Item #6.A +
6/25/24 6.B
City Council Meeting
Item # 6.A
Public Hearing: Adoption of
the Proposed FY 2024/25 & FY
2025/26 Biennial Capital
Improvement Program Budget
and FY 2024/25 Operating
1852 Budget Changes
THE MISSION CITY Item # 6.B
Establish the City's Fiscal Year
2024/25 Appropriations Limit
June 25, 2024
Agenda
• FY 2024/25 and FY 2025/26 Proposed Budget
- Budget Overview
- Amendments to the Proposed Budget
- Follow-up from Budget Study Sessions
• FY 2024/25 Appropriations Limit (Gann Limit)
• Recommendations
City of
Santa Clara
The Center of What's Possible
POST MEETING MATERIAL
1 Budget Overview
City of
Santa Clara
Budget Calendar
• Oct - Nov 2023 - Departments submit CIP Project requests; turn over Operating Budget and begin work on proposed Municipal Fee Schedule
• December - March - Review of CIP and Operating Budget requests; prepare Ten-Year General Fund Forecast, complete review of Proposed Municipal Fee Schedule • April 9 - City Council Study Session on the Proposed Municipal Fee Schedule • April 23 - Public Hearing and Adoption of the Proposed Municipal Fee Schedule • April 29 - Proposed Capital Budget Released
• May 7 - City Council Study Session on Capital Budget and Operating Budget Changes • June 4 - Second City Council Study Session on Capital Budget and Operating Budget Changes • June 25 - City Council Adoption of Capital Budget, Appropriations Limit (Gann Limit), Operating Budget Changes and CIP Carryovers
City of
Santa Clara
2 Capital Budget Overview
• This two-year budget cycle focuses on the capital budget with amendments to the FY 2024/25 Operating Budget
• FY 2024/25 and FY 2025/26 Capital Budget ($926.8 M) and Five-Year Capital Improvement Program (CIP) ($1.33 B)
• Capital program is a mixed bag: well-funded for the utilities (83% of the CIP), investments in projects with dedicated funding (e.g., transportation), but falls well short in other areas
• Insufficient funding to address unfunded needs of over $600 M; General Fund Capital Projects Reserve of $23.9 M to support projects; recommended use of $15.0 M in this CIP and $1.0 M from last CIP • Project carryover requests (from FY 2023/24 to FY 2024/25) total $279.9 M and are included in Attachment 2
City of
Santa Clara
The Center of What's Possible
Operating Budget Overview
• Updates to the FY 2024/25 Adopted Operating Budget
- Updates to revenue, labor, non-personnel,
resource/production costs for General Fund and all
operating funds
- General Fund structural deficit remains
- No capacity for restorations, service expansion,
ongoing capital maintenance, reserve contributions
- Unknown impact of ongoing labor negotiations
• Small FY 2024/25 General Fund shortfall balanced with use of reserves; additional budget balancing actions FY 2023/24 and FY 2024/25 expected in next Biennial Operating Budget Adopted Operating Budget
• Limited budget actions supported by current year City of Santa Clara
savings
City of
Santa Clara
tho Controvastat
City Budget
City of Santa Clara Budget*
FY 2023/24 FY 2024/25 FY 2024/25
Fund Type Amended Budget
General Fund
Special Revenue Funds
Enterprise Funds 872,344,414
Internal Service Funds
Debt/Other*
Less (Transfers, Contributions, and Reserves)**
Subtotal Operating Budget $1,102,049,653 $1,127,113,314 $1,077,356,920 Capital Funds $657,486,151 $567,807,159
Less (Transfers, Contributions, and Reserves)**
Subtotal Capital Budget $565,988,844
Total Budget $1,756,347,599 $1,234,045,068 $1,643,345,764 Does not include the Stadium Authority Budget
** Adjusts for transfers, contributions and reserves to avoid double counting of the same funds (e.g., internal service funds are excluded)
City of
Santa Clara
The Center of Whats Possible
CIP Projects by Theme
2024/25 2025/26 Biennial Five-Year
Theme Budget Budget Budget CIP
Administrative Facilities $4,095,210 $310,000 $ 4,405,210 $4,405,210 Community Facilities 5,048,553 500,000 5,548,553 5,548,553 Convention Center 4,426,973 4,426,973 4,426,973
Electric Utility 381,349,796 304,154,500 685,504,296 915,168,496 Other Community Projects 10,155,928 5,411,998 15,567,926 28,356,945 Parks and Trails 22,359,260 2,158,838 24,518,098 29,018,098 Sewer Utility 44,498,871 22,216,632 66,715,503 157,575,724 Solid Waste 788,000 812,000 1,600,000 4,180,000
Storm Drain 9,387,028 1,934,750 11,321,778 13,121,778
