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Home My WebLink AboutA - Budget Overview - PowerPointMay 24, 2016 Joint Meeting Agenda Item No. A CITY OF NEWPORT BEACH BUDGET PRESENTATION FISCAL YEAR 2016-17 Dave Kiff, City Manager Dan Matusiewicz, Finance Director Tuesday, May 24, 2016 GF Revenues $199,222,163 T2.58% from FY 2015-16* FY 2015-16 was T4.52% from FY 2014-15 Trend over the last 6 years = T4.79% *Note: Net of a one-time $2.0 million receipt expected in 2015-16, the budget assumes Sales Taxes are expected to grow 3.4% during 2016-17. GF Operating Expenditures $190,127,787 T3.87% from FY 2015-16* FY 2015-16 was T8.92% from FY 2014-15 Trend over the last 6 years = T4.98% *Adjusting for PERS, MOUs, etc, GF Op Expenses down 0.2% YOY Net Change In Fund Balance Summary of the FY 2016-17 Proposed Budget General Fund (millions) Revenue Estimated Operating Revenue Total Revenues Expenditures $199.2 $199.2 Proposed Operating Expenditures $190.1 Proposed New CI P Appropriations 5.6 Total Expenditures $195.7 Plus Transfers In $8.9 Less Transfers Out (10.0) Less Planned Use of Reserves (2.5) Net Surplus $0.0 What are the YOY changes? Pension Costs - T$3.9M to $40.36M On accelerated schedule by choice, but... Safety -Cost is -70% of wages Non -safety -Cost is -35% of wages More EE PIERS Contributions - T$1 M offset (now at $9.5M/year) Safety employees pay up to 14.6% of salary Non -Safety employees pay up to 13.0% of salary What are the YOY changes? Labor MOUS - T~$3.2M Cost of Living Adjustments T 1-2.75% Health Care contributions T7.23% (non- PERSable) Other: Marina Park (75% offset by new revenues) — T0.26% of YOY change. Less staff, other - J$ 1.2M or ,0.81 % offset Summary of Changes YOY $3,500,000 $3,000,000 m a� pip $2,500,000 m m$2,000,000 } $1,500,000 LL E $1,000,000 U. m _ $500,000 V m $(500,000) L n. $(1,000,000) $(1,500,000) $2.9M 1.6% ■ CaIPERS Unfunded Acturarial Liability 0.911% 019 ■ Employee Agreements (MOUs) $0.9% ■ Employee Benefits (Cafeteria Plan) 0 $0.8 M $0.7 M ■ CaIPERS Increases 0.48% 0.38% $.6M ■ Overtime 0.33 0 $0.47% Employee Promotional Increases 0.26% Marina Park Other Completed encumbered contracts CaIPERS Employee Contributions -0.37% ° -$0.8M -0.56% Total Net Change -$1.0M Over PY 3.87% r Expenditures Grew. Did City Government Grow? i v a Pension Payments Labor Costs Wages Health Care Marina Park exp & rev Contingency Reserve 25% of a higher amount Investment in Harbor Some MOD contracts Net FTEs Down six, even with MP REASONS TO LIKE THE BUDGET Should I like or dislike this budget? Important Goals Met Budget is balanced. Reserve policies met (except one). PERS obligations fully funded, even advanced. Greater capital investment in Sea Walls, the Harbor. Met our "rule of thumb" GF CIP - $5.5M Includes good pavement management index of +80% CIP Master Plans fully programmed Including the Wastewater Master Plan. Important strategic savings continued Vehicle ISF, IT ISF, General Liability, more. Reforms & Reductions 16 net change in FTEs - includes 14 in Fire (savings of -$710,500) Three FFs (all were vacant) One Assistant Fire Chief/Fire Marshal 15 in MOD (savings of ~$631,800) T2 in Recreation (net cost of ~$70,000) T1 in PD (FT CSO - net cost of -$74,000) Reforms & Reductions Realigned the Vehicle ISF (Finance Committee) t$1M in one-time savings \,$350K/year in ongoing costs Improvements to CDD: Fire Plan Check overseen by CDD Two paths for Plan Check (inside, outside) Changes in Full-time Staffing FY 17 Full-time Position Changes 1 Civilian Police Position (3) Firefighters (approved in MOU) (1) Assistant Fire Chief (3) Limited Term Groundsworkers (1) Maintenance Worker (1) Utilities General Manager 1 Office Assistant (Recreation) 1 Recreation Coordinator (6)Net Change in Positions 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 $8.5 $8.5 $ - Facilities Maintenance Plan - Transfers 1.5 1.0 (.5) Vehicle Replacement Plans — Department Cost 3.3 2.7 (.6) Emergency Communication System - Transfers 1.0 .5 (.5) Other Equipment (Safety, IT, Parking & Rec) 1.6 1.8 (.2) Workers Compensation — Department Cost 2.8 2.8 - General Liability — Department Cost 4.1 4.1 - Compensated Absences — Department Cost 2.5 2.5 - Retiree Insurance (OPEB) — Department Cost 2.8 4.0 1.2 Total $28.1 $27.9 (.2) 15 REASONS NOT TO LIKE IT (BUT WHAT CAN OR CAN'T BE DONE... ) Should I like or dislike this Budget? Is this Budget Likable? • Personnel Costs • No pension alternatives • Cafeteria allowances • Enough outsourcing? • Overall efficiency • Locked into MOUs — but staffing levels can change. • Maybe someday, at PERS • A DC plan? Initiative? Reed-DeMaio • Yes, but non-PERSable • What's the community tolerance? • We wonder about this, too. Something worked on daily. What's Discretionary?