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Home My WebLink About2007/06/07 Agenda Packet I, I declare under penalty of perjury that I am employed by the City of Chula Vista in the ~ ~ f/.. Ifi of the City Clerk and that I posted thi~ t on the bulletin board according t~ requirements. ~-:?-~~ , <;;It!W-- CllY OF ,~.-{J7 Signed I~ CHtdIA VlsrA Cheryl Cox, Mayor Rudy Ramirez, Councilmember Jim Thomson, Interim City 1\1anager John McCann, Council member Ann Moore, City Attorney Jerry R. Rindone, Council member Susan Bigelow, City Clerk Steve Castaneda, Councilmember CITY COUNCIL WORKSKHOP June 7, 2007 6:00 P.M. CALL TO ORDER John Lippitt Public Works Center 1800 Maxwell Road ROLL CALL: Councilmembers Castaneda, McCann, Ramirez, Rindone, and Mayor Cox PLEDGE OF ALLEGIANCE TO THE FLAG AND MOMENT OF SILENCE PUBLIC COMMENTS Persons speaking during Public Comments may address the Council on any subject matter within the Council's jurisdiction that is not listed as an item on the agenda. State law generally prohibits the Council from taking action on any issue not included on the agenda, but, if appropriate, the Council may schedule the topic for future discussion or refer the matter to staff Comments are limited to three minutes. I. THIRD QUARTER FINANCIAL STATUS REPORT If you wish to speak on any item listed below, please fill out a "Request to Speak" form (available in the lobby) and submit it to the City Clerk prior to the meeting. QUARTERLY FINANCIAL STATUS REPORT FOR THE QUARTER ENDED MARCH 31, 2007 Presented for Council consideration, is the Financial Status Report for the third quarter of Fiscal Year 2006-2007. The detailed Financial Status Report for the quarter ending March 31, 2007, projects that the City will continue to maintain an 8% General Fund reserve level as required by Council policy. (Finance Director) Staff recommendation: Council accept the report. 2. FISCAL YEAR 2007-2008 PROPOSED BUDGET PRESENTATION . Introduction . General Fund 5-year Revenue and Expenditure Forecast . Fiscal Year 2007-2008 Proposed Capital Improvement Program . Fiscal Year 2007-2008 Proposed Budget . City Council Budget Staff recommendation: That Council hear the budget presentation. ADJOURNMENT to the Regular Meeting on June 12, 2007 at 6:00 p.m. in the Council Chambers. In compliance with the AMERICANS WITH DISABILITIES ACT The City of Chula Vista requests individuals who require special accommodations to access, attend, and/or participate in a City meeting, activity, or service request such accommodation at least forty-eight hours in advance for meetings and five days for scheduled services and activities. Please contact the City Clerk for specific information at (619) 691-5041 or Telecommunications Devices for the Deaf (TDD) at (619) 585-5655. California Relay Service is also available for the hearing impaired. Page 2 - Council Agenda htto://www.chulavistaca.gov June 7, 2007 City Council Workshop ~II?- --- ~ ""'" OlUlA VISTA Budget Workshop Agenda · Introduction · Fiscal Year 2006-07 Third Quarter Financial Report · General Fund 5-Year Forecast · Capital Improvement Program Overview · Fiscal Year 2007-08 Proposed Budget · Mayor and Council Budget 1 ~ Independent Financial Review · Reverting to a one-year budget cycle · Providing a more transparent identification of issues and constraints · Placing limitations on new expenditures · Freezing or eliminating unfilled positions not required for core functions · Creating a facility maintenance fund Independent Financial Review · Basing near-term revenue forecasts and staffing decisions on the likelihood of a continued downturn in the housing market · Deferring the establishment of higher reserve funds until sufficient revenues become available · Continuing to transition to a program-level, performance-based budget process 2 ~If? - - 1: COY Of CHUlA VISfA General Fund Reserves Projected as of June 30, 2007 PROJECTED GENERAL FUND AVAILABLE BALANCE General Fund Resenes July 1, 2006 Projected Re\enues & Transfers In Projected Expenditures & Transfers Out Revenues o\er (under) Expenditures "ProJected Available Fund Balance 85 of June 30, 2007 $ 14,929,410 $ 164,923,405 $ 166,738,376 $ $ (1,814,971) 13,114,439 Reserves as Percentage of General Fund Operating Budget 8.0% 3 General Fund FY 06-07 Projected Total Revenue Shortfall Mid-Year Appropriations Total Expenditure Savings ($7.1 million) ($0.6 million) $5.9 million Net Impact to Reserves ($1.8 million) Third Quarter Report · Recommendation: Council accept the Report 4 .':.' ~lf? - - ~- c",,,, CHUlA VISTA ~\f? - - ~++ cm", CHUlA VISIA 5- Year Forecast: Revenue Trends General Fund Revenues $180 $160 $140 $120 $100 $80 $60 $40 $20 $0 FY 03 Actual FY 04 Actual FY 05 Actual FY 06 Actual FY 07 Estimated FY 08 Estimated . Sales Tax . Interfund Reimb, . TOT II Property Taxes . Transfers In II Charges for Sel"otces o Motor Vehicle Licenses _ De-.elopment Rev. . Franchise Fees . Utility Users Taxes . Other Local Taxes 0 Other Re-.enue 5 ~I'?- 1M ""'" CHUlA VJSrA 5- Year Forecast: Revenue Trends Sales Tax Revenue and Change in Growth ., $45 c: ~ $40 i $35 $30 $25 $20 $15 $10 $5 $0 FY 89 FY 91 FY 93 FY 95 FY 97 FY 99 FY 01 FY 03 FY 05 FY 07 FY 09 FY 11 1_ Sales Tax -+- % Growth I ~\I?- 't.",,,,~ ""'" CHUlA VlSfA 5- Year Forecast: Revenue Trends Sales Tax Comparison - San Diego County Cities 10% 8% 6% 4% 2% 0% ~2% .4% -6% -8% . Chula Vista . San Diego . Coronado . EI Cajon Escondida Third Quarter Comparison (FY 2006 to FY 2007) . Il'T'perial Beach . Vista Solana Beach . Santee _ Carlsbad . San Marcos . San Diego County fI Oceanside _ Del Mar . Poway . Lemon Grove . Encinitas . La Mesa . National Ci '. 20% 15% 10% 5% 0% -5% 6 ~Ir?- - - ~ 0"'''' CHUlA VlSfA 5- Year Forecast: Revenue Trends Sales Tax Comparison* - State of California 6% 5% 4% 3% 2% 1% 0% -1% -2% -3% ~4% . Chula Vista . S.F. Bay Area . South Coast Third Quarter Comparison (FY 2006 to FY 2007) . Central Valley _ Inland Empire . Statewide . North Coast ;;r Central Coast . Sacramento VaHey ,.. Adjusted for inflation ~Ir?- --- 5- Year Forecast: Revenue Trends c~'" CHULA VISTA Sales Tax Per Capita $350 County Average $139/State Average$141 $300 $250 $200 $150 $100 $50 $- Carlsbad Chula Vista Del Mar EI Cajon Escondida Imperial National City San Diego $241 $106 $328 $220 $205 Beach $25 $243 $152 . General Retail m Construction . Food products II Business to Business o Transportation . Miscellaneous 7 ~I!?- ~ 5- Year Forecast: Revenue Trends '"'''' CHUIA VISTA Historical Change in Assessed Value and Proiected out Five Years 25% 20% 5% 15% 10% T""",4" 0% 4% 1995 1996 1997 1998 1999 2000 2001 200220032004 2005 2006 2007 2008 2009 2010 2011 2012 I-o-Chula Vista-*-- County o.eraul ~\I?- ~~~ 5- Year Forecast: Revenue Trends '"'''' CHUIA VISTA Development Activity Residential Building Permits Issued Bv Fiscal Year 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 1998 2000 2002 2004 . Single Family 2006 2008 2010 D r..tJ~i-Family I 2012 8 Potential Budgetary Gap to be Closed for Fiscal Year 2008-09 · Projected Revenues · Projected Expenditures $170.3 million - $175.1 million · Projected Budget Gap - $4.8 million ~II?- ~ em", OlUlA VISTA 5- Year Forecast Projected General Fund Revenues and Expenditures $200 $190 $180 $170 $160 $150 $140 $130 $120 $110 $100 2001-02 2002-03 2003-04 2004-05 2005-06 20Q6..07 2007-08 2008.09 2009-10 2010.11 2011-12 Actual Actual Actual Actual Actual Est. Est. Forecast Forecast Forecast Forecast Note. Projected expenditures do not Include new Initiatives I -0- Revenues ~ Expenditures I 9 ~!I?- ~- c"'''' CHUlA VISfA 5- Year Forecast Projected General Fund Reserves 30.0% 25,0% 5.0% . 20.0% 15.0% 10.0% - 0.0% 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Note Projc<.ted n~..erve.. do nol Indude npw initiative') ~\f? --- ~ ""'" CHUIA VISTA 10 ~I'?- - - ~ ,~'" CHULA VISIA Capital Improvement Program FY 2007-08 New Funding - $23.9 million Historical Funding Comparison $60 $53.9 $50 $40 $30 $20 $10 $0 FYOO/01 FY01/02 FY02/03 FY03104 FY04/05 FY05/06 FY06107 FY07108 Actual Actual Actual Actual Actual Actual Actual Proposed FY 07-08 CIP: Funding Sources Sewers 15% CD8G 2% DIF Fees 10% Prop 18 15% Traffic Signal 10% Misc. 1% Grants 2% TransNet 37% 11 .s-ll,::. im en". CHUIA VISTA FY 07-08 CIP: Funding by Project Type Drainage... Redevelopment 4% \;eneral Gov!. Traffic 5% 6% 15% Sewers 14% Misc. 2% FY 07-08 CIP: Street Projects · Pavement Rehabilitation ($10.8 million) · ADA Curb Ramps ($430,582) · Palomar Gateway ($500,000) · Sidewalk Safety ($256,000) · Bayshore Bikeway Segment 7 ($100,000) 12 'U FY 07-08 CIP: Traffic Projects . 2 New Traffic Signals ($362,000) . 10 Traffic Signal Modifications ($1.8 million) . Neighborhood Safety Program ($130,000) . . School Zone Traffic Calming ($130,000) . Major Intersection Safety ($200,000) . Traffic Congestion Relief Program ($125,000) . West Side Transportation Development Impact Fee ($350,000) . I 805 Corridor Improvements ($75,000) . SR125 Corridor Operations ($100,000) FY 07-08 CIP: Sewer Projects · Sewer Rehabilitation ($1.5 million) · G Street Sewer Improvements ($1.7 million) · C Street Sewer Improvements ($600,000) · Garrett Street Sewer Improvements ($480,000) · Inflow and Infiltration Study ($174,300) 13 FY 07-08 CIP: Drainage Projects · Telegraph Canyon Drainage Study, Third Ave. and L Street ($900,000) · CMP Rehabilitation ($200,000) - To be utilized as a match toward a $2 million grant. If grant unsuccessful, will be used for projects. FY 07-08 CIP: Government and Miscellaneous Projects · Civic Center Phase 3 ($1.4 million) · Construction & Repair Minor CIP ($147,000) · Civic Center Library Flooring ($50,000) · Fire Station No. 1 Programming/Site Analysis ($50,000) · CIP Advanced Planning ($225,000) · CIP Management and Equipment ($125,398) · Auto Park Sign ($1.2 million) 14 CIP: Anticipated Mid-Year Major Project Appropriations · Buildings and Parks Projects - Mt. Miguel Community Park ($6,300,000) - Rancho Del Rey Library (Add!. Est. $15,000,000) · Infrastructure Projects - Castle Park Street Improvements ($9,100,000) ~I'?- - - ~ Off'" CHUlA VISTA FY 2007 - 08 CIP: Funding by Project Location. Citywide 67% Western CV 25% Montgomery 4% Eastern CV 4% Typically 50% to 60% of the Citywide category is utilized in western Chula Vista. 15 ~I!?- ~ cn< OF OlUIA VISfA ~I!?- ".~ ='" CHULA VIsrA All Funds: Revenues $300 M Tranfers In 10% Property Taxes 14% Other Rewnue 13% Other Local Taxes 22% Development Impact Fees 4% Licenses & Permits 2% Other Agencies Use of $ and Prop 13% 3% Fines, Fort, Penalties 1% 16 ~l!?- - - 'l' : ,~~ CHUlA VISfA All Funds: Budget $299 M Sewer Funds 11% Internal Service Funds 4% Capital Project Debt SeNice Funds 6% 6% Transit Funds 1% General Fund 54% Redewlopment Agency 6% Budget Reduction Plan Initial Budget Gap $10.1 million · Protect core public safety and infrastructure services maintenance service · Minimize overall service impacts to the community · Avoid layoffs of permanent staff · Rely as little as possible on one-time solutions 17 Budget Reduction Plan · Support Services . Development Services · Direct Services $4.6 million $2.5 million $1.3 million · Reductions include: - Elimination of 34.25 vacant positions - Freezing 11 vacant positions Revenue Enhancements · Cell phone site revenues · Programmatic revenues ,.".:' $0.5 million $0.9 million 18 4/19 Budget Workshop: Follow-Up Remaining Budget Gap 4/19 $ 0.4 million Residential Development Projection $ 0.7 million Reduced (1,600 - 1,000 units) Remaining Budget Gap $ 1.1 million Closing the Remaining Gap Defer non-critical vehicle replacement Eliminate Technology Replacement Fund Additional Management Furlough savings TransNet reimbursements $0.6 million $0.2 million $0.2 million $0.1 million Total Gap Reduction $1.1 million 19 Budget Reduction Adjustments · Restructuring of Adult Literacy Program · 1 library branch to remain open to public during furlough period Staff Transfers 78 Positions Moved Out of General Fund 20 ".,,: .~....:< ~I'C- - - ~ em' OF atULA VISTA General Fund Expenditure Summary FY 06-07 Amended Budget FY 07-08 Budget w/out Staff Transfers $172.6 million $172.7 million Less than .1 million increase or 0.05% change FY 07 -08 Budget with Staff Transfers $164.2 million ~I~ --- - "'"" CHULA VISfA General Fund Budget by Category Personnel Services $139,353 $141,513 $2,160 Supplies & Se/"\lices $19,370 $19,019 ($351) Other Expenses $1,081 $720 ($361) Operating Capital $762 $103 ($658) Utilties $5,419 $5,174 ($245) Debt Service/Transfers Out $6,534 $6,092 ($442) Capital Projects $120 $97 ($23) GF Budget wlout Staff Transfers $172,639 $172,719 $80 Costs transferred out ofthe GF $0 ($8,485) ($8,485) GF Budget wI Staff Transfers $172,639 $164.233 ($8,406) 21 Budget Trends Council Adopted Budget Comparison Millions $150 $125 $100 $75 $50 $25 $- FY 2003-04 FY 2004-05 FY 2005-06 FY 2006-07 FY 2007-08 ~I'?- "'''''''~ CID'''' CHUIA vtSTA Budget by Department Boards & Commissions ~________*_.____,,____.___.1,6~: i : ____.~.___.__.____~2~ }--- (9~) Ci Clerk lL--~-- 1,208 $ 14 ~_~~~~~ ---~----1-------~ ;':i~ I-~-~-- -~::~~ I: -_._.._-~ ITS ___._i_.__ 4452, $. 4,174 $ ~ Human Resources ! $ . 5,3n $ 4,663 $ 714 ~~~e rtmental ---.---------~-}----.---.---~-~- ~:~tt.---~- .-.-------~~ ~----~ General Services ; $ --10,997"'1$"- 11,151 $ 154 Communi Develo-ment ! $ 3,7991 $_.__~____~1Z4 L._~. 626 Plannin..9..!.. Building i $ 10,575 .l-1-___~52 L__ 823 Engineering i $ 7.816 I $ 7,222 $ (593) Police $ 51,191 $ 52,473 $ 1,282 Fire $ 23,317 $ 24,694 $ 1,3n Public Works $ 21,123 $ 22,155 $ 1,032 Recreatio,! $ 7 041 $ 6,541 . $ 500 Library _ ._____..________~mm________~__20,363 ~L_.~~._.__~~24! $__ (439) NalureCenter i$ 1,193 $ 1,2451$ 52 GF Bud et w/out Staff Transfers : $ 172,639 $ 172,719 I $ 80 Costs transferred oul of the GF $ $ 8,486 $ 8,486 GF Bud et wi Staff Transfers I $ 172,639 I S 164,233 I S 8,406 22 General Fund Budget by Service Group $80 $70 $80 $50 ! $40 i $30 $20 $10 $- ~ ~ : : <r- i i ~ ~ 'i 'l FY2001- FY2002- FY2003- FY2004- FY2005- FY2006- FY2007- ~ ro 04 ~ 00 ~ 00 ~ Legislative and Administration ..... Public Safety ~II?- ~= Staffing by Service Group CHULA VISTA Council Adopted Budget FY01 - 02 FY07 - 08 FY02 - FY08 LI. Legislative and Administrative 133.00 139.00 6.00 Development and Maintenance 387.50 459.25 71.75 Public Safely 431.98 540.50 108.52 Communi Services 107.75 109.75 2.00 Total Ci Staff 1,060.23 1,248.50 188.27 23 Staffing per 1,000 Population City of Chula Vista Staffing (FTE) Compared to FTE's per Thousand Residents 1,500 6.5 1,250 6.0 1,000 0 w 5.5 ~ ... 750 ~ u. 5.0 ii:i 500 ... u. 250 4.5 0 4.0 FY 2003-04 FY 2004-l)5 FY 2005-lJ6 FY 2006-07 FY 2007-l)8 _Total FTE's -+- FlE's/1000 Net City Cost Police 45% Nature Cente<. G vt 1" (;en. 0 . 10 1% Com. Dev. 2% Ping. & Bldg. 2% 24 New Initiatives · Passport Services · Distressed Property Management Program · Property Profile Report Program · Establishment of Building Maintenance Fund · Police Records Management System · New and Improved Police Mobile Data Computers · Fire Prevention Staffing Enhancements . Stormwater Permit Compliance Equipment and Staffing · All Seasons Park 25 Future Issues · Police Grant Funds and Patrol Staffing . Sewer Rate Increase and Sewer Maintenance Staffing . Increasing Fleet Fund Reserve Levels . Increasing General Fund Reserve Levels . Operating Costs for Rancho del Rey Library . FY 08-09 Projected Gap of $4.8 M Staffing Adjustments: Frozen Human Resources Community Development Planning and Building Assistant City Manager Training Captain Public Education Specialist Administrative Secretary Office Specialist Senior Management Position Senior Planner Principal Civil Engineer Engineering Technician II Purchasing Agent Accountant Total Frozen Positions 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 11.0 26 Staffing Adjustments: Deletions -1.0 -2.0 Human Resources -0.5 -1.0 -3.5 Community Development -1.0 Police -1.0 library Redevelopment Engineering Planning and Building Public Works Operations Total Deleted Positions Staffing Adjustments: Additions General Services Nature Center Fire Prevention Engineer Electrician Nature Center Maint. Specialist Maintenance Worker I Environmental Health Specialist Engineering Technician Public Works Specialist Public Works Supervisor Senior Maintenance Worker Total Added Positions 1.0 1.0 0.25 5.0 1.0 1.0 1.0 1.0 3.0 14.25 Public Works Operations 27 Staffing Adjustments: Reclasses Assistant City Attorney .1.0 Deputy City Attomey III 1.0 ($36,472) Assistant City Manager -1.0 Administration ($78,430) Economic Development Officer 1.0 Senior Benefits Technician -1.0 Benefits Technician 1.0 ($9,747) Educational Services Manager -1.0 After School Manager 1.0 ($30,865) Staffing Adjustments: Net - 36.50 FTE + 14.25 FTE - 22.25 FTE 28 ~..