Technology and Equipment 7,949,131 751,000 8,700,131 11,168,931 Transportation 68,362,528 14,470,938 82,833,466 123,918,142 Water and Recycled Water Utilities 9,385,881 6,225,000 15,610,881 29,510,881 TOTAL $567,807,159 $358,945,656 $926,752,815 $1,326,399,731 City of
Santa Clara
4 CIP Projects by Funding Source
All Other
Utilities Projects
(e.g. customer (e.g., General
service Fund; grant
charges), fundings, traffic
$1,106,435,101, mitigation fees,
83% MFA),
$219,964,630,
17%
City of
Santa Clara
The Contero What obe
General Fund Capital Projects Reserve
(CPR)
• General Fund CPR funded from CPR Funding in Five-Year CIP = $16.0 M excess revenues and expenditure
Storm Drain,
savings at the end of a fiscal year Parks and $ 4.7 M, 29.4% Trails, $ 0.9 M,
• Used to fund capital projects with no 5.6%
other funding source
Community Facilities,
• Current balance of $23.9 M proposed $ 1.6 M, 10.0% Technology & Equipment,
to be reduced by $15.0 M to $8.9 M; $ 2.7 M, 16.9%
additional $1.0 M funded from CPR
funds set aside in last CIP
Administrative
Facilities, $ 2.7 M,
• Address high priority needs across 16.9%
program areas Transportation,
$ 3.4 M, 21.2%
City of
Santa Clara
10 The Center of What's Possible
5 Unfunded Capital Needs
• Unfunded needs across several themes Five-Year CIP Unfunded Needs = $626 M* • Identified unfunded projects in CIP represent Community only a portion of the unmet/deferred Facilities, $ 211.6 M,
33.8%
infrastructure. Other needs include:
Administrative
- Storm Drain Master Plan - $290 million (in Facilities, $ 202.6 M, 2018 dollars) 32.4% Convention
Center,$ 15.8 M,
Santa Clara Bicycle Plan Update 2018- 2.5%
$39.3 million (in 2018 dollars)
- Santa Clara Pedestrian Master Plan - $194.0
Parks and Trails,
million (in 2019 dollars) $ 117.6 M, 18.8%
Americans with Disabilities Act Self-
Evaluation and Transition Plan (Draft- Transportation,
Storm Drain,
$ 32.4 M, 5.2%
$758.5 million (in 2024 dollars) Technology & $ 45.0 M, 7.2% - Public buildings (e.g., new City Hall, existing Equipment, City Hall, historic buildings, corporation yard) $ 1.2 M, 0.2% * $624 M General Fund need City of
Santa Clara
The Center of What's Possible
FY 2024/25 Operating Budget
Amendments
• FY 2023/24 and FY 2024/25 Adopted Operating Budget approved June 2023 • FY 2024/25 Operating Budget amendments necessary to:
- Update revenue estimates for the General Fund and other funds - Make adjustments to account for updated labor and non-personnel costs in the General Fund and other funds
- Update resources and production costs in Enterprise Funds - Update positions to reflect adjustments and reclassifications • Described in the Appendices section of the Proposed Budget City of
Santa Clara
The Center of What's Possible
6 General Fund Budget Actions
• Use of the Budget Balancing Reserve ($0.4 M) and the Budget Stabilization Reserve ($0.5 M) addresses the FY 2024/25 General Fund shortfall of $0.9 M • Limited budget actions using current year savings to support key areas:
- Police Park Patrols: adds reserve officer funding of $230,000 for parks patrols on weekdays from 3 p.m. to 11 p.m., Saturdays from 7 a.m. to 8 p.m., and Sundays from 11 a.m. to 7 p.m. - Library Hours: adds four hours of library service at Central Park Library on Sundays - Senior Center Trips: restores funding for approximately 10 local trips annually that would be partially offset by revenue; the net cost is estimated at $13,100 • Structural Deficit remains - Additional budget balancing actions expected in next FY Biennial Operating Budget (June 2025) to address projected General Fund shortfalls City of
Santa Clara
The Center of What's Possible
Amendments to the Proposed
Budget
City of
14 Santa Clara
7 Amendments to the Proposed Budget
• Attachment 2 to the RTC
• Capital project carryovers from FY 2023/24
• Limited operating carryovers (e.g., Commerce Plaza maintenance/repairs, City Council initiatives) and other adjustments to reflect revised revenues/expenditures • Actions occurring after development of the Proposed Budget:
- Grant funding agreement with the 49ers ($200 K annual allocations) - Convention Center Developer Contribution/Santa Clara Convention Center Assessment project ($550 K allocation as outlined in the contract extension with OVG) - Updates to the San José - Santa Clara Regional Wastewater Facility costs - Addition of 1.0 Assistant Director of Electric Utility - Elimination of the Downtown Parking Maintenance District assessments - Housing and Urban Development Annual Action Plan Updates City of
