City Council:
Sandra Lowe, Mayor
John Gurney, Vice Mayor
Jack Ding
Patricia Farrar-Rivas
Ron Wellander
This meeting will be conducted in person only with no virtual public participation. Members of the public are encouraged to attend the meeting and make public comment.
Emails will continue to be accepted; however, they will not be read aloud at the meeting.
This meeting will not be live streamed; however, the meeting recording will be available after the meeting on the City's CivicWeb Portal (sonomacity.civicweb.net) and YouTube Channel.
SPECIAL MEETING OF THE SONOMA CITY COUNCIL
Emergency Operations Center, 175 First Street West
Tuesday, May 30, 2023
12:00 p.m. Special Meeting
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AGENDA
Be Courteous - TURN OFF your cell phones and pagers while the meeting is in session.
NOTICE: Mayor Sandra Lowe has called the City Council into a Special Meeting to discuss only the matters stated on the agenda listed below.
PUBLIC COMMENT AT SPECIAL MEETING: Members of the public shall have the opportunity to address the City Council concerning any item listed on the agenda during consideration of that item, when the Mayor opens public comment. No other items may be discussed at this special meeting.
Page
1. CALL TO ORDER
2. STUDY SESSION
2.1: Review, Discussion, and Direction Regarding the Proposed FY 2023/24 Operating General Fund Budget, Capital Improvement Plan, and Other CityWide Fund Budgets for the City of Sonoma (David Guhin, City Manager & Chuck McBride, Interim Finance Director)
RECOMMENDATION: Discussion and direction.
Agenda Report - FY 2023/24 Budget Study Session - Pdf
2 - 92
3. ADJOURNMENT
I do hereby certify that a copy of the foregoing agenda was posted on the City Hall bulletin board legally required.
Rebekah Barr, MMC, City Clerk/Executive Assistant.
*********************************************************************************************************************************** Copies of all staff reports and documents subject to disclosure that relate to any item of business referred to on the agenda are normally available for public inspection the Wednesday before each regularly scheduled meeting at City Hall, located at No. 1 The Plaza, Sonoma CA. Any documents subject to disclosure that are provided to all, or a majority of all, of the members of the City Council regarding any item on this agenda after the agenda has been distributed will be made available for inspection at the City Clerk’s office, No. 1 The Plaza, Sonoma CA during regular business hours.
If you challenge the action of the City Council in court, you may be limited to raising only those issues you or someone else raised at the public hearing described on the agenda, or in written correspondence delivered to the City Clerk, at or prior to the public hearing.
In accordance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting, please contact the City Clerk (707) 933-2216. Notification 48-hours before the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting.
City of Sonoma
Agenda Item Summary
Meeting: Special City Council - 30 May
2023
Department
Administration
Staff Contact
David Guhin, City Manager
Chuck McBride, Interim Finance Director
Agenda Item Title
Review, Discussion, and Direction Regarding the Proposed FY 2023/24 Operating General Fund Budget, Capital Improvement Plan, and Other City-Wide Fund Budgets for the City of Sonoma
Summary
The FY 2023-24 Proposed Operating and Capital Improvement Project (CIP) Budget is a document that strives to align City goals with available resources in the coming year. The coming year will offer some financial challenges to the City, and the proposed budget seeks to navigate those challenges in a way that preserves services and improves our infrastructure.
The purpose of this meeting is to provide the Council with an overview of the current fiscal environment, an overview of the citywide financial condition, and proposals for staffing and funding departments and allocation of resources to capital projects. More detailed information is contained in the Supplementary Report and attachments and in the presentation provided.
Recommended Council Action
Discussion and direction.
Attachments
Supplemental Report
Citywide Revenues
Citywide Expenditures
Capital Improvement Plan
FY 2023/24 Budget Presentation
Agenda Item #2.1:
SUPPLEMENTAL REPORT
FY2023-24 BUDGET DISCUSSION
For the City Council Meeting of May 30, 2023
General Fund Revenues
General Fund revenues for FY 2023-24 are projected to decrease by five percent, overall, compared to the forecast for the current year. Major revenue sources are expected to grow moderately from present levels, despite expected economic headwinds at the national and local levels.
Transient Occupancy Tax (TOT) is expected to increase in line with average daily rates.
Property tax revenue is expected to grow in line with the maximum Proposition 13 cap of two percent per year.
Sales tax revenue for the City is expected to outpace statewide projections provided by HdL, primarily due to continuing inflationary pressures on consumer goods. The supplemental half percent sales tax, approved by voters, is expected to increase by 4.5 percent, based on data provided by HdL. The difference in growth when compared to the baseline sales tax is likely due to timing differences in receipts from Measure V.