~,:"": ,.,.' ~ ,.- Document Overview · Budget document reformatted to improve readers understanding of the budget · Redesigned Department Descriptions, including: - Strategic Goal Statements and status updates - Line of Business budgets, major accomplishments, and performance measures ~!I?- Example ~ Document Overview: ,~'" CHUlA VlSfA L I N E OF BUSINESS: LIBRARY ADMINISTRATION The purpose of the Administration line of business is to support the successful operation of the libral)l Department through effective promotion, planning, analyses, and resource/personnel management. CORE SERVICES , InventOfy control Technology services , Operation, administrative and financial . Staff training/evaluation coordination reporting . COmmunity relations . Planning services . Attractive, structurally sound, safe, and fundraising services environmentally friendly library facUlties Resource management . Partnering with community organizations . Operations analysis to address community need. . System budgetary selVices . 29 ~II?- Example ~~ Document Overview: ""'" CHULA V1SI"A RESOURCE SUMMARY ..'(I()-t \l-; -'(10,11" _(JllI,.I) - _00- (I" \( Il \1 \( It \1 \\11 '\,11I j) FlU ll'( )"-11) Personnel S 922,013 S 996,996 S 1,021,711 S 958,466 Supplies & Services S 399,335 S 399,609 S 263,295 S 217,227 Other Expenses S 1,100 S - S 1,950 S 2,500 Utilities S 363,461 S 297,261 . S 404,206 S 382,863 Expend,.",. To"''' S 1,178,901 S 1,1183,981 Is 1.llt1.112 S 1,811,081 ~II?- Example ~~,. Document Overview: ""'''' CHUIA VISTA MAJOR ACCOMPLISHMENTS . Using existing stall the Ubnlry .....led a Digital 5arvica 0Ilica 10 ma~ and coordinate its Intagratad Online Systam and wabsita. . Over $120,000 in donations has been raisad 10 supportlillraly servicas. . Tho library's naw materials recovery S8lVica has resutted in $42,238 in returned materials and cash. 30 .......,....~.. ~11c- 6 Document Overview: Example ,~'" CHlAA VISTA KEY PERFORMANCE MEASURES Ranking in the annual Hennen American Public Library Ratings (peroenti1e in com ulation 68th percentile 68th """""tile 68th percentile MUSUNmeM: Square footage of library space per 1,000 populatioo UIny~'~1*1.,*,popt,IIMlon 600 500 400 300 200 100 o FY Q4..()5 FY 05-06 FY 06-07 FY 07-08 Actual Actual Estimated Projected Notes: The GMOC target Is 500 square fNt Of library space per 1,000 population. By 2009 we plan to be above this threshold wlth the addition of the Rancho Del Rey LIbrary. ~11c- --- ~ ,~'" CHUlA VtSTA Mid Year Budget Adjustments FUND tl:>>""":~I:.IIf.l~ Mid Year adjultments with Fiscal Year 2007-08 Impact _ Council Meeting 5/22107 REV EXP NET SLESF Grant Fund SLESF grant $ 434,664 $ 434,864 $ General Fund .Police SLESF grant $ 434,864 $ 434,864 $ LLEBG Grant Fund JAG grant $ 90,139 $ 90,139 $ General Fund -Police JAG grant $ 90,139 $ 90,139 $ Federal Grant Fund Homeland Security grant $ 22,078 $ 22,078 $ Federal Grant Fund EMPG grant $ 61,458 $ 61,458 $ General Fund EMPG grant Fire Department adjustment $ $ (30,729) $(30,729) Non Departmental adjustment $ $ 30,729 $ 30,729 31 ~!I?- ~t General Fund Budget AdJoustments QlUIA VISTA FUND REV EXP NET Police Fire Non Departmental Nature Center Recreation $ $ $ $ $ (10,000) $ 28,407 $ $ 15,000 $ 79,107 $ (10,000) $ 39,920 $ (11,513) $ 15,000 $ 79,107 $ 11.513 (11,513) ~!I?- ,,~"'''' ""''" CHUtA VISTA Non GF Budget Adjustments FUND REV EXP NET Federal Grant Funds $ (90,874) $ (90,874) $ Parking Meter $ (7,000) $ (3,117) $ 3,883 Trunk Sewer Capital ReseM $ (710,409) $ $ 710,409 CDBG Home Program $ (17,444) $ (17,444) $ Poggi Canyon Sewer Basin DIF $ $ (710,409) $ (710,409) PFDIF $ $ 46,500 $ 48,500 RDA-So WesV TC IVOtay Valley $ 300,000 $ $ (300,000) Energy Consene.tion Fund $ (26,822) $ (26,822) $ Equipment Replacement $ (184,500) $ (859,814) $ (895,114) AD 90-2 Otay Valley lmprowment $ $ 12,500 $ 12,500 AD 94-1 Eastlake Greens IIlmprmement $ $ 12,500 $ 12,500 CFD 12.M Otay Valley Ranch Village 7 $ 40,000 $ 40,000 $ CFD 13-M Otay Valley Ranch Village 2 $ 41,480 $ 41,480 $ 32 . t,l ~I~ -n- ~= Budget AdJ'ustments CHUlA VISTA Description Revenue Expenditures General Fund Budget Adjustments Updated General Fund $164,233,175 $164,233,175 $ 637,517 $ 637,517 $164,870,692 $164,870,692 Other Funds Adjustments to Other Funds Updated Other Funds Budget $136,610,768 $135,021,113 $ (27,030) $ (944,761) $136,583,738 $134,076,352 FY 2007-08 Proposed Council Budget Personnel Services Executive Secretary, Office Specialist $165,571 Services and Supplies League of Cities membership dues State of the City Address Boards and Commission Dinner Beautification Dinner Office Supplies $127,045 $ 1 ,444 33 FY 2007-08 Proposed Council Budget Personnel Services $140,619 Council Member and Sr Council Aide Note: Personnel SeNces includes $58,510 for the Sr. Council Aide Services and Supplies Cell Phone Service Printing and Binding Postage Tra'ieVConferenceslMeetings Other Commodities $ 16,574 FY 2007-08 Proposed Council Budget Personnel Services $590,134 Mayor, Chief of Staff, Coastal and Environmental Policy Consultant, Constituent Services Manager Services and Supplies $ 32,648 Cell Phone Service Printing and Binding Postage Tra'ieVConferenceslMeeti ngs Other Commodities 34 Next Steps · Council adoption of budget · Planning for FY 2008-09 gap June 19 35 CITY COUNCIL AGENDA STATEMENT ~\'f:. CITY OF .if>>CHULA VISTA 06/07/2007, Item~ ITEM TITLE: QUARTERLY FINANCIAL STATUS REPORT FOR THE QUARTER ENDED MARCH 31, 2007 DIRECTOR OF FINANCE/T~URER--j~ INTERIM CITY MANAGER j! 4/5THS VOTE: YES D NO 0 SUBMITTED BY: REVIEWED BY: BACKGROUND Section 514 (f) of the City Charter requires quarterly fiscal status reports to be filed by the Director of Finance through the City Manager. ENVIRONMENTAL REVIEW Not Applicable RECOMMENDATION That Council accepts the report. BOARDS/COMMISSION RECOMMENDATION Not Applicable DISCUSSION Attached for your consideration is the financial status report for the third quarter of fiscal year 2006-07. The detailed Financial Status Report for the quarter ending March 31,2007, assumes that the City will continue to maintain a reserve level at the 8.0% Council General Fund reserve policy. DECISION MAKER CONFLICT Staff has reviewed the decision contemplated by accepting this report and has determined that it is not site specific and consequently the 500 foot rule found in the California Code of Regulations section 18704.2(a)(1) is not applicable. FISCAL IMPACT The City's General Fund ended the fiscal year 2005-06 with an available balance of $14.9 million or 8.8% of the operating budget. Based on updated revenue J- J projections and the implementation of the citywide contingency plan, the General Fund reserves at the end of fiscal year 2006-07 are currently projected at 8.0% or $13.1 million as summarized below. Pro"ected General Fund Available Fund Balance 14,929,410 164,923,405 166,738,376 $ **Net of 1.8 million in bud et car overs for encumbrances and CIP The projected reduction of $1.8 million in reserves from the beginning of fiscal year 2006-07 is primarily due to the following: . Projected shortfalls in development related revenues of approximately $3.3 million as a result of the continued slow down in the housing market. . Tax revenue shortfalls of approximately $1.7 million primarily in utility users tax, franchise fees and real property transfer tax. . Departmental revenue shortfalls of approximately $2.1 million primarily due to lower than anticipated recreation classes, grant revenues and reimbursable staff time. . Net mid-year appropriations of $616,222 of which $450,000 was related to the Fire Department overtime, which staff determined was under budgeted based on an analysis recently presented to Council. The fiscal impacts related to these items will be largely offset through the mid- year contingency plan initiated by the City Manager. The plan identified departmental savings and implemented the active management of vacant positions resulting in projected expenditure savings of approximately $5.9 million, which will mitigate significant impacts to the reserves. The table below summarizes the projected impacts to reserves and are discussed in more detail in the attached report. acts to General Fund Reserves (3,259,539) (1 ,651 ,608) (2,148,505) {616,222 /-~ The currently projected $1.8 million reduction in the reserves at the end of the current fiscal year is about $1.3 million more than the $0.5 million reduction projected in the second quarter financial status report. The increase of $1.3 million is primarily explained by additional development related revenue shortfalls of $0.9 million and the appropriation of $450,000 for Fire Department overtime. The projected impact to the General Fund reserve is due to a number of factors. However, the reasons are still consistent with the discussions in the second quarter report. The most significant reason is the increase in the projected development revenues shortfall from $2.4 million to $3.3 million. Additionally, since the second quarter report, projected Departmental revenue shortfalls have increased by $1.6 million but are offset by a $1.6 million increase in Departmental expenditure savings. ATTACHMENTS Attachment 1 - Financial Status Report Prepared by: Phillip Davis, Assistant Director of Finance, Finance Department Lisa Partee, Senior Management Analyst, Finance Department ;-3 FINANCIAL STATUS REPORT Third Quarter Fiscal Year 2006-07 Prepared by the Finance Department ~\ft. - - ~ mY'" CHUA VIS1A INTRODUCTION The purpose of this report is to provide the City Council, management and the citizens of Chula Vista an update on the City's fiscal status based on the most recent financial information available. The projections presented in this report were prepared through the hard work and efforts of the various Department Heads, departmental analysts, Finance Department staff and the Office of Budget and Analysis. The City began the fiscal year with a balanced general fund budget, which included appropriations for expenditures and transfers out of $170.1 million, supported by estimated revenues and transfers in of $170.1 million. Through the end of the third quarter, Council approved a total of $2,524,563 in additional appropriations supported by additional revenues of $1,908,341 resulting in a net impact to reserves of approximately $616,222 as described in Schedule D. Overall, general fund discretionary revenues such as property taxes and sales taxes continue to be strong as projected. However, the utility users tax (UUT), franchise fees and real property transfer taxes are projected to be $1.7 million less than budgeted although there is no change from the second quarter report. This amount represents about 1.6% of general fund discretionary revenues. In addition, the development services departments are projecting a shortfall in development revenues of approximately $3.3 million in the current fiscal year, which is an increase of $0.9 million from the second quarter report. Other departmental revenues are also projected lower by $2.1 million primarily within the Recreation Department due to lower than anticipated recreation class registration fees ($545,000); the Police Department due to an unanticipated shortfall in grant related revenue ($339,000), CVHF Booking Fees ($337,000), and State Subvention Booking Fees ($259,000); and within several departments due to a lack of reimbursable staff time ($225,000) and other miscellaneous revenues ($395,000). These shortfalls in the Recreation Department, Police Department and for staff time reimbursements will be fully offset by identified expenditure savings. SUMMARY OF PROJECTED REVENUE SHORTFALLS Net Tax Revenue Shortfalls Development Revenue Shortfalls Other Departmental Revenue Shortfalls Total $ (1,651,608) $ (3,259,539) $ (2,148,505) $ (7,059,652) -4.1% % of Budgeted Revenues To address the anticipated shortfalls in revenues, a citywide contingency plan has been implemented. The City went through an extensive contingency planning process, working with departments to identify expenditure savings within existing budgets to /- if FINANCIAL STATUS REPORT Third Quarmr RscaI Year 2006-07 Page 2 assist in mitigating impacts to the general fund reserves. The remaining impacts will be partially mitigated by actively managing vacant positions. It is anticipated that these changes can be implemented with little to no impact on existing service levels. A summary of the revenue shortfalls and the anticipated savings are summarized as follows. SUMMARY OF FISCAL ISSUES Projected Revenue Shortfall: Tax Revenues (net) Development Revenues Other Departmental Revenues *Mid-Year Appropriations $1,651,608 $3,259,539 $2,148,505 $ 616,222 $7,675,874 Dept Projected Exp Savings $ 5,860,917 Projected Impact to Reserves $ (1,814,957) *Represents net impact of Mid- Year Council Approved Appropriations. GENERAL FUND RESERVES The City General Fund ended the fiscal year 2005-06 with an available balance of $14.9 million or 8.8% of the operating budget. Based on updated revenue projections and the implementation of the citywide contingency plan, available reserves are projected at 8.0% or $13.1 million at the end of the current fiscal year. General Fund Reserves July 1, 2006 Projected Revenues & Transfers In Projected Expenditures & Transfers Out** Revenues over (under) Expenditures *projected Available Fund Balance as of June 30, 2007 Reserves as Percentage of General Fund Operating Budget 14,929,410 164,923,405 166,738,376 $ (1,814,971) 13,114,439 8.0% **Net of $1.8 million in bud et car overs for encumbrances and CIP GENERAL FUND EXPENDITURES Total General Fund expenditures and encumbrances through March 31, 2007 were $126.5 million. Actual expenditures year to date are comparable on a quarter-by- quarter basis as reflected under the attached Schedule A. 1- 5 FINANCIAL STATUS REPORT Third Quarter RscaI Year 2006-07 Page 3 Overall, through identified departmental savings and management of vacant positions, expenditure savings of $5.9 million are projected to partially mitigate the impacts of the projected revenue shortfalls of $7.1 million. The expenditure savings have been identified as salary savings based on managing vacancies citywide, supplies and services savings and savings in other expenses. The contingency plan has been implemented by management and is being monitored departmentally. Schedule A also lists the expenditures to date and projected savings by department. Health insurance costs were projected in the second quarter to increase citywide by approximately $470,000 for the remainder of the fiscal year. Any general fund impacts from the health insurance cost increases will be mitigated by reallocating existing budgets between departments as part of the year-end budget clean up. MAJOR DISCRETIONARY REVENUES Overall, the major discretionary revenues, such as sales taxes and property taxes continue to be strong. However, franchise fees, utility users tax and real property transfer tax are projected to be under budget by approximately $1.7 million or -1.6%. At this time, due to a citywide contingency plan, which has been implemented by management, no general fund impacts are anticipated due to these shortfalls. Fiscal Year 2005-06 Fiscal Year 2006-07 Maior Discretionary Revenues Actual Budae! Projected Variance % Variance "Property Taxes $ 22,192.789 $ 26,999.041 $ 27,649,041 650,000 2.4% Sales Taxes $ 26,715,515 $ 30,997,040 $ 30,997,040 0 0.0% Franchise Fees $ 9,492,759 $ 11,368,337 $ 10,528,835 (839,502) -7.4% ransient Occupancy $ 2,336,204 $ 2,581,975 $ 2,581,975 0 Q.OlJ; Utility Users $ 6,363,446 $ 8,030,681 $ 6,617,984 (1,412,697) -17.6% Business License $ 1,234,912 $ 1,238,340 $ 1,238,340 0 0.0% Real Property Transfer $ 2,122,860 $ 2,648,554 $ 2,035.145 (613,409) -23.2% **State Motor Vehicle License Fees $ 18,354,839 $ 17,864,139 $ 17,864.139 0 0.0% Miscellaneous Revenues $ 1,602,222 $ 1,082,930 $ 1,646.930 564,000 52.1% otal $ 90,415,546 $102.811,037 $101,159,429 1(1,651,608) -1.6% GENERAL FUND MAJOR DISCRETIONARY REVENUES *Property Taxes in Fiscal Year 2005-06 are net of the $1.8 million state takeaway related to ERAF lit. **In Fiscal Year 2005-06, VLF total reflects reimbursement from State due to previous takeaways. 