MEETING DATE:
FEBRUARY 14, 2017
SUBJECT:
Title
RESOLUTION NO. 2017-8304 - RECEIVE THE FISCAL YEAR 2016-17 MID-YEAR BUDGET AMENDMENTS AND ADOPT A RESOLUTION AMENDING THE FISCAL YEAR 2016-17 OPERATIONS & MAINTENANCE AND CAPITAL IMPROVEMENTS PROJECTS BUDGET
Body
Recommendation
Recommendation
ADOPT a resolution amending the Fiscal Year 2016-17 Operations & Maintenance Budget and Capital Improvement Project Budgets.
Body
Board or Commission Action
Not applicable
Relevant Council Strategic Theme
Good Governance
Relevant Department Goal
Not applicable
Introduction
The City Council adopted the Fiscal Year 2016-17 Budget at its June 14, 2016 meeting. At that time, a balanced budget was presented thus laying the framework for maintaining necessary levels of service to the residents of San Marcos. To date, the City’s revenue projections appears to be on target. Generally, normal expenditures are occurring at the expected pace. There have, however, been expenditures that have occurred or are expected to occur that were unknown at the time of budget. Therefore, staff is submitting mid-year budget amendments for City Council review and approval.
Discussion
The purpose of the Fiscal Year 2016-17 Mid-Year Budget Amendments is to amend the base budget as adopted by the City Council for items unanticipated or unknown at the time of budget. The budgetary legal level of control resides at the departmental level (e.g. Public Safety, Public Works, Community Services, etc.). That is to say, a given department has the operational flexibility to reallocate appropriations within specified budgeted line-items, but cannot exceed the overall appropriation level as approved by the City Council.
At this time, staff has identified additional expenditures that would exceed the overall appropriation level originally approved by the City Council.
Attached as Exhibit A for the City Council’s review are the mid-year budget amendments classified by fund and expenditure type. Expenditure types are identified as unanticipated and discretionary. Unanticipated expenditures are those items that were unknown at the time of budget adoption, but the expenditure authority is needed prior to the end of the current fiscal year. Discretionary items are also items that were not requested as part of the FY 2016-17 budget. The discretionary expenditures are less critical to maintaining current operations and services and could be deferred to next fiscal year.
Following Exhibit A are revised capital improvement project worksheets for four capital improvement projects. Staff is proposing to increase the budget for three projects and to reallocate the spending plan for the fourth project, so that expenditures can occur in FY 2016-17 instead of FY 2017-18.
General Fund
The majority of the unanticipated expenditures are relatively small dollar amounts, and in the discretionary expenditure category there are two items that represent the majority of the funds being requested. Together the requests total $201,088 or approximately 0.3% of the approved General Fund budget which is considerably lower than midyear requests in FY 2015-16 ($792,843) and in FY 2014-15 ($2,392,504). It is anticipated that most of the additional FY 2016-17 expenditures will be offset partially or entirely by additional revenue as detailed below.
The three largest items within the unanticipated expenditure category pertain to Finance contract services, Public Works contract services, and Community Services ActiveNet fees.
The additional contract expense of $45,000 for the Finance department consists of an additional $20,000 for sales tax audits performed by our sales tax consultants, $20,000 for services performed by Bartel & Associates for other post-employment benefit liabilities required for this year’s financial audit, and lastly $5,000 for new financial advisory services. Throughout the year, our sales tax consultants perform sales and use tax audits to identify and recover tax allocation errors which aid in maximizing the City’s sales tax revenues. Over the past three years, approximately $900,000 has been recovered through sales tax audits. It was also necessary to obtain actuarial services for this year’s financial audit to comply with Governmental Accounting Standards Board (GASB) Statements #45 & #72 pertaining to the City’s liability for other post-employment benefits offered to retirees. This GASB disclosure requires an actuarial consultant every couple of years. The City contracted with Bartel & Associates to perform these services for $20,000. Also this year, pursuant to SB 1029 which passed on September 12, 2016, the City must adopt a debt policy before any additional bonds can be issued and/or refunded. The City will be preparing this policy in house however it is in the best interest of the City to have this reviewed by our financial advisory firm at a not-to-exceed cost of approximately $5,000.
The Public Works contract increase of $23,423 is for the repair of electrical issues at Alder Glen Park, Mission Sports Park, Sunset Park, Walnut Grove Park, and Mulberry Park. Public Works is also requesting additional funds for new uniform requirements ($7,560), a prevailing wage contract settlement ($14,133), and stencil materials ($7,300). The $20,000 increase in Community Services ActiveNet fees results from increased activity of the City’s on-line recreational enrollment application program. These fees are entirely offset by additional program revenue. Community Services also is requesting funds for the replacement of the plexiglass at the Sunset Park soccer arena. The current glass is fogged up and obstructing the view. The approximate cost of this is $15,000 allocated to the General Fund and the CFD 98-02 funds.
