MEETING DATE:
June 14, 2016
SUBJECT:
Title
RESOLUTION NOS. 2016-8213, 2016-8214, 2016-8215 - PROPOSED OPERATIONS & MAINTENANCE BUDGET FOR FISCAL YEAR (FY) 2016-17 AND CAPITAL IMPROVEMENT PROJECTS BUDGET FOR FISCAL YEAR (FY) 2016-17 FOR THE CITY OF SAN MARCOS
Body
Recommendation
Recommendation
ADOPT the following three resolutions: 1) a resolution approving the Operation & Maintenance Budget for Fiscal Year (FY) 2016-17 and Capital Improvement Projects Budget for Fiscal Year (FY) 2016-17, authorizing the appropriation of the funds from the City Treasury, and adopting the Fiscal Year (FY) 2016-17 classification and compensation schedule; 2) a resolution authorizing the appropriation and transfer of funds for the establishment of an appropriated reserve fund for future expenditures and/or contingencies for Fiscal Year (FY) 2016-17; and 3) a resolution setting the tax rate for Fiscal Year (FY) 2016-17.
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Board or Commission Action
The Budget Review Committee met on April 28th, May 9th, May 16th, May 23rd and June 6th to review the proposed Operations & Maintenance Budget and Capital Improvement Projects Budget.
Relevant Council Strategic Theme
Quality of Life
Planning for the Future
Dynamic and Responsive Service Delivery
Good Governance
Economic Development
Relevant Department Goal
Not applicable.
Introduction
Each year staff presents the City Council with the proposed Operations & Maintenance Budget and Capital Improvement Projects Budget for the next fiscal year. The City’s fiscal year begins July 1st and ends on June 30th.
The proposed Operation & Maintenance Budget for FY 2016-17 and Capital Improvement Projects Budget for FY 2016-17 represent the culmination of several months of review and analysis by the City Manager, Finance Director and all City departments. Prior to presenting the budgets to the City Council for consideration, the City Council appointed citizen Budget Review Committee met to review and discuss the proposed budgets.
Discussion
Proposed Budget Overview
The first attachment to this staff report begins with the City Manager’s budget transmittal letter which highlights changes to the budget document, overall economic factors that were considered in the development of the budget, challenges associated with developing the budgets, as well as key components of the proposed General Fund budget from both a revenue and expenditure perspective. The letter concludes with a section devoted to the Capital Improvement Projects Budget. This section provides a high level overview of the types of projects being funded, as well as funding sources.
The City’s proposed budget for FY 2016-17 amounts to $113.5 million, down from $120.3 million approved a year ago. The FY 2016-2017 budget includes money for the General Fund ($69.3 million), Special Revenue Funds ($23.3 million), Debt Service Fund ($470,353), Enterprise Fund ($4.9 million), and Internal Service Funds ($6.4 million). The Capital Improvement Projects budget amounts to $18.0 million and includes funding from some of the various funds listed above.
The budget was developed utilizing the Fiscal Management Policy that Council adopted on May 12, 2015. As a result 3.1% of the adopted FY 2015-16 budget or $2,023,167 is being set aside in the proposed FY 2016-17 budgets for infrastructure, City facility rehabilitation, and vehicle and equipment replacement.
The City Council’s adopted General Fund Reserve Policy has been adhered to despite rising operating costs and sluggish revenues. Factors such as cost containment and one-time revenues have contributed to a projected surplus for FY 2015-16 and FY 2016-17. Reserves for both years are expected to be above the required policy which commits to maintaining unassigned fund balance at a minimum to 40% of General Fund annual operating expenditures.
Following the City Manager’s budget transmittal letter, is the proposed General Fund budget which begins with summary pages followed by budget detail pages for all City departments and divisions. The General Fund budget summary page 7 shows a balanced budget is being recommended. The recommended budget includes funding for some of the operating supplemental budget requests submitted by the departments. Departmental budget requests are submitted as part of the budget process for items typically associated with one-time needs or delayed programs/projects prioritized as such and included in the department’s budget submitted to the City Manager. The City Manager ultimately recommends to City Council only those items of high priority for which funding is available.
The recommended budget also includes newly negotiated employee compensation under new approved Memorandums of Understandings for both San Marcos Classified Miscellaneous Employees’ Association and San Marcos Supervisors’ Employees’ Association effective July 1st, 2016. Additionally, to ensure fairness and equity across labor divisions, unrepresented and safety employees will also be receiving the two percent salary range structure adjustment based on the average of the Bureau of Labor Statistics and World at Work Cost of Labor indexes.
Other salary and benefit funding impacts to the budget include scheduled merit step increases for eligible employees as well as expected retirement and health insurance cost increases. Positions were limited and associated with departments that restructured with salary savings. Public Works, Parks Division, will be hiring three new full time positions in lieu of utilizing part time maintenance employees for park maintenance. This change will allow for a more consistent and efficient work flow. Development Services will be hiring a new Storm Water Inspector towards the middle of the fiscal year due to increased storm water regulatory requirements. Excluding part-time employees, the budgeted full-time equivalent employee position count is 247 for FY 2016-17, up from 244 budgeted for FY 2015-16. Overall, salary and benefits represent 47% of the General Fund Operating budget and increased approximately 2.5% over FY 2015-16 projected year end amounts.
The proposed General Fund budget is followed by summary and detail information for all other funds. Lastly, detailed information for all proposed Capital Improvement Projects for FY 2016-17 is also included.
In addition to the financial information presented in the attachments, the budget book, which will be produced and available to citizens online prior to July 1st, will contain general department information including organizational charts and goals and metrics.
Requested City Council Action
There are three resolutions on which the City Council must take action in order to adopt the Operations & Maintenance Budget for FY 2016-17 and Capital Improvement Projects Budget for FY 2016-17.
1) Resolution 2016- XXXX adopts both budgets and authorizes appropriation of the funds from the City Treasury. Additionally, this resolution adopts the FY 2016-17 classification and compensation schedule. All of the salaries included in the proposed budget are based upon this schedule.
2) Resolution 2016-XXXX authorizes the appropriation and transfer of funds for the establishment of an appropriated reserve fund for future expenditures and/or contingencies for FY 2016-17. This continues the reserve funds which are already in existence and allows for expenditures included in the proposed budget.
3) Resolution 2016-XXXX sets the tax rate for FY 2016-17. The proposed tax rate remains at the City's proportionate share of 1% of the market value, plus any incremental increase permitted by State law, as imposed by the San Diego County Tax Assessor.
Fiscal Impact
The City’s proposed Operations & Maintenance Budget and Capital Improvement Projects Budget for FY 2016-17 are $113.4 million and $18.0 million, respectively. Detailed information about the fiscal impact is presented in the attached documents.
Attachment(s)
1) City Manager’s Budget Transmittal Letter
2) Proposed Operations & Maintenance Budget for FY 2016-17 and Capital Improvement Projects Budget for FY 2016-17
3) Resolution 2016- XXXX Adopting 2016-17 Budgets
4) Resolution 2016- XXXX Establishing Reserves
5) Resolution 2016- XXXX Setting Tax Rate
Prepared by: Alan Stutler, Budget and Revenue Officer
Reviewed by: Laura Rocha, Finance Director
Approved by: Jack Griffin, City Manager