Santa Clara 15
Responses to May 7th and June 4th
Study Session Questions
City of
16 Santa Clara
8 May 7th Study Session Responses
Question: What is the difference between Response: The $45 million is a subset of the $290 million in the the $45 million of unfunded Storm Drain Storm Drain Master Plan and reflects the most urgent needs over the projects listed in the CIP and the five-year CIP cycle. Given the size of the needs, they are phased in unfunded projects in the Storm Drain with only a portion reflected based on urgent needs identified over Master Plan of $290 million? the five-year CIP period.
Question: Will the potential bond get the Response: The City is evaluating a $598 million bond. While that City through the $626 million of unfunded would not address all unfunded projects, it would make a sizable needs? Please reconcile the timing of the dent. This would be a substantial investment and provide dedicated bond (30-year bond vs. five-years of one-time funding to address the City's capital needs. unfunded needs). If voters approve a bond measure, the dollar amount would be issued in phases to align with the capital project delivery schedules; projects are expected to be delivered over three to eight years. Typically, the bond issuances have a term of 30 years, allowing the projects to be paid off over time.
City of
Santa Clara
June 4th Study Session Responses
Question: Does the budget reflect the Response: The budget assumes the base rent and the majority of $20 M in settlement funds from the 49ers the senior/youth fees. The budget does not assume $17.4 million and do we still have a deficit? expected over the next two years. One-time funds of $7.1 million from prior year performance rent is expected in FY 2024/25 and will be brought forward for appropriation. The remaining $10.3 million represents estimated amounts to be received after the close of the Stadium Authority budget in FY 2024/25 and FY 2025/26. The actual amounts received will be incorporated into future budgets. This revenue stream is not expected to fully offset the deficit.
Question: The General Fund grew 6% Response: Approximately one-half of the increase was the result of from the FY 2024/25 Adopted to the FY increases in the cost of delivering services (e.g., salaries, retirement, 2024/25 Amended. What were the drivers health, interfund services) while the remaining half was the result of of that increase? higher transfers from the General Fund Capital Projects Reserve to various capital funds to support capital projects in the CIP. Revenue growth was sufficient to offset almost all the increases in cost with the use of $0.9 million in reserves to balance the budget.
City of
Santa Clara
The Center of Whath Possible
9 June 4th Study Session Responses
Question: The June 4th Study Session Response: The "Cumulative Shortfall/Surplus" label should have presentation (slide 8) included a General read "Shortfall/Surplus" as the amount is not cumulative. It is the Fund Forecast slide that showed projected revenues less the projected expenditures. The City "Cumulative Shortfall/Surplus." Is it continues to have a projected deficit in each year of the Ten-Year cumulative? Forecast.
Question: The Convention Center capital Response: Convention Center operating profits are used to program needs are meant to be funded by the some improvements at the Convention Center. The unfunded needs Convention Center operating profits. The of $15.8 million would ideally be funded by additional operating June 4'h Study Session presentation (slide profits. If operating profits are not sufficient to fund those needs, other 25) shows Convention Center unfunded sources would need to be identified, especially for urgent needs. The CIP need of $15.8 million. Does funding General Fund is assumed as the other potential funding source. for those projects come from the
Convention Center operations or the
General Fund?
City of
Santa Clara
19 June 4th Study Session Responses
Question: The lawn bowl facility has Response: The cost of a lawn bowl facility is preliminarily estimated $175,000 allocated, what additional funds at approximately $1.0 million, leaving a funding gap of $825,000. This are needed to bring this back? cost is based on an initial assessment from 2018 that has been escalated along with contingency to address the project scope. This figure would need to be refined based on the final project scope.
