaPERS Performance - 24 Month Lag $3 M
Extended / Slower Sales Tax Recovery ($2 M)
Other Net Changes (e.g., Interfund Services) ($2 M)
Total Changes $18 M
Projected Shortfall (March 2023) ($9 M)
City of
Santa Clara
The Center of Whats Possible
10-Year General Fund Forecast
Projected Shortfalls
General Fund Forecast Timeline - COVID - 19 Induced Impact January January January June March
2020 2021 2022 2022 2023
Forecast Forecast Forecast Update Forecast
General Fund ($8 M-
($13 M) ($42 M) ($20 M) ($27 M)
Shortfall 9 M)*
COVID - 19 Induced Impact
* Projected shortfall through FY 2024/25
City of
Santa Clara
the CarteWaits
10-Year General Fund Forecast
2023/24 General Fund Revenues = $272.6 M
Transient
Occupancy
Tax, $20.4 M,
7.5%
Charges for
$166.7 Mor Services, $37.5
M, 13.7%
61% of
General Sales Tax,
$60.5 M, 22.2%
Fund Transfer from City
Revenue Utilities, $32 M,
11.7%
Other
Property Tax, Revenue, $36.4
$85.8 M, 31.5% M, 13.4%
City of
Santa Clara
17 The Center of What's Possible
Selected General Fund Revenues
FY FY FY FY FY FY FY
2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 Actual Actual Actual Actual Estimate Forecast* Forecast* Property Tax $58.4 M $65.5 M $68.8 M $74.6 M $81.9 M $85.8 M $89.6 M Sales Tax $58.5 M $55.3 M $56.2 M $56.9 M $58.7 M $60.5 M $62.4 M Transient Occupancy Tax $22.5 M $16.0 M $2.9 M $10.8 M $19.0 M $20.4 M $22.0 M Charges for Services $35.4 M $31.2 M $26.9 M $32.9 M $35.9 M $37.7 M $38.7 M Transfer from City Utilities $21.3 M $22.7 M $24.5 M $27.3 M $30.0 M $32.0 M $34.0 M * While revenues have improved significantly since start of COVID-19, however, still no capacity for unmet operational and capital needs.
City of
Santa Clara
18 The Center awaits fate
9 10-Year General Fund Forecast
Transient Occupancy Tax (TOT)
$35.0
• COVID-19 Significantly Impacted $30.0
TOT receipts
$25.0
• Occupancy and room rates
$20.0
plummeted in 2020; activity starting
$15.0
to improve
$10.0
• Rate increase effective January
2022 (increase from 9.5% to 11.5%) $5.0
$0.0
• No additional hotels assumed
FY 2003/10 Actual FY 2010/11 Actual FY 2011/12 Actual FY 2012/13 Actual FY 2027128 Forecast FY 2028/29 Forecast FY 2032/33 Forecast FY 2033/34 Forecast City of
Santa Clara
The Contero Whats AM NA
10-Year General Fund Forecast
Sales Tax
Sales Tax Based on $100 Purchase
Santa Clara Caltrain,
• The City of Santa Clara County $0.125 City of
(Including VTA), Santa Clara,
receives $1 of every $9.125 of $2.00 $1.00
sales tax collected
• Most of sales tax revenues
support the State and County
Transportation
• Potential to add local sales tax
Statewide
through a ballot measure Sales Tax.
$6.00
City of
Santa Clara
The Center of What's Poss bie
10 10-Year General Fund Forecast
$90.0
Sales Tax
$80.0
$70.0
• 2nd largest General Fund
$60.0
revenue source
$50.0
• COVID-19 Impacted $40.0
Collections in FY 2019/20 $30.0
and 2020/21
$20.0
$10.0
• Business-to-Business sales
make up over 40% of the S0.0
orecast Forecast
City's Sales Tax FY 2009/10 Actual FY 2010/11 Actual FY 2011/12 Actual FY 2012/13 Actual FY 2013/14 Actual FY 2014/15 Actual FY 2016/17 Actual* FY 2017/18 Actual FY 2018/19 Actual FY 2019/20 Actual FY 2020/21 Actual FY 2021/22 Actual FY 2022/23 Estimate FY 2023124 Forecast FY 2024/25 Forecast FY 2025/26 Forecast FY 2026/27 Forecast FY 2027128 Forecast FY 2028/29 Forecast FY 2029/30 Forecast FY 2030/31 Forecast FY 2031/32 Forecast FY 2032/33 Forecast FY 2033/34 Forecast 027/2
• Economically sensitive
*FY 2016/17 includes one-time $7.0 million true-up payment due to the unwinding of the State's Triple Flip.