1- f.t, FINANCIAL STATUS REPORT Third Quarter Fiscal Year 2006-07 Page 4 SALE_~T!,Xl!...SlE3.l!..D~l!...! E 1:~_'i'IL~/Ofi'f'I'/O~EE!~eE1_.0'i'ILLlONL... Sales and use tax revenue is the City's single largest discretionary revenue source, accounting for 30.6% of the total projected discretionary revenue for the General Fund in fiscal year 2006- 07. During fiscal years 2004-05 and 2005-06 sales tax revenues increased by 10.2% and 13.2% respectively primarily due to increased population and the opening of several new commercial centers in the eastern section of the City. During fiscal year 2006-07, sales tax revenues are projected to increase by 16.0% from the prior year due to the expansion of the auto park and the highly anticipated and publicized opening of the Otay Ranch Town Center Mall. Growth in sales tax revenue has averaged 7% per year over the past five years. Sales Tax Revenue $35,000,000 $30,000,000 $25,000.000 $20,000.000 $15,000,000 $10,000,000 $5,000,000 $0 1997 2001 2003 2005 2007 1999 PR!?PERTY TAXES (BuJ)G~!.:$27.0 MILLION, PROJECTED $27.6 MILLION} Property taxes continue to grow Countywide, although at a slower rate than in previous years. The pace of new and existing home sales slowed dramatically and is anticipated to continue the trend of slow growth into fiscal years 2007- 08 and 2008-09 and is reflected in the proposed budget. Property Taxes $28,000,000 $24,000,000 $20,000,000 $16,000,000 $12,000,000 $8,000.000 $4.000,000 $0 19971998199920002001 200220032004200520062007 For comparison purposes, the property tax revenue does not reflect $1.8 million in State takeaways in fiscal year 2004-05 and 2005-06. 1-7 FINANCIAL STATUS REPORT Third Quarter Fiscal Year 2006-07 Page 5 According to the most recent County of San Diego Assessor's Office Report, assessed values in Chula Vista have increased by 15.43% for fiscal year 2006-07 compared to 20% in the 2005-06 fiscal year. Based on the updated report from the County Assessor, property tax revenues are projected to be higher than budgeted by approximately $650,000. Growth in Assessed Value 25.00% 5.00% 20.00% 15.00% 10.00% 0.00% 1995 1997 1999 2001 2003 2005 2007 -County Overall __ j -Chula Vista *As represented in the chart, this is the 8th straight year that the City has seen double-digit growth in assessed values. REALPROPERTY TRANSFERT~!L~~eGET$2.6MILLION, PROJECTED $2.01ilILLlON} _~___nn._.__ _ When real property is sold, the County assesses a transfer tax. The tax rate is $1.10 per thousand multiplied by the selling price of the property. The City receives 50% of the transfer tax for sales within Chula Vista. Property transfer taxes are reflective of the housing market. Due to the significant slow down in real estate construction and the cooling of resale homes during the current fiscal year, the revenue projections are being adjusted downward by $600,000. STATE MOTOR V~r/ICLEL.I,?~N~~t=.~~~L~U[)(,~T!17.9 MILLlON,PROJECTED $17~ MIL~ON} . The VLF revenue has gone through many changes in the past two years. The fee was initially established back in 1948 and directed to local government. The State had previously assessed a 2% of value Motor Vehicle License Fee on car registrants on behalf of local governments. During fiscal year 2003-04, the State dropped the fee from 2% to 0.65%. Except for the first three months of that year, the State back-filled this fee reduction with other State funds, keeping local government revenue whole. Beginning in fiscal year 2004-05, the local government share of VLF has narrowed. Cities continue to receive the 0.65% portion of the fee directly from the State, but this amount is now net of County realignment and administrative reductions. The State backfills the gap created by the fee reduction from 2% to 0.65% with an additional allocation of local property tax from County ERAF funds, referred to as the VLF swap. After 2006, the VLF swap will be valued at the original 2005 amount, and increased by the jurisdiction's annual growth in assessed valuation. These changes in valuation are reflected in the fiscal year 2006-07 budget and are projected to come in at budgeted levels. ! -8 FINANCIAL STATUS REPORT Third Quarter Fiscal Year 2006-07 Page 6 FRA~l?fI~~_F~E~Jl!'!e~~T!:D$11:_~ftIIIL_LlON, _PROJEC!E.e.$!~:~_ftII/~~~?/II) Franchise fee revenues are generated from public utility sources such as San Diego Gas & Electric (2% on gas and 1.25% on electricity), trash collection franchises (9.05% fee), and cable franchises (5% fee) conducting business within City limits. SDG&E is the single largest generator of Franchise Fees and accounts for approximately 50% of the total franchise revenues, which are received semi-annually, in March and August. SDG&E collects the franchise fee from Chula Vista customers and through a municipal surcharge imposed on the South Bay Power Plant based on their usage of natural gas. Due to the volatility of the price of natural gas and fluctuation in usage this component is difficult to project. Trash franchise fees and cable fees are more predictable due to the fixed rates charged and the monthly and quarterly receipt of the revenues respectively. Total franchise fees received in fiscal year 2005-06 were $9.5 million, which was $457,000 less than projected in the prior year third quarter fiscal status report. At this time, we are projecting franchise fee revenues to come in at approximately $10.5 million. This is $840,000 less than budgeted in the current year due to the prior year shortfall. Staff has continued to monitor this revenue source and anticipates no change from the second quarter projection. Franchise Fees .. $9.0 .~ $80 $7.0 :i1 $6.0 $50 $4.0 $3.0 $2.0 $1.0 $- . / .+-. .... .. / , ,. I / ,/ .. 2001 2002 2003 2004 2005 2006 2007 I I -----~_.._._..-..__.--.---I --- Trash/Cable I .- - Energy UTILITY USERS TAX (BUDGET $8.0 MILLION, PROJECTED $6.6 MILLION) .- ... -----------..- The City adopted its Utility Users Tax (UUT) in 1978. The City of Chula Vista imposes a UUT on the use of telecom at the rate of 5% of gross receipts, which represents 66% of the total UUT revenues received. The UUT on natural gas services is $0.00919 per therm and $0.00250 per kilowatt on electricity services, which equates to approximately a 1% tax. UUT revenues are projected to grow using population factors and are adjusted downward to account for market saturation in the wireless telecom sector due to the shift in usage of land line telephones to cellular telephones and to internet and other private-network communications. SDG&E is the predominant energy provider with dozens of telecommunications providers. UUT is received on a monthly basis from the various providers. Total UUT revenues received in fiscal year 2005-06 were $6.4 million, of which $2.2 million was from energy and $4.2 million was from telecommunications. The total was 1-9 FINANCIAL STATUS REPORT Third Quarter RscaI Year 2006-{)7 Page 7 $872,000 less than projected in the fiscal year 2005-06 third quarter fiscal status report. The shortfall in UUT was due to one-time credits for billing errors by SDG&E of approximately $84,000 and the relatively mild winter and summers which resulted in lower energy usage. Some large telecommunications providers and taxpayers have taken the position that the UUT does not apply to long distance, VolP (voice over internet), and cellular phone charges. Although pending litigation and potential legislation could adversely affect the telecommunications revenues, they are unlikely to do so during the next twelve months. We are therefore projecting revenues to come in relatively flat at $6.6 million resulting in an overall budgetary shortfall of $1.4 million. Utility Users Tax '" $7.0 c ,g $6.0 :E $5.0 $4.0 $3.0 $2.0 $1.0 $0.0 --- -- ./ - 2001 2002 2003 2004 2005 2006 2007 I ~Energy .--.- Telecom ---*- Total DEVELOPMENT RELATED REVENUES Current projections of development related revenues citywide indicate unanticipated revenue shortfalls of approximately $3.3 million in the development services departments, including the Planning & Building, and Engineering Departments, and the Construction Inspection section of Public Works Operations. These shortfalls are projected in both the fee based and deposit based revenue budgets, at $1.8 million and $1.5 million respectively. These revenue shortfalls are discussed in detail in the following sections. Projected expenditure savings to mitigate this impact totaling $1.8 million have been identified in the Planning & Building and Engineering Departments and are also discussed below. DEVELOPMENT SERVICES GENERAL FUND IMPACT SUMMARY Budgeted Revenues $ 9,790,564 $ 6,922,290 $ 16,712,854 Projected Revenues $ 7,423,419 $ 6,029,896 $ 13,453,315 Revenue Shortfall $ (2,367,145) $ (892,394) $ (3,259,539) Expenditure Savings $ 460,941 $ 1,336,533 $ 1,797,474 General Fund Impact $ (1,906,204) $ 444,139 $ (1,462,065) )-ID FINANCIAL STATUS REPORT Third Quar1Er Fiscal Year 2006-07 Page 8 DEVEL()PI1/ll!.!'!J:>~"!.O~~E~StNG.fE~~_(~l.J[)~_ET1~.!J'/'tLL~O"'~J:>~CJ.!~~C!~[)~!~._O MILLION) -~--- ------------------- Development related revenues consist of two categories: development processing fee revenues and deposit based revenues. In all, a $3.3 million shortfall is projected in development related revenues. Of that amount, $1.8 million is attributable to development processing fee revenues and is discussed in this section. The remaining $1.5 million shortfall is attributable to deposit based revenues, and is discussed in the following section of this report. Residential Building Permits Units Issued by Fiscal Year 4,000 3,500 3.000 2.500 2,000 1,500 1,000 500 o 1998 1999 2000 2001 2002 L__._~Sjngle Family 2003 2004 2005 2006 2007 .Mult.i~~a_~_~~ Development processing fee revenues, which include building permits, planning fees, other building department fees, and engineering fees, reflect a significant decrease year-to-date. One of the major sources of development revenues are building permits, which are down 25% compared to last fiscal year. The decrease in building permit revenue is derived from the combination of a decrease in the valuation of new construction and a decrease in the number of residential building permits issued. New residential building permits pulled year to date (as of March 31) totaled 658. This represents a 37% decrease from the 1,037 residential units pulled as of March 31, 2006. This same measure was as high as 1,403 units in January 2005. In total, 2,216 units were permitted in fiscal year 2004-05 and 1,406 residential units were permitted in fiscal year 2005-06. The highest fiscal year residential construction activity occurred in fiscal year 2003-04, with the permitting of 3,694 units. These historic trends are illustrated in the 'Residential Building Permits' chart above. Current projections for fiscal year 2006-07 reflect the permitting of 1,000 residential units, a reduction of 73% since fiscal year 2003-04 and the lowest level since 1998. Development related revenues for the current fiscal year are projected to total $5.0 million. This projection assumes the issuance of approximately 1,000 new residential construction permits this fiscal year. This projection represents a revenue shortfall of $1.8 million (or 26%), as compared with the approved revenue budget of $6.7 million. )-11 FINANCIAL STATUS REPORT Third Quarter RscaI Year 2006-07 Page 9 STAFF TIME REIMBURSEMENT REVENUES Of the projected $3.3 million revenue shortfall in the development services departments, $1.8 million is attributable to the development related fee revenues detailed above. The remaining $1.5 million revenue shortfall projected is associated with staff time reimbursement revenues. These reimbursement revenues are primarily generated by deposit-based accounts. The deposit accounts are funded by developers and reimburse the City for costs associated with development project processing. These reimbursements are based upon actual staff hours expended on projects, which are then billed to the developers' deposit accounts at full cost recovery. The remaining staff time reimbursement revenues are generated by work in redevelopment areas; special tax districts; Development Impact Fee (DIF) program administration; and Capital Improvement Program (CIP) project design, administration, and construction. As described in the previous 'Development Processing Fee' section, the City is experiencing a significant decline in development activity. This decline in development activity directly impacts staff workload, which in turn directly impacts deposit-based revenues. In fiscal year 2005-06, a total of $10.2 million in deposit-based revenues were included in the approved budget. Of this amount, the City's General Fund realized only $8.0 million, or 78%. In response to this revenue shortfall in fiscal year 2005-06, the revenue budget for fiscal year 2006-07 was reduced by 15%, from $10.2 million to $8.7 million. As of the end of the third quarter of fiscal year 2006-07, deposit-based reimbursement revenues are projected to generate a revenue shortfall in the current fiscal year of $1.0 million. The remaining reimbursement based revenue shortfall of $500,000 is associated with the other reimbursement revenue areas described above. DEVELOPMENT SERVICES BUDGETARY ADJUSTMENTS In response to projected shortfalls of $3.3 million in the Planning & Building and Engineering Departments, expenditure budget adjustments have been identified to generate budgetary savings, thereby mitigating impacts to the General Fund. In the Planning & Building Department, projected expenditure savings of $460,941 have been identified for the current fiscal year. These savings reduce the impact of their revenue shortfall from $2.4 million to $1.9 million. In the Engineering Department, projected expenditure savings of $1.3 million have been identified for the current fiscal year. These savings completely offset their revenue shortfall of $892,394 and further reduces their General Fund net cost by an additional $440,044. I-I&-. FINANCIAL STATUS REPORT Third Quarter Fiscal Year 20Q6-{)7 Page 10 BUDGET ADJUSTMENTS Per Council direction, a list of budget adjustments between summary accounts approved by the City Manager during the quarter are to be provided. The third quarter budget adjustments are detailed in Schedule E. ATTACHMENTS Schedule A - Expenditure Status by Department Schedule B - Revenue Status by Department Schedule C - Revenue Status at Fund level Schedule D - Mid-Year Appropriations Schedule E - General Fund Budget Transfers 1- /3 Sche-dule A Financial Status Report GENERAL FUND