Loading...
HomeMy WebLinkAboutA - Proposed Budget - Handout?ro-nc A o 1 oint Meetingof,-the CityCouncil mpg and the Finance -.Committee :ooP.M.,True : da Ma 2 2013 YY 3� 7 May 23, 2017 Agenda Item A FY 2017-18 Proposed Budget - Highlights • Budget is balanced Still a $5M investment in General • $9M more as discretionary payment for Fund CIP, includes $iM for GP Update pensions •Revenues &reserves remain strong • Largest infusion yet ($6M) to Harbor & Beaches Capital Fund •Continued focus on enhancing the community's quality of life and safety With Checklist: Checklist: Transfer of $8.5 million to Facilities • No net change to full-time staffing Financial Planning Fund • Increase of part-time staffing by 5.58 FTE Pa � Sources and Uses Summary of the FY 2017-18 Proposed Budget All Funds (Millions) 2016-17 2017-18 Revised Proposed Expenditures Expenditures Variance Operating Budget $252.6 $257.0 1.7% CI P Projects $76.8 $63.7 -17.1% Total Budget $329.5 $320.7 -2.7% Summary of the General Fund FY 2017-18 Proposed Budget (Millions) Uses Operating Expenditures $192.6 $202.5 5.2% Transfers Out $23.3 $22.8 -2.3% Total Uses $215.9 $225.3 4.4% Surplus/(Deficit) $9.2 $0.3 -96.9% 3 2016-17 2017-18 Revised Proposed Budget Budget Variance Sources Prior Year Surplus $10.9 $9.2 -15.5% Operating Revenue $201.1 $209.3 4.1% Transfers In $7.3 $7.7 4.9% Set Asides $5.9 ($0.5) -108.8% Total Sources $225.1 $225.6 0.2% Uses Operating Expenditures $192.6 $202.5 5.2% Transfers Out $23.3 $22.8 -2.3% Total Uses $215.9 $225.3 4.4% Surplus/(Deficit) $9.2 $0.3 -96.9% 3 I I I City Charter Requirements • Requires Budget submittal to Council at least 35 days prior to July i • Requires public notice and public hearing • Council shall adopt budget on or before June 30 M About Revenues Fiscal Year2017-i8 FY 2017-18 General Fund Revenue (millions) ■ Property Taxes $99.9 ■ Sales Tax $35.9 Transient Occupancy Tax $24.3 Other Taxes $8.3 it All Other Sources $40.9 FY 2017-18 Total $209.3 million FY 2o16-1'7 Total $201.1million rol I I I FY 2017-18 General Fund Revenue Assumptions Property Tax 94, 864, 960 99, 878, 340 47.7% 5.3% Sales Tax 34, 612, 648 35, 932, 370 17.2% 3.8% Transient Occupancy Tax 22,578,447 24,332,966 11.6% 7.8% All Other Revenue 49, 049, 345 49,176, 639 23.5% 0.3% Total General Fund Revenue $2019105,400 $209,320,315 100.0% 4.1% I I I Assessed Valuation $60,000,000,000 6.5% $50,000,000,000 5.296 5.796 $40,000,000,000 k 5.9% 1.8% 0.2% 1.0% 2.9% 12.6% $30,000,000,000 11.4% 10.0% 520,000,000,000 8.996 $10,000,000,000 Ib IJN� Property Tax Revenues $120,000,000 100,000,000 $80,000,000 $00,000,000 $40,000,000 $20,000,000 4a5,Ji �} �y4 C, ' {' fO-a\ ` 'aa ya\' yal'� �.ti-a\ I 4 JV � � Yk' a4J 1Vol � M �y[��? ( A�T� 4 V �YLi_ 'Trt�S�A iF/ 5a -JE, � 0-a\ 0'6 �1�$Y�[5'r� V 1L1 we Sales Tax Revenues $40,000,000 Sales Tax 12.31 -6.2 3-6.2% $35,0()0r000 6.5�`a 5.1% 1()_89!4 $30,()00,()00 -14.9%T69 12.69a $25,000,000 $20,000,000 $15, 000,000 — $10,000,000 $5,000,000 ,gal 0a\ gat , ,�a�a1 ,LaN a1 ua e� ed P` 1� P` � P` �'�3 r'' �"�� �' �'� �` �'�'� �` ��,��'k� �` ��,�� �5 �' _16 �'��iraP°� *Note: FY 17 decrease due to one-time receipt of $2.7 million in FY 16. Net of a one-time increase, Sales Taxes grew l.2% in FY 17. r[.7 TOT/Hotel Bed Tax Revenues $30,000,000 $25,000,0010 $20,000,000 $15,000,000 $10,000,000 Rl e��4a� ON SS ti "al a i Ora\ oget anis X1306-01 �' 1013 _ $ jvoll p9 .100 20.11 ` -10.11 �` 101 -P- .1� gxO' 11 Budget Priorities Fiscal Year Zoic -i8 110a Key Priority: Maintain a Prosperous, Fiscally Sustainable, and Economically Viable City • Strong