Question: Can we see a breakdown of Response: A preliminary breakdown of project funding by category the costs and specific projects that would (e.g., public safety, street repair and transportation, parks and be funded by a bond on the ballot community facilities) is under development and will be brought measure? forward for City Council consideration as part of the potential General Obligation Bond Fund discussion. If a bond is approved, a detailed project listing would be developed and brought forward on a regular basis to Council and an advisory board. Those specific projects would be budgeted in a separate fund specifically created for the bond projects and incorporated into future budgets.
City of
Santa Clara
The Center of What's Possible 20
10 June 4th Study Session Responses
Question: How much of the International Response: The unfunded projects list includes a placeholder of $44 Swim Center (ISC) cost is included in the million for the ISC project that is expected to be updated upon the roughly $600 million of unfunded approval of a project scenario. The Parks and Recreation Department projects? $1 million is set aside for ISC, is developing a number of project scenarios for City Council but what else is included? consideration. Limited project funding is budgeted, including new funding of $1.0 million in the Proposed Budget and existing funding of $0.9 million, for total project funding of $1.9 million.
Question: When will the Economic Response: While a date has not been set, the City Manager's Office Development and Marketing expects to schedule the Economic Development and Marketing Subcommittee resume its meetings? Subcommittee meetings later in FY 2024/25.
Question: How much would a rainbow Response: The preliminary estimate for the cost of a rainbow crosswalk in Santa Clara cost? crosswalk is $100,000. If funded, this figure would be refined based on the location and scope of the project.
City of
Santa Clara
21 The Center of What's Possible
FY 2024/25 Appropriations
Limit (Item# 6.B)
City of
22 Santa Clara
11 FY 2024/25 Appropriations Limit
• In compliance with Propositions 4 (Gann Initiative) and 111 (Spending Limitation Act of 1990), State constitution limits the amount of revenue that can be spent by governmental agencies
• Beginning with FY 1990/91 appropriations limit, cities can use the following as an adjustment factor:
- Annual growth in City's population or County's population - Annual growth in California per capita income or non-residential assessed valuation • FY 2024/25 calculation used the County's population growth and the California per capita income
• The calculation limits the City from receiving more than $651.4 million in tax-based revenues in FY 2024/25
• The revenue subject to the appropriation limit totals $235.4 million or 36.14% of the limit City of
Santa Clara 23
The Center of Whats Possib
Recommendations
City of
24 Santa Clara
12 Recommendations - Agenda Items 6A and 6B
Agenda Item# 6.A - Budget Adoption
1. Approve the Proposed FY 2024/25 and FY 2025/26 Biennial Capital Budget, including the recommended revisions detailed in Attachment 2 (Majority Affirmative Council Votes Required)
2. Approve the FY 2024/25 Operating Budget changes included in the recommended revisions detailed in Attachment 2 (Five Affirmative Council Votes Required)
3. Approve the Appropriation Schedule for capital funds totaling $567,807,159 in FY 2024/25 and $358,945,656 in FY 2025/26 and the FY 2024/25 Appropriation Schedule for operating funds totaling $1,494,223, 189 as detailed in Attachment 3 (Majority Affirmative Council Votes Required)
4. Approve the Housing Authority FY 2024/25 expenditure budget of $468,931 as presented in the Operating Budget (Majority Affirmative Council Votes Required)
5. Approve the Sports and Open Space Authority FY 2024/25 expenditure budget of $10,200 as presented in the Operating Budget (Majority Affirmative Council Votes Required) City of
Santa Clara 25
The Center of What's Possible
Recommendations - Agenda Items 6A and 6B
Agenda Item# 6.B - Appropriation Limit
1. Adopt a Resolution establishing the City's FY 2024/25 appropriations limit of $651,370,972
City of
Santa Clara
The Center Whats Possible
13 Questions and Answers
City of
27 Santa Clara
The CateriN PMON
City Council Meeting
Item # 6.A
TATIA CLARA CATA Public Hearing: Adoption of
the Proposed FY 2024/25 & FY
2025/26 Biennial Capital
Improvement Program Budget
and FY 2024/25 Operating
Budget Changes
1852
THE MISSION CIT Item # 6.B
Establish the City's Fiscal Year
2024/25 Appropriations Limit
June 25, 2024
14