The discretionary expenditures category is primarily made up of a Fire Department request and a Finance/IT request. The Fire Department is proposing to convert the current 12-hour ambulance operating five days a week (part-time) to a 24-hour ambulance operating seven days a week (full-time). The request is being put forward due to the continued rise in call volume and the need to sustain successful continuity of operations and service to the community. Transitioning the 12-hour part-time ambulance staffed with overtime to a 24-hour full-time ambulance will require the hiring of three new Firefighter/Paramedics and continued utilization of part-time Emergency Medical Technicians (EMTs). An in-depth analysis of incident response trends support that if the full-time ambulance captures at least 15 more transports per month, costs to the City would be neutral. Current trends are reflecting positively in support of this transport goal.
Staffing options were discussed at length in order to minimize additional personnel costs. Given the current service model within the Fire Department, this appears to be the most efficient staffing structure until a better process is vetted out for responding to basic life support (BLS) calls. The City is diligently committed to bettering the overall process for responding to these type of calls, however, this will command region wide agency efforts. It is hoped that within the coming year, discussions will begin amongst agencies in North Zone to restructure the current transport model.
In order to better serve the City’s GIS and IT needs, finance is requesting to convert a part-time position in GIS to full-time and increase the rate of pay for the part-time IT help desk position. The current workload and skill set demand in GIS is becoming increasingly high. To date, we have been somewhat successful with non-paid interns; however, learning curves, skill sets and high turnover prove to be challenging which often costs more to manage. The City would be better served by converting the current part-time GIS position to full-time.
Other Funds
In addition to the proposed budget amendments to the General Fund, one change is also being proposed to the Vehicle and Equipment Replacement Fund.
Vehicle & Equipment Replacement Fund
Staff is proposing to increase the budgeted amount for Public Works’ capital equipment replacement by $3,000. The increase is due to higher than expected costs for the fuel island dispenser replacement.
Capital Improvement Program (CIP)
Staff is proposing budget modifications to three CIP projects.
Southlake Community Park (CIP #88129)
Staff recommends updating the current spending plan so that $105,796 of expenditures can occur in FY 2016-17 instead of FY 2017-18. This change in spending plan does not change the current overall project budget.
Street Rehabilitation - 2015 (CIP #86003)
Staff recommends increasing the project budget by $203,156 due to unforeseen structural re-construction needed as part of the rehabilitation and preventative preservation work on Rancho Santa Fe Road.
Citywide Turf Median Conversion (CIP #82001)
Staff recommends increasing the project budget by $295,670 due to the lowest responsive proposal for the work exceeding the current project appropriation by this amount. This project will rehabilitate the medians and parkways along Las Posas and Borden Roads with high-efficient irrigation distribution system and water-wise plants and trees.
Drainage Master Plan (CIP #85002)
Staff recommends increasing the project budget by $100,000 to account for the further evaluation of specific infrastructure needs and CIP projects not defined in the original scope of services.
Fiscal Impact
Approving the General Fund mid-year budget amendments will increase the General Fund operating expenditure budget in Fiscal Year 2016-17 by $201,088 or 0.3% of the original budgeted expenditures. A portion of the proposed increase ($80,000) will be offset by corresponding revenue increases known at this time. The total revised General Fund budget will be $70,718,383. This revised number includes previously approved carry-over amounts from the Fiscal Year 2015-16 budget of $1,209,880.
Staff has reviewed General Fund revenues through December 31, 2016. Major revenues, such as sales taxes, property taxes, and rental income are trending as expected. Other revenues such as development fees and ambulance billings are projected to come in higher than budgeted. One-time nominal revenues not anticipated at the time of budget are expected to occur by the end of the fiscal year. At this time, Staff does not anticipate the use of reserves for additional budget amendments. It is anticipated that revenues along with other salary and operational cost savings will be sufficient to maintain the required level of reserves. Should further review in the next six months prove otherwise, staff will bring forth the information to City Council for review and subsequent recommendations.
Approving the proposed changes to the Vehicle & Equipment Replacement Fund will increase the fund’s expenditure budget in Fiscal Year 2016-17 by $3,000.
There is no fiscal impact of approving the proposed changes to the South Lake Community Park Project (CIP #88129) since available bond proceeds will merely be expended in FY 2016-17 instead of FY 2017-18.
Approving the proposed changes to the Street Rehabilitation - 2015 Project (CIP #86003) will increase the project budget by $203,156 for a total project budget of $3,743,156. Staff is recommending the additional project funding come from the City’s Infrastructure Replacement /Rehabilitation Fund.
Approving the proposed changes to the Citywide Turf Median Conversion (CIP #82001) will increase the project budget by $295,670 for a total project budget of $895,670. Staff is recommending the additional project funding come from the City’s Infrastructure Replacement /Rehabilitation Fund.
Approving the proposed changes to the Drainage Master Plan Project (CIP #85002) will increase the project budget by $100,000 for a total project budget of $480,000. Staff is recommending the additional project funding come from the Public Facilities Fees Fund.
Attachment(s)
Exhibit A - Fiscal Year 2016-17 Mid-Year Budget Amendments
Capital Improvement Program Project Worksheets (4)
Amended Budget Resolution 2017-XXXX
Prepared by: Alan Stutler, Budget and Revenue Officer
Reviewed by: Laura Rocha, Finance Director
Approved by: Jack Griffin, City Manager