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Home My WebLink About23 - FY 2009-10 Budget ReductionsCITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item No. 23 March 23, 2010 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: City Manager's Office Dave Kiff, City Manager (949) 644 -3000 or dkiff(a)newportbeachca.gov Administrative Services Department Tracy McCraner, Administrative Services Director (949) 644 -3123 or tmccraner(o)newportbeachca.gov SUBJECT: FY 2009 -10 BUDGET REDUCTIONS ISSUE: Should the City Council reduce budget appropriations in FY 2009 -10 in order to reduce the budget shortfall? RECOMMENDATION: 1. Approve Budget Amendment 10BA -035 reducing Workers' Compensation appropriations by $430,160. 2. Approve Budget Amendment 10BA -036 reducing General Liability appropriations by $188,165. 3. Approve Budget Amendment 10BA -037 reducing the CIP budget for deferred projects by $325,000 and transferring the Bristol Street North Landscape Improvement project, $100,000, from the General Fund, 7013- C2002028, to the Bristol Street Relinquishment Fund, 7253- C2002028. DISCUSSION: In the fall of 2009, staff identified a structural deficit in the FY 2009 -10 budget and initiated planning to address the deficit. The deficit is considered structural because our revenues are not sufficient to maintain service levels and capital improvement expenditures for the next several years. The current deficit for FY 2009 -10 is projected to be approximately $8,000,000. This includes a required transfer of $2,500,000 to the Facilities Financing Plan for which we will be recommending a one -time use of some reserves. That leaves a shortfall of approximately $5,500,000 in the General Fund. In January 2010, the City Council passed Resolution 2010 -4 which was a fiscal sustainability plan for the City of Newport Beach. In conjunction with the Fiscal FY 2009 -10 Budget Reductions March 23, 2010 Page 2 Sustainability Plan, the City Manager has developed a five -point plan to bridge the budget gap: 1. Reducing Operating Budget expenditures, both short and long -term 2. Rethinking our Capital Improvement Project (CIP) Approach 3. Appropriate Revenue Adjustments 4. Strategic Use of Reserves 5. Restructuring A reduction of operating expenditures was the focus at a meeting of Department Directors on February 12, 2010. Ideas to reduce operating budgets without negatively affecting service levels were discussed. Through a combination of position vacancies, reduced overtime, renegotiation of service contracts, purchase delays, etc., operating savings for FY 2009 -10 are estimated at $2,220,568. This is a conservative estimate and may be greater by the end of the fiscal year. Capital Improvement Projects were reviewed and 13 projects have been or will be completed this year and the accounts can be closed. This total is $859,356. A list of the completed projects is included as Attachment A. These accounts would have been closed at fiscal year end and the remaining balances returned to unappropriated fund balance. This transaction allows us to post this savings earlier than usual. Additionally, staff has reviewed inactive encumbrances and has identified ten encumbrances that should be closed, for a total of $190,043. Attachment B is a list of the inactive encumbrances. These encumbrances would have been identified for closure in August when all encumbrances are reviewed prior to rolling them forward to the next fiscal year. Again, this transaction allows us to post this savings earlier than usual. One of the first actions