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FY 2010 -11 Budget Overview
Agenda
• Budget Process
• Assumptions
• Revenues
• Expenditures
• Reserves & Fund Balance
• Pending Issues
City Charter Budget Provisions
• Fiscal Year is July 1 through June 30 (Section 1100)
• Delegates authority for preparation to the City
Manager for recommendation to the City Council
(Section 110 1)
• Requires budget submission to the City Council at
least 35 days prior to the beginning of each fiscal
year; Proposed Budget was distributed on May 7
(Section 1102)
• Requires public notice, scheduled for tonight, May
25, and public hearing, scheduled for June 8
(Section 1103)
City Charter Budget Provisions
• Council may modify budget before adoption
(Section 1104)
• Council to adopt budget on or before June 30
(Section 1104)
• Council may amend the budget after adoption
(Section 1105)
• Council may also reduce appropriations if
deemed necessary (Section 1105)
• All appropriations lapse at the end of the fiscal
year if not expended or legally encumbered
(Section 1105)
Budget Preparation Process
• Nov — Project current year financial forecasts.
• Dec — Prepare preliminary revenue estimates and
balance revenues and expenditures to ensure reserves
are fully funded.
• Jan — Establish budget ceilings.
• Feb /Mar — Departments submit budgets for City
Manager review.
• Apr — The Proposed budget is printed and distributed.
• May —City Council review.
• Jun — Public Hearings are conducted and budget is
adopted
City's Fund Structure
Fund Type Definition Fund Names
General Fund Chief operating fund in the City's budget used to account
for all financial resources exceptthose required to be
accounted for in another fund.
Special Revenue Funds Used to accountfor revenue derived from specific taxes or State Gas Tax, Measure M,
revenue sources restricted for a specific purpose. Environmental Liability,
Contributions, etc.
Debt Service Funds Used to accountfor debt service transactions including Library COP, Civic Center
revenue collections and payments of principal and (Major Facilities Replacement
interest on long -term obligations of the City. Debt Service)
Capital Projects Funds Used to accountfor financial resources to be used for the Oasis Sr. Center, Marina Park,
acquisition or construction of major capital facilities. Sunset Ridge, Civic Center, etc.
Internal Service Funds Used to allocate the cost of providing centrally managed Insurance Reserve, Retiree
services to departments on a full cost recovery basis. Medical, Compensated
Absence, Equipment
Permanent Funds Used to report resources that are legally restricted to the Ackerman Endowment and Bay
extentthat only earnings and not principal may be used Dredging Fund
to support a particular activity_ (Robinson /Skinner
Enterprise Funds Business -type activities, self- supporting in thatthey are Water and Wastewater
financed through user charges_
Revenue Budgeting
• Known Factors
• Historical Analysis
• State and County Issues
• Economy
• Economic Development
• Growth Expectations
• Department Input
FY 2010 -11 Revenue, All Funds
Property Taxes $ 70,642,840 • Property Taxes - 33%
Sales & Other Taxes
43,622,841
Other Revenue
4,205,749
■ Sales & Other Taxes - 20%
Use of Money & Property
19,055,248
Fines, Forfeitures, & Penalties
3,651,500
Other Revenue - 2%
Charges for Services
13,940,895
Intergovernmental Revenue
10,494,999
■ Use of Money & Property - 9%
Licenses, Fees, & Permits
4,213,975
Enterprise Fund Revenue
27,318,052
■ Fines, Forfeitures, & Penalties -
Internal Service Fund Revenue
18,369,103
Total Revenues
215,515,202
E Charges for Services - 6%
Other Financing Sources Use*
130,000,000
Total Revenues and Other Sources
$ 345,515,202
■ Intergovernmental Revenue - 5 0r
