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Home My WebLink About20 - Budget Amendment to Update Revenue, Authorize Transfers & Increase Expenditure AppropriationsTO: CITY OF NEWPORT BEACH City Council Staff Report Agenda Item No. 20 May 28, 2013 HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Finance Department Dan Matusiewicz, Finance Director 949 - 644 -3126, danm @newportbeachca.gov PREPARED BY: Susan Giangrande, Budget Manager APPROVED:, TITLE: Budget Amendment to Update Certain Revenues Estimates, Authorize Fund Transfers and Increase Expenditure Appropriations ABSTRACT: Following a review of Fiscal Year 2012 -13 revenue and fund balance estimates, Finance staff is recommending the approval of three budget amendments to appropriate City Manager assignments, increase certain General Fund revenues, and record interfund transfers and increase expenditure appropriations. RECOMMENDATION: 1. Per Council Policy F -2 (Reserves), approve Budget Amendment 13BA -041 that appropriates the City Manager assignments of fund balance that were the result of Fiscal Year 2011 -12 surpluses. The total amount assigned by the City Manager was $13,582,180 and the budget amendment appropriates $5,043,503. The remaining balance was expended through previous Council appropriations or released to fund balance. 2. Approve Budget Amendment 13BA -042 that increases General Fund revenue estimates by $6,205,629. This action will align the budget with the revenue estimates that are forecasted through the end of FY 2012 -13. 3. Approve Budget Amendment 13BA -044 that records 'interfund transfers totaling $25,441,983, and increases General Fund expenditure appropriations by $633,000, Building Excise Tax Fund expenditure appropriations by $500,000, Equipment Fund expenditure appropriations by $542,182, and IT Strategic Fund expenditure appropriations by $861,913. Budget Amendment to Update Certain Revenues Estimates, Authorize Fund Transfers and Increase Expenditure Appropriations May 28, 2013 Page 2 DISCUSSION: Budget Amendment 13BA -041 Assignments represent a portion of a fund balance that includes amounts that are constrained by the City's intent to be used for specific purposes. Council Policy F -2 (Reserves) delegates the authority to the City Manager to modify or create new assignments of fund balance. Appropriations of balances are subject to Council Policy F -3 (Budget Adoption and Administration). Budget Amendment 13BA -041 recommends that the City Council appropriate $5,043,503 from Fiscal Year 2011 -12 General Fund surplus to be transferred to the Facilities Financial Planning (FFP) Reserve. This will reduce General Fund reserves and provide over $5.0 million of additional funding for projects programmed in the Facilities Financial Planning Program such as Marina Park, Sunset Ridge Park, and Lifeguard Headquarters. The remaining assignment balance was expended through previous Council appropriations such as Lower Bay Dredging Phase II and similar capital appropriations. Unutilized amounts were released to fund balance. Budget Amendment to Update Certain Revenues Estimates, Authorize Fund Transfers and Increase Expenditure Appropriations May 28, 2013 Page 3 Budget Amendment 13BA -042 A second budget amendment (13BA -042) increases General Fund revenue estimates by $6,205,629 in FY 2012 -13 as indicated in the table below: PROPERTY TAXES Secured Property Tax Property Tax - In Lieu of VLF Unsecured Property Tax Redemptions, Penalties& Interest Supplemental Taxes Homeowners Exemption RDA Residual One time unencumbered RDA Property Transfer Tax Property Tax Subtotal TAXES OTHER THAN PROPERTY City Sales and Use Tax. Sales Tax Sharing Agreement Property Tax - In Lieu of Sales Tax Cable Franchise Transient Occupancy Tax (TOT) Transient Occupancy Tax (TOT) Payments to Visit Newport Beach Taxes Other Than Property Subtotal LICENSES AND PERMITS Park Fees FINES,. FORFEITURES & PENALTIES Parking Fines & PD Admin Fines 2012 -13 2012 -13 2012 -13 Original Requested Revised Reason for Recommended