Town of Yountville
Staff Report
6550 Yount Street
Yountville, CA 94599
Agenda Item #: {{section.number}}A
Yountville Town Council Staff Report
DATE: May 21, 2024
TO: Mayor and Town Council
FROM: Brad Raulston, Town Manager; Celia King, Administrative Service Director PREPARED BY: Celia King, Administrative Service Director
RECOMMENDATION
Consider Adoption of Resolution Number 24-4270 adopting the Biennial Budget for Fiscal Year 2024/2025 and 2025/2026, Appropriations (Gann) Limit for Fiscal Year 2024/2025, Salary Ranges and Existing Policies (General Finance Policy, Town Investment Policy, Use of Long-Term Debt Policy, OPEB Trust Investment Policy, Utility Enterprise Rate Policy, Use of Drought Water Reserve Policy) and revised Fund Balance Policy.
DISCUSSION/BACKGROUND
The Town’s Management Team began work on the budget in December 2023 with budget planning and discussions, preparing salary/benefit projections, developing preliminary revenue and expenditure estimates, and entering budget requests into the Town’s OpenGov budgeting software.
On February 6, 2024, budget parameters and assumptions were introduced to the Town Council for feedback and direction. Staff continued to work on developing and compiling the budget and each department presented their budget requests to the Town Manager for review and approval before presentation to the Town Council.
This is the Town’s first Biennial Budget which includes revenue and expenditure estimates for two fiscal years rather than one. Therefore, the proposed budget reflects revenue and expenditure projections for both Fiscal Year (FY) 2024/2025 and FY 2025/2026. This report will focus on data for upcoming FY 2024/2025.
Staff presented the proposed Biennial Budget for Town Council to review and discuss at two budget workshops.
Budget Workshop #1 held on April 16, 2024 included General Fund revenues, all General Fund department expenditures, contributions to the OPEB and PERS UAAL Trusts, as well as expenditures for Non-Capital Special Revenue Funds, Custodial Fund, and Debt Service funds. Budget Workshop #2 was conducted on May 7, 2024 and focused on the Water and Wastewater Utility Enterprise Funds, and all Capital Projects Funds.
At the regular May 7, 2024 meeting the Town Council approved a revised Fund Balance Policy that consolidated two reserve funds into one. The Emergency Reserve Fund (04) and Unanticipated Tourism Revenue Deficits Reserve Fund (05) were combined into the new General Fund Reserve (07). The new reserve is set by policy at a minimum of 35% of General Fund expenditures. In both fiscal years presented in the proposed Biennial Budget, this reserve is meeting and exceeding this minimum target.
In the Biennial Budget, the General Fund maintains established core levels of service with a focus on initiatives identified at the January 30, 2024 Town Council Goal Setting Session. The Biennial Budget not only provides for the costs of existing employee salaries and benefits but includes one new and two reinstated positions to ensure the Town’s capacity to continue providing high quality services. As the Town was able to purchase the former Yountville Elementary School property in April 2024, the Biennial Budget is forward looking in regard to anticipating increased buildings and grounds maintenance and community-based services and programs. The General Fund also accommodates contractual cost increases for public safety and animal shelter services, and continues the Town’s investment in technology, infrastructure, and reserves.
The following are a few of the notable outcomes of the Town’s Biennial Budget with a focus on FY 2024/2025:
Total Expenditure Budget for FY 2024/2025 including General Fund, Enterprise Funds, Special Revenue Funds, Capital Projects, and Debt Service: $29,183,983.
Total General Fund Revenue for FY 2024/2025 projected at: $14,899,756 with the following three sources as the most significant to the Town’s ability to provide services.
Transient Occupancy Tax (TOT), 59% of the General Fund Revenue, is projected at $8,875,600. This estimate is based on the revenue trends emerging from the prior and current fiscal years and the expectation that tourism in Yountville will remain stable.
Sales Tax, 12% of General Fund revenue, is projected at $1,737,000. Approximately 70% of the Town’s sales tax revenue is derived from the many successful restaurants and tasting rooms in Yountville. This estimate was lowered slightly from what was originally presented in the Budget Parameters and at Budget Workshop #1 based on revised revenue estimates received on April 19, 2024 from HdL, the Town’s sales tax auditing firm.
Property Tax, 18% of General Fund revenue, is projected at $2,679,300 based on prior year actuals, year-to date property tax revenue received in the current fiscal year, and a growth factor of 2% which is the maximum inflation allowed per the State Board of Equalization Property Tax Division.
Total General Fund Expenditures for FY 2024/2025 (not including transfers) projected at: $13,155,860. Of this amount, 62% is attributed to costs in Public Safety, Public Works, Parks and Recreation and the remaining 38% attributed to the following General Government departments: Town Council; Non- Departmental; Information Technology; Community Promotion; Town Manager; Finance and Human Resources; Risk Management; Town Attorney; Town Clerk and Communications; and Planning.