* Bond proceed estimate ® Licenses, Fees, & Permits - 2%
Enterprise Fund Revenue - 12%
■ Internal Service Fund Revenue - 9%
FY 2010 -11 General Fund Revenues
Property Taxes
$ 70,642,840 ■ Property Taxes - 48%
Taxes Other Than Property
43,622,841
Licenses and Permits
2,663,975 ■ Taxes Other Than Property -30°/
Intergovermental
1,840,272
Charges for Current Services
13,878,895 1- icenses and Pernuts - 2%
Fines, Forfeitures & Penalties
3,651,000
Use of Money and Property
9,213,907 ■ Intergovermental -1%
Other Revenue
433,050
$145,946,780 ■ Charges for Current Services - 10%
■ Fines, Forfeitures & Penalties - 3%
Usc of Money and Property - 6%
Other Revenue - 0%
Top Three General Fund Revenues
Revenue Category FY 2009 -10 FY 2010 -11 Revenue Assumption
Total Property Tax
Sales Tax & In Lieu of Sales Tax*
Transient Occupancy Tax **
Total
$
71,723,296
$
70,642,840
$
20,502,660
$
23,667,007
$
10,806,095
$
11,485,034
47.1% Decrease-1.51%
15.8% Increase 8.2%
7.6% Increase 6.2%
$ 103,032,051 $ 105,794,881 70.5%
*Projected increase in Sales Taxis 8.2% for FY 2010 -11; however, the FY 2009 -10 projected revenue includes a ($1.2M) refund to the
State for an overpayment of In Lieu Sales Taxes made during FY 2008 -09. If this correction were added back to FY 2009 -10 the
increase would reflect the 8.2% assumption.
** For improved disclosure, effective FY 2010 -11, the Conference & Visitor's Bureau contribution is being reported as a separate revenue
line item in the budget as opposed to being consolidated with TOT revenue. This will improve the analytical review of actual TOT amounts
on a prospective basis.
Principal Property Taxpayers
2009 (CAFR)
Percent of
Total City
Taxable
Taxable Assessed
Assessed
Taxpayer
Value
Rank
Value
Irvine Company
$ 1,198,690,765
1
3.16%
Irvine Apartment Communities LP
357,260,080
2
0.94%
4000 MacArthur Limited Partnership
143,770,581
3
0.38%
Newport Bluffs LLC
135,435,013
4
0.36%
Balboa Bay Club Inc.
127,595,495
5
0.34%
Jazz Semiconductor Inc.
125,900,087
6
0.33%
100 Bayview LLC
121,735,889
7
0.32%
UDR Newport Beach North Ltd. Partner.
115,457,240
8
0.30%
Coronado South Apts. Ltd. Partnership
112,371,413
9
0.30%
HHR Newport Beach LLC
85,182,642
10
0.22%
$ 2,523,399,205
6.65%
Expenditure Budgeting Policies
• Council priorities — City Manager and
department budget recommendations were
made in support of the Council's priorities and
with an emphasis on the following areas of the
City Council approved Fiscal Sustainability
Plan:
Fiscal Sustainability Plan
• Establish and maintain appropriate cash
reserves. (FSP #4)
• Manage Facilities Financing Plan to not exceed
the 5% of General Fund expenditures
threshold. (FSP #5)
• Review revenue performance no less than
quarterly and make appropriate budget
adjustments in advance of budget year end if
revenue performance is not meeting
projections. (FSP #6)
Fiscal Sustainability Plan
• Consider competitive contracting of services
and equipment when appropriate and where
clear, cost - effective alternatives exist. (FSP #9)
• Establish appropriate cost - recovery targets for
fee structure and annually adjust fee structure
to ensure that fees continue to meet cost
recovery targets. (FSP #11)
• Work in partnership with employees to ensure
fair compensation and that costs related to
pension and other benefits are appropriately
allocated between employer and employee.
(FSP # 13)
Items Included in the Budget
• Council Reserve Fund Policies.
• Approved positions and recommended position
changes.
• Merit step increases.
• Funding for a City -wide classification and
compensation study, an IT study, and a fleet
management study.
• Known MOU decreases for Fire and Lifeguards.
• Funding for new OASIS facility staffing and
operations.
• Civic Center contracts.