Expenditure- Status by Department as of March 31 j 2007 *Amended Actual Exp. Outstanding Available Projected Proj~ted % Available (3rd qtr.) Denartment Budnet Year To Date Encumbrances Balance Ex"enditures EXD. Savlnos FY07 FY 06 Legislative and Administrative City Council 1,638,747 1,094,768 62,795 481,184 1,575,147 63,600 29.4% 30.7% Boards and Commissions 14,252 11,029 338 2,865 14,252 0 20.2% 56.4% City Clerk 1,155,549 829,866 35,627 290,056 1,147,949 7,600 25.1% 36.8% CilyA!torney 2,723,608 1,951,453 68,814 703,341 2,713,608 10,000 25.8% 33.4% Administration 3,986,459 2,496,958 388,344 1.101,157 3,673,033 313,426 276% 27.1% Information Technology Services 4.461,887 3,192,528 143,424 1,125,935 4,321,415 140,472 25.2% 36.9% Human Resources 5,382,264 3,810,428 436,756 1,135.080 5,275,503 106,761 21.1% 26.1% Finance 3,205,939 2,154,512 75,873 975,554 3,145,939 60,000 30.4% 26.3% Total Legislative and Administrative $22,568,705 $15,541,542 $1,211,971 $5,815,192 $21,866,846 $701,859 25.8% 30.3% Non-Departmental $3,725,858 $4,677,160 $129,837 ($1,081,139) $3,725,858 $0 -29.0% 28.6% Development and Maintenance Services General Services 11,012,673 7,599,695 380,086 3,032,892 10,946,874 65,799 27.5% 28.3% Community Development 3,954,618 2,659.033 233,739 1,061,846 3,751,362 203,256 26.9% 30.8% Planning and Building Services 10,616,759 7,402,255 701,564 2,512,940 10,155,818 460,941 23.7% 29.9% Engineering 7.908,040 4,600,970 969,732 2,337,338 6,571,507 1,336,533 29.6% 34.5% Public Works 21,372,349 14,609,666 488,366 6,274,317 20,946,470 425,879 29.4% 29.9% Total Development and Maintenance Services $54,864,439 $36,871,619 $2,773,487 $15,219,333 $52,372,031 $2,492,408 27.7% 30.3% Public Safety Police 51,190,608 34,492,967 1,093,574 15,604,067 50.045,226 1,145,382 30.5% 29.6% Fire 23,447,970 16,082,325 290,005 7,075,640 23,278,195 169,775 30.2% 27.9% Total Public Safety $74,638,578 $50,575,292 $1,383,579 $22,679,707 $73,323,421 $1,315,157 30.4% 29.1% Culture and Leisure Recreation 7,043,087 4,324,878 839,743 1,878,466 6,223,171 819,916 26.7% 42.2% Library 10,389,689 6,599,418 732,299 3,057,972 9,918,367 471,322 29.4% 30.3% Nature Center 1,194,857 786,059 70,756 338,042 1,134,602 60,255 28.3% 31.5% Total Culture and Leisure $18,627,533 $11,710,355 $1,642,798 $5,274,480 $17,276,140 $1,351,493 28.3% 34.6% Total General Fund $174,425,213 $119,375,968 $7,141,672 $47,907,573 $168,564,296 $5,860,917 27.5% 30.2% ~Includes $1.8 million in budget carrryovers for encumbrances and C!P projects. 1-14 Financial Status Report Schedule B GENERAL FUND Revenue Status By Department as of March 31, 2007 . Amended Actual Projected Var. Proj. Percent Department Budget To Date Revenue To Budget Variance Legislative and Administrative City Council 0 0 0 0 0.0% Boards and Commissions 0 0 0 0 0.0% City Clerk 88,499 3,275 88,499 0 0.0% City Attorney 860,050 301,974 860,050 0 0,0% Administration 442,292 240,434 364,377 (57,915) -13.1% Information Technology Services 797,682 424,720 737,576 (60,106) -7.5% Human Resources 454,794 174,112 419,333 (35,461 ) -7.8% Finance 1,299,705 685,921 1,299,705 0 0.0% Total Legislative and Administrative $3,943,022 $1,830,436 $3,789,540 ($153,482) -3.9% Non-Departmental $109,850,250 $55,586,833 $108,198,642 ($1,651,608) -1.5% Development and Maintenance Services General Services 5,725,631 4,039,847 5,667,010 (58,621) -1.0% Community Deve!opment 3,432,743 2,121,987 3,464,984 32,241 0.9% Planning and Building Services 9,790,564 5,027,290 7,423,419 (2,367,145) -24.2% Engineering 6,922,290 3,904,417 6,029,896 (892,394) -12.9% Public Works 15,627,901 8,358,689 15,413,922 (213,979) -1.4% Total Development and Maintenance Services $41,499,129 $23,452,230 $37,999,231 ($3,499,898) -8.4% Public Safety Police 9,529,056 3,988,852 8,665,032 (864,024) -9.1% Fire 1,328,581 1,142,013 1,420,154 91,573 6.9% Total Public Safety $10,857,637 $5,130,865 $10,085,186 ($772,451 ) -7.1% Culture and Leisure Recreation 3,058,271 1,447,159 2,305,541 (752,730) ~24.6% Library 2,497,856 1,119,188 2,247,496 (250,360) -10.0% Nature Center 276,892 214,191 297,769 20,877 7.5% Total Culture and Leisure $5,833,019 $2,780,538 4,850,806 ($982,213) -16.8% Total General Fund $171,983,057 $88,780,902 $164,923,405 ($7,059,652) -4.1% 1-15 Financial Status Report Schedule C General Fund Revenues Summary by Revenue Category Fiscal Year 2006-2007 as of March 31, 2007 Amended Actual Projected Var. Proj. Percent Budget To Date Revenue To Budget Variance Property Taxes $26,999,041 $16,365,810 $27,649,041 $650,000 2.4% Other Local Taxes Sales 30,997,040 11,529,708 30,997,040 0 0.0% Franchise 11,368,337 3,246,288 10,528,835 (839,502) -7.4% Transient Occupancy 2,581,975 1,593,006 2,581,975 0 0.0% Utility Users 8,030,681 4,605,419 6,617,984 (1,412,697) -17.6% Business License 1,175,429 1,048,306 1,175,429 0 0.0% Other 2,711,465 933,660 2,066,422 (623,043) -23.0% Total Other Local Taxes $56,864,927 $22,956,387 $53,989,685 ($2,875,242) -5.1% Licenses & Permits Building, Plumbing, Electrical 3,678,859 1,606,799 2,134,141 (1,544,718) -42.0% Other 602,876 468,775 640,448 37,572 6.2% Total Licenses & Permits $4,281,735 $2,075,574 $2,774,589 ($1,507,146) -35.2% Fines, Forfeitures & Penalties $1,462,125 $991,915 $1,304,193 ($157,932) -10.8% Revenue from Use of Money & Property $2,550,687 $1,448,755 $2,351,281 ($199,406) ~7.8% Revenue from Other Agencies State Motor Vehicle License Fees 17,864,139 9,100,164 17,864,139 0 0.0% Police Grants 3,819,871 1,573,987 3,481,370 (338,501 ) -8.9% Other 3,731,205 1,875,533 3,473,671 (257,534 ) -6.9% Total Revenue from Other Agencies $25,415,215 $12,549,684 $24,819,180 ($596,035) -2.3% Charges for Current Services Development-re!ated Services 11,446,550 7,140,334 9,959,722 (1,486,828) -13.0% Other Charges 6,260,498 2,900,383 5,672,576 (587,922) -9.4% Total Charges for Current Services $17,707,048 $10,040,717 $15,632,298 ($2,074,750) -11.7% Other Revenues Reimbursements from Other Funds 15,786,564 9,145,144 14,987,421 (799,143) -5.1% Other 2,064,966 2,149,158 2,564,968 500,002 24.2% Total Other Revenues $17,851,530 $11,294,302 $17,552,389 ($299,141) -1.7% Transfers-In $18,850,749 $11,057,758 $18,850,749 $0 0.0% TOTAL REVENUES & TRANSFERS-IN $171,983,057 $88,780,902 $164,923,405 ($7,059,652) -4.1% 1-16 Schedule D Fiscal Year 2006-07 as of March 31, 2007 General Fund Budget Amendments Per Council Resolutions Est. Add'l Add'l General Fund Description Revenues Approp Net Impact One-time grant from the Dept. of Alcoholic Beverage Control (ABC Grant) $88,048 $88,048 $0 Park ranger station and facilities for the Otay Valley Regional Park $0 $100,000 1$100,000) Costs for inclusion on the ballot of two proposed charter amendments $0 $50,000 ($50,000) Reimbursement for special event services for the seventh Annual Otay Ranch Day $1,381 $1,381 $0 Contribution towards the cost of defibrillators for Chula Vista schools $0 $27,000 ($27,000) Grand funding (UASI 03 Part II) for first responder decontamination Equip. & Truck $46,303 $46,303 $0 Community donations in support of Fire Dept. ceremony and recognition event $6,540 $6,540 $0 Office of Traffic Safety Grant to fund staff, equip. & materials for STEP prog. $199,303 $199,303 $0 Total of 1st Quarter BUdget Arnendmerii$. . . . . $341,575 $518,575 ($177,000) State contract with Police Dept. for In Custody Drug Treatment Program (ICDTP) $400,046 $400,046 $0 Reimbursement from Allied Waste for a public education booklet $30,304 $30,304 $0 Dept. of Education Even Start Family Literacy Program grant $5,833 $5,833 $0 Gates Foundation Public Access Computer Hardware Upgrade grant (PAC HUG) $39,000 $39,000 $0 One~time augmentation to the Public Library Fund (PLF) grant $57,807 $57,807 $0 Addition of two California Border Alliance Group (CBAG) funded positions $164,379 $159,591 $4,788 Agreement with Southwestern Community ColJege for in-service training program $15,000 $15,000 $0 Donations to the Animal Care Facility $4,767 $4,767 $0 Grant from the San Diego County Law Enforcement Foundation (SDCLEF) $3,900 $3,900 $0 Total of 2ndQuartBr Bili!get Aniendmenbk .. . $721,036 $716,248 $4,788 MOU with HWtop Middle School for extended after-school program hours $6,000 $6,000 $0 MOU with Castle Park Middle School for extended after-school program hours $6,000 $6,000 $0 MOU with Chula Vista Middle School for extended after-school program hours $14,011 $14,011 $0 MOU with YMCA for provision of after~school program hours at middle schools $8,370 $8,370 $0 Donation to Library to be used to purchase books and DVDs $55,000 $55,000 $0 Addition of one Latent Print Examiner position $92,102 $92,102 $0 Donation to Fire Dept to be used to purchase equip., supplies, and repairs to facilities $116,000 $116,000 $0 Reimb. to Fire Dept from various agencies used to offset overtime/contractual costs $210,083 $210,083 $0 Telecom site lease revenue to be used for improvements/upgrades at McCandliss Park $120,014 $120,014 $0 HIDTA program funds to be used to purchase monitoring and surveillance equipment $205,670 $199,680 $5,990 Fire Department overtime costs $0 $450,000 ($450,000) Donation to Fire Dept to be used to purchase rescue related equipment $12,480 $12,480 $0 Total of 3rd.Quclrmr Budget AmendmentS $845,730 $1,289,740 ($444,010) Year to Datel $1,908,341 $2,524,563 ($616,222) I 1-17 Schedule E General Fund Budget Transfers Approved by Administration Fiscal Year 2006-07 as of March 31,2007 Department From To Descriction Amount '. '.' Total of 1st Quarter Budget Transfers $0 , Total of 2nd Quarter Budget Transfers $0 Finance Personnel Services Supplies & Services Annual audit services $15,000 Public Works Supplies & Services Other Expenses Repair damage to city property $7,500 Public Works Utilities SUDo!ies & Services Buildinas and- around maintenance $15,000 . .... . . .... . Total of 3rd Quarter Budaet Transfers $37,500 Year to Date I $37,500 I 1-18 ~ {f?. ~ ~---- - City Of Chula Vista City Manager's Office 276 Fourth Avenue Chula Vista, Ca 91910 619.409.5282- 619.585.5612 Fax MEMO CllY OF CHUlA VISfA DATE: May 31, 2007 TO: FROM: Honorable Mayor and Council ~ Jim Thomson, Interim City Manager II Ed Van Eenoo, Director of Budget and Analysis Z:v VIA: SUBJECT: Fiscal Year 2007-2008 Proposed Budget Presentation Item 2 on the agenda for the June 7, 2007 meeting of the City Council is a presentation on the following documents/reports: 1. Five Year Financial Forecast Report 2. Fiscal Year 2007-08 Proposed Capital Improvement Program 3. Fiscal Year 2007-08 Proposed Budget 4. City Council Budget Report The Five Year Financial Forecast Report and the City Council Budget Report are included with this packet of information. The Fiscal Year 2007-08 Proposed Capital Improvement Program and the Fiscal Year 2007-08 Proposed Budget were submitted to Council on May 24, 2007 under separate cover. ~-I :' ,',', ',-' - ' ; , ,~ , ' " " "'T" 'V"." E.X', ;E:C"'li,'I,,',,.., ,','_ ';-<,,'/_;",,:',,;-'~'Ii'k_,,::.:,:;; ,,': _\,::!:'_,< ,.....:...........:;.....'........,......., :c....... ....i "8' 'u' 'g' 'M'A'RY' " .4::, ':'~ .,.,'/:" -:"'!' <:f' ",\" H ; :A, " )/ ~, ';.: :,'> :< """',_ ',_ -', .'....d. .,', ....."... ',- ..... ,',', ,...'.... ,", June 1, 2007 Honorable Mayor and City Council: This is the second year that the Finance Department has issued the Five Year Financial Forecast Report. The purpose of this report is to assess the General Fund's ability over the next five years to continue current service levels based on anticipated growth. Can we afford new initiatives? Simply stated, this is a fundamental question of priorities, not of financial capacity. Based on projected expenditures and revenues, funding major initiatives will require trade offs during the budget process. While we anticipate that the budget balancing challenges facing us will be difficult, as stated by Economic Planning Systems (EPS) who conducted an Independent Financial Review (IFR) for the City of Chula Vista, "the circumstances faced by the City are entirely manageable; while there are existing and future challenges to be faced, the prospects for the City are very sound given regional market conditions, related development opportunities and the investments the City has made. " EPS concluded that the fiscal sustainability and well-being of the City of Chula Vista will depend on the City Council: . Fully recognizing revenue limitations and risks, . Achieving economic development objectives, . Establishing clear expenditure priorities, and . Balancing decisions regarding capital improvements, staffing levels and compensation, and services against conservative revenue forecasts. 1 ~-9 The main purpose of the forecast and Long Term Financial Plan (L TFP) is to serve as a tool for the City Council to achieve the objectives listed above. In essence, it is an annual check up with the long-term goal of staying fiscally healthy. The L TFP would also assist with the issue of fiscal fragmentation, which occurs when significant projects or plans, such as departmental strategic plans, are being brought forward for Council consideration. The creation of a L TFP is one of the strategic goals of the Finance Department, which would address some of this fragmentation and provide a long-term perspective as projects or funding requests are being considered. It is important to stress that this forecast is not a budget. It does not make expenditure decisions but does assess the need to prioritize the allocation of City resources. The purpose of the forecast is to provide an overview of the City's fiscal health based on various assumptions over the next five years. The Government Finance Officers Association (GFOA) recognizes the importance of combining the forecasting of revenues and expenditures into a single financial forecast. The GFOA also recommends that a government should have a financial planning process that assesses long-term financial implications of current and proposed policies, programs, and assumptions that develop appropriate strategies to achieve its goals. The Finance Department will continue to update the five-year forecast report as projections are refined. This forecast will serve as the foundation for the City's Long Term Financial Plan and will serve as a funding basis for the operating and capital budgets. During the coming fiscal year it is anticipated that the scope of the forecast will be expanded to cover a ten-year period and include other City funds such as the sewer funds, transportation funds and capital project funds to assess the ability over the long-term to maintain existing infrastructure and assets. KEY ASSUMPTIONS The General Fund forecast is built upon a set of assumptions about the future economic environment impacting ongoing revenues and expenditures. Some of the key assumptions used to prepare this report are as follows: . The regional economies will continue at a moderate rate of growth, with relatively low inflation, slightly higher interest rates and low unemployment. 