Along with other routine operating costs, the Town’s Biennial Budget includes:
o 10% estimated increase for medical benefits.
o Funding for 36 full-time positions as well as seasonal/part-time positions. o $931,920 for PERS Normal Costs and Unfunded Actuarially Accrued Liability. o Worker’s Compensation ($136,627), Property ($122,520) and Liability ($336,481) Insurance premiums allocated to departments.
The General Fund budget includes the following fund balance allocations:
o Committed for Insurance & Claims Retention (minimum requirement $30,000):
$50,000
o Assigned for Budget and Legal Contingencies: $657,793 (5% of budgeted General Fund expenditures)
o Assigned for Leave Buyout: $160,000
o Assigned for Workers Compensation Self Insured Retention: $20,000 General Fund Reserve Fund Balance at the end of FY 2024/2025 is estimated to be $4,935,729. o This balance represents 38% of Fiscal Year 2024/2024 General Fund Expenditures. o Of this amount, 20% ($987,146) is categorized as available for Emergency use as defined in the Yountville Municipal Code.
o The remaining balance in the fund ($3,948,583) is categorized as available for Contingency use.
Enterprise Funds:
The Water and Wastewater Utility Enterprise Funds budgets account for revenues collected for providing services as well as expenditures relative to operating, and capital projects.
The Water Utility Operations Fund (61) is projected to end FY 2024/2025 with a fund balance of approximately $74,000. This estimation is contingent upon the annual water purchase and wastewater treatment cost true-up conducted with the Veterans Home at the close of the current fiscal year.
Activity in the Water Utility Capital Improvements Fund (60) for FY 2024/2025 includes $120,000 budgeted for the Webber Street Inter Tie Project, $100,000 to replace a utility truck, and $250,000 for lateral lead testing and assessment. Total project costs for this fund are estimated to be $733,500. This fund is supported by transfers in from the Water Utility Operations Fund (61) and will also receive a transfer in from the Utility Enterprise Capital Projects Restricted Fund 06 in both fiscal years of the Biennial Budget. The total transfers coming from Utility Enterprise Capital Projects Restricted Fund 06 over the two fiscal years is $725,000.
The Wastewater Utility Operating Fund is projected to end with a positive fund balance of $188,644 at the end of FY 2024/2025, after accommodating transfers and covering operating expenses. This estimation is also contingent upon the annual water purchase and wastewater treatment cost true-up conducted with the Veterans Home at the close of the current fiscal year. The Wastewater funds continue to budget necessary debt payments for the State Water Resources Loan, and a portion of the 2020 Direct Placement Financing related to the Madison & Yount Sewer Replacement project.
In FY 2024/2025, the Wastewater Treatment Capital Fund 63 includes costs for the continuation of two large projects, the Wastewater Reclamation Facility (WRF) Office Modifications ($1,960,000), and the Emergency Recycled Water Transmission Main Repair ($1,724,000). The Town anticipates that some federal grant funding in the form of a low interest USDA loan and insurance reimbursement will help to cover these costs. Other large projects include the WRF Component Assessment & Repair Plan ($400,000) and Cleaning the Digester ($150,000).
In January 2024, the Town implemented the second year of the five-year utility rate schedule adopted in 2022.
It is expected that the rate schedule will eliminate the gap between expenditures over revenues and ensure that utility operations are able to remain self-sustaining. It is adopted Town Council policy that the General Fund does not subsidize the cost of water and wastewater utility service. As the January 2025 scheduled rate increaseas per the adopted rate study approaches, Town staff will bring back a review of the impacts of the current five-year utility rate schedule, to be able to better inform the Town Council about future revenue and expenditure projections.
Capital Projects:
The Town continues its commitment to invest in the capital infrastructure and maintenance for streets, parks, pathways, facilities, and flood control. All capital projects for the fiscal year are listed in the Capital Improvement Program section of the budget and have been included in the Capital Projects Fund, Gas Tax Fund, Water Capital Fund, Wastewater Collection System Capital Fund, Wastewater Treatment Capital Fund, SB1 Fund , and Measure T Fund.
The Town’s Capital Improvement Program for FY 2024/2025 includes costs totaling $8,587,847 for projects. Of this amount, $733,500 is applicable to Water Utility Enterprise projects, $4,902,500 is for Wastewater Utility Enterprise projects, and the remaining $2,951,847 is related to General Fund and Special Revenue supported projects.
The acquisition of the former Yountville Elementary School property has now been completed. Capital Projects Fund 50 and Measure S Workforce and Affordable Housing Fund 71 include a total of $1,000,000 in funding for the interim uses and future planning.