City of
Santa Clara
The Center of What's Possible
10-Year General Fund Forecast
Sales Tax
Santa Clara
SAA
Annual Per Capita Sales Tax $AZ
Adjusted for Inflation $49 $39
• Annual Per Capita Sales $35
(Constant 20185) $52
$28
Tax remains below 2018 $43
$29 $35
$69
$63
levels $48 $58
#General Retail $71
$39
$40
S32
$31 $31
• Business-to-Business is
•Transportation
the backbone of the City's •Construction
$174 $156 $151 $145
$139
sales tax IllBusiness To Business
#Miscellaneous
$2 $2 $2
County Pool
• Internet sales (County S80 $7a 574
(Cash Basis) S73
Pool) is 20% of sales tax
2018Q4 $450 2015435 202003 5571 202104 $383 202204 $398 Source: Avenulnsights
City of
Santa Clara 22
11 10-Year General Fund Forecast
Property Tax $160.0
$140.0
$120.0
• Largest General Fund
revenue source $100.0
$80.0
• Secured valuation growth Millions
ranging from 4.5% - 6.0% $60.0
over the forecast period $40.0
$20.0
• Assumes approximately
$750 M - $1.0 billion $0.0
areas
annual development Fy 2009/10 Actual FY 2010/11 Actual FY 2011/12 Actual FY 2012/13 Actuat FY 2013/14 Actual® FY 2014/15 Actual FY 2015/16 Actual FY 2016/17 Actual FY 2017/18 Actual FY 2018/19 Actual FY 2019/20 Actual FY 2020/21 Actual FY 2021/22 Actual FY 2022/23 Estimate FY 2023124 Forecast FY 2030/31 Forecast FY 2031/32 Forecast FY 2032/33 Forecast 31/22 FY 2033/34 Forecast 2032/33 6 12033/34 growth valuation in out FY 2024125 FY 2025/ FY 2026 FY 2029/30 years *FY 2013/14 includes one-time $6.1 million due to Redevelopment Agency dissolution
City of
Santa Clara 23
The Center of What's Possible
10-Year General Fund Forecast
Property Tax Property Tax Distribution Per $100 Collected Other Special ERAF (Other
• The City of Santa Clara Districts, School
$2.51 Districts),
West Valley
receives $10.17 of every College, $15.19
$11.09
$100 collected in property
tax City of Santa
Clara, $10.17
• Most of property tax County Office
of Education,
revenues support schools Santa Clara
$3.97
Unified
and the County School
County of
District,
Santa Clara $38.36
$18.71
City of
Santa Clara 24
The Carterol Whats Possible
12 10-Year General Fund Forecast
2023/24 General Fund Expenditures = $280.6 M
Benefits,
$79.3 M, Non-
28.3% Personnel/Other,
$68.6 M, 24.4%
$212 M or 76%
of General
Fund
Expenditures
Salaries,
$132.7 M,
47.3%
City of
Santa Clara
25 The Center of What's Post bie
10-Year General Fund Forecast
Pension Costs
General Fund PERS Costs
• Managing three impacted categories:
$90.0
retirees, classic members, and new
employees (under PEPRA) $80.0
$70.0
• From FY 2023/24 to 2033/34 General Fund
$60,0
projected to increase $27.9 M (from $55.1 Millions
$50.0
M to $83.0 M)
$40.0
• Current Unfunded Actuarial Liability (UAL) $30.0
(all funds) of $513 M1 $20.0
- 67% of Miscellaneous and 73% of $10.0
$0.0
Safety Accrued Liability due to retirees
• Actuary projects rates to peak at end of FY 2023124 Fore FY 2024/25 Foroc FY 202528 Forocast FY 2028727 Forecas FY 2027128 Forecast FY 202829 Forecas FY 2020130 Forecan FY 2030231 Forecast FY 2031/92 Forecast FY 2032/33 Forocast FY 2033/34 Forecast forecast period
• Labor agreements can impact UAL • Miscellaneous • Safety 1 Combined Safety and Miscellaneous Unfunded Accrued Liability, as of June 30, 2021 CaPERS valuation report City of
Santa Clara
Tha Carim at WhittAMan 26
13 10-Year General Fund Forecast
Retirement Contributions Peak in 8 Years
CONTRIBUTION PROJECTIONS - MISCELLANEOUS CONTRIBUTION PROJECTION - SAFETY Contribution Projection - Percent of Pay Contribution Projection - Percent of Pay With EE Cost Sharing
50% 90%
80%
70%
30% 50%
20%
30%
20%
10%
10%
0% 0%
a Percentile m50ch Percentile da Peressie 1) 25th Percennile Source: Foster & Foster Actuaries and Consultants CaPERS Analysis City of
Santa Clara
The Center of What's Possible
10-Year General Fund Forecast
Non-Personnel Costs
• Materials, Services and Supplies largest Loans and
Transfers,