FY 2010 -11 Expenditures, All Funds
1* 6 0
Salaries & Benefits $122,356,283
Maintenance & Operations 60,555,409
Capital Outlay 1,850,781
Debt Service 2,979,432
CI P 51,043,789
$ 238,785,694
■ Salaries & Benefits -51.2%
■ Maintenance & Operations - 25.4%
■ Capital Outlay - 0.8%
■ Debt Service - 1.2%
■CIP -21.4%
Total General Fund Expenditures
Salaries & Benefits $106,876,262
Maintenance & Operations
Capital Outlay
Debt Service
CIP
35,406,812
978,781
780,000
4,790,100
$148,831,955
• Salaries & Benefits - 72%
• Maintenance & Operations - 24%
• Capital Outlay -1%
• Debt Service - 1%
■CIP -3%
Expenditure Summary
2009 -10 2009 -10 Change from 2010 -11 Change
Original Revised Mid -Year Proposed from
Function and Activities Budget Budget Budget Adj. Budget Revised
.e3 ►1 =C7_\0191k►IRle111DIC3a1
General Government
$
16,281,291
$
15,521,319
-4.67%
$ 15,516,702
-0.03%
Public Safety
$
78,617,750
$
78,084,316
-0.68%
$ 76,878,354
-1.54%
Community Development
$
8,746,353
$
8,819,164
0.83%
$ 7,910,348
- 10.31%
Public Works
$
31,026,388
$
30,117,757
-2.93%
$ 28,892,972
-4.07%
Community Services
$
13,790,978
$
13,905,106
0.83%
$ 14,063,479
1.14%
Debt Service
$
-
$
-
n/a
$ 780,000
n/a
Total General Fund Operating
$
148,462,760
$
146,447,662
-1.36%
$ 144,041,855
-1.64%
General Fund CIPs
$
8,636,613
$
8,162,989
-5.48%
$ 4,790,100
- 41.32%
Total General Fund Budget
$
157,099,373
$
154,610,651
-1.58%
$148,831,955
-3.74%
TOTAL CITY BUDGET
Total Operating Budget
$
195,805,687
$
196,486,304
-0.35%
$187,741,905
-4.45%
Total CIP Budget
$
60,784,459
$
60,962,102
-0.29%
$ 51,043,789
- 16.27%
Total City Budget
$
256,590,146
$
257,448,406
-0.33%
$238,785,694
-7.25%
Less Internal Charges
$
(14,938,989)
$
(14,938,989)
0.00%
$ (14,149,469)
-5.28%
Total City Budget Net of Internal
$
241,651,157
$
242,509,417
-0.36%
$224,636,225
-7.37%
Debt Service Expenditures
EM
Debt Service Estimates
2010.11
2011
Yearof
Original
Balance
Balance
Total
Principal
Final
Issuance
0710112010
Additions Deletions
0613012011
Payments
Interest
Paid to Date
Payment
Balboa Parking Lot Loan (608 E. Balboa)
1,500,000
1,500,000
(750,000)
750,000
780,000
30,000
750,000
2012
Balboa Marina Loan
3,457,930
932,934
(195,080)
737,854
237,062
41,982
2,720,076
2016
Pre - Annexation Agreement
18,000,000
8,400,000
(1,200,000)
7,200,000
1,200,000
10,800,000
2017
Refunding Library COP
7,330,000
3,990,000
(360,000)
3,630,000
563,025
203,025
3,700,000
2019
Section 108 Loan
2,400,000
1,883,000
(95,000)
1,788,000
199,345
104,345
612,000
2024
Total Debt Service
32,687,930
16,705,934
(2,600,080)
14,105,854
2,979,432
379,352
18,582,076
Internal Service Fund Expenses
ONEquipment Replacement $ 960,500
Equipment Maintenance
Compensated Absences
Workers' Compensation
General Liability
Retiree Medical Insurance
2,070,898
1,635,100
2,623,400
2,495,100
5,848,000