2 ~-tf . City sales tax revenues will continue to grow at healthy rates for most of the forecast period. The additional revenues generated by the Otay Ranch Town Center, expansion of the Auto Park and additional commercial centers in the east will add to the base throughout this forecast period. . City population will continue to increase but at lower rates than during the past five years. . There will be significantly less housing development during fiscal years 2007-08 and 2008- 09, and in 2009-10 the forecast assumes that it will improve but at much lower rates than experienced during the past 10 years. During fiscal years 2007-08 and 2008-09 residential building permits are forecasted at 1,200 per year. Beginning in fiscal year 2009-1 0 to 2011- 12 residential permits are projected at 1,600 per year. . Expenditures related to negotiated salary increases are reflected in the forecast through fiscal year 2009-10 when the term of the current Memorandums of Understanding expire. No additional salary adjustments are assumed beyond the current MOUs. Starting in fiscal year 2010-11, a 1 % citywide salary increase would cost about $1.3 million per year. . The Mid-Management Study and Non-Management Classification Study to be brought forward for Council consideration on June 5, 2007 are assumed to be approved, resulting in a fiscal impact of approximately $180,000 beginning in fiscal year 2008-09. . There is no future funding assumed for the frozen positions which were identified as part of balancing the fiscal year 2007-08 City Manager's proposed budget. . Franchise Fee revenue projections assume the continued operation of the South Bay Power Plant throughout the forecast period. The closure of the South Bay Power Plant would reduce General Fund revenues by approximately $2.5 million per year. . The additional staffing and other costs required by the Regional Water Quality Control Board stormwater permit are assumed, but no state reimbursement is assumed for the unfunded state mandate. . No further State takeaways are assumed in the projections. 3 bl-5 FISCAL SUMMARY The Council's General Fund minimum reserve level policy of 8%, which became effective in 1996, was established to prudently protect the fiscal solvency of the City. Reserves are important in order to mitigate the negative impact on revenues from economic fluctuations, to withstand State budget grabs and to fund unforeseen expenditure requirements. As evidenced by the following chart, the General Fund reserves were at an all time high of $31.2 million or 28.5% of the operating budget at the end of fiscal year 2001-02. The City's General Fund reserves placed the City in the enviable position to withstand the State's revenue cuts during fiscal years 2004-05 and 2005-06 and provided the City with the opportunity to reinvest back into the community. At the end of fiscal year 2005-06, the General Fund available reserves were $14.9 million or 8.8% of the operating budget, just above the 8% policy level adopted by Council. General Fund Reserves 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 'Council reserve policy was adopted in 1996. Reserves for fiscal years reflected as of June 30. Reserves for fiscal years 2006-07 to 2011-12 are based on projections. (Blue reflects $4.8 million budget gap in fiscal year 2008-09 and ongoing impacts) (Yellow reflects reserves with balanced fiscal year 2008-09 budget). Both scenarios are discussed under the Reserve Summary section of report. The reduction in reserves, $16.3 million over a four-year period, occurred due to a combination of significant State revenue takeaways, mid-year appropriations and the slow down in the housing market as summarized below: 4 ;2 -0 . State revenue takeaways ($3.5 million Vehicle License Fee Gap and $1.8 ERAF III) - $5.3 million . Fire Department staffing, Fire Station and equipment enhancements - $3.8 million . Purchase of Oxford Property for development of Harbor Side Park - $2.3 million . Unanticipated litigation and workers compensation costs - $2.1 million . Fire Department Computer Aided Dispatch Center - $1.8 million . Municipal Utility Study/Franchise Negotiations - $1.4 million . University Study - $1.0 million . Police Department mid-year appropriation requests of $1.7 million, which included funding for the first phase of the Police Strategic Plan and a CalPERS calculation adjustment and projected revenue shortfalls of $1.2 million related to State takeaways of booking fees and grant related reductions. . Revenue shortfalls of $3.3 million in the Development Services Departments. . Offsetting some of these impacts was a transfer of $3.4 million from the Equipment Replacement Fund and Technology Replacement Fund per Council action in fiscal year 2005-06. Based on the most current projections we anticipate the available fund balance to be $13.1 million or 8% at the end of fiscal year 2006-07, which is right at the Council reserve policy of 8%. This is a projected reduction of $1.8 million in reserves from the beginning of fiscal year 2006-07. The anticipated reduction in is primarily due to the following: . Projected shortfalls in development related revenues of approximately $3.3 million as a result of the continued slow down in the housing market. . Tax revenue shortfalls of approximately $1.7 million primarily in utility users tax, franchise fees and real property transfer tax. . Departmental revenue shortfalls of approximately $2.1 million primarily due to lower than anticipated recreation classes, grant revenues and reimbursable staff time. 5 ;).-7 . Net mid-year appropriations of $616,222 of which $450,000 was related to the Fire Department overtime, which staff determined was under budgeted based on an analysis recently presented to Council. The fiscal impacts related to these items will be largely offset through the mid-year contingency plan initiated by the City Manager. The plan identified departmental savings and implemented the active management of vacant positions resulting in projected expenditure savings of approximately $5.9 million which will mitigate significant impacts to the reserves. FISCAL OUTLOOK (THE BOTTOM LINE) Very few cities in the State are involved in the number of major projects and growth that Chula Vista is experiencing. Due to the number of sianificant chanaes on the City's horizon. it is unrealistic to base our proiections solelv on historical trends. Therefore, various assumptions regarding residential and commercial development, economic forecasting and anticipated events are included in this forecast. Base revenues are adjusted to reflect updated projections. Base expenditures are adjusted for approved salary and benefit enhancements negotiated with the various bargaining groups and any mid-year appropriations with ongoing budgetary impacts. The General Fund major discretionary revenues are projected to increase by an annual average of 4.0% during the next five-year period. This compares to a historical annual average growth rate of 10%, over the past five years. Expenditures are projected to grow at an annual average rate of 4.1 % over the same time frame, as compared to historical annual average rates of 8.1 % over the past five years. Current projections indicate additional base budget reductions and/or revenue enhancements of approximately $4.8 million will be required in fiscal year 2008-09 in order to avoid further impacting reserves. If the City fails to make the necessary long-term budget adjustments, reserves are currently projected to drop to approximately $1.3 million (or .7% of the operating budget) by fiscal year 2011-12. Assuming long-term corrective actions are made to balance the fiscal year 2008-09 budget process, reserves are projected to remain at or slightly below the City Council's 8% minimum reserve level policy through fiscal year 2009-10 and to begin increasing significantly thereafter coinciding with the expiration of the current Memorandums of Understanding with the City's four employee bargaining groups as well as the final debt service payment related to the Pension Obligation Bonds scheduled for fiscal year 2011-12. It should be noted that no salary 6 ;;)-g increases are assumed starting in fiscal year 2010-11. Beginning in fiscal year 2010-11, a 1% citywide salary increase would cost about $1.3 million per year. The forecast also assesses the ability to fund new initiatives such as the opening of the Rancho del Rey Library and additional public safety positions initially grant funded but becoming a General Fund obligation beginning in fiscal year 2008-09. These items are included under major initiatives for informational and discussion purposes: . Projected operating costs for the Rancho Del Rey Library ($0.3 million beginning in fiscal year 2008-09 and increasing to $0.6 million in fiscal year 2009-10) . Four Public Safety positions (1 Traffic Sergeant and 3 Peace Officers) which will initially be 100% grant funded but become a General Fund obligation beginning in fiscal year 2008-09. . Additional park maintenance staff due to anticipated opening of All Seasons Park in Otay Ranch Village 7 in fiscal year 2008-09 ($81,000). Projected Reserves Summary (If Further Reductions Are Not Made) (Reflects $4.8 million budget gap in fiscal year 2008-09 and ongoing impacts) (In Millions) 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Actual Actual Est. Est. Forecast Forecast Forecast Forecast Revenues $137.8 $157.8 $164.9 $164.2 $170.3 $178.0 $185.8 $193.2 Expenditures/Fund Balance Adj.{Note 1) ($143.2) ($160.8) ($166.7) ($164.2) ($175.1) ($182.8) ($187.9) ($193.3) Subtotal DeficiVSurplus ($5.4) ($0.2) ($1.8) $0.0 ($4.8) ($4.8) ($2.1) ($01) General Fund Reserves $15.1 $14.9 $13.1 $13.1 $8.3 $3.5 $1.4 $1.3 Projected R.rves 9.7% 8.8% 8.0% 8,0% 4;7% 1.9% 0.7% 0.7% Major Initiatives (Note 2): RDR Library(Qperations) ($0.3) ($0.6) ($0.6) ($0.6) Public Safety Staffing ($0.3) ($0.5) ($0.5) ($0.5) Park Maintenance ($0.1) ($01) ($0.1) ($0.1) Additional impact to Reserves ($0.7) ($1.1) ($1.2) ($1.2) General Fund Reserves (Note 3) $7.6 $2.4 $0.2 $0.1 Projected R.rves (Including Majodn~lative.) 9.7% 8.8% 8.0% 8.0% 4.4% 1.3% 0.1% 0.0% Notes: 1) General Fund reserves based on the various assumptions discussed in the forecast report. Does not assume funding for any frozen positions or one time savings which helped balance the fiscal year 2007.08 budget which would add an additional $3.2 million to the budgetary gap in fiscal year 2008-09. Also does not assume any further salary increases beyond the current MOUs. Beginning in fiscal 2010.11, a 1 % citywide salary increase would cost approximately $1.3 million/yr. Forecast assumes funding for Classification Studies. 2) Major Initiatives listed for informational purposes only. Staff reports discussing fiscal impacts will be brought forward at time of Council consideration. 3) Forecasted General Fund reserves reflecting projected impacts of major initiatives listed above. 7 ;).-9 Projected Reserves Summary (Reflects balanced fiscal year 2008-09 budget) (In Millions) 2005 2006 2007 2008 2009 2010 2011 2012 Actual Actual Est. Est. Forecast Forecast Forecast Forecast Revenues $137.8 $157.8 $164.9 $164.2 $170.3 $178.0 $185.8 $193.2 Expenditures/Fund Balance Adj. (Note 1) ($143.2) ($160.8) ($166.7) ($164.2) ($170.3) ($177.8) ($182.9) ($188.2) Subtotal DeficiUSurplus ($5.4) ($0.2) ($1.8) $0.0 $0.0 $0.2 $2.9 $5.0 General Fund Reserves $15.1 $14.9 $13.1 $13.1 $13.1 $13.3 $16.2 $21.2 Projected Reserves 9.7% 8.8% 8.0% 8.0% 7.7% 7.5% 8.9% 11.3% Major Initiatives (Note2): RDR Library(Operations) ($0.3) ($0.6) ($0.6) ($0.6) Public Safety Staffing ($0.3) ($0.5) ($05) ($0.5) Park Maintenance ($0.1) ($0.1) ($0.1) ($0.1) Additional impact to Reserves ($0.7) ($1.1) ($1.2) ($1.2) General Fund Reserves (Note 3) $12.4 $12.2 $15.0 $20.0 Projected Reserves (Including Major Initiatives) 9.7% 8.8% 8.0% 8.0% 7.3% 6.8% 8.2% 10.6% Notes: 1) General Fund reserves based on the various assumptions discussed in the forecast report. Does not assume funding for any frozen positions or one time savings which helped balance the fiscal year 2007~08 budget which would add an additional $3.2 million to the budgetary gap in fiscal year 2008-09. Also does not assume any further salary increases beyond the current MOUs. Beginning in fiscal 2010.11, a 1% citywide salary increase would cost approximately $1.3 million/yr. Forecast assumes funding for Classification Studies. 2) Major Initiatives listed for informational purposes only. Staff reports discussing fiscal impacts will be brought forward at time of Council consideration. 3) Forecasted General Fund reserves reflecting projected impacts of major initiatives listed above. It is important to keep in mind that this is a forecast made at a time when the City continues to experience significant change. The information provided here should be used primarily as an indicator of the relative health of the General Fund over the next five years and is intended to serve as a tool to provide Council with the insight to address upcoming initiatives. This report will be provided to Council at the beginning of each calendar year prior to the priority setting budgetary workshop or as major initiatives are proposed. The five-year forecast is also intended to serve as a planning tool to bring a long-term perspective to the budget process. 1f;17~ !Jim Thomson Interim City Manager 1,2A~o~~ Director of Finance/Treasurer Attachments: Attachment A - Five-Year Financial Outlook Report Attachment B - Projected Reserves Summary (If Further Reductions Are Not Made) Attachment C - Projected Reserve Summary (Reflects Balanced Budget for Fiscal Year 2008-09) 8 :;;.-/0 t . AtTACHMIiSNTA INTRODUCTION The goal of the Five-Year Financial Forecast is to assess the City's ability over the next five years to continue current service levels based on projected growth, preserving our long-term fiscal health by aligning operating revenues and costs, and maintaining reserves at the Council policy level of 8%. It is important to stress that this forecast is not a budget. It doesn't make expenditure decisions but does assess the need to prioritize the allocation of City resources. The purpose of the forecast is to provide an overview of the City's fiscal health based on various assumptions over the next five years and provide the City Council, management and the Citizens of Chula Vista with a "heads up" on the financial outlook beyond the budget cycle. The Government Finance Officers Association (GFOA) recognizes the importance of combining the forecasting of revenues and expenditures into a single financial forecast. The GFOA also recommends that a government should have a financial planning process that assesses long-term financial implications of current and proposed policies, programs, and assumptions that develop appropriate strategies to achieve its goals. FINANCIAL FOCUS The focus of the Five-Year Financial Forecast Report (forecast) is the General Fund. The General Fund is the City's operating fund which pays for public safety services, libraries, parks, recreation and administration. All the major discretionary revenues such as Property Taxes, Sales Taxes and Motor Vehicle License Fees are accounted for within the General Fund. The forecast reflects final audited figures for fiscal years 2004-05, 2005-06, estimated figures for fiscal year 2006-07, 2007- 08 and forecasted figures for fiscal years 2008-09 through 2011-12. The Finance Department will continue working with the various departments to update the forecast as projections are refined. This forecast will serve as the foundation for the City's Long Term Financial Plan (L TFP), which will have a 1 O-year outlook. The L TFP will ultimately include not only 1 ;}- / / FIVE YEAR FORECAST FISCAL YEARS 2008-2012 the General Fund but the Redevelopment Funds, Development Impact Funds, Sewer Funds and various other funds which are key components that play into the City's long term financial viability. ECONOMIC AND DEMOGRAPHIC ASSUMPTIONS POPULATION AND HOUSING Over the past five years the population in Chula Vista has grown at an average 4% per year. Due to the slow down in residential development, population growth is assumed at 2% per year throughout the forecast period. Chula Vista remains as the 14th largest California city in population. Year-to-year population growth is a useful factor in predicting increases in other revenue categories, such as Franchise Fees and Business Licenses. The population forecast is derived using the number of homes constructed. The California State Department of Finance (OaF) estimates that Chula Vista has an average of 3.036 persons per household. Assuming that this factor is accurate and remains valid over the next five years, and assuming a 3.01 % vacancy rate, Chula Vista can expect a total population of approximately 250,439 persons by the end of 2012. This is estimated as follows: . The California State Department of Finance (OaF) estimated a Chula Vista population of 227,723 as of January 1, 2007. . The recently updated General Plan identified the capacity for an additional 30,000 units throughout the City through build out. . An additional 1 ,448 units were occupied in calendar year 2006. . Over the next decade residential (and related population) growth rates are expected to be, on average, below the growth experienced during calendar years 1998 - 2005. 