* • Travel, Meetings, Training • Some: Contract services, Supplies, Postage, small capital outlay, supplies, etc. • Pubs, Dues, Council Grants • Some HR Programs • BID Support • Other Grants (NBFF, Boat Parade, more) • Fireworks • PD helicopter • CERT supplies, training • General Fund CIP ($5.5M) Staffing levels, program provision Salaries & Benefits (MOUs) Unfunded Pension Liability FLSA Overtime (Fire) Contracts, with COLAs Insurance, GL, Work Comp Facilities Maintenance Water purchases Electricity Debt Service More * CM's biased interpretation What's Discretionary? Amount rniinr:il Discretionary Grants $ A,, 000 Travel and Meetings $ 235,000 Training 597,000 20. of Postage 77,E Dues and Publications $ 200,000 Portion of Contracts/Services $ 200,000 Office Supplies Adverkis,ing/PR $ 30,000 $ "131,000 HR Programs (Wellne55, III, recognition) $ 53,000 50 of Recruiting (HR) $ 00'.5()0 Subtotal Green = $ 1,090,100 0.61% BID/merchantsAssn support Fireworks. (1uly4, Beat Parade) Helicopter (PDQ Homeless (PD) CERT & Related Public Works' General Fund CIP Subtotal Purple =1 $ .5,500,CCI-. Totals =1 $ 1,590,100 1 5 871,500 1 5 5-,500,000 1 8,067,600 1 x.90`"-- 80, 000 .50,000 700, 000 $ 5 000 3E�,500 Subtotal Blue - $ 871,500 0.31�r� Subtotal Purple =1 $ .5,500,CCI-. Totals =1 $ 1,590,100 1 5 871,500 1 5 5-,500,000 1 8,067,600 1 x.90`"-- Who Funds City Operations? Property Tax 17% of the 1 % Basic Levy Sales Tax 1 % of the 8% Sales Tax If you shop/eat here Other Parking permits (& fees) Rec & Sr. classes Fire/Medics program Plan check fees Water/wastewater rates Sales Tax 1% of the 8% Sales Tax at any restaurant, car dealership, etc Hotel Bed Tax 10% of the Room Rate 18% goes to VN B Property Tax About 17.1% is non-residential Business License Tax Development Impact Fees Parking, Income Properties, Tidelands, Rec & Sr. classes, more all DECISIONS TO MAKE The FY 2016-17 City of Newport Beach Budget What to do with $3.5M Wastewater Fund below Policy reserve levels. Delay got us into a hole. WMP said $7.5M Sewer CIP We spent $4.4M Sewer CIP Could mitigate a future rate increase. Shares "surplus" with most residents. Atypical to have GF support an Enterprise Fund If a rate increase is never approved, this is a band- aid. Other important GF needs/wants: Pension Debt & OPEB WCH Landscaping 22 THE BUDGET WORK OF THE FINANCE COMMITTEE Fiscal Year 2016-17 Finance Committee Budget Review • 9/16/15 Discussion of Proposed Budget Preparation Framework. • 10/15/15 Implementation of Budget Preparation Framework -Review of FY 16 Operating Budget, Session 1 (Recreational and Senior Services Department). • 11/12/15 Implementation of Budget Preparation Framework -Review of Operating FY 16 Budget, Session 2 (Police Department) Finance Committee Budget review, cont. • 12/10/15 Implementation of Budget Preparation Framework -Review of FY 16 Operating Budget, Session 3 (Fire Department). • 1/14/16 Implementation of Budget Preparation Framework -Review of FY 16 Operating Budget, Session 4 (Public Works Department). • 2/11/16 Implementation of Budget Preparation Framework -Review of FY 16 Operating Budget, Session 5 (Municipal Operations Department) Finance Committee Budget Review, cont. • 3/10/16 Review of FY 17 Budget Assumptions. • 4/28/16 First review of FY 17 Operating Budget • 5/4/16 Second review of FY 17 Operating Budget • 5/12/16 Third review of FY 17 Operating Budget 4.1 FINAL IMPORTANT THOUGHTS The FY 2016-17 City of Newport Beach Budget Our Future Pension UL may be at $300M (6-30-16) Pensions cost NB $40.4M/year in FY 16-17 --5x the Civic Center COPS ($8.2M/year) Trend is to $45.5M/yr by 2021, $52.8M/yr by 2026 The "What Ifs" are all bad: PERS return rate too optimistic? Worse mortality studies ahead? When's the next recession? OPEB Liability addressed well, but not completely addressed Our Future Costs rising faster than revenues 6 -year Trend: Revenues T4.52%, Expenses T4.98% And these were strong economic years, generally. Pensions are the big part of this — another $12M/year by 2026 When's the next recession? Will millennials' purchasing practices affect our revenue model? Airbnb, Uber, on-line purchases, more... What will the next 10 years bring? Questions & Comments City's budget documents can be accessed at: www.newportbeachca.gov/budget 0 30 QUESTIONS AND COMMENTS The FY 2016-17 City of Newport Beach Budget Budget Checklist—Amendments to the Proposed Budget Fiscal Year 2016-17 CHANGES TO THE PROPOSED BUDGET AS PRINTED - PERSONNEL RELATED Budget Department/Account Number/Description Increase (Decrease) Approved City Clerk Add 1.96 FTE Part -Time Department Assistants (Limited Term) for Records Management H Fire Department Reduction in overtime funding for modified summer surge ambulance program_ $ (80,5GG) ....................................................................................................................................................................................................................................................................................................................................................................................................................:................. Police Budget Checklist—Amendments to the Proposed Budget Fiscal Year 2016-17 CHANGES TO THE PROPOSED BUDGET AS PRINTED - MAINTENANCE & OPERATIONS Budget Increase (Decrease) Approved City Council `01005005 Funding for "Heroes Hall" at the OC Fair and Events Center $ 25,000 ...................................................................................................................................................................................................................................................................................................................................................................................................................................... 01 005001-811008 Expected airport analysis needs can be reduced from past years $ (241.000) ...................................................................................................................................................................................................................................................................................................................................................................................................................................... Policelinformation Technology Peninsula'vVireless Mesh Network Expansion 150,000 Municipal Operations Additional steam cleaning - Balboa Village & McFadden Square (Mayor Dixon)$ 37.500 ...................................................................................................................................................................................................................................................................................................................................................................................................................................... 01 09062-81 1 008 Increased cost of graffiti removal contract (prevailing wage) $ 30.000 ....................................................................................................................................................................................................................................................................................................................................................................................................................:................. Library & Cultural Arts Pacific Symphony on the Civic Green (Arts Commission) $ 60.000 ...................................................................................................................................................................................................................................................................................................................................................................................................................................... Balboa Village Chalk Art Festival (Arts Commission) 12.500 .......................................................................................................................................................................................................................................................................................................................................................................................................................................... Equipment