Financial Profile -Fitch reaffirmed AAA rating (Apr. zoic), Moody's reaffirmed AAA (Mar.2017) • Strong Fiscal Management and Discipline ✓ Use of FY 15-16 budget surplus consistent with Policy (50% to pay down debt and 50% for the Harbor) ✓ New Harbor and Beaches Capital Plan receives $5 million surplus plus $i million from existing operating revenues ✓ Continued effort to pay down pension obligation: ✓ T $9M to pay off liability in - zo years - v/ Net new interest savings -$iz.z million over zo years 13 111 Key Priority: Invest More in Harbor and Beaches Balboa Island Seawall Replacement - West End $ 4,971,225 Balboa Island Seawall Cap - North / South Sides $ 2 000 000 Newport Pier Platform and Piles $ 1,3o6,o99 American Legion Bulkhead $ 1000 000 Grand Canal Dredging $ 800 000 Central Ave Public Pier / Street End Improvement $ 7257562 Ocean Piers Inspection and Maintenance $ 7o6,791 Harbor -wide Dredging / Planning $ 500,000 Bilge Pump -out Dock / Oil Collection Centers $ 200,000 Beach and Bay Sand Management $ 150,000 Harbor Maintenance / Minor Improvements $ 150,000 Seawall Extensions $ 150,000 Abandoned /Surrendered Watercraft Abatement $ 100,000 Harbor Tide Gauge $ 50,000 TOTAL $ 12,8o9,677 cAND vau SaY LEGEhS]: s x rH ExNasu �t STRUCTURAL RETROFIT. TOP OF WALL +8.5 FT NAVD88 NEW SEAWALL, TOP OF WALL +9.0 FT NAVD88 - - CAP EXTENSION, TOP OF WALL +9.0 FT NAVD88 CAP EXTENSION, TOP OF WALL +8.5 FT NAVD88 14 Key Priority: Keep Newport Beach Looking Great with Quality Infrastructure FY 18 Proposed CIP - $63,711,762 Parks, &B $1, Dollars in Millions Misc Wastewater $4.1 M $6a7k 6% Transportation mreers & urainage $a.,7 M $16.7M q% 26% 15 I I Key Priority: Provide Safety in the Community Police Department: • i new Animal Control Officer for a variety of needs • New police car computers Fire Department: • Basic Fire Academy - training for newly hired firefighters • Additional set of ALS Equipment to cover everyday medical needs of residents/visitors. 16 About Expenditures Fiscal Year2017-i8 17 FY 2017-18 General Fund Proposed ■ General Government ® Public Safety Community Development '*: Public Works M Community Services Non Departmental & Estimated Salary Savings Operating Expenditures by Function (in Millions) 0.3% FY 2017-18 Total $202.5 million FY 2o16-17 Total $192.6 million General Fund Expenditure Summary by Function (Millions) 2016-17 2016-17 2017-18 % of Total % Change Adopted Revised Proposed GF Op Over PY Function and Activities Expenditures Expenditures Expenditures Budaet Revised General Government 16, 641, 094 Public Safety 101, 588,148 Community Development 12,175,693 Public Works 36,932,288 Community Services 22,596,359 General Fund Non Dept Exp 586,704 General Fund Anticipated Savings - Total General Fund Operating Budget 19095209286 General Fund CIPS and Transfers Out 51550,000 Total General Fund Budget 19650709286 16, 899, 750 17, 616, 640 8.7% 4.2% 102, 956, 517 108, 805, 802 53.7% 5.7% 12, 692, 568 13, 361, 785 6.6% 5.3% 37, 287, 743 37, 725, 973 18.6% 1.2% 23,776,583 24,428,430 12.1% 2.7% 168,896 2,086,458 1.0% 1135.4% (1,190, 761) (1,499,754) -0.7% 25.9% 192, 591, 296 202, 525, 334 100.0% 5.2% 6,350,000 5,725,000 -9.8% 198, 941, 296 208, 250, 334 4.7% 19 Changes in Full -Time Positions Full Time Position Eliminated Dept Library Clerk Library Groundsworker RSS Groundsworker MOD Groundsworker MOD Facilities Maintenance Technician* MOD * Checklist Item Full Time Position Added Dept Deputy City Attorney (early 2017) CAO Budget Analyst Finance Building Inspector CDD Animal Control Officer PD Traffic Engineer PW pX.1 