taken to address the budget deficit was an Early Retirement Incentive Plan (ERIP). Fifty -one employees participated in that plan. Their positions were either eliminated, frozen, or replaced at a lower -level allowing the City to save $1,850,000 in the current fiscal year, with savings of $3,000,000 expected in FY 2010- 11. Since the implementation of the ERIP, a number of vehicles have been returned as they are no longer needed. That savings for the balance of FY 2009 -10 is $37,768. Per Council Policy F -3, the above actions do not require Council approval, however we are including them here to allow for a complete picture of our recommended financial plan. Several identified actions do require Council approval including several transfers related to our internal service funds. Both the Workers' Compensation and General Liability reserves are currently in excess of the requirements identified in Council Policy F -2. We are recommending that a reduction in rates be implemented this fiscal year, reducing contributions slightly more than 13% in Workers' Compensation and reducing General Liability contributions by approximately 5.5 %. The reduction in Workers' Compensation is $430,160 of which FY 2009 -10 Budget Reductions March 23, 2010 Page 3 $379,777 is General Fund, and the reduction in General Liability is $188,165 of which $164,398 is General Fund. The following CIP projects are being recommended for deferral: 7013- C2002036 Street - Mariners Mile Business Area Improvements $ 150,000 7015- C4002016 Parks - Mariners Mile Boardwalk Study 100,000 7231- C1002012 Lifeguard HQ Office Remodel 35,000 7231- C5100894 Bayside Waterfront Walkway 40,000 $ 325,000 And finally, we are recommending that funding for the Bristol Street North Landscape Improvement project, $100,000, be transferred from the General Fund, 7013- 02002028, to the Bristol Street Relinquishment Fund, 7253- C2002028. At a subsequent Council meeting this spring, staff will return with some revenue enhancement options in the area of parking fees as well as additional internal service fund reductions pending Council approval of contracts for street sweeping and beach refuse container maintenance. Environmental Review: The City Council's approval of this agenda item does not require environmental review. Public Notice: This 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). Funding Availability: Approval of the attached budget amendment will reduce the City's FY 2009 -10 budget by $1,043,325 in addition to $3,307,735 of administrative reductions. Submitted by: J�� c, Dav iff City Manager Tracy McC a er Administra ' Services Director Attachments: A — Completed /Almost Completed CIP projects B — Inactive Encumbrances recommended for closure C — Budget Amendments FY 2009 -10 Budget Reductions March 23, 2010 Page 4 ATTACHMENT COMPLETED OR SOON TO BE COMPLETED CIP PROJECTS Remaining Division Account Account/Project Title Balance 7019 C1002022 Capital Purchase & Repair -Corp Yard Bldg I Rehab. $60,000.00 7011 C2320715 Facilities -Fire Station #7 Training Tower Improv. $46,000.00 7011 C5100907 Facilities - Little Corona Restroom Rehabilitation $37,395.87 7012 C2502004 Drainage - Subdrain Improvements $126,051.55 7013 C3001004 Street - Neighborhood Traffic Management $84,588.10 7013 C3170904 Street -Irvine Terrace Landscaping $10,278.00 7013 C2002027 CdM Beach Landscape Improvements (Breaker's Dr) $1,781.39 7019 C1002021 Capital Purchase & Repair - Central Library HVAC Rehab. $15,000.00 7013 C3002007 Street - Oceanfront Boardwalk Safety Improvement $10,000.00 7231 