Adjustment Revenue 13BA -042 Revenue Info from County Assessor Info from County Assessor Based on year -to -date receipts Based on year -to -date receipts Based on year -to -date receipts Based on year -to -date receipts Staff recommendation Staff recommendation Based on year -to -date receipts Info from consultant Info from consultant Info from County Assessor Based on year -to -date receipts Based on year -to -date hotel receipts Based on year -to -date residential receipts Per revised TOT reciepts Move to Facilities Financial Planning Reserve Based on year -to -date receipts TOTAL RECOMMENDED GENERAL FUND REVENUE ESTIMATE CHANGES $60,236,000 $1,188,455 $61,424,455 6,788;083 177,795 6,965,878 2,400,000 (133,797) 2,266,203 1,300,000 (100,000) 1,200,000 725,000 (125,000) 600,000 526,063 (4,518) 521,545 - 774,020 774,020 - 1,873,172 1,873,172 1,000,000 325,000 1,325,000 $72,975,146 $3,975,127 $76,950,273 $20,631,629 $950,914 $21,582,543 (451,500) (28,500) (480,000) 6,613,750 464,767 7,078,517 1,600,000 200,000 1,800,000 15,967,875 1;032,125 17,000,000 1,575,000 75,000 1,650,000 (2,874,218) (185,782) (3,060,000) $43,062,536 $2,508,524 $45,571,060 578,022 (578,022) - 2,600,000 300,000 2,900,000 .$119,215,704 $6,205,629 $125,421,333 Housing demand within Orange County is increasing and contributing to higher home valuations in 2013. Overall, it is forecasted that property taxes will finish the year $4 million, or 5.4 %, higher than the FY 2012 -13 original budget. Contributing to the property tax increase is a $1.9 million anticipated one -time receipt by year -end from the County resulting from the dissolution of the Santa Ana Heights redevelopment zone. The revenue for Taxes Other Than Property, which includes sales and transient occupancy taxes is forecasted to be over $2.5 million higher than originally budgeted due to sales trends in various industries; higher occupancy rates in the City's hotels, motels, cottages and resorts; and a generally improving travel and tourism business sector. Budget Amendment to Update Certain Revenues Estimates, Authorize Fund Transfers and Increase Expenditure Appropriations May 28, 2013 Page 4 Under the Licenses and Permits revenue category, staff also recommends the transfer of $578,022 in park fees from the General Fund to the FFP Reserve in accordance with the recent revisions to Policy B -1 (Park Fees) approved by the City Council. Per Policy B -1, park fees are to be used solely for the acquisition, establishment or rehabilitation of existing parks, open space and recreational facilities. All major facility construction projects, including park development projects, are planned and funded through the FFP Reserve. Under the Fines, Forfeitures and Penalties category, staff recommends an increase to parking fines estimates by $300,000 to align the budget with actual revenue receipts. Budget Amendment 13BA -044 The City has prior -year surplus funding as described in the narrative section for Budget Amendment 13BA -041 above and anticipated FY 2012 -13 surpluses in the General Fund, Equipment Fund, and General Liability Fund. These surpluses can, with Council approval, either be programmed as a City Manager assignment, or as recommended by staff, transferred to other funds as proposed below: As Proposed Funding Source (Transfer From) Funding Use (Transfer To) for 13BA -044 General Fund Facilities Financial Planning Reserve $3,500,000 General Fund ff Strategic Fund 2,551,815 General Fund Other Post Employment Benefits 1,500,000 General Fund Major Maintenance and Repair Fund 1,000,000 General Fund 800 MHz Public Safety 1,000,000 General Fund Back Bay Science Center - close fund 125,421 Subtotal from General Fund $9,677,236 Equipment Fund Facilities Financial Planning Reserve 2,000,000 - General Liability Fund Compensated Absences Fund 1,013,371 General Liability Fund Workers' Compensation Fund 751,376 ' Subtotal from Internal Service Fund Surpluses $3,764,747 Facilities Financial Planning Reserve Civic Center Project Fund $12,000,000 Grand Total