Fees & Charges for Service are those revenues generated for city services, primarily to developers. This revenue source is expected to decrease moderately in FY 2023-24 as permitting activity tapers slightly compared to the current fiscal year. Franchise taxes, collected from entities such as utilities, are expected to grow by 8 percent based on existing contracts.
Business license tax is expected to increase by a modest 2 percent.
A major portion of the overall drop in revenues is attributed to the loss of funding from the American Rescue Plan Act (ARPA) that provided two years’ worth of funding to governments to combat the effects of the COVID pandemic.
Finally, Other Revenues are expected to drop by a little over $450,000, primarily due to a grant that was budgeted in the previous fiscal year that may have been a one-time increase. Other Revenues were forecast at $1.65 million in the FY 2021-22 budget. Other Revenues includes such sources as donations, small grants, and transfers into the General Fund.
Revenue Type FY 2022-23 Budget FY 2023-24 Budget Change (%) Transient Occupancy Tax (TOT) $6,359,254 $6,518,236 2.5% Property Taxes $4,951,750 $5,050,785 2.0%
Sales Tax (General, Public Safety) $3,888,829 $3,972,363 2.1% MeasureV Local Sales Tax $2,887,770 $3,016,419 4.5%
EMS - Ambulance Billing Revenue $2,275,000 $2,275,000 0.0% Fees & Charges for Services $1,016,431 $982,297 -3.4%
Franchise Tax $533,159 $575,812 8.0%
Business License Tax $380,000 $387,600 2.0%
Federal Grants (ARPA) $1,318,588 $0
Other Revenues $1,904,166 $1,448,330 -23.9%
Total Revenues $25,514,948 $24,226,842 -5.0%
Agenda Item #2.1:
General Fund Expenditures
General Fund expenditures for services provided by the City are forecasted to increase by four percent in FY 2023-24, compared to the amended budget for the current year.
Personnel costs include salaries and benefits for full-time and part-time employees, as well as the normal cost for the defined benefit retirement plan (CalPERS), health and dental benefits, and worker compensation costs.
Salaries have increased by one percent compared to the FY 2022-23 amended budget.
However, salaries increased by approximately 6.7 percent compared to the FY 2022-23 adopted budget due to the effects of negotiated MOUs with the City’s bargaining units. Benefit costs increased by approximately eight percent, primarily driven by increasing costs in employee health insurance.
Contributions to CalPERS, based on normal cost, remained essentially flat and may decrease in future years as new employees often fall under the PEPRA tier, which offers a more cost advantageous benefit. The Unfunded Accrued Liability (UAL) for the defined benefit pension plan decreased marginally for the coming budget year, due to CalPERS’ positive investment gains.
The FY 2023-24 budget also incorporates staffing changes as depicted in the chart below.
Description
FY 22-23
Adopted
Budget
FY 22-23
Amended
Budget
FY 23-24
Proposed
Budget
$ Change FY23-
24 Proposed
Budget to
FY22-23
Amended
Budget
% Change FY23-
24 Proposed
Budget to FY22-
23 Amended
Budget
Personnel Costs 4,634,618 4,845,872 5,002,595 156,722 3% PERS UAL 1,329,412 1,329,412 1,327,620 (1,792) 0%
Prof Services 1,210,262 1,463,762 1,315,420 (148,342) -10% Police Contract 5,089,745 5,089,745 5,344,529 254,784 5% SVFRA Contract 6,241,038 6,376,368 6,773,055 396,687 6% Operating Costs 4,884,163 4,940,330 5,282,376 342,046 7% Transfers to CIP 240,000 240,000 280,000 40,000 17%
TOTAL OPERATING EXPENDITURES 23,629,239 24,285,490 25,325,595 1,040,104 4% Agenda Item #2.1:
Professional Services decreased by 10 percent in the FY 2023-24 budget. Much of this decrease is due to expiration of one-time costs, such as the City Manager recruitment and a decrease in the City Clerk budget for elections costs.
The Police contract, entered into with the Sheriff’s Office in 2004, is increasing by five percent in the coming year, based on increasing labor costs.
The SVFRA contract for Fire services is increasing by six percent and is composed of two elements. The contract obligation, which cost approximately $6.3 million, and an additional cost of $490,000 for additional Fire personnel. A three-year SAFER grant, which funded a portion of the three additional Fire personnel, sunsetted with the 2022/2023 fiscal year.
Operating costs increased by seven percent, based on a myriad of drivers. Insurance costs are rising, statewide, and the City is seeing marked increases for property insurance and workers compensation insurance – 20 percent and 16 percent, respectively. The proposed 2023/24 budget for Operating costs also includes an additional $260,000 for homeless services.
Transfers to Capital Improvement Projects (CIP) vary from year to year based on programmed capital work.
General Fund Overview
Based on projected revenues and the FY 2023-24 budget, the General Fund is expected to end the budget year with a deficit.