C4802001 Tidelands: Capital -Cstl Sand Rpinishmnt. Cooper. Project $30,000.00 7231 C2370522 Tidelands: Capital - Eelgrass Mitigation Bank $37,298.25 7231 C2371772 Tidelands: Capital- Mooring Layout Design $98,400.00 7231 C5400053 Tidelands: Capital -Oil Field Improvement Prog $302,563.00 $859,356.16 Enc # 29503 E0611001 E2310003 E2310003 E2340019 E2340020 E271001 E271001 E2710043 E2710045 E2710054 Department Police Administrative Services Fire Fire Fire Fire Planning Planning Planning Planning Planning FY 2009 -10 Budget Reductions March 23, 2010 Page 5 ATTACHMENT B INACTIVE ENCUMBRANCES Division Account Amount 1820 8091 9,559.50 0611 8080 18,126.02 2310 9010 1,509.00 2320 8080 9,400.00 2340 8141 11,997.29 2340 8010 26,110.00 2710 8080 1,319.57 2710 8293 41,951.92 2710 8080 6,324.74 2710 8080 28,745.00 2710 8294 35,000.00 190,043.04 Vendor CAPTARIS INC. BATCHELOR, PHIL OMEGA GROUP OMEGA GROUP ACULERT INTERNATIONAL CO MARICICH & ASSOCIATES PBS &J PBS &J ROMA DESIGN GROUP HOGLE- IRELAND INC LEIGHTON CONSULTING INC City of Newport Beach BUDGET AMENDMENT 2009 -10 EFFECT ON BUDGETARY FUND BALANCE: Account 010 Increase Revenue Estimates X 3605 Decrease Expenditure Appropriations AND 3605 530 Transfer Budget Appropriations SOURCE: 3605 0620 7370 from existing budget appropriations 7370 0640 from additional estimated revenues 0650 7370 from unappropriated fund balance EXPLANATION: This budget amendment is requested to provide for the following: To reduce expenditure appropriations for Workers' Compensation. ACCOUNTING ENTRY: BUDGETARY FUND BALANCE Fund Account 010 3605 230 3605 500 3605 530 3605 610 3605 NO. BA- 108A -035 AMOUNT: 5430,160.00 Increase in Budgetary Fund Balance X Decrease in Budgetary Fund Balance No effect on Budgetary Fund Balance Amount Description Debit Credit General Fund - Fund Balance $379,776.90 Tidelands Fund - Fund Balance $4,033.84 Water Fund - Fund Balance " $25,564.27 Wastewater Fund - Fund Balance $9,441.04 Equipment Fund - Fund Balance " $11,343.95 REVENUE ESTIMATES (3601) Fund /Division Account Description EXPENDITURE APPROPRIAT IONS (3503) Division Account .0210 7370 0310 7370 0410 7370 0510 7370. 0611 7370 0620 7370 0630 7370 0640 7370 0650 7370 1810 7370 1810 7371 1820 7370 1820 7371 1830 7370 1830 7371 1840 7370 1840 7371 1850 7370 1850 7371 2310 7370 2310 7371 2320 7371 2330 7370 2330 7371 2340 7370 2340 7371 2351 7371 2352 7371 2353 7370 2360 7371 Description CITY CLERK - WORK COMP CITY MGR - WORK COMP PERSONNEL -WORK COMP CITY ATTY - WORK COMP RES MGMT -ADMIN -WORK COMP FISCAL SVCS - WORK COMP INFORMATION TECHNOLOGY - WORK COMP REVENUE -WORK COMP ACCOUNTING - WORK COMP POLICE CHIEF - WORK COMP POLICE CHIEF - WORK COMP SAFETY PD- SUPPORT SVCS - WORK COMP PD- SUPPORT SVCS - WORK COMP SAFETY PD- PATROL - WORK COMP PD- PATROL - WORK COMP SAFETY PD- TRAFFIC - WORK COMP PD- TRAFFIC - WORK COMP SAFETY PD- DETECTIVE - WORK COMP PD- DETECTIVE - WORK COMP SAFETY FIRE -ADMIN - WORK COMP FIRE -ADMIN - WORK COMP SAFETY FIRE -OPS - WORK COMP SAFETY FIRE - PREVENTION - WORK COMP FIRE - PREVENTION - WORK COMP SAFETY FIRE -EMS - WORK COMP FIRE -EMS -WORK COMP SAFETY TRAINING -FIRE - WORK COMP SAFETY TRAINING- LIFEGUARDS - WORK COMP SAFETY TRAINING -JR GIRDS - WORK COMP FIRE - LIFEGUARDS - WORK COMP SAFETY $473.80 $1,069.51 $856.17 $1,283.97 $839.21 $2,724.89 $4,912.29 $2,293.97 $1,143.05 $288.53 $9,038.85 $6,564.89 $10,258.96 $133.36 $77,024.27 $3,753.05 $15,503.94 $404.65 $32,350.44 $1,172.67 $3,312.16 $65,424.64 $126.15 $2,774.50 $204.08 $4,274.17 $1,101.53 $461.65 $1,649.74 $11,170.83 City of Newport