2 ;)-/ d- FIVE YEAR FORECAST FISCAL YEARS 2008-2012 Chula Vista Population 275 250 . . . . III 225 . . . "C . C . III 200 . III . :::s 0 175 . oJ: . l- . 150. . . 125 100 97 9S 99 00 01 02 03 04 05 06 07 OS" 09" 10" 11" 12" "Population data for 1997 to 2007 reflects California Department of Finance comprehensively revised population figures as of January 1 st. The 2008 to 2012 population estimates assume an average growth rate of 1.6%. INFLATION (CONSUMER PRICE INDEX)-Inflation is a measure of the increase in cost of goods and services. Inflation impacts many revenues, such as rents and leases, and most expenditure categories throughout the five-year forecast and is projected to average 3% per year. GENERAL FUND FORECASTED REVENUES Revenue estimates contained in this forecast are based on the assumptions discussed below. The revenue projections assume that no major economic downturns occur within the next five years and that development will continue but at a significantly slower pace. One of the City's strengths has been its diversified revenue base. A diversified revenue base lessens the impact fluctuations in specific economic sectors have on the City's ability to provide services. Although we maintain a diversified revenue base, it will be imperative to the continued fiscal sustainability of the City to focus on increasing our Sales Tax revenue base. 3 ;)-/3 FIVE YEAR FORECAST FISCAL YEARS 2008-2012 General Fund Revenues 180 160 140 120 100 80 60 40 20 FY 03 Actual FY 04 Actual .Sales Tax . Development Rev. III Franchise Fees . Charges for Services FY 05 Actual FY 06 Actual . Property Taxes .Interfund Reimb. . Utility Users Taxes o Other Local Taxes FY 07 Estimated FY 08 Estimated o Motor Vehicle Licenses . Transfers In OTOT ill Other Revenue SALES TAXES Prior to fiscal year 2004-05, the City received 1 % in sales and use tax revenue from all taxable retail sales occurring within the City limits. Beginning in fiscal year 2004-05, the State reduced the local allocation by 0.25% and applied these funds as security for the State's Economic Recovery Bonds. The State committed to replacing the 0.25% sales tax revenues dollar-for-dollar in local property taxes from the County Educational Revenue Augmentation Fund (ERAF). For forecasting and comparison purposes, sales tax revenues are projected at the full 1 % rate. Sales tax revenues are collected by the State at a rate of 7.75% for the San Diego County region. The sales tax revenues are then allocated based on the following rates: State State Fiscal Recovery Fund (Economic Recovery Bonds) Local Jurisdiction (City or County of place of sale or use) Local Transportation Fund (County of place of sale/use) Local San Diego County Transnet Funding 6.00% 025% 0.75% 0.25% 0.50% Sales tax revenue is highly sensitive to economic conditions, and reflects the factors that drive taxable sales, including the levels of unemployment, consumer confidence, per-capita income, and business investment. In addition, the proximity to the Mexican border and the number of 4 ;;2- /1 FIVE YEAR FORECAST FISCAL YEARS 2008-2012 transactions related to cross border shopping also makes the City's sales tax revenues particularly susceptible to volatility if a downturn in the Mexican economy were to occur. Sales and use tax revenue is the City's single largest discretionary revenue source, accounting for 19% of total projected revenue for the General Fund in fiscal year 2006-07. During fiscal years 2004-05 and 2005-06 sales tax revenues increased by 10.2% and 13.2% respectively, primarily due to increased population and the opening of several new commercial centers in the eastern section of the City. Growth in sales tax revenue has averaged 7% per year over the past five years and is projected to increase at an average of 8% over the forecast period due to the recent opening of several commercial centers such as the Otay Ranch Town Center, Eastlake Design Center and the Crossings Commercial Center as well as the anticipated opening of the Eastlake Village Walk. The opening and continued expansions of these centers over the next five years create a great potential to generate significant new sales tax revenues to the City. Overall, approximately $11.4 million in new sales tax revenues are projected by fiscal year 2011-12. The sales tax projections included assume that there will be no major downturns in the economy. Sales Tax Revenues Ul $45 ~ $40 :!; $35 $30 $25 $20 $15 $10 $5 $0 20% 15% 10% 5% 0% -5% FY 89 FY 91 FY 93 FY 95 FY 97 FY 99 FY 01 FY 03 FY 05 FY 07 FY 09 FY 11 1_ Sales Tax -% Growth I 5 ;)-/5 FIVE YEAR FORECAST FISCAL YEARS 2008-2012 Actual Actual Estimated Estimated Forecast Forecast Forecast Forecast Fiscal Year 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Sales Tax $23,600 $26,716 $30,997 $35,078 $36,832 $38,673 $40,607 $42,434 (In thousands) 000 % Change 10.2% 13.2% 16.0% 13.2% 5.0% 5.0% 5.0% 4.5% As noted on the following chart, sales tax on a per capita basis for the City is $106 compared to the County average of $139 and the State average of $141. This comparison indicates that the City's residents spend a high percentage of retail dollars elsewhere, especially considering that a healthy share of our sales and use tax revenues are generated by cross-border shoppers. Sales Taxes Per Capita $350 $300 $250 $200 County Average $139/State Average$141 $150 $100 $50 $- Carfsbad Chula Vista $241 $106 . General Retail o Construction Del Mar EI Cajon Escondida $326 $220 $205 . Food products o Business to Business Imperial National Beach $25 City $243 DTransportation . Miscellaneous San Diego $152 As reflected in the following chart, the City is making strides in capturing sales tax revenues which were being lost to neighboring cities, but it is clear that the City must continue to place a high priority on developing its retail business base by focusing on projects such as the expansion of the Auto Park and the development of the Eastern Urban Center and the Bayfront in order to tap into the opportunities to capture a greater share of the sales tax base. 6 d-- -/0 FIVE YEAR FORECAST FISCAL YEARS 2008-2012 Sales Tax Comparison (San Diego County Cities) 10% 8% 6% 4% 2% 0% -2% -4% -6% -8% .Chula Vista _ San Diego . Coronado . EI Cajon Escondido Third Quarter Comparison (FY 2006 to FY 2007) ~, Imperial Beach _ Vista Solana Beach _ Santee - Carlsbad II San Marcos _ San Diego County Oceanside ~ Del Mar Poway . Lemon Grove . Encinitas _ La Mesa National City PROPERTY TAXES Under Proposition 13, which was enacted in 1979, property taxes for general government purposes are limited to 1 % of the market value of the property assessed. Assessment of property tax, as well as collection and apportionment of tax revenues are all functions performed by the County. Increases in assessed values to reflect current market values are only allowed when property changes hands or when the property is improved. Otherwise, annual assessment value increases are limited to 2% or the increase in the consumer price index, whichever is lower. Based on recent projections provided by the County Assessors Office, assessed values in Chula Vista increased by 21% in fiscal year 2005-06 and 15.43% in fiscal year 2006-07. Property taxes continue to grow countywide but at much slower rates than in previous years. The pace of new and existing home sales slowed dramatically and is anticipated to continue the trend of slow growth into fiscal years 2007-08 and 2008-09. Property tax revenue projections will continue to be conservative pending the continued cooling down in the housing market. 7 d-/1 FIVE YEAR FORECAST FISCAL YEARS 2008-2012 Proposition 1A: In November 2004, the voters of California approved Proposition 1A, an amendment to the California state constitution intended to restore predictability and stability to local government budgets. The proposition included revenue and mandate protections for cities, counties and special districts revenues. The agreement includes the permanent elimination of the Vehicle License Fee backfill (fee reduction from 2% to .65%) and replacement with a like amount of property tax revenues with the exception of a two-year contribution of $1.3 billion each year by local governments to be used towards solving the State's budgetary deficit. The City of Chula Vista's share of the two-year contribution was $18 million in both fiscal year 2004-05 and fiscal year 2005-06. For comparison purposes, the property tax revenues reflected below include the full receipt of property taxes without the State takeaway. Actual Actual Estimated Estimated Forecast Forecast Forecast Forecast Fiscal Year 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Property Tax $ 19,934 $ 23,992 $ 27,649 $ 30,250 $ 32,280 $ 34,451 $36,771 $39,253 (In thousands) 000 % Change 22% 20% 15.0% 9.4% 6.7% 6.7% 6.7% 6.7% ... For comparison purposes, the property tax revenue assumes receipt of the $1.8 million in State takeaways in each of fiscal year 2004-05 and 2005-06. Historical Change in Assessed Value and Projected out Five Years 25% 20% . . . 15% . . . . ... . .. 10% ... A .. A .. ... . . . . . . 5% . . , . 0% .. .. 1995199619971998199920002001200220032004 2005 2006 2007 2008 2009 2010 20112012 I · Chula Vista & County Overall I FRANCHISE FEES Franchise fee revenues are generated from public utility sources such as San Diego Gas & Electric (2% on gas and 1.25% on electricity), trash collection franchises (9.05% fee), and cable franchises (5% fee) conducting business within City limits. SDG&E is the single largest generator of franchise fees and accounts for approximately 50% of the total franchise revenues, which are received semi- 8 d- -/ g FIVE YEAR FORECAST FISCAL YEARS 2008-2012 annually, in March and August. SDG&E collects the franchise fee from Chula Vista customers and through a municipal surcharge imposed on the South Bay Power Plant based on their usage of natural gas. Due to the volatility of the price of natural gas and fluctuation in usage, this component is difficult to project. Trash franchise fees and cable fees are more predictable due to the fixed rates charged and the monthly and quarterly receipt of the revenues respectively. Revenue growth is projected based on population and inflation factors. Historical Franchise Fee Revenues and Projected out Five Years .. $9.0 c $8.0 ~ :E $7.0 $6.0 $5.0 $4.0 - $3.0 . $2.0 $1.0 $- - ,& ,& ,& ,& - ,& ;. . - - - - - ,& - ,& ;. . - 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 I · Trash/Cable - Energy I Actual Actual Estimated Estimated Forecast Forecast Forecast Forecast Fiscal Year 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Franchise Fees $ 9,838 $ 9,493 $ 10,529 $ 10,450 $ 10,554 $ 10,660 $ 10,767 $10,874 (In thousands) 000 % Change 25.8% -3.5% 10.9% -0.7% 1.0% 1.0% 1.0% 1.0% "Projections do not assume the potential revenue impacts related to the decommissioning of the South Bay Power Plant. MOTOR VEHICLE LICENSE FEE (VLF) The Vehicle License Fee (VLF) revenue has gone through many changes in the past few years. The fee was initially established back in 1948 and directed to local government. The State had previously assessed a 2% of value VLF on car registrants on behalf of local governments. In May 2004, in an attempt to assist with the State's fiscal crisis, the State dropped the VLF fee from 2% to 9 d- - IC! FIVE YEAR FORECAST FISCAL YEARS 2008-2012 .65%. Except for the first three months of fiscal year 2004-05, the State back-filled this fee reduction with other State funds, keeping local government revenue whole. Beginning in fiscal year 2004-05, the local government share of VLF has narrowed. Cities continue to receive 65% portion of the fee directly from the State, but this amount is now net of County realignment and administrative reductions. The State backfills the gap created by the fee reduction from 2% to .65% with an additional allocation of local property tax from County ERAF funds, referred to as the VLF swap. After 2006, the VLF swap was valued at the original 2005 amount, and increased by the jurisdiction's annual growth in assessed valuation. These changes in valuation are reflected in the five-year forecast. Actual Actual Estimated Estimated Forecast Forecast Forecast Forecast Fiscal Year 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 VLF (In thousands) $13,941 $ 14,968 $ 17,864 $ 19,373 $ 20,658 $ 22,030 $23,498 $24,627 000 % Change 11.2% 7.0% 19% 8.4% 6.6% 6.6% 6.7% 4.8% *Adjusted to account for the $3.4 million VLF repayment related to the 2004 State funding gap. **After fiscal year 2005-06, 67% of the total VLF revenues are adjusted based on the City's assessed value growth. UTILITY USERS TAX The City adopted its Utility Users Tax (UUT) in 1978. The City of Chula Vista imposes a UUT on the use of telecom at the rate of 5% of gross receipts, which represents 66% of the total UUT revenues received, The UUT on natural gas services is $0.00919 per therm and $0.00250 per kilowatt on electricity services, which equates to approximately a 1% tax. UUT revenues are projected to grow using population factors and are adjusted downward to account for market saturation in the wireless telecom sector due to the shift in usage of landline telephones to cellular telephones and to internet and other private-network communications. SDG&E is the predominant energy provider with dozens of telecommunications providers. UUT is received on a monthly basis from the various providers. Total UUT revenues received in fiscal year 2005-06 were $6.4 million, of which $2.2 million was from energy and $4.2 million was from telecommunications. Some large telecommunications providers and taxpayers have taken the position that the UUT does not apply to long distance, 10 ;)-;;20 FIVE YEAR FORECAST FISCAL YEARS 2008-2012 VolP (voice over internet), and cellular phone charges. The City will continue to monitor legislation which may require adjustments to the assumptions used in the forecast. Actual Actual Estimated Estimated Forecast Forecast Forecast Forecast Fiscal Year 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Utility Users (In thousands) $ 6,580 $ 6,363 $6,618 $ 6,683 $6,756 $ 6,830 $6,926 $7,022 000 % Change 17.0% -3.3% 4.0% 1.0% 1.1% 1.1% 1.4% 1.4% TRANSIENT OCCUPANCY TAX (TOT) The current TOT rate in the City is 10% and generated approximately $2.2 million in revenues during fiscal year 2005-06. This represented approximately 2% of total General Fund revenues. The potential for significant revenue growth is feasible provided quality hotels are built in the City. The ability to generate increased TOT revenues are also being reviewed in conjunction with proposed Baytront developments but this forecast does not assume new hotels are built and opened in the forecast period. Actual Actual Estimated Estimated Forecast Forecast Forecast Forecast Fiscal Year 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 TOT $ 2,269 $ 2,336 $ 2,582 $ 2,672 $ 2,753 $ 2,835 $ 2,920 $ 3,008 (In thousands) 000 % Change 5.1% 3.0% 10.5% 3.5% 3.0% 3.0% 3.0% 3.0% DEVELOPMENT RELATED REVENUES Development related revenues consist of two categories: development processing fee revenues and deposit based revenues. Development processing fee revenues include building permits, planning fees, other building department fees, and engineering fees. Deposit based revenues are generated through staff time reimbursements related to specific projects. Development revenues are increasing from $11.8 million to $14.5 million in fiscal year 2007-08, an increase of $2.6 million, or 22.4%. The increased revenues are chiefly the result of a recent increase in development related permit fees, as calculated in the MAXIMUS Fee Study. Approved in January of 2007, these new fees are projected to generate an additional $2.4 million in revenues, assuming the permitting of 1,200 residential units annually. The remaining $200,000 results from a projected increase in residential development from 1,000 units in fiscal year 2006-07, to 1,200 units in fiscal year 2007-08. 