Town staff will continue to pursue grant opportunities to help support Capital Projects Fund 50, as well as focus on infrastructure project grants for the water and wastewater utility capital funds to reduce potential rate payer costs.
Summary of changes from budget workshops:
o Per Town Council request, increased Elections cost by $4,200 in the Town Clerk Department to cover candidate statement translations.
o Based on Town Council feedback, increased Community Promotions budget by $20,000 to be used for the Town’s 60th anniversary celebration in 2025. o Removed Forester Lane ADA Improvements project from FY 2025/2026 and re-scheduled this project for FY 2026/2027 once Mobility Plan has been completed. o Reduced Utility Undergrounding project costs to $45,000 in FY 2024/2025 for engineering and design and pushed remaining projects costs to FY 2026/2027. o Reduced transfer into Capital Projects Fund 50 from Utility Undergrounding Impact Fee Fund 46 to $45,000 to match estimated project costs in FY 2024/2025.
Changes in addition to direction from budget workshops:
o Decreased Sales Tax revenue projections in General Fund by $43,000 in FY 2024/2025 and $27,400 in FY 2025/2026 based on lower revenue estimates received on April 19, 2024 from HdL, the Town’s sales tax auditing firm.
o Increased State COPS Grant revenue estimate in General Fund by $15,000 in FY 2024/2025 and $18,000 in FY 2025/2026 to more accurately reflect anticipated revenue based on current fiscal year collections.
o Increased Interest Income revenue estimate in General Fund by $5,000 in both fiscal years to more accurately reflect anticipated revenue based on current fiscal year collections. o Increased Sales Tax Public Safety revenue estimate in General Fund by $5,000 in both fiscal years to more accurately reflect anticipated revenue based on current fiscal year collections. o Revised Community Center Enhancement project costs reflect $92,000 in current FY 2023/2024, and $158,000 in FY 2024/2025 to accommodate purchases that need to be made prior to June 30, 2024.
o Renamed Vineyard Park Enhancement Project as Vineyard Park Repair and Maintenance to better represent actual project scope.
o Renamed New Path Church to Southern Loop Project as New Path Southern Loop Design. o Added $1,750,000 of revenue from insurance reimbursement in Wastewater Treatment Capital Recovery Fund 63 as a funding source for the Emergency Recycled Water Transmission Main Repair project upon receiving confirmation from the insurance claim representative of eligibility.
Additional Town Council discussions:
During the budget workshops, the Town Council discussed a few items of interest that are not included in the proposed Biennial Budget. Staff will bring back for future discussion and direction in the upcoming fiscal year. These items include:
• Yountville Green initiatives that support sustainability and resilience. • Analyzing current staffing levels, employee allocations, and salary and benefit costs. • Identifying opportunities to promote business and economic development.
Gann Limit:
In concert with the annual budget adoption process the Gann Limit calculations have been completed to ensure the Town is in compliance with and not exceeding the limit including its’ voter approved override. For the upcoming fiscal year, the Town is under the limit by 9.10%. Because this limit is driven by legislation governing the use of tax proceeds, staff has reviewed Article XIII B, California Constitution Government Spending Limit, and the League of California Cities 1991 Revenue Manual, to ensure all calculations were properly included.
Budget Completion:
On or before July 1, the final adopted budget document will be available on the Town’s website on the Budget Information page. The Town will offer an Online Budget Book, a PDF version of the budget document on the Town’s website, and a printed budget document that will be made available to Council Members and Management Team staff. A physical public copy of the budget document will be kept at Town Hall and the Yountville Library. Please follow the link below to view the Town of Yountville Online Budget Book.
Town of Yountville Biennial Budget Fiscal Years 2024/2025 and 2025/2026
ENVIRONMENTAL REVIEW
Exempt per California Environmental Act (CEQA) Guideline, Section 15061(b)(3)
FISCAL IMPACT
Is there a Fiscal Impact? Yes
Is it Currently Budgeted? No
Where is it Budgeted? N/A
Is it Mandatory or Discretionary? Mandatory
Is there a Staff Resource Impact? Yes
STRATEGIC PLAN GOAL
Is item Identified in Strategic Plan? Yes
If yes, Identify Strategic Goal and Objective. Responsible Fiscal Policy: The Town maintains its fiscal health through policies designed to maximize economic opportunities, manage expenses, and ensure prudent reserves.
Briefly Explain Relationship to Strategic Plan Goal and Objective. The Town's budget funds Town Council priorities and initiatives. It also enables staff to complete projects and conduct business to serve residents, businesses, and visitors on a daily basis. The budget is a financial plan that is developed in conjunction with the Town Council Goal Setting Sessions.