Beach BUDGET AMENDMENT 2009 -10 EFFECT ON BUDGETARY FUND BALANCE: Account 2710 Increase Revenue Estimates X 7370 Decrease Expenditure Appropriations AND 7370 2920 Transfer Budget Appropriations SOURCE: 7370 3110 from existing budget appropriations 3130 from additional estimated revenues 3140 from unappropriated fund balance EXPLANATION: This budget amendment is requested to provide for the following: To reduce expenditure appropriations for Workers' Compensation. ACCOUNTING ENTRY: EXPENDITURE APPROPRIATIONS (3603) Division Account 2710 7370 2720 7370 2910 7370 2920 7370 2930 7370 3110 7370 3130 7370 3140 7370 3150 7370 3170 7370 3180 7370 4002 7370 4010 7370 4020 7370 4030 7370 4040 7370 4050 7370 4310 7370 4320 7370 4330 7370 4340 7370 4350 7370 4410 7370 5050 7370 5100 7370 5200 7370 5300 7370 2371 7370 2372 7370 5500 7370 5600 7370 6110 7370 Signed PLAWADMIN - WORK COMP PLAN -ECON DEVT - WORK COMP BLDG -ADMIN - WORK COMP BLDG- INSPECTIONS - WORK COMP BLDG -PLN CHK/PRMITS - WORK COMP GS -ADMIN -WORK COMP GS -FIELD MAIN - WORK COMP GS- OPERATIONS SUPPRT- WORK COMP GS- REFUSE - WORK COMP GS -PARKS - WORK COMP GS- STREET TREES - WORK COMP. CULTURAL & ARTS - WORK COMP SUPPORT SERVICES - WORK COMP BALBOA BRANCH - WORK COMP CDM BRANCH - WORK COMP MARINERS BRANCH - WORK COMP CENTRAL LIBRARY - WORK COMP SUPPORT SERVICES - WORK COMP ADULT SPORTS - WORK COMP FEE BASED CLASSES - WORK COMP AQUATICS - WORK COMP YOUTH SPORTS- WORK COMP OASIS - WORK COMP PW -ADMIN -WORK COMP PW- ENGINEERING - WORK COMP PW -TRANS DEVT- WORK COMP UTILITIES - ELECTRICAL - WORK COMP TIDELANDS - WORK COMP PARKING OPS - WORK COMP UTILITIES -WATER UTIL -WORK COMP UTILITIES - WASTEWATER - WORK COMP EQUIP MAINT- MAINT- WORK COMP NO. BA- 10BA -035 AMOUNT: Sa30,180.00 Increase in Budgetary Fund Balance X Decrease in Budgetary Fund Balance No effect on Budgetary Fund Balance $2,645.36 $677.35 $1,004.34 $3,131.32 $2,471.04 $1,077.96 $16,969.18 $22,411.64 $21,847.11 $16,913.13 $181.39 $93.42 $3,440.92 $357.32 $270.06 $712.36 $3,350.16 $2,935.44 $721.86 $192.47 $435.79 $886.69 $1,673.49 $962.01 $3,538.94 $4,785.97 $3,500.23 $2,603.14 $1,430.70 $25,564.27 $9,441.04 $11,343.95 " Automatic Svstem Er Financial Approval: Administrative Services Director Date Signed: Administrative Approval: City Manager Date Signed: City Council Approval: City Clerk Date City of Newport Beach BUDGETAMENDMENT 2009 -10 EFFECT ON BUDGETARY FUND BALANCE: Fund Account Increase Revenue Estimates X 230 Decrease Expenditure Appropriations AND 500 3605 Transfer. Budget Appropriations SOURCE: 610 3605 from existing budget appropriations 8340 from additional estimated revenues 8340 from unappropriated fund balance EXPLANATION: 0650 This budget amendment is requested to provide for the following: To reduce expenditure appropriations for General Liability. ACCOUNTING ENTRY: BUDGETARY FUND BALANCE Fund Account 010 3605 230 3605 500 3605 530 3605 610 3605 REVENUE ESTIMATES (3601) Fund /Division Account EXPENDITURE APPROPRIATIONS (3603) Division Account 0110 8340 0210 8340 0310 8340 0510 8340 0611 8340 0620 8340 0630 8340 0640 8340 0650 8340 1820 8340 2310 8340 2320 8340 2330 8340 2340 8340 2360 8340 2710 8340 2720 8340 2910 8340 2920 8340 2930 8340 3110 8340 3130 8340 3140 8340 3150 8340 3170 8340 3180 8340 4002 8340 4010 8340 4310 8340 4410 8340 5100 8340 5200 8340 5300 8340 2371 8340 5500 8340 5600 8340 6110 8340 Signed: Signed: Signed: NO. BA- 10BA -036 AMOUNT: $188,165.00 Increase in Budgetary Fund Balance Decrease in Budgetary Fund Balance % 1 e No effect on Budgetary Fund Balance - Description