categories: consultant services, utilities, Materials,
$5.8 M, 8.5% Services,
maintenance, and supplies
Supplies,
• Interfund Services $34.7 M,
50.6%
- Information Technology
- Vehicle Maintenance & Replacement
- Workers' Compensation & Special Liability
- Communications Equipment
- Unemployment Insurance Interfund
• Loans and Transfers - debt service, Services,
$28.1 M,
transfers to other funds (e.g., 41.0%
maintenance districts, cemetery, and
PW Capital Projects Management)
City of
Santa Clara
14 FY 2023/24 & FY 2024/25
Proposed Operating Budget
City of
29 Santa Clara
ater of whots Peace
Proposed Budget
Service Preservation and Fiscal Stability
• With COVID restrictions lifted, continue to improve services within authorized budget by hiring staff to fill existing budgeted positions • Preserve public safety services (hiring 40 Police and Fire underway) • Expenditure reductions without layoffs that limit impacts to direct services • Maintain parks, restrooms, and landscaping within existing cycle times • Support for legacy events (e.g., Parade of Champions, Showtime) • Strategic enhancements (Building Development Services, SVP Sustainability and EV Program expansion)
City of
Santa Clara
15 Budget Guiding Framework
Council Adopted Strategic Pillars:
1. Promote and Enhance Economic, Housing and Transportation Development
2. Deliver and Enhance High Quality Efficient Services and Infrastructure
3. Enhance Community Sports and Recreational and Arts Assets
4. Enhance Community Engagement and Transparency
5. Ensure Compliance with Measure J and Manage Levi's Stadium
6. Manage Strategically Our Workforce Capacity and Resources
7. Promote Sustainability and Environmental Protection
City of
Santa Clara
The Center of What's Possible
Summary of Funded Position Changes
Summary of Funded Position Changes (All Funds)
FY 2022/23 Budget 1,127.00
Base Budget Changes (Fire SAFER Grant firefighter positions) 18.00 Base Budget Changes (SVP Funded) 10.00
Base Budget Changes (Development Fee Funded) 5.00
Base Budget (Other Changes) 0.25
Base Budget Changes (freeze Related-funded positions) (7.00) Proposed Budget Changes - General Fund Reductions (4.00) FY 2023/24 Budgeted Positions 1,149.25
FY 2024/25 Proposed Additional Positions (Building Fee Funded) 4.00 FY 2024/25 Budgeted Positions 1,153.25
City of
Santa Clara
32 16
Proposed Budget Overview
Table 1: FY 2023/24 and FY 2024/25 Proposed Budget
FY 2022/23 FY 2023/24 FY 2024/25
Fund Type Adopted Budget Proposed Budget Proposed Budget General Fund $272,355,355 $280,773,558 $287,458,968
Special Revenue Funds 28,469,289 38,411,889 37,111,226
• General Fund supports Enterprise Funds 815,864,620 872,344,414 968,035,945 variety of services to 42,429,153 38,850,861 41,629,602 Internal Service Funds
residents and 374,983,049 40,658,134
Debt/Other 19,846,647
businesses (e.g., police,
Less (Transfers, Contributions, (203,142,483) (509,709,569) (247,780,561) fire, libraries, parks, and Reserves)*
community centers, and Subtotal Operating Budget $975,822,582 $1,095,654,202 $1,127,113,314 streets maintenance) Capital Funds $357,380,666 $396,879,114 $108,385,754 Budget deficit Less (Transfers, Contributions, (1,588,205) (1,454,000) and Reserves)* (1,454,000)
addressed in Proposed
Total Capital Budget $355,926,666 $395,290,909 $106,931,754 Budget
Total Budget $1,331,749,248 $1,490,945,111 $1,234,045,068 *Adjusts for transfers, contributions and reserves to avoid double counting of the same funds (e.g., internal services funds are excluded)
City of
Santa Clara 33
Budget Balancing Strategy
• Combination of strategies to address ongoing
deficit in Biennial Budget
- Revenue-generating actions
Use of Revenue
- Ongoing/one-time expenditure reductions Reserves Solutions - Use of Reserves
- Continue phased approach
• Maintain Budget Stabilization Reserve at 15% Reduce
Costs
• Restoration of services not in budget; would rely