Other Staffing Changes • City Attorney -various reclassifications • Human Resources - addition of 0.5 part-time Student Aide • City Clerk - addition of 1.96 part-time Department Assistant (Limited Term) and 0.5 part-time Records Specialist (Limited Term) • Recreation and Senior Services -reclassify one position • Municipal Operations - addition of limited term Intern, one reclassification of Water Supervisor • Public Works - Add 0.5 part-time Technical Aide and overtime staffing • City Manager - reclassification of part-time • Police - Add o.96 part-time Community position Services Officer • Information Technology - various reclassifications Net Staffing Change - Up 5.58 FTEs part-time and no change in full-time, if checklist adopted 21 Other Major Supplemental Budget Enhancements • Maintenance and Operations expenditure for the Fostering Interest in Nature (FiiN) program - $147,000 • Fire facilities maintenance - $135,000 (transfer from MOD) • Solid waste consultant in MOD - $ioo,000 • Basic Fire Academy - $8o,079 • Fire advanced life support equipment - $40,000 • Expanding neighborhood special events - $30,000 • The proposed budget does not yet include positions and budget for the final harbor mooring administration plan. The-$5ooKpaid to OCSD and a marina contract will likely be allocated by adding some FT but mostly PT staff. Pia Salaries & Benefits Most significant changes • MOU Contracts+$2.6M • Salaries T 3% or$2.15M • Unfunded Pension Liability and normal cost payment T $9M or 37% • Employee Contributions to PERS T $555I< to $ioM per year 23 A Typical Non -Safety Employee • Earns $80,700 in wages • City pays: • $ao,7oo towards purchase of health insurance • sig,800 = 65% of total pension cost (normal & UAL) • Employee pays: • $110,500 towards pensions. That's: • 35% of total pension cost; and "'13% of their pensionable earnings; and • About 8o% of the Normal Cost of the non -safety pension benefit 24 Budgeted Expenditures by Department General Fund Operating (Millions) Police Fire Municipal Operations Recreation and Sr Svcs Community DeveGopment Public Works Library Services Finance City Manager Human Resources City Attorney city council City Clerk FY 17 Revised ■ FY 18 Proposed $0.0 $10.0 $ 20.0 $30.0 $ 4t}_0 $50.0 $60.0 $70.0 25 In ■ Salaries & Benefits $145.4 General Fund Expenditures by Type (in Millions) Maintenance & Operation $56.3 Capital Improvement Projects & Capital Outlay $6.6 FY 2017-18 3 Total $202.5 million FY 2o16-17 0.5% Total $192.6 million a6 Harbor and Beaches Capital Funding Sources 1,000j000 16,0001000 14,000,000 :$12,000,000 $10,000,000 $8,000,000 $01000,000 $4,000{000 $2,000,000 RE m m m I Grants ■ Periodic GF or One-time Transfers ■ General Fund Contributions ■ Interest Earnings ■ Incremental Revenue Projection 27 Igg Investing in Future Needs (in Millions) This budget also includes over X34. million of savings to fund long-term liabilities and capital replacement plans. Facilities Financial Plan - Transfers 8.5 8.5 Harbor & Beaches Capital Fund - Transfers - 6.0 6.0 Facilities Maintenance Plan - Transfers 1.0 1.0 - Vehicle Replacement Plans - Department Cost 2.7 2.8 0.1 Emergency Communication System - Transfers •5 •5 - Other Equipment (Safety, IT, Parking & Rec) 1.8 2.3 0.5 Workers Compensation - Department Cost 2.8 2.8 - General Liability - Department Cost 4.1 4.0 -0.1 Compensated Absences - Department Cost 2.5 2.5 - Retiree Insurance (OPEB) - Department Cost 4.0 4.0 - Total $27.9 $34.4 X6.5 NO More about Pension Funding Fiscal Year2017-i8 29 Pension Funding Normal Cost 616.2 Default Pension