HomeMy WebLinkAbout8.4 Five Year General Fund ForecastOF
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DATE:
TO:
FROM:
SUBJECT:
STAFF REPORT
January 21, 2014
Honorable Mayor and City Councilmembers
CITY CLERK
File #330 -20
Christopher L. Foss, Acting City Manager
Five -Year General Fund Forecast, Including Preliminary FY 2014 -15 / 15 -16
Budget, and Proposed Calendar for the FY 2014 -15 / 15 -16 Proposed Budget
Prepared by Colleen Tribby, Director of Administrative Services
EXECUTIVE SUMMARY:
This report provides the updated five -year General Fund forecast, with preliminary FY 2014 -15 /
15 -16 budget numbers, and includes a discussion of its implications on the fiscal sustainability
of ongoing City operations. It also contains the calendar of major tasks and dates for the
upcoming two -year budget cycle.
FINANCIAL IMPACT:
The five -year General Fund forecast is based on the most recent assumptions of the City's
largest revenue sources, expenditure projections, and proposed capital projects using General
Fund dollars. The projections indicate an ongoing operating deficit beginning in FY 2017 -18, and
significant changes to reserve balances over the five year period. Staff will continue to update
the assumptions with the most recent information and will provide the forecast to City Council
with the quarterly budget reviews. During the 2014 calendar year, Staff plans to continue
discussions with City Council on budget - balancing solutions.
RECOMMENDATION:
Staff recommends that the City Council receive the report, and approve the proposed calendar
related to the FY 2014 -15 / 15 -16 Proposed Budget.
Submitted By
Administrative Services Director
Reviewed By
Acting Assistant City Manager
Page 1 of 5 ITEM NO. 8.4
DESCRIPTION:
With the preparation of the City's FY 2014 -15 / 15 -16 Proposed Budget currently underway,
Staff has updated the Five -Year General Fund Forecast using the most recent information
available. Revenue, expenditure, and reserve projections are summarized in Attachment 1 to
this report. The following is a broad discussion of the major trends in the General Fund
operating budget and their effects on reserve balances over the next five years. With regard to
the FY 2014 -15 / 15 -16 projections, it should be noted that the figures contained in this report
are preliminary, and that changes will likely occur between now and the budget adoption. This
report should serve as information on the overall health of the General Fund and the fiscal
sustainability of City operations over the long term.
General Fund Forecast
The General Fund operating budget is balanced when ongoing revenues cover ongoing
expenditures, before transfers out to capital projects. Such transfers are typically funded by the
planned use of committed reserves, with one -time revenue sources such as Community Benefit
Payments, or with surplus revenues, as approved by City Council. Over the last several years,
revenue growth has been sufficient to allow for the absorption of rising operating costs without
tapping into contingency or emergency reserves. The City has also been able to maintain
adequate pension and cash flow reserves, and has set aside additional funding towards various
capital projects, as permitted by the City Fund Balance and Reserves Policy.
However, while Staff expects the City's largest revenue sources, Property Tax and Sales Tax, to
continue their upward trend, that growth is likely to be modest in comparison to the rising costs
of public safety contracts, maintenance services, operational costs of new facilities, and
employee benefit costs. As was reported to the City Council in April 2013, absent a strategy for
increasing revenues and /or reducing expenditures, the five -year projection shows the City
beginning to draw down essential operating and contingency reserves beginning in FY 2016 -17.
The following table is a high -level summary of projected General Fund revenues and
expenditures, and reserve changes through FY 2018 -19.