on outperforming forecast and/or new revenues
City of
Santa Clara
34 The Center of Whats Post bie
17 Budget Balancing FY 2023/24 and FY 2024/25 Biennial Operating Budget General Fund Balancing
($ in millions)
Strategy FY 2023/24 FY 2024/25 Ongoing
Forecast Shortfall ($8.0 M) ($8.9 M) ($11.4 M)
Increased Revenues
• We need both new revenues -Increase TOT Rate: phased 2% 0.9 1.7 3.4 -Fee Adjustments 0.5 0.8 0.8
and expenditure reductions
-One-Time Revenues 0.2 0.0 0.0
($8 M- $12 M ongoing) Total Revenue Solutions
1.6 2.5 4.2
Expenditure Reductions
• Continued phased approach;
-Fire SAFER Grant 1.0 3.1 0.0
address approx. half of ongoing -Police Vacancy Savings 1.6 1.7 0.0 need - Other Departmental Proposals 2.7 2.7 2.0
Total Expenditure Solutions 5.3 7.5 2.0
• Use one-time funds (SAFER Use of Reserves
-Budget Balancing Reserve 1.1 (1.1) 0.0
grant, salary savings, reserves)
Use of Reserves 1.1 (1.1) 0.0
to balance budget
Future Unidentified Solutions 5.2
General Fund Balancing Total $8.0 M $8.9 M $11.4 M
City of
Santa Clara
35 Budget Balancing Strategy
Revenue Solutions
• Transient Occupancy Tax - phase in the remaining voter-approved Transient Occupancy Tax increase in FY 2023/24 (1 percent in January 2024) and in FY 2024/25 (1 percent in January 2025), generating additional revenue of approximately $0.9 million in FY 2023/24 and increasing to $3.4 million ongoing
• Fee increases were brought forward and approved by the City Council on April 18, 2023 • Anticipated increase to the Storm Drain Environmental Compliance fee is assumed in FY 2024/25
• One-time transfer of $149,000 from the Vehicle Replacement Fund for the sale of vehicles that will be retired as a budget proposal
City of
Santa Clara
The Cerfer of What's Post be 36
18 Budget Balancing Strategy
Transient Occupancy Tax by City
Phase in TOT Increase
City Rate
• City of Santa Clara's current TOT rate is 11.5% Gilroy 9.0% Saratoga 10.0%
• The City has implemented 2% of the 4% TOT Fremont 10.0% Mountain View 10.0%
increase approved by the voters
San Jose 10.0%
Morgan Hill 11.0%
• Remaining 2% needed to address deficit
Santa Clara 11.5%
(additional 1% in Jan. 2024 and 1% in Jan. 2025) Campbell 12.0% Cupertino 12.0%
• Outreach regarding this proposal occurred with Los Gatos 12.0% Sunnyvale 12.5%
several large City hotels earlier in March 2023
Los Altos 14.0%
Milpitas 14.0%
Palo Alto , 15.5%
City of
Santa Clara 37
The Carterol What AMONe
Budget Balancing Strategy
Expenditure Savings/Reductions
• In FY 2022/23, the Fire Department was awarded a three-year SAFER grant, which will generate annual General Fund savings ($1.0 million to $3.1 million) during the grant period
• Align the Police Department's vacancy factor with the historical staffing rates over the past decade, generating savings of $1.6 million - $1.7 million in FY 2023/24 and FY 2024/25; the vacancy factor adjustment will allow the continuation of recruitments and hiring efforts
• Other departmental reductions limit direct service impacts, and the 4.0 position reductions are in strategic supports areas (City Attorney's Office, City Manager's Office, City Auditor's Office, Human Resources Department)
City of
Santa Clara
38 19
Budget Balancing Strategy
Use of Reserves/Future Unidentified Solutions
• In FY 2022/23, Budget Balancing Reserve established as part of the FY 2021/22 Budgetary Year-End Close process; this Proposed Budget uses $1.1 million of this reserve in FY 2023/24 and replenishes the amount in FY 2024/25 • After the biennial budget period, future balancing solutions are expected to be necessary; a revised forecast will inform the needed actions at that time City of
Santa Clara
Budget Stabilization Reserve
Budget Stabilization Reserve
90 • Budget Stabilization Reserve has 80
dropped almost half from $80 M
70 • Other one-time sources used for budget 60
balancing 50
- Land Sale Reserve ($11 M) 40
- Federal Stimulus Funds ($26 M) 30