$15,632,998
• Equipment Replacement
• Equipment Maintenance
• Compensated Absences
• Workers' Compensation
• General Liability
• Retiree Medical Insurance
FY 2010 -11 Budgeted Positions
300
250
200
150
100
50
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F/T
FTE
City Council
0.00
0.07
City Clerk
3.00
0.00
City Attorney
10.00
0.70
Human Resources
10.00
1.50
Planning
22.00
0.40
City Manager
18.00
11.33
Building
31.00
1.16
Public Works
32.00
2.58
Utilities
55.00
0.50
Administrative Seances
53.00
4.97
Recreation
29.00
33.37
Library
41.00
26.48
General Services
108.00
3.00
Fire
156.00
33.13
Police
238.00
15.55
Total
806.00
134.74
300
250
200
150
100
50
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FY1 0 vs. FY1 1 Budgeted Positions
TIDELANDS FUND
City Manager - Harbor Resources
WATER ENTERPRISE FUND
SEWER ENTERPRISE FUND
7.00 8.77
35.00 6.28
13.00 1.75
5.00 8.77
37.00 0.50
14.00 0.00
-2.00
-3.78
EQUIPMENT FUND 15.00 0.75 13.00 0.75 -2.00
TOTALS 833.00 142.31 806.00 134.74 -34.57
FY 2009 -10
FY 2010 -11
Original Budget
Original Budget
F/T
FTE
FIT
FTE
Variance
Administrative Services
58.00
4.97
53.00
4.97
-5.00
34.00
1.16
31.00
1.16
-3.00
modBuilding
City Attorney
8.00
0.40
10.00
0.70
2.30
City Clerk
3.00
0.00
3.00
0.00
0.00
City Council
0.00
0.07
0.00
0.07
0.00
City Manager
14.00
2.56
13.00
2.56
-1.00
Fire
156.00
35.26
156.00
33.13
-2.13
General Services
107.00
2.75
95.00
2.25
-12.50
Human Resources
10.00
2.00
10.00
1.50
-0.50
Library
43.00
26.48
41.00
26.48
-2.00
Planning
23.00
0.40
22.00
0.40
-1.00
Police
241.00
15.55
238.00
15.55
-3.00
Public Works
33.00
2.58
32.00
2.58
-1.00
Recreation
28.00
29.68
29.00
33.37
4.69
Utilities - Electrical
5.00
0.90
4.00
0.00
-1.90
GENERAL FUND
763.00
124.76
124.72
-26.04
737.00
TIDELANDS FUND
City Manager - Harbor Resources
WATER ENTERPRISE FUND
SEWER ENTERPRISE FUND
7.00 8.77
35.00 6.28
13.00 1.75
5.00 8.77
37.00 0.50
14.00 0.00
-2.00
-3.78
EQUIPMENT FUND 15.00 0.75 13.00 0.75 -2.00
TOTALS 833.00 142.31 806.00 134.74 -34.57
Budgeted Positions, Historical
FY 2004 -5 FY 2005 -06 FY 2006 -07 FY 2007 -08 FY 2008 -09 FY 2009 -10 FY 2010 -11
F/T F/T FIT FIT F/T F/T F/T
Administrative Services 50 53 56 56 56 58 53
Building 29 29 29 33 34 34 31
City Attorney 5 5 5 3 8 8 10
City Clerk 3 3 3 3 3 3 3
City Council 0 0 0 0 0 0 0
City Manager 19 20 13 14 14 14 13
Fire 148 150 153 156 156 156 156
General Services 109 109 110 112 107 107 95
Human Resources 9 9 9 9 10 10 10
Library 37 40 41 41 43 43 41
Planning 18 19 23 23 23 23 22
Police 237 238 240 241 241 241 238
Public Works 33 34 33 33 33 33 32
Recreation 23 25 25 27 28 28 29
Utilities - Electrical 5 5 5 5 5 5 4
GENERAL FUND 725 739 745 756 761 763 737
TIDELANDS FUND
City Manager - Harbor Resources 0 0 7 8 8 7 5
WATER ENTERPRISE FUND 34 34 34 35 35 35 37
SEWER ENTERPRISE FUND 13 13 13 13 13 13 14
