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Home My WebLink AboutSS7 - FY 15-16 Budget Overview - PowerPoint (Staff)0 May 12, 2015 Item No. SS7 FY 2015 -16 PROPOSED BUDGET City of Newport Beach Council Study Session May 12, 2015 0 FY 2015 -16 Highlights • Budget is balanced • Revenues remain strong • No use of reserves for operations • Sustained progress toward pension obligations • Continued focus on enhancing the community's quality of life and safety Revenues &Expenditures Summary of the FY 2015 -16 Proposed Budget General Fund (Millions) Revenue Estimated Operating Revenue $191.74 Total Revenues $191.74 Expenditures Proposed Operating Expenditures $178.23 Proposed New CIP Appropriations $5.26 Total Expenditures $183.49 Plus Transfers In $7.76 Less Transfers Out - $12.38 Less Set Asides -$3.41 Net Surplus $0.23 Summary of the FY 2015 -16 Proposed Budget All Funds (Millions) Revenue Revenue -All Funds Total Revenues $ 278.2 $ 278.2 Operating Budget $ 257.4 New Capital Improvement Projects (CIPs) $ 25.0 New Appropriations $ 282.4 Planned use of fund balance (Capital Improvements) -4.2 Budget Principles Budget emphasizes: • Providing a Municipal Government that Residents Demand • Providing a Safe and Secure Neighborhood • Keeping Newport Beach Looking Great • Maintaining a Prosperous, Fiscally Sustainable, and Economically Viable City 0 Charter Requirements • Requires Budget submittal to Council at least 35 days prior to July 1 • Requires public notice and public hearing • Council shall adopt budget on or before June 30 • REVENUES Fiscal Year 2015 -16 FY 2015 -16 General Fund Revenue Chart (millions) ■ Property Taxes $87.9 (47 %) Lo Sales Tax (includes in -Lieu) $37.0 (20 %) Transient Occupancy Tax $20.0 (11 %) Other Taxes $8.0 (4 %) ■All Other Sources $37.0 (19 %) a FY 2015 -16 General Fund Revenue Assumptions (Millions) Note: Net of a one -time $2.7 million receipt expected in 2015 -16, the budget assumes Sales Taxes are expected to grow 4.73% during 2015 -16. 2014 -15 2014 -15 2015 -16 Adopted Revised Proposed %Incr /(Decr) Over Revenue Source Revenue Revenue Revenue PY Revised Property Taxes $82.6 $84.0 $87.9 4.65% Sales Tax $31.7 $32.7 $37.0 12.98% Transient Occupancy Tax $18.3 $19.4 $20.6 6.39% All Other Revenue $41.7 $44.8 $46.3 3.31% Total General Fund Revenue $174.3 $180.9 $191.7 6.01% Note: Net of a one -time $2.7 million receipt expected in 2015 -16, the budget assumes Sales Taxes are expected to grow 4.73% during 2015 -16. Assessed Valuation $45.0 $40.0 $35.0 $30.0 H $25.0 m $20.0 $15.0 $10.0 $5.0 $0.( 0 Sales Tax $2,8MK $2,413OK $2,009K $1,809K $1,21XIK S8MK S4MK $OK Auto-. General and Consumer Transportation Goods 4013 Compared To 4Q 14 Restaurants Business and and Hotels Industry Major Sales Tax Industry Year - Over -Year Groups Change Autos and Transportation 4.3% General Consumer Goods 5.6% Restaurants and Hotels 7.7% Business and Industry 24.1% Food and Drugs 6.7% Fuel and Service Stations -2.6% Building and Construction 21.7% 4413 4Q14 rrrrrr Food Fuel and Binding and Service and Drugs Stations Construction 0 Transient Occupancy Tax $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 Transient Occupancy Tax Receipts FY 07 -08 to FY 15 -16 FY 07 -08 FY 08 -09 FY 09 -10 FY 10 -11 FY 11 -12 FY 12 -13 FY 13 -14 FY 14 -15 FY 15 -16 Actual Actual Actual Actual Actual Actual Actual Revised Proposed Hoteliers can command higher room rates due to higher demand for Newport Beach as a travel and tourist destination. N 1� 91I0 IMN-�I, [MI. Principle #1: Provide the Municipal Government that Our Residents Demand ■ CDD — Online permitting & electronic plan review ■ Finance, IT & HR — continued implementation of new Enterprise Resource Planning (ERP) system ■ New Parks & Community Centers F--%i Services that are better, faster and less expensive Principle #2: Provide Safe and Secure Neighborhoods Police Department: • 3 new Police Officers, • 1 new Police Sergeant and • 1 new Civilian Investigator Fire Department: • Implementation of Automatic Vehicle Location program • Increased staffing of part -time seasonal lifeguards Community Development: • Implementation of special code enforcement programs relating to property maintenance =Code forcement 949-644,3215 Our Goal The mission of the Code Enforcement Division is to work in partnership with the residents and businesses to promote and maintain a safe and desirable living and working environment. Principle #3: Keep Newport Beach Looking Great Maintain a high - quality natural and physical environment by creating aesthetically pleasing places in which to live, work, recreate, and visit Newly Proposed Projects Re- budgeted Projects Total Appropriation Requested Encumbered Funds (Estimated) Nt, WFUR rnncm Total Community Reinvestment (Estimated) $25 million 42 million $67 million 33 million $100 million Principle #4: Maintain a Prosperous, Fiscally Sustainable, and Economically Viable City • Responsible and Affordable Debt Levels • Strong Financial Profile • Strong Fiscal Management and Discipline ✓ Cash funding of big projects — Marina Park, CdM, & Mariners Fire Stations, Bonita Creek Imprvmts. ✓ $22 Million to address Pension Shortfall ✓ Manageable OPEB Liability — Retiree Insurance ✓ $44 Million Contingency Reserve EXPENDITURES Fiscal Year 2015 -16 FY 2015 -16 Budgeted Expenditures by Function (Millions) ■ General Government $15.5 (9 %) m Public Safety $95.5 (54 %) Community Development $11.0 (6 %) 20% Public Works $35.5 (20 %) ■ Community Services $20.4 (11 %) 60, Non Departmental $0.3 (0.2 %) ray A General Fund Expenditure Summary by Function (Millions) Total General Fund Budget $175.9 $193.5 $183.5 - 5.18% 1% 2014 -15 2014 -15 2015 -16 %of Total %Incr /(Deer) Adopted Revised Proposed Operating Over PY Function and Activities Expenditures Expenditures Expenditures Budget Revised GENERAL GOVERNMENT $15.4 $15.9 $15.5 8.7% -2.62% PUBLIC SAFETY $36.5 $95.2 $95.5 53.6% 0.32`Yo COMMUNITY DEVELOPMENT $10.7 $11.1 $11.0 6.2% -0.90% PUBLIC WORKS $32.9 $34.4 $35.5 19.9% 3.24% COMMUNITY SERVICES $19.0 $19.9 $20.4 11.4% 2.28°% General Fund Non Dept Exp $0.3 $0.3 $0.3 0.2% -0.34% General Fund Anticipated Savings ($1.0) $0.0 0.0% - 100.00% Total General Fund Operating Budget $164.7 $175.9 $178.2 104.0% 1.34% General Fund CIPs $5.2 $17.6 $5.3 - 70.21% Total General Fund Budget $175.9 $193.5 $183.5 - 5.18% 1% a Budgeted Expenditures by Department All Funds (Millions) Recreation & Sr. Svcs. $10.2 $11.4 Library Services K$7.2 5 Public Works $9. $9.7 Muni. Operations - Utilities Municipal Operations Community Development $10.2 $10.5 Fire Police Finance $7 $7.3 City Attorney $2.3 $2.3 Human Resoruces $2.6 $2.6 City Manager $3.1 $3.0 City Clerk $0.8 $0.7 City Council $1.0 $1.1 $- $10.0 3.8 $26.2 $25.6 $29.3 $39.2 $43.2 7 ■ $52.2 ■ FY 15 ■ FY 16 $20.0 $30.0 $40.0 $50.0 $60.0 General Fund Expenditures by Type (Millions) ■ Salaries & Benefits $124.8 (65 %) i ii Maintenance & Operation $53.4 (27 %) Capital Improvement Projects $5.3 (3 %) Transfers $12.4 (6 %) (Savings for Future Capital Expenditures) 0 Savings for Future Needs (Millions) This budget also includes nearly $30 million of forced savings that fund long -term liabilities and capital replacement plans. Facilities Financial Plan - Transfers Facilities Maintenance Plan - Transfers Vehicle Replacement Plans — Department Cost Emergency Communication System - Transfers Other Equipment (Safety, IT, Parking & Rec) Workers Compensation — Department Cost General Liability — Department Cost Compensated Absences — Department Cost Retiree Insurance (OPEB) — Department Cost Total 14-15 15 -16 Change 0 ,. ,0 0.4 1.5 1.1 3.3 3.3 - 1.0 1.0 - 1.3 1.6 0.3 2.8 2.8 - J 3.1 4.1 1.0'1 2.3 2.5 .2 3.4 2.8 -0.6 $25.6 $28.1 $2.5 0 Changes in Full -time Staffing FY 16 Full -time Position Changes (1) Deputy Human Resources Director 1 Civilian Investigator 1 Police Sergeant 3 Police Officer 1 Recreation Manager 1 Recreation Supervisor 1 Office Assistant 1 Facilities Maintenance