Interfund Transfers- All Funds $25,441,983 "The Finance Committee reviewed reserve levels at their March 25, 2013, meeting and recommended that staff bring these to the City Council for authorization. Budget Amendment to Update Certain Revenues Estimates, Authorize Fund Transfers and Increase Expenditure Appropriations May 28, 2013 Page 5 Proposed interfund transfers from the General Fund to other funds total $9.7 million and will provide $3.5 million to fund key projects in the Facilities Financial Plan; $2.6 million for key Information Technology projects that will improve service efficiency; $1.5 million to improve the City's funded status of retiree insurance liabilities; $1.0 million to provide funding to maintain and conduct major repairs to the City's aging facilities; $1.0 million in support of the City's share of the 800 MHz Countywide Coordinated Communications System (CCCS) for public safety; and $125,421 to eliminate a deficit in a fund that is no longer in use. As recommended by the Finance Committee on March 25, 2013, this budget amendment also proposes interfund transfers totaling $3.8 million from the internal service funds. Since the Equipment Fund has exceeded its target funding in recent years, $2.0 million of this surplus is proposed to be transferred to the FFP Reserve to fund critical community serving facilities. In FY 2012, the City's Compensated Absences and Workers' Compensation Funds did not meet their minimum funding status. The Compensated Absences Fund is utilized primarily as a means to smooth the annual fluctuations in flex leave, vacation leave and sick leave bank liquidations. The City fell below the minimum funding level in FY 2011 primarily due to the impact of the Early Retirement Plan (ERIP) offered during 2010. The Workers' Compensation Fund provides wage replacement and medical benefits to employees injured in the course of employment. Since the City's General Liability Fund exceeded its target funding by approximately $1.8 million, it is recommended that $1,013,371 be transferred to the Compensated Absences Fund and $751;376 be transferred to the Workers' Compensation Fund from the General Liability Reserve. This budget amendment also reflects a recommended $12 million transfer from the FFP reserve to cover estimated cash flows for the Civic Center project above the Certificate of Participation (COP) funded portion of $123 million. Budget Amendment 13BA -044 also increases General Fund expenditure appropriations by $633,000, Building Excise Tax Fund expenditures appropriations by $500,000, Equipment Fund expenditure appropriations by $542,182, and IT Strategic Fund expenditure appropriations by $861,913 as detailed in the table below. Budget Amendment to Update Certain Revenues Estimates, Authorize Fund Transfers and Increase Expenditure Appropriations May 28, 2013 Page 6 ENVIRONMENTAL REVIEW: Staff recommends the City Council find this action is not subject to the California Environmental Quality Act ( "CEQA ") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378)of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. NOTICING: The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers the item). Submitted by: Z4i z� an Matusiewicz Finance Director Attachment: Budget Amendments 2012 -13 Requested Expenditure Fund Reason for Recommended Adjustment 13BA -042 Civic Center IT /AV Equipment ITISF Equipment Replacement $ 861,913 800 MHz Radios Equipment Radio acquisition 542,182 LibraryFF &E BET Eligible Use of BET Funds 500,000 Airport EIR General Fund City Manager request 350,000 Maintenance General Fund Increased costofjanitorial services 100,000 EOC Equipment General Fund New EOC equipment 53,000 Reforestation General Fund Additional reforestation efforts needed 50,000 FEMA General Fund Study for National Flood insurance 50,000 Citizen Survey General Fund City Counci I request 30,000 TOTAL REQUESTED EXPENDITURE APPROPRIATION $ 2,537,095 ENVIRONMENTAL REVIEW: Staff recommends the City Council find this action is not subject to the