Title
Staff Report for the Public Hearing and Adoption of the Proposed 2012-13 Budgets for the City of San Leandro, the Successor Agency to the Redevelopment Agency of the City of San Leandro, and the San Leandro Public Financing Authority and the Appropriation of $1.5 Million for One-time Needs
Staffreport
SUMMARY AND RECOMMENDATIONS
Staff recommends that the City Council conduct a public hearing and take public testimony regarding the City Manager's Proposed Budget, for fiscal year 2012-13. At the conclusion of the public hearing and after Council's deliberations, staff requests that Council provide staff with final direction regarding the 2012-13 proposed budget adoption:
City Council approve the following Resolutions to adopt the City Manager's fiscal year 2012-13 Proposed Budget as reviewed by City Council on May 21, 2012:
1. Resolutions:
a. Resolution adopting the budget of the City of San Leandro for fiscal year 2012-13.
b. Resolution adopting the budget for the Successor Agency to the Redevelopment Agency of the City of San Leandro (SARA) for fiscal year 2012-13.
c. Resolution adopting the budget of the Public Financing Authority of the City of San Leandro for fiscal year 2012-13.
2. Amendments:
a. Allocate $1,505,000 to the one-time line item needs listed on Attachment A identified in the fiscal year 2011-12 budget.
b. Allocate $50,000 from the City Manager's contingency account to fund Building Futures $20,000, San Leandro School District's Community Violence Prevention Program $25,000 and a Martin Luther King Day Celebration $5,000.
BACKGROUND
The City Manager's Proposed Budget for 2012-13 was presented to City Council on May 21, 2012. The budget represents the City's fundamental financial planning and communications tool, describing how resources are allocated to implement Council policies and goals, as well as providing the legal basis for the expenditure of public funds.
Overall, the expenditure budget proposed for 2012-13 totals $119.5 million. The City's General Fund accounts for $76.1 million, the SARA is $5.9 million, Enterprise activities (Water Pollution Control, Environmental Services, Shoreline Fund and Storm Water Fund) are $13.9 million and all other activities equal $23.6 million for 2012-13.
The General Fund budget reserves remain untouched for 2012-13. However, $507,000 of 2011-12 fund balance (carryover from 2011-12 revenue appropriations matching related expenditures in 2012-13) is used to close the revenue and expenditure imbalance. Consistent with prior City Council policy, an additional $300,000 transfer from the Community Impact Fund will be appropriated in 2012-13. The City has reduced the General Fund budget by $2 million from 2008-09 levels, including a 22% reduction to our workforce.
However, the City would have faced even greater reductions if not for the infusion of new revenue from Measure Z, a temporary, quarter cent sales tax measure approved by over 60% of the voters in the November 2010 election. Measure Z's passage will bring in about $3.8 million annually in additional revenue, allowing the City to maintain existing service levels and begin to replenish reserves. Even with reductions in staffing and services, Measure Z's passage, and the beginnings of an economic recovery, the City still faces economic challenges. Indeed, the five year forecasts for all funds show that sustaining balanced budgets in subsequent years will be difficult.
Budget preparation, analyses and revisions have become year-round endeavors. Staff began planning the 2012-13 budget in the Fall of 2011, and started discussing it with City Council in February 2012. As part of the annual budget process, the City Council reaffirmed its vision for the City during its annual goal setting session in February 2012. These areas of focus help set the framework for the City's budget development. Since January, staff has continued this conversation with the Council Finance Committee and the City Council through a number of budget updates and budget work sessions that focused on budget forecasts, possible State budget impacts, effects of the Great Recession, the dissolution of the Redevelopment Agency, and the City's capital needs.
Budget Analysis
A number of factors influence the long-term fiscal health of the City: the slow economic recovery, the ability for San Leandro's revenues to sustain the cost of providing services, and the continued State budget gap.
The 2012-13 General Fund budget reflects revenue growth largely attributed to property tax revenues, sales and use tax and backfill revenues and utility user's tax revenues which constitute almost 80% of the revenue increase. Staff continued to perform a detailed line-item budget review of all funds and departments with minimal impact due to last year's findings of $1.2 million reductions.