Table 1: Five Year General Fund Forecast, Operating Budget and Impact on Reserves
Total Reserves 1 67,681,056 58,650,284 1 57,957,726 57,315,299 55,923,635
The projections in Table 1 illustrate a balanced operating budget (see Budget Impact line)
through FY 2015 -16. Additionally, in FY 2014 -15, with a positive Budget Impact of $2.3 million,
and after $1.3 million in transfers to capital projects identified in the five -year CIP and a one -time
payment of $750,000, the City anticipates increasing reserves by $1.7 million. However, these
funds do not flow directly into the cash flow used for operations, but instead must be allocated to
Page 2 of 5
14-15
15 -16
16 -17
17 -18
18 -19
Revenues
60,960,406
60,263,699
60,635,832
61,338,499
62,091,167
Expenditures
58,635,062
59,126,553
60,940,653
61,870,966
63,312,307
Budget Impact
2,325,344
1,137,146
(304,821)
(532,467)
(1,221,140)
Transfers Out
(1,345,436)
(10,167,918)
(387,736)
(109,961)
(170,524)
One -Time Revenues
750,000
2,000,000
Impact on Reserves
r 1,729,908 F
(7,030,772)
(692,557)
(642,428)
(1,391,664)
Total Reserves 1 67,681,056 58,650,284 1 57,957,726 57,315,299 55,923,635
The projections in Table 1 illustrate a balanced operating budget (see Budget Impact line)
through FY 2015 -16. Additionally, in FY 2014 -15, with a positive Budget Impact of $2.3 million,
and after $1.3 million in transfers to capital projects identified in the five -year CIP and a one -time
payment of $750,000, the City anticipates increasing reserves by $1.7 million. However, these
funds do not flow directly into the cash flow used for operations, but instead must be allocated to
Page 2 of 5
committed reserves in order to fund several large capital projects, such as the Cemetery
Expansion, proposed for the next year.
By FY 2016 -17, the General Fund is projected to incur an operating loss of $305,000, before
transfers to capital projects. If the projection is realized, it will require the use of the reserves to
balance the budget before transfers. Because that deficit budget will grow as expenditures
continue to outpace revenues, the City will be required to continue to draw down reserves for
operational purposes. Staff is concerned that, at that point, the City will lose the ability to
maintain an adequate cash flow reserve, and will not be able to set aside additional General
Fund funding for new capital projects.
Because of these trends, the City Manager has communicated to departments that the next two -
year expenditure budget will be a "hold- the -line" budget, with few exceptions. Salaries, benefits,
contracted services, and utilities will be updated by Finance Staff, with the majority of all other
expenditure budgets held flat.
Large Revenues and Expenditure Changes
As shown in Attachment 1, revenue and expenditure projections show significant changes, year
to year, beginning in FY 2014 -15. Property Tax and Sales Tax projections included percentage
increases on the current tax bases, and do not assume any large fluctuations in the base.
Building permit revenue is based on the most recent projection of expected construction activity.
Charges for Services include plan checking and zoning revenues, which also vary with
development activity. Personnel costs include Cost of Living Adjustments (COLAs) and the most
recent PERS and healthcare rates. Parks operational increases are related to the parks and
facilities listed in Table 2.
Table 2: Parks and Community Services, 5 -Year Operational Costs
* Projects such as Sean Diamond Park are dependent on the availability of Parks Impact Fees funding
It should also be noted that the current revenue and expenditure projections do not take into
account the following:
1. Revenues and expenditures related to the Emerald Glen Aquatics Center. Staff is
working on the business plan for this facility and will bring this back for City Council
review in the calendar year. Preliminarily, the net contribution /subsidy from the
General Fund would be approximately $700,000 to $900,000 per year. The final
impact will depend upon a number of factors, such as fee levels and staffing
requirements;
Page 3 of 5
FY 14 -15
FY 15 -16
FY 16 -17
FY 17 -18
FY 18 -19
FIVE YEAR
TOTAL
Passatempo Park (1/2 year in FY 13 -14)
30,310
30,310
30,310
30,310
30,310
151,550
Jordan Ranch Park
30,310
60,610
60,610
60,610
212,140
Library Expansion (placeholder)
10,000
20,000
20,000
20,000
20,000
90,000
Fallon Sports Park Lower Terrace
346,710
346,710
346,710
1,040,130
Sean Diamond Park *
-
-
44,415
88,830
88,830
222,075
Dublin Crossing Community Park - Phase I
-
-
-
-
88,830
88,830
TOTAL
$ 40,310
$ 80,620
$ 502,045
$ 546,460
$ 635,290
$1,804,725
* Projects such as Sean Diamond Park are dependent on the availability of Parks Impact Fees funding
It should also be noted that the current revenue and expenditure projections do not take into
account the following:
1. Revenues and expenditures related to the Emerald Glen Aquatics Center. Staff is
working on the business plan for this facility and will bring this back for City Council
review in the calendar year. Preliminarily, the net contribution /subsidy from the
General Fund would be approximately $700,000 to $900,000 per year. The final
impact will depend upon a number of factors, such as fee levels and staffing
requirements;
Page 3 of 5
2. Potential one -time Community Benefit Payments generated by the Dublin Crossings
Project; and
3. Any set asides for future capital projects last identified by City Council in April 2013.
Contribution to CIP
The FY 2013 -14 budget includes planned General Fund contributions to the CIP total $12.2
million (Table 3), with the largest expenses for the completion of the Maintenance Facility and
the Public Safety Complex. Beginning with the FY 2014 -15 budget, projections include the
funding of the Emerald Glen Aquatic Center, Fallon Sports Park, and the Cemetery Expansion
project. With the exception of anticipated Community Benefit Payments of $750,000 and
$2,000,000 for the Cemetery Expansion and Fallon Sports Park, respectively, the remainder of
the capital contributions will come from General Fund Committed Reserves.