Worker II (2) Refuse Worker (1) Utilities Specialist (1) Inventory Assistant 4 Net Change in Positions as printed (1) Librarian II 3 Net Change in Positions with Checklist Downsizing efforts continue offset by additional Police and Marina Park staffing 0 Salaries & Benefits Most significant changes Unfunded Pension Liability payment increased $9 Million or 68% ($7.7 million included in 2014 -15 amended budget) Salaries increased 2% or $1.2 Million (includes 3 net new employees) Employee Contributions to PERS increased $826 Thousand to $8.3 Million per year. Typical Employee (non- safety) Earns $75,500 in wages City pays $19,800 towards purchase of health insurance City pays $12,341 or 16.73% towards pension Employee pays )9,239 or 12.35 towards pension Already Accelerated PERS Payment Schedule Significantly Normal Cost Amortized Cost of Unfunded Liability* Total Annual PERS Cost Employee Contributions Net Employer Cost Total Annual PERS Cost *FY 2015 Amended includes Fresh Start amount of $6.6M plus $1M previously authorized. Saves $129 million over 30 years Saves $47million in today's dollars Other Post Employment Benefits (OPEB — Retiree Insurance) Legacy Retiree Insurance Benefit: • Provided Life Time Annuity of $400 - $425 Monthly Benefit • Closed to new participants - January 1, 2006 Current Plan: • Defined Contribution limited to employer contribution to Health Reimbursement Account (HRA) during active employment (similar to 401 k) • Statutory obligation to make minimum employer contribution to retiree health plan, currently $122 /Month Unfunded Obliaation: $25 Million, $2.8 million per year, 13 years remaining New Actuarial Standard (ASOP 6) will increase OPEB liability -$10 million and increase required contribution $1 million per year - Not currently budgeted 0 Maintenance &Operations Most significant changes Litigation costs - $5 million (mostly one -time) City beautification & maintenance efforts - $1.2 million (mostly one -time) (Contracts for Medians, Parks, Trees, Beaches & Storm Drains) Imported Water and Groundwater expense - $1.1 million General Liability - Internal Charges $1 million Information Technology - Internal Charges - $800K Marina Park Operations (not including payroll) - $400K W Capital Improvement Program Capital • . Projects Newly Proposed Projects $25 million Re- budgeted Projects 42 million Total Appropriation Requested $67 million Encumbered Funds (Estimated) $33 million Total Community Reinvestment (Estimated) $100 million 9. I A BALANCED APPROACH Fiscal Year 2015 -16 a 3tW How much debt to we pay down relative to current amenities and services? unity center Newport coma cements? \N es *orhooc Sa En? Ne g commun,ty . Debt Reduction Efforts Recommendation: Balanced Approach to Surpluses 50% Community Benefit — Today New Neighborhood Enhancement Fund (NEF) A funding mechanism for: Quality of Life Projects Save today for community prioritized enhancements 50% Long -term Stewardship Retiree Insurance (OPEB) Liability A change in actuarial standards will soon impact how OPEB liabilities are measured. Liability will increase $10 million Increasing expected contribution by $1 million per year Checklist Items — Administrative CHANGES TO THE PROPOSED BUDGET AS PRINTED - OPERATING EXPENDITURES Administrative Prior Year Surplus Recommendation 2014 -15 Unassigned, Unrestricted Fund Balance General Fund Transfer Out - Neighborhood Enhancement Fund General Fund Transfer Out - Retiree Insurance Fund for OPEB Liability Balance Budget Increase (Decrease) Approved $ 1,982,412 $ (991,205) $ (991.206) Checklist Items — Revenue Estimates CHANGES TO THE PROPOSED BUDGET AS PRINTED - REVENUE Budget DepartmentlAccount Number /Description Increase (Decrease) Approved 425 -5898 Public Arts & Culture - Visit Newport Beach Public Benefit Fee $ 150;DDD TOTAL CHANGES TO THE PROPOSED REVENUE BUDGET $ 150,000 $ TOTAL CHANGES TO THE PROPOSED REVENUE BUDGET BY FUND Public Arts Fund $ 150.000 Total Changes to the Proposed