The forecast for the General Fund is a much improved picture from prior years, with a balanced budget for 2012-13. However, the General Fund deficit reappears over the next four years. This is mainly driven by conservative revenue estimates, and anticipated increases in operating costs.
In addition to the General Fund, the City maintains other key revenue funds that range from the Water Pollution Control Plant to Special Revenue funds. Multi-year forecasts for each fund, for the most part, show these funds to be balanced in terms of available resources and projected requirements for 2012-13. There are, however, certain funds that will require additional attention in order to achieve long-term financial stability.
The Shoreline Fund is the only fund that is projected to be in deficit for 2012-13 (Business Improvement District fund reflects a $1,000 deficit). Staff will be reviewing balancing options and monitoring program revenue, and has included interest only loan payments to the General Fund as per the Council Finance Committee recommendation.
Proposed Budget Amendments
Pursuant to City Council direction, staff is presenting two amendments to the City Manager's Proposed Budget for consideration as part of the Adopted Budget.
1. $1,505,000 for One-Time Needs. Use anticipated General Fund savings in the 2011-12 budget to fund the ten one-time needs listed on Attachment A which align with the City Council 2012-13 goals. Staff will review the one-time needs expenditures and provide an update to City Council at the 2012-13 mid-year update.
2. $50,000 from the City Manager's Contingency Account for Additional One-Time Needs. Allocate $50,000 from the City Manager's contingency account in 2012-13 for three additional one-time needs listed on Attachment A also in alignment with the 2012-13 City Council goals.
Current City Council Policy
· Article V of the City of San Leandro Charter requires the City Manager to submit the Proposed Budget to the City Council at least thirty-five days prior to the beginning of each fiscal year and for Council to adopt the Budget following a Public Hearing, by no later than June 30th.
Previous City Council Actions
· February 25, 2012 City Council Retreat established goals for the new fiscal year budget and reviewed the overall 2012-13 Baseline Budget.
· March 26, 2012 City Council held a Budget Work Session on the proposed 2012-13 budget: General Fund preliminary budget and multi-year forecast, Capital Improvement Program and the SARA budget.
· April 23, 2012 City Council held a Budget Work Session on the proposed 2012-13 budget: General Fund follow-up items, Other Revenue Funds, SARA, and the Alameda County Fire Department budget.
· May 7, 2012 City Council held a Public Hearing and approved the increases in fees and charges for services by City departments for fiscal year 2012-13 and the annual CPI adjustment to the City's EMS Tax, 9-1-1 Tax and the Business License Tax.
· May 11, 2012 City Council received the City Manager's 2012-13 Proposed Budget document.
· May 21, 2012 City Council discussed the proposed budget.
City Council Finance Committee Review and Action
· November 14, 2011 City Council Finance Committee discussed the 2012-13 budget calendar, the five year forecast and budget development issues and policy considerations.
· December 2, 2011 City Council Finance Committee discussed the 2012-13 budget development process.
· March 2, 2012 City Finance Committee discussed the formation of the citizens Oversight Committee required by the transaction and use tax (Measure Z) ordinance.
· April 6, 2012 City Council Finance Committee discussed several key 2012-13 budget issues:
o The $1.5 million one-time needs
o The Shoreline Fund potential deficit and changing the debt service payment to an interest only payment
o Proposed ordinances amending the annual adjustments to the 2012-13 business license tax, emergency communication system access (911) tax and the emergency medical services tax
o Resolution adjusting the 2012-13 City's fees and charges for services provided by City departments
· May 4, 2012 City Council Finance Committee continued discussion and follow-up of the 2012-13 budget development.
Summary of Advisory Committee Review/Public Outreach Efforts
All City Council and Council Finance Committee meetings were properly noticed in accordance with the City Charter and California law.
Fiscal Impact
The 2012-13 proposed budget for all City funds is $119.5 million. The 2012-13 proposed budget for the General Fund Budget is $76.1 million.
Budget Authority
· The Charter of the City of San Leandro.
Attachment
· Attachment A $1,505,000 and $50,000 for the one-time line item needs reviewed by City Council
PREPARED BY: David Baum, Finance Director, Finance Department