California Environmental Quality Act ( "CEQA ") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378)of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. NOTICING: The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers the item). Submitted by: Z4i z� an Matusiewicz Finance Director Attachment: Budget Amendments City of Newport Beacon BUDGET AMENDMENT 2012 -13 EFFECT ON BUDGETARY FUND BALANCE: Increase Revenue Estimates X Increase. Expenditure Appropriations AND Transfer Budget Appropriations SOURCE: from existing budget appropriations from additional estimated revenues from unappropriated fund balance EXPLANATION: This budget amendment is requested to provide for the following: To appropriate fund transfers related to the City Manager's FY 11 -12 assignments. ACCOUNTING ENTRY: BUDGETARY FUND BALANCE Fund Account Description 010 3799 General Fund - City Manager Assignments 010 3605 General Fund - Fund Balance 405 3605 Facilities Financing Fund - Fund Balance NO. BA- 13BA -041 AMOUNT: $5,043,503.00 Increase in Budgetary Fund Balance Decrease in Budgetary Fund Balance No effect on Budgetary Fund Balance Amount Debit Credit $13,582,180.00 $5,043,503.00 * $13,582,180.00 * $5,043,503.00 REVENUE ESTIMATES (360 1) Fund /Division Account Description 9405 6000 Facilities Financing - Transfer In $5,043,503.00 EXPENDITURE APPROPRIATIONS (3603) Description Division Number 9010 General Fund Account Number 9900 Transfer Out Division Number Account Number Signed: Signed: Signed: �vIFI&4inkn. Financial Approval: Finance Director Administrative Approval: City ManageY City Council Approval: City Clerk $5,043,503.00 * Automatic System Entry 3 --a1 -/ � Date Date Date City ®f Newport Beach BUDGET AMENDMENT 2012 -13 EFFECT ON BUDGETARY FUND BALANCE: Incr /Decr Revenue Estimates Increase Expenditure Appropriations AND Transfer Budget Appropriations SOURCE: from existing budget appropriations x from additional estimated revenues from unappropriated fund balance EXPLANATION: This budget amendment is requested to provide for the following: NO. BA- 13BA -042 AMOUNT: $s,zas,szs.00 Increase in Budgetary Fund Balance Decrease in Budgetary Fund Balance No effect on Budgetary Fund Balance To increase revenue estimates in the General Fund as explained in detail in the Council staff report. ACCOUNTING ENTRY: BUDGETARYFUND BALANCE Amount Fund Account Description Debit Credit 010 3605 General Fund - Fund Balance $6,205,629.00 REVENUE ESTIMATES (3601) Fund /Division Account 0643 5212 Parking Fines $300,000.00 Administrat'lve Approval: City Managef Signed: 9010 4001 Secured Property Tax $1,188,455.00 9010 4002 Property Tax - In Lieu of VLF $177,795.00 9010 4005 Unsecured Property Tax 133,797.00 9010 4015 Redemptions, Penalties & Interest 100,000.00 9010 4016 Supplemental Taxes 125,000.00 9010 4020 Homeowners Exemption 4,518.00 9010 4021 RDA Residual $774,020.00 9010 4022 One time unencumbered RDA $1,873,172.00 9010 4026 Property Tax Transfer $325,000.00 9010 4400 City Sales & Use Tax $950,914.00 9010 4001 Property Tax - In Lieu of Sales Tax $464,767.00 9010 4402 Sales Tax Sharing 28,500.00 9010 4412 Cable Franchise $200,000.00 9010 4405 Uniform Transient Occupancy Tax - Hotel $1,032,125.00 9010 4405 Uniform Transient Occupancy Tax- Resident $75,000.00 9010 4405 Visit Newport Beach 185,782.00 4310 4701 Park Fees - Zone 1 238,397.00 4310 4703 Park Fees - Zone 3 156,750.00 4310 4710 Park Fees - Zone 10 182,875.00 EXPENDITURE APPROPRIAT IONS (3603) Signed: _ 1 %�� /Y(C✓ /�/l /A� Financial Approval: Finance Director Signed: 'I"�d— .Q.,e.