EQUIPMENT FUND 13 13 15 15 15 15 13
TOTALS 785 799 814 827 832 833 806
Position Changes —Full-time
Position
Department Assistant
Paralegal
Budget Manager
Recreation Coordinator
Maintenance Worker II
Department
City Attorney
City Attorney
Administrative Services
Recreation (New OASIS Building)
General Services (Street Sweeping)
Full -time
1.00
1.00
1.00
1.00
( 3.00)
1.00
Total Expenditures All Funds & General Fund
Salary & Benefits
Maintenance & Operations
Capital Outlay
Debt Service
Total Operating Budget
CIP
Total Budget
Internal Charges
Net Budget
Total Expenditures
$122,356,283
54.47%
607555,409
26.96%
178507781
0.82%
299799432
1.33%
187,741,905
83.58%
517043,789
22.72%
238,7857694
148,831,955
(1471497469)
-6.30%
$ 224,6361225
100.00%
General Fund
Expenditures
$106,876,262
71.81%
35,406,812
23.79%
978,781
0.66%
780,000
0.52%
144,041,855
96.78%
4,790,100
3.22%
148,831,955
0.00%
$148,831,955 100.00%
Special Financial Reserves
CITY OF NEWPORT BEACH SPECIAL FINANCIAL RESERVES
Reserve CIP Estimated
Proposed Transfers Expenditure Ending
FY 2009 -10 FY 2010 -11 FY 2010 -11 FY 2010 -11 FY 2010 -11
GENERALFUND
Accounting Reserves
Reserve for Inventories
Reserve for Long term receivables
Reserve for Prepaid Items
Reserve for Encumbrances
Affordable Housing Reserve
Designated Reserves
Reserved for Facilities Financing Plan
Senior Citizen Site
Off Street Parking
Paramedic Program (Hoag)
Recreation Instruction Reserve
Park In Lieu Fees
In Lieu Parking Fees
Neighborhood Enhancement Res. A
Neighborhood Enhancement Res. B
Oceanfront Encroachment
Cable Franchise
START Video
Hoag Circulation Improvements
Contingency Reserve (12 %)
Stabilization Reserves
Appropriations Reserve (Operations)
Appropriations Reserve (CIP rebudget)
Fair Value Adjustment
Reserve for PERS Rate Changes
FACILITIES FINANCING FUND (FFP Fund)
Reserved for Facilities Financing Plan
TOTAL SPECIAL RESERVES
219,698
219,698
-
-
219,698
425,000
425,000
-
-
425,000
451,138
451,138
-
-
451,138
1,686,724
1,686,724
-
-
1,686,724
27,500,000
27,500,000
(27,500,000)
-
-
23,790
23,790
-
-
23,790
(11,932)
(932)
-
-
(932)
406,201
406,201
-
-
406,201
446,983
481,983
-
-
481,983
733,871
733,871
-
-
733,871
(44,532)
-
-
-
-
152,030
152,030
-
(328,000)
(175,970)
11,835
199,001
-
-
199,001
71,645
251,645
-
-
251,645
1,357,436
1,357,436
-
-
1,357,436
316,417
303,917
-
-
303,917
134,760
134,760
-
-
134,760
18,081,425 2
17,867,635
-
-
17,867,635
11,660,321
11,660,321
(2,561,023)
-
9,099,298
3,729,100
3,729,100
-
(3,729,100)
-
5,000,000
5,000,000
-
-
5,000,000
-
-
30,061,023 1
(10,000,000)
20,061,023
72,351,910
72,583,318
__(11, 057, 1001
58,526,218
1 During FY 2011 the Facilities Financing Reserve will be moved from the General Fund into the FFP Fund. We estimate
approximately $10,000,000 needed to cash fund completion of the OASIS Senior Center CIP.