UAL $2.5.0 Additional payment towards UAL $ 9.1 • Normal Cost = A plan's normal cost represents the present value of benefits that have accrued on behalf of the members during the current plan year. • Unfunded Pension Liability = occurs when something goes actuarily awry - investment return is low, mortality is long, etc. • Default UAL = the amount PERS requires us to pay on a given year. It's on a ramp -up. • Additional payment = a discretionary decision on the City's part to pay more now on Pension UAL to avoid costs later. Not a "Fresh Start" Less Amt Paid by Employees -$ -JL 0.o Amt Paid by Employees = negotiated pension contributions, paid via paycheck deductions. Net FY 2017-18 Pension Cost $40.3 • Net new savings of additional payment = -$15 million (or $8 million in today's dollars) over Zo years 30 An important note • The proposed FY 17-18 budget's GF Contingency Reserve: Is set at 25% of GF's operational expenses by Policy F -z - Goes from $47.5M (i6 -i7) to $48.5M (i7 -i8); but this amount... - Excludes the Additional Discretionary Pension Payment (-$9M) from the Z5%calculation. • Policy F -a should be adjusted to accommodate this. 31 In Unfunded Pension Liability Projected $1,200 ��• , , _: .. Growth ...� ■� ��■■' 77 $800 CornpoJ" ■ „______��=e $(200) Accrued Pension Liability 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2018 $501 $553 $617 $652 $693 $727 $755 $820 $848 $906 1,007 � Market Value of Assets $499 $472 $354 $395 $467 $452 $497 $567 $573 $576 653 (Unfunded Liability at Market Value $2 $82 $263 $257 $226 $275 $258 $253 $276 $330$353 CalPERS Rate of Investment Return 18.8% -2.9% -23.6% 11.1% 20.7% 1.0% 12.5% 18.4% 2.4% 0.6% 7.5 , 32 Phase-in of New Amortization Bases s18,000,000 The Simple Message s16,000,000 of this Complex $14,000,000 Chart: $12,000,000 Paying more ss now, $10,000,000 while we can, allows $8,000,o°° us to avoid the penalty $6,000,000 (i.e. interest) of PERS$4,000,000 ramp -ups and phase - $2,000,000 Ins 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 F7 48 ■ 2015 Loss ■ 2016 Loss ■ 7.375% Discount ■ 7.25% Discount ❑ 7.o% Discount 33 Comparison of UAL Payment Options s60,000,000 $50,000,000 — -$25 M $40,000,000 I We pay more her $30,000,000UJLI $20,000,000 $10,000,000 T But we save more here +$40 M $0 NN N N N N N N N N N 0 0 0 0 0 0 0 0 0 0 0 Ov Ct7 0 N N W 4� Ln 01 V Co paw +$40 M —$25 M N N N N N N 0 0 0 0 0 0 l4 0 3 N W 4� —Default UL Payment Including Known Losses Phased In – +Alt 2 - 20 Yr Level $ Payment at 7/© - Additional Cost Compared to Default Additional Savings Compared to Default +$15 M NET SAVINGS OVER 20 YEARS 34 Pension Payment History (All Funds) Normal Cost Amortized Cost of Unfunded Liability Total Annual PERS Cost Employee Contributions Net Employer Cost Total Annual PERS Cost M1jrj1 FY 2017111 Y 2FO18 FY 2015 FY 2016 Estimated Proposed 14,503,234 14,899,906 15,837,180 16,178,468 12,791,284 21,524,369 24,701,593 33,871,716 27,294,518 36,424,275 40,538,773 50,050,184 7,430,028 8,401,598 9,469,380 10,024,552 19,864,490 28,022,677 31,069,393 40,025,632 27,294,518 36,424,275 40,538,773 50,050,184 35 Pension Payment History (All Funds) In FY 2015-16, Pension costs in NB =10.4% of all funds' revenue In FY 2017-18, Pension costs in NB =14.6% of all funds' revenue Normal Cost Amortized Cost of Unfunded Liability Total Annual PERS Cost Employee Contributions Net Employer Cost Total Annual PERS Cost 36 Long Range Financial Forecast Fiscal Year2017-i8 14*41' 4 The Long Range Financial Forecast can be accessed at: i www.newportbeachca.gov/financialinfo 37 151 Long