Revenue Budget $ 150,000 $ 0 Checklist Items — Personnel CHANGES TO THE PROPOSED BUDGET AS PRINTED -OPERATING EXPENDITURES Personnel City Manager /Economic Development Reclassify one Public Information Specialist to Administrative Analyst Fire Reclassify one Department Assistant to Senior Fiscal Clerk Library & Cultural Arts Eliminate one Librarian II and reallocate funds to Part-time Library Assistant positions (Adds 1.96 Part-time FTE) Municipal Operations Reallocate Refuse Superintendent classification to Senior Management Analyst (eliminate Refuse) TOTAL CHANGES TO THE PROPOSED OPERATING EXPENDITURE BUDGET Budget Increase (Decrease) Approved $ 8,130 $ 3,974 $ (32,294) $ $ (20,190) $ Checklist Items — CIP Additions lei: /AM44f— •Ii1:I�J: • - • - ICI ■I�3 1�F�� li�i�� ■�6 ».� »►1 ■]�i�1:7 3 Department/Account Number /Description Capital Improvement Project 7013- C2002066 CdM Entry Way 7261- C2002060 Old NewporL?W Coast Hwy Modification 7284- C2002060 Old NewportAV Coast Hwy Modification TOTAL CHANGES TO THE PROPOSED CIP EXPENDITURE BUDGET TOTAL CHANGES TO THE PROPOSED CIP EXPENDITURE BUDGET BY FUND General Fund Transportation & Circulation Fund Measure M Fund Total Changes to the Proposed CIP Exp Budget Approved $ 400;000 $ (500,000) $ (500,000) S (600,000) $ - $ 400,000 $ {500,000} $ (500,000) $ (600,000) $ a How to Balance Proposals — Some Ideas... Improvements? Additional Policing on the Peninsula Objective: Better manage unruly evening crowds on the Peninsula Proposal: Add 1 Sergeant, 3 Police Officers with vehicles and equipment Approximate Cost: $800,000 Funding Proposal (Included in Proposed Budget): • Raise parking rates to defray some costs to visitors • Residents with annual passes less impacted • 98% of parking spaces would increase 0 -25 cents /hour • 65 business area parking spaces would incur 50 /hour premium after 2 hours Unfunded CdM Entryway Project Objective: Fund CdM Entryway Project Funding Proposal (For Discussion -Not included in proposed budget): Add paid parking on PCH between Avocado and Poppy Additional Benefits: Generate adequate parking turnover in commercial area Consistent with CdM Parking Management Plan recommendation #9 Creates ongoing funding source for neighborhood enhancements, further parking strategies and BID recommendations Timed parking already enforced so residential spillover should be minimal • n+ierer iocatron: Highway 1 (aVocaaa Avenue Lo Poppy avenue), all pun iic Strategy 9 lots /garages. Long Term More convenient and accessible for • Meter type: Include credit cards, pay -by- phone, and wireless technology. if needed, implement pricing to residents and visitors Target occupancy rates: 85% (on-street) and 90% (off-street) ensure parking availability. Generate adequate turnover Hours: To be determined. • Frking: As low as needed to achieve target rates. • Pnrkinn rovpnrrp• Npt rovpniip rp<prvprl fnr Inral imnrnvpmpnfc Proposed Mooring Rent Reduction Incremental Rents previously pledged to repay $15 million General Fund advance Lower Bay Dredging Rhine Channel Dredging Linda Isle Dredging Marina Park Marina Total Proposed Mooring $5,443,1445 Rent Reduction may 4,202,784 cost $750,000 /Year 30,730 6,132,190 $15,809,559 Grand Canal Dredging Harbor Piers & Gangway Maint. Lower Castaways Harbor Dredging Permit leaving very little to fund projects after repaying advance $500,000 $551,600 $200,000 $75,000 Recent Budget Activity • 4/30/15 Budget delivered to City Council, Finance Committee, Public Libraries & Posted On -line • 5/11/15 Finance Committee met to review and discuss budget. Recommended Budget be forwarded to Council for review. • 5/12/15 Council Study Session What's next? • 5/12/15 Council Meeting set the date for the public hearing on budget appropriation. • 5/26/15 Public hearing and adoption of FY 2015 -16 GANN Appropriations limit. • 7/1/15 Fiscal Year 2015 -16 begins. 0 Questions &Comments City's budget documents can be accessed at: www.newportbeachca.gov/budget �1 IS