11 c?-C) / FIVE YEAR FORECAST FISCAL YEARS 2008-2012 For forecasting purposes during fiscal years 2009-10 to 2011-12, a figure of 1,600 residential units per year are being used to projected development related revenues. This is consistent with the recommendation issued by Economic Planning Systems as part of the Independent Financial Review Report, "For purposes of budgeting forecasting, a figure of 1,600 residential units per year is a sound estimate for the next ten-year period, although annual rates will vary around this number." Development Activity Residential Building Permits Issued By Fiscal Year 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 1998 2000 2002 2004 2006 2008 2010 2012 .Single Family D Multi-Family Actual Building Permits issued from fiscal year 1997-98 to 2005-06. Forecasted Building Permits issued from fiscal year 2006-07 to 2011-12. FORECASTED EXPENDITURES PERSONNEL SERVICES Salary and Benefits: Since fiscal year 2001-02, the City has added 194.52 permanent, full time, benefited positions. This equates to an 18.35% increase in authorized staffing levels during this period. The majority of these positions have been in the areas of public safety (103.52 new positions representing a 24% increase) and development and maintenance services (74.25 positions representing a 19.2% increase). Council authorized salary adjustments are reflected in the forecast. As part of the City Manager proposed operating budget for fiscal year 2007-08, a total of 35.25 positions are being deleted and 10 positions are frozen and not funded. The forecast does not assume funding for any of these positions throughout the forecast period. Based on the forecast, funding these positions will likely require tradeoffs during the budget process. The 12 ;} - cP ;;A FIVE YEAR FORECAST FISCAL YEARS 2008-2012 forecast does assume a 1 % increase in the overall personnel category to account for increases in workers compensation costs. No adjustments to salaries beyond the current MOUs are reflected in the forecast. Beginning in fiscal year 2010-11, a 1 % citywide salary increase is estimated to cost approximately $1.3 million per year. Summary of MOU Salary Increases January 2006 to January 2010 Effective Date IAFF POA MiSe January 2006 8.00% 10.00% 3.00% January 2007 2.00% 4.00% 3.00% July 2007 2.00% - - January 2008 400% 3.00% 4.00% January 2009 4.00% 4.00% 4.00% Januarv 2010 4.00% 4.00% 4.00% IAFF -International Association of Fire Fighters POA - Police Officers Association MiSe - Miscellaneous Group includes all non-public safety benefited positions. Califomia Public Employees Retirement System (CaIPERS): The large increase in PERS costs was by far the greatest fiscal challenge the City has faced during the past five years. The two key factors driving the increased costs were the significant investment losses experienced by CalPERS and enhanced benefits during the same time period. Currently, the payments made to the retirement system equal 16% of the City's General Fund. The CalPERS pooled investment returns of -7.2% for fiscal year 2000-01, -6.0% for fiscal year 2002, 4.0% for fiscal year 2002-03 have each produced actuarial losses compared to the investment return assumptions of 8.25% for those years. Because of the asset smoothing method, only a portion of the total loss for these years has been reflected in our employer contribution rates through 2007-08. The budgetary impacts caused by the increased employer contribution rates have been significant. The City's employer contribution rates rose from 0% for public safety and 0% for miscellaneous in fiscal year 2001-02, during a time the City was "super funded", to 22.3% and 18.3% respectively in fiscal year 2007-08. This translates into an increase of $21.3 million in budgeted PERS contributions - from $6.5 million in fiscal year 2001-02 to $27.8 million in fiscal year 2007-08 (these figures include employer contribution, city-paid employee contribution, and Pension Obligation Bond). The vast majority of this increase is related directly to the CalPERS investment losses previously discussed. 13 ;:1-,;23 FIVE YEAR FORECAST FISCAL YEARS 2008-2012 CalPERS Historical Market Value Rates of Return Relative to Assumed Investment Return of 7.75% 31.00% 23.25% 15.50% 7.75% 0.00% -7.75% ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ N N N N N N N N W m w w w w w w w w w w W woo 0 0 0 0 0 0 ~ 00 00 00 W W W W w m w W W ID 0 0 000 0 0 0 m ~ 00 w 0 ~ N W ~ rn m ~ 00 ID 0 ~ N W ~ rn m ~ Note: Beginning in fiscal year 2005-06, the estimated rate of return used by CarPERS in calculating employer contribution rates will be 7.75%. As defined by CaIPERS, "Retirement benefits are funded through contributions paid by contracting employers, member contributions, and earnings from CalPERS investments. Employer contribution rates are determined by periodic actuarial valuations under State law. The actuarial valuations are based on the benefit formulas the agency provides and the employee groups covered. These contribution amounts are expressed as a percentage of active member payroll reported to CaIPERS." The following table reflects the actual and forecasted employer contribution rates. The actual rates were calculated by CalPERS and the forecasted rates were provided by the City's CalPERS consultant Bartel & Associates. These rates were used in forecasting future retirement benefit costs included in this report. Employer CalPERS Contribution Rates Actual and Projected Actual Actual Estimated Estimated Forecast Forecast Forecast Forecast Fiscal Year 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Public Safety 22.1% 23.3% 21.1% 22.3% 23.5% 24.0% 24.5% 25.0% Miscellaneous 16.0% 20.1% 18.5% 18.3% 18.1% 18.1% 18.2% 18.3% (1) CalPERS provided the 2008 employer contribution rates and are included in the base budget. Rates for 2009 - 2012 are projected. (2) Rates do not reflect additional costs incurred to repay City's Pension Obligation Bonds which are scheduled to be paid off in 2012. (3) Based on the Annual Valuation Report issued on October 4. 2006. the funded status for the Public Safety Group and Miscellaneous Group combined was 82% in actuarial value and 84% in market value. 14 d-;)L/ FIVE YEAR FORECAST FISCAL YEARS 2008-2012 Health Insurance Premiums: Kaiser and PacifiCare insurance premiums have increased an average of 10.8% per year since the beginning of fiscal year 2001-02. The annual budget for flexible spending accounts has increased from $6.3 million in fiscal year 2001-02 to $12.3 million in fiscal year 2007-08. Included in the forecast are assumptions that premiums will continue to increase at an average rate of 10% per year. DEBT SERVICE Over the past five years the City has issued $143 million in debt used to fund several major capital projects such as the new public works yard, police facility and the expansion of the Civic Center. The debt service payments for these capital projects are funded out of various sources such as the General Fund, Residential Construction Fund and Development Impact Fee. The General Fund's annual debt service "commitment" is projected to be approximately $13.7 million, or approximately 7.8% of the projected General Fund operating budget for fiscal year 2007- 08. This continues to be within the City Council's debt service limit policy of 10%. However, it must be noted that although this amount is a General Fund commitment, only $6.2 million is actually projected to be paid out of the General Fund, which represents approximately 3.6% of the projected General Fund operating budget. The remaining $7.5 million is paid from other sources such as development fees, tax increment revenues and residential construction taxes. It is important to note that the final debt service payment related to the 1994 Pension Obligation Bonds will occur in fiscal year 2011-12, which is approximately $2.5 million per year. Sched. Pmt Interest Debt Service Fundinq Source Par Amount FY 07-08 Rate GF PFDIF RCT ASF 2000 COP- Public Works Yard $23,730,000 $1,867,453 5.14% 41% 59% 2000 COP - 800 MHz $1,525,000 $255,469 5.14% 25% 21% 54% 2002 COP - Police Facility $60,145,000 $3,914,146 4.93% 56% 44% 2004 COP - Civic Center Phase I $26,692,417 $2,392,155 4.65% 18% 82% 2004 COP- Infrastructure Improvements $10,547,583 $677,536 4.65% 100% 2006 COP - Civic Center Phase II $18,155,000 $744,000 4.32% 11% 89% 2006 COP- Nature Center $2,170,000 $159,000 4.32% 100% Total $142,965,000 Major Facility Financing - Debt Service Obligations GF- General Fund PFDIF- Public Facilities Impact Fee Fund RCT-Residential Construction Tax ASF- Asset Seizure Funds 15 ;2-;)5 FIVE YEAR FORECAST FISCAL YEARS 2008-2012 Annual Debt Service Payments Millions $14.0 $12.0 $10.0 $8.0 $60 $4.0 $2.0 $- FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 o General Fund . Non General Fund FINDINGS AND CONCLUSIONS As discussed in the Independent Financial Review Report prepared by Economic Planning Systems (EPS), "During the last decade, the City of Chula Vista has successfully managed a very rapid growth rate, requiring a substantial effort involved with planning, administering, and investing in necessary infrastructure and expansion of municipal services. As the City is transitioning from a sustained period of high growth and development to a more stable level, it faces many transitional issues. Slowing revenue growth and continued cost growth create a significant set of challenges, compounded by current budget conditions, to achieving a fiscally sustainable city. While there are existing and future challenges to be faced, the prospects for the City are very sound given regional market conditions, local development opportunities, the ex1ensive capital investments that have been made, and the capabilities of City staff." During these transitional times and environment of economic uncertainty, financial planning is always a prudent activity and development of a long-term financial plan is essential to sound fiscal management The plan is not able to predict with certainty the City's fiscal future, rather it will serve as a tool to highlight significant issues or problems that must be addressed if the City's goal of maintaining fiscal sustainability over the long term is to be achieved. MAJOR INITIATIVES It should be noted that this report has focused on the City's ability to provide for operating service programs that are currently in effect using existing sources of revenue. As the City continues to grow, additional parks, public facilities and roads will need to be added in order to maintain service 16 ;2-;;)& FIVE YEAR FORECAST FISCAL YEARS 2008-2012 levels mandated by the Growth Management Ordinance. Based on the five year forecast report, funding for any new programs or other major initiatives will require trade ofts during the budget process. Included under major initiatives in the forecast summary below are anticipated operating costs related to the opening of the Rancho Del Rey Library. Construction costs related to this project will be funded from the Public Facilities Development Impact Fees. Also included under major initiatives are costs related to funding four public safety positions which are initially fully funded by grants but become a General Fund obligation beginning in fiscal year 2008-09. These items are anticipated to be brought forward for Council consideration in the near future. Projected Reserves Summary (If Further Reductions Are Not Made) (Reflects $4.8 million budget gap in fiscal year 2008-09 and ongoing impacts) (In Millions) 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Actual Actual Est. Est. Forecast Forecast Forecast Forecast Revenues $137.8 $157.8 $164.9 $164.2 $170.3 $178.0 $185.8 $193.2 Expenditures/Fund Balance Adj.(Note 1) ($143.2) ($160.8) ($166.7) ($164.2) ($175.1) ($182.8) ($187.9) ($193.3) Subtotal Deficit/Surplus ($5.4) ($0.2) ($1.8) $0.0 ($4.8) ($4.8) ($2.1) ($0.1) General Fund Reserves $15.1 $14.9 $13.1 $13.1 $8.3 $3.5 $1.4 $1.3 Projected R<\ferves 9.7% 8:8% 8.0% 8.0% 4.7% 1.9% 0.7% 0.7% Major Initiatives (Note 2): RDR Library(Operations) ($0.3) ($0.6) ($06) ($0.6) Public Safety Staffing ($0.3) ($0.5) ($0.5) ($0.5) Park Maintenance ($0.1) ($0.1) ($0.1) ($0.1) Additional impact to Reserves ($0.7) ($1.1) ($1.2) ($1.2) General Fund Reserves (Note 3) $7.6 $2.4 $0.2 $0.1 Projected R*rves(lncluding Major Initiatives) 9.7% 8,8% 8.0% 8.0% 4.4% 1.3% 0.1% 0.0% Notes: 1) General Fund reserves based on the various assumptions discussed in the forecast report. Does not assume funding for any frozen positions or one time savings which helped balance the fiscal year 2007-08 budget which would add an additional $3.2 million to the budgetary gap in fiscal year 2008-09. Also does not assume any further salary increases beyond the current MQUs. Beginning in fiscal 2010-11 , a 1% citywide salary increase would cost approximately $1.3 million/yr. Forecast assumes funding for Classification Studies. 2) Major Initiatives listed for infonnational purposes only. Staff reports discussing fiscal impacts will be brought forward at time of Council consideration. 3) Forecasted General Fund reserves reflecting projected impacts of major initiatives listed above. 17 ;2-cJ7 FIVE YEAR FORECAST FISCAL YEARS 2008-2012 Projected Reserves Summary (Reflects balanced fiscal year 2008-09 budget) (In Millions) 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Actual Actual Est. Est. Forecast Forecast Forecast Forecast Revenues $137.8 $157.8 $164.9 $164.2 $170.3 $178.0 $185.8 $193.2 Expenditures/Fund Balance Adj. (Note 1) ($143.2) ($160.8) ($166.7) ($164.2) ($170.3) ($177.8) ($182.9) ($188.2) Subtotal Deficit/Surplus ($5.4) ($0.2) ($1.8) $0.0 $0.0 $0.2 $2.9 $5.0 General Fund Reserves $15.1 $14.9 $13.1 $13.1 $13.1 $13.3 $16.2 $21.2 Projected Reserves 9.7% 8.8% 8.0% 8.0% 7.7% 7.5% 8.9% 11.3% Major Initiatives (Note2): RDR Library(Qperations) ($0.3) ($0.6) ($0.6) ($0.6) Public Safety Staffing ($0.3) ($0.5) ($0.5) ($0.5) Park Maintenance ($0.1) ($0.1) ($0.1) ($0.1) Additional impact to Reserves ($0.7) ($1.1) ($1.2) ($1.2) General Fund Reserves (Note 3) $12.4 $12.2 $15.0 $20.0 Projected Reserves (Including Major Initiatives) 9.7% 8.8% 8.0% 8.0% 7.3% 6.8% 8.2% 10.6% Notes: 1) General Fund reserves based on the various assumptions discussed in the forecast report. Does not assume funding for any frozen positions or one time savings which helped balance the fiscal year 2007-08 budget which would add an additional $3.2 million to the budgetary gap in fiscal year 2008-09. Also does not assume any further salary increases beyond the current MOUs. Beginning in fiscal 2010-11, a 1 % citywide salary increase would cost approximately $1.3 million/yr. Forecast assumes funding for Classification Studies. 2) Major Initiatives listed for informational purposes only. Staff reports discussing fiscal impacts will be brought forward at time of Council consideration. 3) Forecasted General Fund reserves reflecting projected impacts of major initiatives listed above. 