Range Fiscal Forecast Model • The new Long Range Fiscal Forecast Model: — Allows us to estimate stable tax and service levels to the community over a multi-year period. — Helps us to proactively assess the General Fund's multiple saving and spending plans in a coordinated and strategic manner. — Isn't perfect: • Challenging to "pick a downturn" and incorporate it in a specific period. • That alone makes the Model volatile in the "out years." I I I What the Long -Term Plan Does • Uses FY 18 Proposed Budget as Base Year (General Fund Only) • Demonstrates the impact of various pension funding scenarios - Zo YR level $ payment at 7% is active • Captures all transfers, set -asides, and contingency reserve funding commitments • Prior year revenue and expenditure, along with cyclical economic, trends informed go - forward growth assumptions. Forecast uses historical average growth rates. • Most sensitive to changes in the largest revenue and expenditure categories • Take-aways: • Financial commitments seem to be sustainable over the long-term, but only based on our assumptions • Especially in out years, Year -Over -Year changes may deviate significantly, positively or negatively • A good tool, but one to use cautiously. 39 I " I Long -Term Financial Plan Overview 4A z 0 J J $500.0 $450.0 $400.0 $350.0 $300.0 $250.0 $200.0 $150.0 $100.0 $50.0 SURPLUS/(DEFICIT) GENERAL FUND REVENUES, EXPENDITURES & ACCUMULATED SURPLUS/(DEFICIT) 2017 2019 2020 2021 2022 __--.,.,---11W. 2023 2024 2025 2026 2027 2028 -i 2029 11-1 2030 2031 1 2032 1 2033 1 2034 1 2035 11 2036 2037 $0.0 $0.8 $0.5 $0.7 $0.6 $1.4 $3.1 $4.9 $5.9 $6.9 $8.9 $9.3 $10.3 $10.7 $11.5 $12.3 $13.1 $24.1 $14.9 $15.4 CUMULATIVE DEFICIENCY $- $- $- $- $- $- $- $- $- $- $- $- $- $- $- $- $- $- $- $- SURPLUS BALANCE $0.0 $1.1 $1.6 $2.2 $2.8 $4.2 $7.3 $12.2 $18.1 $25.0 $33.9 $43.2 $53.5 $64.1 $75.7 $88.0 $101.1 $125.2 $140.2 $155.6 -REVENUES $207.4 $225.1 $233.8 $242.7 $251.9 $261.5 $271.4 $281.8 $292.5 $303.7 $315.1 $326.8 $339.4 $352.0 $365.7 $379.9 $394.6 $410.0 $426.0 $442.7 - -EXPENDITURES $207.4 $224.3 $233.4 $242.0 $251.3 $260.0 $268.3 $276.9 $286.7 $296.8 $306.1 $317.5 $329.1 $341.3 $354.1 $367.5 $381.6 $385.9 $411.1 $427.3 --- CUM. SURPLUS/DEFICIENCY TREND $0.0 $1.1 $1.6 $2.2 $2.8 $4.2 $7.3 $12.2 $18.1 $25.0 $33.9 $43.2 $53.5 $64.1 $75.7 $88.0 $101.1 $125.2 $140.2 $155.6 .• � ■ Conclusion Fiscal Year2017-i8 41 I q I "We're in pretty good shape (but....)" • The Good News: — Revenues are strong, reserves too — Aggressive (and historic) Pension and Harbor efforts — General Plan Update kicks off — Budget able to accommodate important org. changes — Services and CIP well -funded — FT positions still flat (a double-edged sword) 42 I q I "We're in pretty good shape (but....)" • The Challenging News: — Watching sales tax and TOT trends closely • Concerns re: international travel • Retail purchasing is changing & will continue to change — T Pension expenses are challenging to sustain. • Significant economic downturn = major hit on these plans • If PERS falls short of 7%, that's a hit, too. • Statewide pension reform is vital for many, many cities M In What's Next? June 8, 2017 June i3, zoic July i, 2017 L ActQn Final Finance Committee Meeting to Review and Recommend Budget to CC • Public Hearing and Budget Adoption (CC) • Adoption of Gann Appropriation Limit (CC) • Budget Checklist Review &Approval • Special Events Allocation • Report on District Discretionary Grants New Fiscal Year Begins i Questions & Comments City's budget documents can be accessed at: www.newportbeachca.gov/budget I 45