�� Administrat'lve Approval: City Managef Signed: City Council Approval: City Clerk S- al —I 3 Date 5 Date Date City of Newport Beach NO. BA- 13BA -044 BUDGET AMENDMENT 2012 -13 AMOUNT: $54,282,974.44 EFFECT ON BUDGETARY FUND BALANCE: Pq Increase Revenue Estimates Increase Expenditure Appropriations AND Transfer Budget Appropriations SOURCE: from existing budget appropriations from additional estimated revenues NX from unappropriated fund balance EXPLANATION: This budget amendment is requested to provide for the following: x Increase in Budgetary Fund Balance x Decrease in Budgetary Fund Balance No effect on Budgetary Fund Balance To record interfund transfers, and to increase expenditure appropriations in the General Fund, Building Excise Tax Fund, Equipment Fund, and IT ISF as explained in detail in the Council staff report. ACCOUNTING ENTRY: BUDGETARY FUND BALANCE Fund Account 010 3605 270 3605 405 3605 410 3605 410 3605 457 3605 480 3605 600 3605 605 3605 610 3605 616 3605 620 3605 630 3605 642 3605 010 3799 REVENUE ESTIMATES (3601) Fund /Division Account Description 9405 Amount FFP Reserve Fund - Transfer In $5,500,000.00 Description Debit Credit $12,000,000.00 General Fund - Fund Balance $10,310,236.22 Back Bay Science Center - Transfer In $125,421.22 Building Excise Tax. Fund - Fund Balance $500,000.00 Major Maintenance & Repair Fund - Transfer $1,000,000.00 FFP Reserve Fund - Fund Balance $12,000,000.00 $5,500,000.00 $751,376.00 Civic Center Fund - Fund Balance 6000 $861,913.00 $1,000,000.00 Civic Center Fund - Fund Balance 6000 $12,000,000.00 $1,013,371.00 Back Bay Science Center Fund - Fund Balance 6000 $125,421.22 $1,500,000.00 Major Maintenance & Repair Fund - Fund Balance 6000 $1,000,000.00 $2,551,815.00 Work Comp Fund - Fund Balance $751,376.00 General Liability Fund - Fund Balance $1,764,747.00 Equipment Fund - Fund Balance $2,000,000.00 Equipment Fund 800 MHz - Fund Balance $542,182.00 $1,000,000.00 Compensated Absence Fund - Fund Balance $1,013,371.00 Retiree Insurance Fund - Fund Balance $1.,500,000.00 IT Strategic Fund - Fund Balance $861,913.00 $2,551,815.00 General Fund - City Manager Assignments $350,000.00 Description 9405 6000 FFP Reserve Fund - Transfer In $5,500,000.00 9410 6000 Civic Center Fund - Transfer In $12,000,000.00 9457 6000 Back Bay Science Center - Transfer In $125,421.22 9480 6000 Major Maintenance & Repair Fund - Transfer $1,000,000.00 9600 6000 Work Comp Fund - Transfer In $751,376.00 9616 6000 Equipment Fund - Transfer In $1,000,000.00 9620 6000 Compensated Absences Fund - Transfer In $1,013,371.00 9630 6000 Retiree Insurance Fund - Transfer In $1,500,000.00 9642 6000 IT Strategic Fund - Transfer In $2,551,815.00 EXPENDITURE APPROPRIATIONS (3603) Signed: / Financial Approval: Finance Director Signed: �c-- �P�\k,� AdminisS ative Approval: City Manager Signed: City Council Approval: City Clerk $861,913.00 Automatic $500,000.00 $9,677,236.22 $12,000,000.00 $2,000,000.00 $1,764,747.00 $861,913.00 $30,000.00 $542,182.00 $53,000.00 $100,000.00 $50,000.00 $50,000.00 Date S 2241 Date Date Description Division Number 7271 Building Excise Tax Fund - Capital Account Number C4010162 Central Library Furniture & Equipment Division Number 9010 General Fund Account Number 9900 Transfer Out Division Number 9405 FFP Reserve Fund Account Number 9900 Transfer Out Division Number 9610 Equipment Fund Account Number 9900 Transfer Out Division Number 9605 General Liability Fund Account Number 9900 Transfer Out Division Number 7410 Civic Center Construction Account Number C1002041 Civic Center IT /AV Equipment Division Number 6420 IT Strategic Fund Account Number 9300 Equipment NOC (IT /AV Equipment) Division Number 0110 City Council Account Number 8080 Services Professional & Technical Division Number 6161 Equipment Fund Account Number 9300 Radios Division Number 2335 Fire - Emergency Preparedness Account Number 8200 Special Department Expense Division Number 3140 MOD - Operations Support Account Number 8081 Services - Janitorial Division Number 2710 CDD - Planning Account Number 8080 FEMA National Flood Insurance Study Division Number 3180 MOD - Street Trees Account Number 80806 Tree Reforestation Signed: / Financial Approval: Finance Director Signed: �c-- �P�\k,� AdminisS ative Approval: City Manager Signed: City Council Approval: City Clerk $861,913.00 Automatic $500,000.00 $9,677,236.22 $12,000,000.00 $2,000,000.00 $1,764,747.00 $861,913.00 $30,000.00 $542,182.00 $53,000.00 $100,000.00 $50,000.00 $50,000.00 Date S 2241 Date Date