Table 3: Projected CIP Project Costs, funded by General Fund
Project
13 -14
14 -15
15 -16
16 -17
17 -18
18 -19
Iron Horse Trail
2,000,000
500,000
500,000
500,000
500,000
500,000
Maintenance Facility
6,027,950
29,998,012
23,064,032
23,070,586
22,960,625
22,790,101
Civic Center Expansion
391,568
24,203,396
24,704,170
24,164,481
23,632,014
22,410,874
Public Safety Complex
3,070,746
12,215,638
12,301,236
12,695,970
12,794,576
12,794,576
Joint City /School Projects
600,000
GIS Upgrades
68,000
67,750
37,750
60,000
ADA Improvements
21,177
21,265
21,358
21,436
21,517
Annual Sidewalk Program
86,972
87,499
88,054
88,525
89,007
Downtown Multi -Modal
172,235
Storm Drain Assessment
160,052
80,341
240,574
Emerald Glen Aquatics
102,350
3,000,000
Cemetary Expansion
837,000
4,450,600
Fallon Sports Park
2,000,000
San Ramon Landscape
239,477
San Ramon Road Trail
101,603
City Entrance Sign
119,383
Total
12,192,614
1,345,436
10,167,918
387,736
109,961
170,524
By FY 2018 -19, the Committed Reserves balance is projected at $22.8 million (Table 4), with
$15.0 million of that committed to non -CIP reserves for Economic Stability and Fire Services
OPEB (Other Post Employment Benefits).
Table 4: Five -Year General Fund Reserve Balances
13 -14 14 -15 15 -16 16 -17 17 -18 18 -19
Projected Proposed Proposed Forecast Forecast Forecast
TOTAL IMPACT ON RESERVES (10,615,985) 1,729,908 (7,030,772) (692,558) (642,427) (1,391,664)
Non - Spendable
2,186,130
1,514,010
830,846
276,689
178,083
178,083
Restricted
500,000
500,000
500,000
500,000
500,000
500,000
Committed
28,635,989
29,998,012
23,064,032
23,070,586
22,960,625
22,790,101
Assigned
23,455,657
24,203,396
24,704,170
24,164,481
23,632,014
22,410,874
Unassigned
11,923,371
12,215,638
12,301,236
12,695,970
12,794,576
12,794,576
TOTAL RESERVES 66,701,149 1 68,431,057 61,400,285 1 60,707,727 60,065,299 58,673,635
Page 4 of 5
During the 2014 calendar year, and as information changes, Staff will update the forecast and
bring back to City Council a discussion of possible long term budget - balancing solutions, with
the ultimate goal of balancing the ongoing operating budget while maintaining a high level of
service to the community.
FY 2014 -15 / 2015 -16 Budget Calendar
Staff proposes to submit the final FY 2014 -15 / 2015 -16 Proposed Budget for Clty Council
adoption on May 20, 2014. Below is the proposed calendar of major tasks and dates:
Item
Budget Study Session
Heritage & Cultural Arts Commission Review CIPs
Parks & Community Svcs Commission Review CIPs
Planning Commission Review -
Finding of General Plan Conformance for the CIPs
2nd Budget Study Session (if needed)
Adopt FY 2014 -15 & FY 2015 -16 Budgets
Date
March 18 Council Meeting
April 8
April 21
April 22
May 6 Council Meeting
May 20 Council Meeting
Depending upon the direction given by City Council at the first study session (March 18) and the
input from commissions, Staff may need to schedule a second study session at the May 6 City
Council meeting.
NOTICING REQUIREMENTS /PUBLIC OUTREACH:
None.
ATTACHMENTS: 1. General Fund Summary Five -Year Forecast: 14 -15 through 18 -19
Page 5 of 5
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