Fund 7529032-911016 Funding adjustment needed based on change to proposed vehicle replacement $ (147,440) ...................................................................................................................................................................................................................................................................................................................................................................................................................................... Add'I funding needed for 800 MHz equipment based on quotes received after proposed budget was developed $ 13,954 ...................................................................................................................................................................................................................................................................................................................................................................................................................................... TOTAL CHANGES TO THE PROPOSED OPERATING BUDGET - M&O $ (59,486) TOTAL CHANGES TO THE PROPOSED OPERATING BUDGET - PERSONNEL AND M&O (78,646) Budget Checklist—Amendments to the Proposed Budget Fiscal Year 2016-17 CHANGES TO THE PROPOSED BUDGET AS PRINTED - CIP EXPENDITURES Budget Capital Improvement Project Increase (Decrease) Approved 70201931-980000-17WO1 0.1ater Main Master Plan Program 50.000 ....................................................................................................................................................................................................................................................................................................................................................................................................................:................. 70101-980000-17WO2 %Aiater t,laster Plan Program 125,000 ...................................................................................................................................................................................................................................................................................................................................................................................................................................... - TOTAL CHANGES TO THE PROPOSED DIP EXPENDITURE BUDGET TOTAL CHA N GES TO THE PROPOSED Circe EXPENDITURE BUDGET BY FUND Water Fund Total Changes to the Proposed CIP Budget 376,000 250.000 260,000 Budget Checklist—Amendments to the Proposed Budget Fiscal Year 2016-17 CHANGES TO THE PROPOSED BUDGET AS PRINTED -REVENUE DeparkmentlAccount Number/Description 01040402-521225 Contract with County for Haz Mat Inspections .................................................................................................................................................................................................................................................................................................................................................... TOTAL, CHANCES TO THE PROPOSED REVENUE BUDGET TOTAL CHANGES TO THE PROPOSED REVENUE BUDGET BYFUND General Fund Total Changes to the Proposed Revenue Budget Budget Increase (Decrease) $ (27.,250) .......................................................................... (27,250) (27,250) (27,250) Approved Proposed Use of Surplus Funds 2015-16 ❑ Contingency Reserve Growth ❑ Replenish General Liability Fund ❑ Newport Blvd Widening ❑ Dover/Westcliffe Pavement Quantities ❑ Corona del Mar Entry ❑ FIIN - Lido House Hotel Mitigation FY 2015-16 Budget Amendments 2016-17 ❑ Irvine Avenue Pavement/Landscaping ❑ City Parcels in Assessment Districts ❑ Median Landscaping ❑ Mariners Mile Study FY 2016-17 Neighborhood Ehancement ❑ City Manager Assignment (Uncommitted) GRAND TOTAL SOURCE ❑ 2014-15 Surplus ❑ 2015-16 Surplus Neighborhood Enhancement 880,000 78,000 175,000 975,000 $2,108,000 500,000 679,500 500,000 60,000 $1,739,500 3,500,000 $7,347,500 Meet/Reduce Obligations 4,000,000 3,000,000 $7,000,000 $0 $7,000,000 Total 4,000,000 3,000,000 880,000 78,000 175,000 975,000 $9,108,000 500,000 679,500 500,000 60,000 $1,739,500 $14, 347, 50 14,200,000 147,500 14, 347, 500