Debit Credit General Fund - Fund Balance ' $164,397.73 Tidelands Fund - Fund Balance ' $67.21 Water Fund - Fund Balance $12,898.28 Wastewater Fund - Fund Balance $6,446.00 Equipment Fund - Fund Balance $4,355.78 Description CITY COUNCIL - GENERAL LIA3ILITY CITY CLERK- GENERAL LIABILITY CITY MGR- GENERAL LIABILITY CITY ATTY- GENERAL LIABILITY RES MGMT -ADM IN - GENERAL LIABILITY FISCAL SVCS - GENERAL LIABILITY INFO TECHNOLOGY - GENERAL LIABILITY REVENUE - GENERAL LIABILITY ACCOUNTING - GENERAL LIABILITY PD- SUPPORT SVCS - GENERAL LIABILITY FIRE -ADMIN - GENERAL LIABILITY FIRE -OPS- GENERAL LIABILITY FIRE - PREVENTION - GENERAL LIABILITY FIRE -EMS - GENERAL LIABILITY FIRE - LIFEGUARDS - GENERAL LIABILITY PLAWADMIN -GENERAL LIABILITY PLAN -ECON DEVT - GENERAL LIABILITY BLDG - ADMIN - GENERAL LIABILITY BLDG- INSPECTIONS - GENERAL LIABILITY BLDG -PLN CHKIPRMITS - GENERAL LIABILITY GS -ADMIN - GENERAL LIABILITY GS-FIELD MAIN - GENERAL LIABILITY GS- OPERATIONS SUPPRT- GENERAL LIABILITI. GS- REFUSE - GENERAL LIABILITY GS-PARKS -GENERAL LIABILITY GS- STREET TREES - GENERAL LIABILITY CULTURAL & ARTS - GENERAL LIABILITY SUPPORT SERVICES - GENERAL LIABILITY SUPPORT SERVICES - GENERAL LIABILITY OASIS - GENERAL LIABILITY PW- ENGINEERING - GENERAL LIABILITY PW -TRANS DEVT - GENERAL LIABILITY UTILITIES - ELECTRICAL - GENERAL LIABILITY TIDELANDS - GENERAL LIABILITY UTILITIES -WATER UTIL - GENERAL LIABILITY UTILITIES - WASTEWATE - GENERAL LIABILITY EQUIP MAINT - MAINT - GENERAL LIABILITY Financial Approval: Administrative Services Director Administrative Approval: City Manager City Council Approval: City Clerk $18.01 $37.03 $36.63 $69.53 $132.22 $84.48 $38802 $100.32 $59.89 $82,875.66 $67.19 $3,934.73 $63.08 $119.98 $8,099.02 $864.73 $353.34 $63.28 $226.37 $130.07 $1,516.68 $16,340.24 $4,443.96 $14,534.83 $3,666.17 $1,329.21 $12.14 $280.21 $3,007.35 $523.33 $7,137.67 $12,523.64 $1,358.74 $67.21 $12,898.28 $6,446.00 $4,355.78 Date City of Newport Beach NO. BA 10BA -037 BUDGET AMENDMENT 2009 -10 AMOUNT: $a2s,000.00 EFFECT ON BUDGETARY FUND BALANCE: Increase Revenue Estimates Increase in Budgetary Fund Balance NX Decrease Expenditure Appropriations AND �X Decrease in Budgetary Fund Balance Transfer Budget Appropriations No effect on Budgetary Fund Balance 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 reduce expenditure appropriations from several CIP projects that are recommended to be deferred and to transfer funding for the Bristol Street North Landscape improvements from the General Fund to the Bristol Street Relinquishment Fund. ACCOUNTING ENTRY: BUDGETARY FUND BALANCE Fund Account 010 3605 230 3605 253 3605 REVENUE ESTIMATES (3601) Fund /Division Account EXPENDITURE APPROPRIATIONS (3603) Description General Fund - Fund Balance Tide & Submerged Land Fund -Fund Balance Bristol Street Relinquishment Fund -Fund Balance Description Amount Debit Credit $350,000.00 $75,000.00 $100,000.00 ` Division Account Description 7013 C2002036 Street - Mariners Mile Buisness Area Improvements $150,000.00 7015 C4002016 Parks - Mariners Mile Boardwalk Study $100,000.00 7231 C1002012 Tidelands: Capital- Lifeguard HQ Office Remodel $35,000.00 7231 C5100894 Tidelands: Capital - Bayside Waterfront Walkway $40,000.00 7013 C2002028 Street - Bristol North Landscape Improvements $100,000.00 7253 C2002028 Street - Bristol North Landscape Improvements $100,000.00 ` Automatic System Entry. Signed: Financial Approval: Administrative Services Director Date Signed: Administrative Approval: City Manager Date Signed: City Council Approval: City Clerk Date