Fortunately, the City had pursued a healthy reserve policy that allows it to weather the projected deficit. At June 30, 2023, the General Fund reserve level is $11.7 million, of which $1.1 million will be used to support budgeted expenses in FY 2023-24.
Revenues $24,226,842
Expenditures $25,325,595
Surplus/(Deficit) ($1,098,753)
FY 2023-24 General Fund Budget
Agenda Item #2.1:
Citywide Budget
Consolidated citywide revenues for FY2023-24 were $44.5 million and citywide expenditures were $42.6 million. Attached schedules give detailed views of revenues and expenditures for all funds.
Agenda Item #2.1:
CITYWIDE REVENUES
Fund Revenue Category
FY 20-21
Actuals*
FY 21-22
Actuals*
FY 22-23
Adopted Budget
FY 22-23
Amended
Budget
FY 22-23
Projected
Actuals*
FY 23-24
Proposed Budget
$ Change FY23-
24 Proposed
Budget to FY22-
23 Amended
Budget
% Change FY23-
24 Proposed
Budget to
FY22-23
Amended
Budget
100 GENERAL 19,697,930.05 24,746,820.02 25,514,947.77 25,514,947.77 25,238,065.33 24,226,842.39 (1,288,105.38) -5%
ENTERPRISE
510 Water Utilities 5,646,807.94 5,914,421.91 6,579,462.00 6,579,462.00 5,975,272.36 6,573,500.00 (5,962.00) 0% 501 Cemeteries 296,948.30 253,183.62 342,373.09 342,373.09 230,421.82 316,923.00 (25,450.09) -7% 504 Cemetery Endowment 39,402.30 49,498.68 40,620.00 40,620.00 29,430.55 39,120.00 (1,500.00) -4% 521 EMS - Equip Replacement 132,341.94 - 2,500.00 2,500.00 2,500.00 2,500.00 - 0%
INTERNAL SERVICE
601 Mgmt Info Systems 233,248.82 342,182.00 425,982.00 425,982.00 400,405.09 488,630.00 62,648.00 15% 603 Vehicle Replacement 189,085.50 351,951.43 398,924.00 398,924.00 339,985.00 332,289.00 (66,635.00) -17% 610 L/T Bridge Maint 184,808.37 314,635.00 303,672.00 303,672.00 268,792.36 312,380.00 8,708.00 3% 614 Computer Loan 46.29 - - - - - -
SPECIAL REVENUE
202 Public Education & Gov't (PEG) 32,551.97 44,721.47 55,200.00 55,200.00 44,426.67 59,061.00 3,861.00 7% 217 SLESF COPS Grant 129,758.88 67,898.56 102,000.00 102,000.00 82,744.00 102,000.00 - 0% 240 Abandoned Vehicle 2,932.47 - - - - - -
302 Gas Tax 251,537.23 265,478.37 325,924.00 325,924.00 256,453.20 267,139.05 (58,784.95) -18% 303 Road Maintenance SB1 204,645.39 219,219.51 250,209.00 250,209.00 211,865.33 250,209.00 - 0% 313 Transportation Measure M Funds 102,417.46 85,475.98 111,700.00 111,700.00 130,294.00 112,144.00 444.00 0% 314 Parks-in- Lieu Fees/Quimby Act 41,467.49 - - - - 50,000.00 50,000.00 315 Parks Measure M Funds 141,104.95 120,293.76 157,570.00 157,570.00 113,365.33 158,200.00 630.00 0% 316 Parks Proposition 68 Funds - - 185,015.00 185,015.00 185,015.00 185,015.00 - 0% 732 Housing Trust Fund 235,690.02 559,978.36 509,872.00 509,872.00 415,289.45 522,600.00 12,728.00 2% 796 IGT Fire 984,381.37 486,018.09 500,000.00 500,000.00 1,134,934.00 500,000.00 - 0%
AGENCY FUNDS
391 Successor Agency 3,235,909.29 2,997,485.00 2,650,427.00 2,650,427.00 2,605,247.00 2,650,427.00 - 0% 704 Alcalde Trust - - - - - -
DEBT SERVICE FUNDS
495 2008 CREB Bonds 41,748.96 - 41,749.00 41,749.00 41,749.00 41,749.00 - 0% 498 2012 Pension Oblication Bonds 402,894.26 - - - - - - 630 Grants Restricted - - 1,102,743.00 1,102,743.00 190,760.00 3,200,000.00 2,097,257.00 190%
CAPITAL PROJECTS FUNDS