18 d-;Jg FIVE YEAR FORECAST FISCAL YEARS 2008-2012 - (10 YEAR. OUTLOOK) As stated previously, very few cities, if any, in the State have as much going on as we do here in Chula Vista. As part of the Finance Department's Business Strategic Plan, staff set a goal to prepare a long-term financial plan with a 10-year outlook. The first step in the financial planning process is to build the foundation, which consists of a five-year financial forecast. As stated by the Government Finance Officers Association, "A long-term financial plan can be defined as a plan that identifies fiscal issues and opportunities, establishes fiscal policies and goals, examines fiscal trends, produces a financial forecast, and provides for feasible solutions." The long-term financial plan will include fiscal impact assumptions regarding several major projects currently under review such as the Bayfront Master Plan, Fire Facilities Master Plan, Ambulance Life Support Study and various departmental strategic planning documents. The plan will include projections using quantitative methodologies, anticipated events as well as historical data. The long-term financial plan will also include a contingency plan to address fiscal challenges that the City may face due to unanticipated swings in the economy, further State funding cuts or other unforeseen events. It will also look ahead to the point when the City will become a mature stabilized community resulting in a decline of development related revenue and adjusting for a slower base revenue growth. Ultimately the goal of strategic planning, as stated in the Governmental Finance Officers Association Recommended Practices Guide, is to "influence the future rather than simply preparing or adapting to it". "Financial health considers the municipality's ability to provide services necessary to the community on an ongoing basis without erosion of fiscal position" from Moody's approach to Local Government Financial Analysis, January 2002 19 :;L--;;; q Projected Reserves Summary (If Further Reductions Are Not Made) (Reflects $4.8 million budget gap in fiscal year 2008-09 and on-going impacts) (In Millions) Key Variable Sensitivity Analysis City of Chula Vista - General Fund Pro forma Scenarios - 5-Year Forecast Summary Revenue Categories Prooertv Taxes Sales Tax (Based on Eff_ 1% Tax Rate Franchise Fees Utility Users Taxes Transient Occupancy Taxes Other Local Taxes Oevelooment Revenue Licenses and Permits Fines, Forfeitures & Penalties Use of Money and Property Motor Vehicle License Fees Police Grants Other Aaenev Revenue Char es for Services Intenund Reimbursements Other Revenues - Miscellaneous Transfers From Other Funds Total Revenue FY04I05 Actual $ 18,134,869 $ 23,600,000 9,837,800 6,579,578 2 268,944 3,624,377 12.412,393 545,525 824,901 2,055,387 13941204 2,328,002 3,291,082 5,174,706 13,970,518 3,468,098 15,706,199 $137,763,583 Exoenditure Cateaories Personnel Services PERS Supplies and Services Utilities Other Exoenses E ui ment Ca ital not CIP T ransfers/Debt Service Capital Improvement Projects Non-CIP Pro"ect Expenditures Fund Balance Adjustments Total Expenditures $91,233,318 19,775,237 18940516 4,540,055 1,185,838 1 439743 3,683,574 1,249,582 147,655 $142,195,518 Adjustment to Fund Balance $ (971,029) $ Net Impact to Reserves ($5,402,964) $15,147,040 9,7% Available General Fund Reserves R_ as . % of ProjoctodExpenclilQrao FY 05/06 Actual 22192789 $ 26,715,515 9,492,759 6 363,446 2,336,204 3,357,772 12,674667 670,304 1,144189 1,497921 18,354,839 2,934 405 4,127,011 5,106,540 16865735 2,701,453 21,274,416 $157,809,965 $102,855,278 24 779 344 19,008,192 4,509,959 2002,836 851,674 5,238426 1,466,149 115,102 $160,826,959 2,799,365 $ ($217,629) $14929,410 U% FY 06107 Estimated 27,649,041 $ 30,997,040 10528835 6,617,984 2,581,975 3,263,851 10,959,214 556 877 1,534,819 2,211,603 17 864,139 3,971,205 3,313,624 6 349 867 15,077,755 2,594,827 18,850,749 $164,923,405 $112,965,882 26,401,826 19,930956 5 435 320 (6,553,349) 879514 6,534,007 1,141,982 2238 $166,738,376 ($1,014,971) $13,114,440 ILl)% FY 07108 Base Budget 30,250317 $ 35 077 840 10,449,988 6,682703 2,672,344 3,276,670 14,452167 868,500 1,951,331 2431659 19,373,416 951,802 3 589 469 6,539,408 11,857,860 3191,157 10,616,544 $164,233,175 $107,754,144 25,980 596 18333,719 5,167,371 719755 88,480 6,092,110 97,000 $164,233,175 $ $13,114440 $.0% FY 08/09 Estimated 32280,212 $ 36,831,732 10,554488 6,756,066 2,752,514 3014970 15,063,993 894,555 2009871 2,489,624 20,657,794 842 346 2,967,525 6,580,617 12715074 2,937,216 10,908,025 $170,256,621 $113,041 776 27,539432 18,883,731 5 322 392 3,769,477 91,134 6320199 97,000 $175,065,141 $ $0 ($4,808,520) FY 09110 Estimated 34,450,664 $ 38673319 10,660,033 6,830,383 2,835,090 3,071,419 16,005993 921 392 1,914,612 2,558,218 22 030 644 749,238 3,058,904 6 803 030 13,200,175 2,959,402 11,258,974 $177,981,489 $118,316,052 29,191,798 19450242 5,482,064 3,804 842 93,868 6,366,769 97000 $182,802,635 $ ($4,021,146) $3,484,774 1.lI% FY10111 Estimated 36771,475 $ 40,606,985 10,766633 6926,008 2,920,142 3,129222 16,256,742 949,033 1,973908 2,628,751 23,498,129 739 238 3153,586 7,030,222 13,629628 3,185,170 11,625,322 $185,790,195 $120,741010 30 943 306 20,033,750 5,646 526 3841,975 96,684 6491 652 97,000 $187,891,903 $ ($2,101,700) $1,383066 0.7% FY11112 Estimated 39,253,132 42,434,299 10,874,299 7,022,972 3,007,747 3,188,415 16512148 977,504 2,035,048 2,701 281 24,627,343 734,238 3,251,692 7265,345 14,074,516 3,233,684 12,007,808 $193,201,472 $123,314,398 32,799904 20 634 762 5,815,922 3 880 965 99,585 6,617,411 97 000 $193,259,947 $ ($58,475) $1,324,591 0.7% General Fund reserves based on the various assumptions discussed in the forecast report. Does not assume funding for any frozen positions or one time savings which helped balance the fiscal year 2007-08 budget which would add an additional $3.2 million to the budgetary gap in fiscal year 2008-09. Also does not assume any further salary increases beyond the current MOUs. Beginning in fiscal year 2010-11, a 1% citywide salary increase would cost approximately $1.3 million/yr. Forecast assumes funding for Classification Studies. ;p -l -l ;p n :J: 3: rrl Z -l Note: ~ I l\) (:). Five-Year Summary $8,305,920 4.7% OJ MuniCast 2.4 - City of Chula Vista - RevMay2007L TFP.xls OS/2912007 Projected Reserved Summary (Reflects balanced fiscal year 2008-09 budget) (In Mill ions) Key Variable Sensitivity Analysis City of Chula Vista - General Fund Pro forma Scenarios - 5.Year Forecast Summary FY 04105 FY 05106 FY 06/07 FY 07/08 FY 08/09 FY 09/10 FY10/11 FY11112 Revenue Cateaories Actual Actual Estimated Base Budget Estimated Estimated Estimated Estimated Prooertv Taxes $ 18,134,869 $ 22,192,789 $ 27,649,041 $ 30,250,317 $ 32,280,212 $ 34,450,664 $ 36,771,475 $ 39,253,132 Sales Tax (Based on Eft. 1% Tax Rate) 23,600,000 26,715,515 30,997,040 35,077,840 36,831,732 38,673,319 40,606985 42,434,299 Franchise Fees 9 837 800 9,492 759 10,528835 10,449988 10,554 488 10,660,033 10,766,633 10,874,299 Utility Users Taxes 6,579,578 6,363,446 6,617,984 6,682,703 6,756,066 6,830,383 6,926,008 7,022,972 Transient Occupancy Taxes 2,268,944 2,336,204 2,581,975 2,672,344 2752,514 2,835,090 2920 142 3,007,747 Other local Taxes 3,624 377 3,357 772 3,263851 3,276670 3,014970 3,071,419 3,129,222 3,188,415 Develooment Revenue 12,412,393 12,674,667 10,959,214 14,452,167 15,063,993 16,005,993 16,256,742 16512148 licenses and Permits 545,525 670,304 556,877 868,500 894,555 921,392 949 033 977,504 Fines, Forfeitures & Penalties 824 901 1144,189 1,534819 1,951,331 2,009871 1,914,612 1 973,908 2,035,048 Use of Money and Property 2,055,387 1,497,921 2,211,603 2,431,659 2,489,624 2,558,218 2,628,751 2,701,281 Motor Vehicle license Fees 13,941,204 18,354,839 17,864,139 19,373,416 20,657,794 22,030,644 23,498,129 24 627 343 Police Grants 2,328 002 2 934,405 3971 205 951 802 842 346 749238 739 238 734,238 Other Aaencv Revenue 3,291,082 4,127,011 3,313,624 3,589,469 2,967,525 3,058,904 3,153,586 3,251,692 Charaes for Services 5,174,706 5,106,540 6,349,867 6,539,408 6,580,617 6,803,030 7,030,222 7 265,345 Interfund Reimbursements 13,970518 16865,735 15,077 755 11857860 12715074 13,200,175 13629628 14,074,516 Other Revenues - Miscellaneous 3,468,098 2,701,453 2,594,827 3,191,157 2,937,216 2,959,402 3,185,170 3,233,684 Transfers From Other Funds 15,706,199 21,274,416 18,850,749 10,616,544 10,908,025 11,258,974 11,625,322 12,007,808 Total Revenue $137,763,583 $157,809,965 $164,923,405 $164,233,175 $170,256,621 $177,981,489 $185,790,195 $193,201,472 Exoenditure Cateaories Personnel Services $91233318 $102855278 $112965882 $107754144 $108241776 $113,324,052 $115,699090 $118,222,059 PERS 19,775,237 24,779,344 26,401,826 25,980,596 27,539,432 29,191,798 30,943,306 32,799,904 Supplies and Services 18,940,516 19,008,192 19,930,956 18,333,719 18,883,731 19,450,242 20,033 750 20634,762 Utilities 4 540 055 4 509 959 5 435 320 5167,371 5,322392 5,482,064 5,646,526 5,815,922 Other Exoenses 1,185,838 2,002,836 {6,553,349 719,755 3,769,477 3,804,842 3,841,975 3 880 965 Eouioment (Caoital not CIP) 1,439,743 851 674 879514 88,480 82614 93 868 96 684 99,585 T ransferslDebl Service 3,683,574 5,238,426 6,534,007 6,092,110 6,320,199 6,366,769 6,491,652 6,617,411 Ca itallm rovement Proiects 1,249,582 1,466,149 1,141,982 97,000 97,000 97,000 97 000 97,000 Non-CIP Pro"ecl Expenditures 147655 115102 2238 - - - Fund Balance Adjustments - - - Total Ex enditures $142,195,518 $160,826,959 $166,738,376 $164,233,175 $170,256,621 $177,810,635 $182,849,983 $188,167,608 Adjustment to Fund Balance $ (971,029) $ 2,799,365 $ $ - $ - $ - $ $ Net Impact to Reserves ($5,402,964) ($217,629) ($1,814,971) $0 $0 $170,854 $2,940,212 $5,033,864 Available General Fund Reserves $15,147,040 $14,929,410 $13,114,440 $13,114,440 $13,114,440 $13,285,294 $16,225,506 $21,259,370 " , R--.... % 01 Projac"'~ &.7% 8.l1% I\.lI% 8.0% 7.7% 7.$% 8.9% 1U% Note: General Fund reserves based on the various assumptions discussed in the forecast report. Ooes not assume funding for any frozen positions or one time savings which helped balance the fiscal year 2007-08 budget which would add an additional $3.2 million to the budgetary gap in the fiscal year 2008-09. Also does not assume any further salary increases beyond the current MOUs. Beginning in fiscal 2010-11, a 1% citywide salary increase would cost approximately $1.3 million/yr. Forecast assumes funding for Classification Studies. :c- -l -l :c- o ::r: 3< /"Tl :z -l o 9v , Lv -- Five- Year Summary MuniCast 2.4 - City of Chula Vista - RevMay2007L TFP.xls 05129/2007 ~~f? ~ ...;;:::---- ~ - - - City Of Chula Vista City Manager's Office 276 Fourth Avenue Chula Vista, Ca 91910 619.409.5282 - 619.585.5612 Fax MEMO CI1Y Of CHUlA VISTA DATE: May 31, 2007 TO: FROM: Honorable Mayor and Council /: Jim Thomson, Interim City Manager JI Ed Van Eenoo, Director of Budget and Analysis ~ VIA: SUBJECT: Fiscal Year 2007-08 Proposed Mayor and Council Budget Attached is a copy of the fiscal year 2007-08 proposed budget for the Mayor and Council. The proposed Mayor and Council budget for fiscal year 2007-08 totals $1,545,614 - a $93,000 reduction from the current fiscal year due primarily to the elimination of the Intergovernmental Affairs Coordinator position, Pursuant to the recommendation of the Council Budget Subcommittee at their February 23 meeting and the direction from the full Council at the March 1 budget workshop, the Mayor and Council budget has been split into the following units: . Department Administration - $294.060 This amount includes a personnel services budget of $167,571 for the Executive Secretary and Office Specialist and a services and supplies budget of $128,489. The services and supplies budget is primarily for expenditures not specific to any Council member such as the annual State of the City Address, the Boards and Commissions recognition event, membership in the League of Cities, and office-wide printing and supply costs, . City Council members - $157.193 per Council member This amount includes $82,109 for the salary and benefits of one Councilmember, a budget of $58,510 per Councilmember for Council aides, and $16,574 per Council member for services and supplies. The Council aide budget is based upon the cost of one full-time benefited aide but can alternatively be used to fund one or more hourly aides. With the exception of office wide administrative expenses, the Mayor and Council services and supplies budget was generally divided 10% for Administration, 30% for the Mayor, and 15% to each Council member pursuant to Council direction given at the March 1 budget workshop, ;:2 - 3 d--. Fiscal Year 2007-08 Budget Update 5/31/2007 . Mavor - $622.782 This amount includes a personnel services budget of $590,134 and a services supplies budget of $32,648. The personnel services budget is comprised of salary and benefits for the Mayor and the following full-time support positions: Chief of Staff, Constituent Services Manager, and Coastal/Environmental Policy Consultant. Should you have any questions, I can be reached at extension 3067. cc: Dan Forster, Chief of Staff Natalie Flores, Executive Secretary c? - 33 Page 2 City Council Administration - 01110 Object Description FY 20 7-08 Propose 6001 Salaries $ 100,821 6005 Wages - Hourly $ 5,677 6101 Overtime - Regular $ 1,803 6122 Differential - Bilingual $ 1,200 6151 Sick in Lieu $ 547 6201 Flex/Insurance $ 19,489 6221 PERS $ 29,540 6222 PARS $ 213 6231 Medicare $ 1,580 6281 Workers Comp $ 4,700 Total Personnel ServIces $ 165,571 6301 Other Professional Services $ 20,000 6521 Promotional Expense $ 31,026 6531 Printing & Binding $ 7,244 6533 Postage $ 284 6541 Travel/Conf/Mtgs $ 5,186 6542 Membership/Dues $ 57,046 6801 Office SUPl?Iies $ 6,259 Total Services and Supplies $ 127,045 6571 Phone Service $ 1 ,444 Total Utilities $ 1,444 Total City Council Administration $ 294,060 d-3'1- Council Seat #1 - 01120 and 01121 bject Description FY 2 -08 Proposed 6001 Salaries $ 85,480 6153 Car Allowance $ 6,600 6201 Flex/Insurance $ 22,554 6221 PERS $ 24,735 6231 Medicare $ 1,250 Personnel Services $ 140,619 6506 Cell Phone Service $ 500 6531 Printing & Binding $ 1,867 6533 Postage $ 428 6541 Travel/Conf/Mtgs $ 7,779 6883 Other Commodities $ 6,000 Services and Supplies $ 16,574 Total Council Seat #1 $ 157,193 d~35 Council Seat #2 - 01130 and 01131 bJeet Oeser ption Y 2007-08 Proposed 6001 Salaries $ 85,480 6153 Car Allowance $ 6,600 6201 Flex/Insurance $ 22,554 6221 PERS $ 24,735 6231 Medicare $ 1,250 Personnel Services $ 140,619 6506 Cell Phone Service $ 500 6531 Printing & Binding $ 1,867 6533 Postage $ 428 6541 Travel/Conf/Mtgs $ 7,779 6883 Other Commodities $ 6,000 Services and Supplies $ 16,574 Total Council Seat #2 $ 157,193 ;2- 3~ Council Seat #3 - 01140 and 01141 Object Description FY 2007-08 Proposed 6001 6153 6201 6221 6231 6506 6531 6533 6541 6883 Salaries Car Allowance Flex/Insurance PERS Medicare Personnel Services $ $ $ $ $ $ $ $ $ $ $ $ Cell Phone Service Printing & Binding Postage T ravel/Conf/Mtgs Other Commodities Services and Supplies Total Council Seat #3 $ ;)-31 85,480 6,600 22,554 24,735 1,250 140,619 500 1,867 428 7,779 6,000 16,574 157,193 Council Seat #4 - 01150 and 01151 Object escription 007-08 Proposed 6001 6153 6201 6221 6231 Salaries Car Allowance Flex/Insurance PERS Medicare Personnel Services $ $ $ $ $ $ 85,480 6,600 22,554 24,735 1,250 140,619 6506 Cell Phone Service $ 500 6531 Printing & Binding $ 1,867 6533 Postage $ 428 6541 Travel/Conf/Mtgs $ 7,779 6883 Other Commodities $ 6,000 Services and Supplies $ 16,574 Total Council Seat #4 $ 157,193 :;;'-3'6 " Mayor - 01160 bject escr ption 2007-08 Proposed 6001 6151 6153 6201 6221 6231 6251 $ $ $ $ $ $ $ 400,221 1,200 16,800 47,731 115,767 5,881 2,533 6506 Cell Phone Service $ 500 6531 Printing & Binding $ 3,734 6533 Postage $ 856 6541 T ravel/Conf/Mtgs $ 15,558 6883 Other Commodities $ 12,000 Services and Supplies $ 32,648 Total Mayor $ 622,782 d,39