20 10
FY 2019/20 FY 2020/21 FY 2021/22 FY 2022/23 FY 2023/24 FY 2024/25 City of
Santa Clara
20 Select General Fund Reserves
2023/24 &
2022/23 2024/25
Reserve Type Balance Balance
General Fund Budget Stabilization (BSR) $40.8 M $45.8 M1 General Fund Capital Projects $6.6 M $6.1 M2
Land Sale Reserve $18.5 M $18.5 M
Pension Trust (General Fund) $21.4 M $21.4 M
FY 2023/24 Budget Balancing Reserve $2.0 M $0.9 M/$2.0 M3 Total $89.3 M $92.7 M/$93.8 M
1BSR increase of $5.0 M needed to meet the 15% target in FY 2023/24 and FY 2024/25; separate action to be brought forward in June 2023 to increase reserve 2Use of $0.5 M funds the third year of the Modesto Ash tree removals plan 3The FY 2023/24 Budget uses $1.1 M of the reserve, which is restored in FY 2024/25 City of
Santa Clara
The Center of What's Possible
FY 2023/24 Capital Budget
Amendments
City of
42 Santa Clara
21 2023/24 Capital Budget Amendments
• FY 2023/24 - Second Year of Biennial Capital Budget
• Adjustments to reflect changes in estimated project costs / timelines
• Limited number of new projects and budget adjustments - Northern Receiving Station Transformer and Breaker Upgrades ($76.3 M)
- Kifer Receiving Station Rebuild and Replacement ($30.7 M) - NRS-KRS 115V Line ($29.3 M)
- Scott Receiving Station Rebuild and Replacement ($29.0 M) • Carryover of FY 2022/23 funds brought forward as part of budget adoption
• Over $500M unfunded infrastructure needs remain
City of
Santa Clara
Council Priorities/Initiatives
City of
44 Santa Clara
22 Council Priorities/Initiatives
Funded Priorities (partial or otherwise)
• El Camino Specific Plan ($1.0 million)
• Station Area Plan ($900,000 through VTA and MTC)
• Vision Zero Plan ($450,000 federal grant)
• City Hall Downtown Relocation Study ($353,000)
• Transportation Demand Management ($200,000)
• International Swim Center Study/Planning ($358,000)
• Homelessness Task Force ($75,000)
• Stadium Neighborhood Committee ($93,000 funded by Stadium in FY 2023/24) City of
Santa Clara
The Center of Whats Ross bie
Council Priorities/Initiatives
No Further Action Items and/or Completed
• Modernization of the Business Tax Program
• Procurement Reform Recommendations
• Pilot Program for e-Bikes and Scooters (Shared Mobility Program) • COVID-19 Recovery and Plan for Reopening
• Levi's Stadium Curfew and Violation Fee
• Elections / Redistricting 2022
• Policy Discussion on Data Centers
• Lawn Bowling Facility - No further action, Council did not prioritize To Be Discussed
• Approximately 13-15 items to be discussed at future Council or Priority Setting Session Future Council Priority Setting Session
• One-time funding of $250,000 added as part of FY 2021/22 Year-end Close City of
Santa Clara
23 Council Options to Consider
Potential November 2024
Measures
City of
47 Santa Clara
The Cartero Mouth Fort
Potential New Revenue Sources
Consider for Implementation in Future Budgets
• General Obligation Bond (Capital Infrastructure)
- Fire, Storm, & Community Facilities Infrastructure
• Library/Community Services Parcel Tax
• Documentary Transfer Tax
• Sales Tax
• Utility Tax (gas, telephone, cable)
City of
Santa Clara 48
The Center of What's Post bie
24 Budget Calendar
City of
49 Santa Clara
Next Steps
FY 2023/24 and 2024/25 Budget Calendar
Date Budget Schedule
April 28, 2023 Proposed Biennial Operating Budget and CIP Budget changes Released May 9, 2023 Study Session to review Biennial Operating Budget and CIP Budget changes June 6, 2023 Study Session to review Biennial Operating Budget and CIP Budget changes June 27, 2023 Public Hearing/Adoption of Biennial Operating Budget and CIP changes City of
Santa Clara
The Center of What's Possible
25 City Council Meeting
Item # 2 - RTC 23-142
Study Session: Review of the
Proposed FY 2023/24 &
FY 2024/25 Biennial Operating
Budget and FY 2023/24 Capital
1852 Budget Changes
THE MISSION CITY
May 9, 2023
26