301 City - CIP 20,857.91 28,288.28 1,235,943.00 1,235,943.00 601,200.00 3,496,810.00 2,260,867.00 183% 304 Parks & Facilities CIP 118.07 - 130,000.00 130,000.00 130,000.00 85,000.00 (45,000.00) -35% 512 Water - CIP 204,921.01 22,405.09 545,250.00 545,250.00 61,863.60 477,750.00 (67,500.00) -12% Revenue Total (Unaudited) 32,453,556.24 36,869,955.13 41,512,082.86 41,512,082.86 38,690,079.10 44,450,288.44 2,938,205.58 7% Agenda Item #2.1:
CITYWIDE EXPENDITURES
Fund Expenditure Category
FY 20-21
Actuals*
FY 21-22
Actuals*
FY 22-23
Adopted Budget
FY 22-23
Amended
Budget
FY 22-23
Projected
Actuals*
FY 23-24
Proposed Budget
$ Change FY23-
24 Proposed
Budget to FY22-
23 Amended
Budget
% Change
FY23-24
Proposed
Budget to
FY22-23
Amended
Budget
100 GENERAL 19,926,891.16 20,741,654.17 23,629,238.68 24,285,490.14 23,281,527.98 25,325,594.52 1,040,104.38 4%
ENTERPRISE
510 Water Utilities 5,090,100.14 3,760,632.45 6,459,543.84 6,547,760.89 4,644,770.40 6,555,949.92 8,189.03 0% 501 Cemeteries 359,442.29 356,775.96 483,145.70 527,533.72 347,493.82 509,532.85 (18,000.87) -3%
INTERNAL SERVICE
601 Mgmt Info Systems 217,000.29 309,180.48 551,930.00 551,930.00 364,642.91 542,393.00 (9,537.00) -2% 603 Vehicle Replacement 297,907.76 236,496.60 536,000.00 536,000.00 236,000.00 536,000.00 - 0% 610 L/T Bridge Maint 0
SPECIAL REVENUE
202 Public Education & Gov't (PEG) 60,383.69 22,018.52 55,000.00 55,000.00 46,753.33 59,061.00 4,061.00 7% 217 SLESF COPS Grant 100,000.00 - 102,100.00 102,100.00 82,744.00 102,100.00 - 0% 302 Gas Tax 135,359.44 14,465.02 300,000.00 272,322.00 199,226.40 510,000.00 237,678.00 87% 303 Road Maintenance SB1 - 24,314.37 249,009.00 249,009.00 347,624.73 350,000.00 100,991.00 41% 313 Transportation Measure M Funds 151,681.50 - 100,000.00 100,000.00 81,420.00 130,000.00 30,000.00 30% 314 Parks-in- Lieu Fees/Quimby Act 76,989.08 15,845.14 - - 84,899.00 50,000.00 50,000.00 315 Parks Measure M Funds 26,591.90 36,477.37 155,000.00 155,000.00 66,735.60 157,000.00 2,000.00 1% 316 Parks Proposition 68 Funds - 52.50 185,015.00 185,015.00 185,015.00 185,015.00 - 0% 521 EMS Equipment Replacement - 80,321.85 79,500.00 156,519.00 171,403.64 - (156,519.00) -100% 630 Grants Restricted 1,102,743.00 1,102,743.00 501,000.00 715 Pool Scholarships - - 25,000.00 25,000.00 25,000.00 25,000.00 - 0% 732 Housing Trust Fund 5,000.00 - - 2,758.83 2,758.00 - (2,758.83) -100% 796 IGT Fire 1,108,483.00 - 861,800.00 861,800.00 975,627.27 861,800.00 - 0% 798 SVFRA 11,013,608.29 9,844.77 - - 4099 - -
504 Cemetery Endowment 50,000.00 - 50,000.00 50,000.00 50,000.00 50,000.00 - 0%
AGENCY FUNDS
391 Successor Agency 1,959,962.36 1,850,631.84 2,630,651.53 2,630,651.53 1,712,514.00 2,630,651.53 - 0%
DEBT SERVICE FUNDS
495 2008 CREB Bonds 41,748.96 41,748.96 41,749.00 41,749.00 41,749.00 41,749.00 - 0% 498 2012 Pension Oblication Bonds 410,983.33 - - - - - -
CAPITAL PROJECTS FUNDS
301 City - CIP 5,706.16 468,778.79 230,000.00 230,000.00 436,640.73 3,470,610.00 3,240,610.00 1409% 304 Parks & Facilities CIP 25,220.00 53,772.41 120,000.00 120,000.00 18,426.00 85,000.00 (35,000.00) -29% 512 Water - CIP 1,269.34 856,147.55 467,500.00 467,500.00 10,299.60 400,000.00 (67,500.00) -14% Expenditure Total (Unaudited) 41,064,328.69 28,879,158.75 38,414,925.75 39,255,882.11 33,918,370.40 42,577,456.82 3,321,574.71 8% Agenda Item #2.1:
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