2 The FY 2011 Contingency Reserve has been reduced to = 12% of annual General Fund expenditures per Council Policy F -2
Balancing the General Fund Budget
Information Technology Consulting $ $ (40,000.
Class and Comp Study $ $ (100,000.
Subtotal $ - $ (140,000.
Revenue Estimate Increase $ - $ 1,107,735.00
Revenue Contract Amendments / Fee Increases $ 30,000.00 $ 2,356,262.00
Subtotal $ 30,000.00 $ 3,463,997.00
Transfer from Facilities Financing Plan Reserve to fund
capital improvements $ 1,483,940.00
NET BUDGET DEFICIT $
FY 2010
FY 2011
NET DEFICIT
$
(8,000,000.00)
$
(11,700,000.00)
MID -YEAR BUDGET ADJUSTMENTS:
Operational Budget Savings
$
2,992,579.00
$
4,956,912.00
Contract Re- negotiations and Outsourcing
$
1,560,800.00
$
209,743.00
CIP close -outs and deferrals
$
1,284,356.00
$
-
Internal Service Fund Surplus
$
618,325.00
$
618,325.00
Special Events Holiday (Employee Recognition)
$
30,000.00
$
30,000.00
Subtotal
$
6,486,060.00
$
5,814,980.00
Information Technology Consulting $ $ (40,000.
Class and Comp Study $ $ (100,000.
Subtotal $ - $ (140,000.
Revenue Estimate Increase $ - $ 1,107,735.00
Revenue Contract Amendments / Fee Increases $ 30,000.00 $ 2,356,262.00
Subtotal $ 30,000.00 $ 3,463,997.00
Transfer from Facilities Financing Plan Reserve to fund
capital improvements $ 1,483,940.00
NET BUDGET DEFICIT $
Pending Issues
• Lower Bay Dredging.
• Airborne Law Enforcement (ABLE) contract.
• PERS changes to actuarial assumptions.
• Funding for a City -wide classification and
compensation study, an IT study, and a fleet
management study.
• Known MOU decreases for PD and Miscellaneous
Bargaining Units.
• Funding for new OASIS facility staffing and operations.
• Civic Center contracts.
• Amendments to the City Manager's Proposed Budget.
• Council Policy F -3: "All proposed Council changes to the City
Manager's proposed budget shall be itemized on a budget
checklist."
Recurring Council Grants
Keco mending a S 175K cap
NOTE: This chart does not include waived fees from FY 2010 or projected for FY 2011
FY 11
Proposed
Recipient Funding for FY 10 Amount
Amount
Balboa Island Historical Society Operations
$15,000
$
10,435
Balboa Island Improvement Assn Flowers and holiday
decorations /storage
$11,250
$
7,825
CdM Chamber* CdM Christmas Walk
$15,000
$
10,435
Leadership Tomorrow Sponsorship
$10,000
$
6,957
Newport Beach Film Festival Sponsorship
$100,000
$
69,565
Newport to Ensenada Race Sponsorship
$20,000
$
20,000
**
Susan B. Komen Race for the Cure
$7,500
$
15,000
* **
OC Marathon Sponsorship
$50,000
$
34,783
$228,750
$
175,000
* Newport to Ensenada race contribution is contracted through FY 2010 -11.
** CdM Chamber also received $5,000 in FY 10 for marketing costs associated with the CdM
5K.
For FY 11,
* ** Susan G. Komen was previously reduced to $15K.
Also, please note that funding for the 2011 Restaurant Week was carried forward from
FY 2009 -10 to FY 2010 -11 per Council action on March 23, 2010.
Budget Goals in 2010 -11:
1. End June 2011 with a balanced budget via:
• Reductions in Expenses:
• Labor negotiations
• Additional retirement savings
• Assessment of Fire - Lifeguards, IT, Facility Maintenance,
Fleet Maintenance, more.
• Revenue Opportunities:
• Fair market value for harbor fees
• Thinking well outside the box:
• Oil Well management
• Parking meter management
2. Continuous customer service improvement — restructuring
3. Incorporate Performance -Based Budgeting