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Home My WebLink About101-Mid Year Report.pdf SARATOGA CITY COUNCIL MEETING DATE: February 3, 2010 AGENDA ITEM: DEPARTMENT: Finance & Administrative Services CITY MANAGER: Dave Anderson PREPARED BY: Mary Furey DIRECTOR: Mary Furey SUBJECT: FY 2009/10 Mid-Year Budget Status Report and Budget Adjustment Resolution RECOMMENDED ACTION: Review FY 2009/10 budget status report and proposed budget adjustments, and adopt resolution approving the City’s FY 2009/10 Operating Budget amendments. REPORT SUMMARY: As the current economic downturn has developed into the longest and deepest contraction in many, many decades, the City’s revenues declined much further than we had anticipated last spring. For example, at budget adoption, our revenue projections reflected a 37% decline in development revenues from the prior year’s adopted budget, whereas our revised projections reflect a 52% decline. To put the economic impact into actual dollars, we are now expecting that we will see a $650,000 drop in planning and building revenues this year, from the high of two years ago. Overall, General Fund Revenues are expected to come in almost $758,000 (5%) less than last year, and $1,487,000 (9%) less than two years ago. While economic downturns are common cyclical events, and are expected to occur from time to time, this one has been described as the most severe in the post-war era and is impacting City revenues far more than we anticipated or have experienced in the past. The magnitude of the revenue shortfalls requires that the City’s adopted budget be revised to reflect the overall projected decrease. For the current year, we are projecting a shortfall of $50,000 in planning revenues, and $240,000 in building revenues from budgeted revenues. Engineering’s development revenues are suffering the same economic hits with an expected $50,000 shortfall from budgeted revenues. Recreation, while making cost recovery headway from last year, is feeling the impact of the economic recession with fewer classes and camps offerings due to lower enrollment. The revised recreation class revenues show a drop of $60,000 from budget, and another $10,000 reduction in camp fees. While Sales Tax was projected at reduced levels due to the anticipation of falling retail and restaurant activity, the revenue is taking a further hit as a result of the State overpaying the City in the prior year based on pre-recession levels of estimated payments. This has resulted in the prior year’s overpayment being charged against current year revenues. Staff is recommending reducing the Sales Tax revenue appropriation by $25,000. Prop 172 Sales Tax is also coming in lower than anticipated, but it is unclear if this is due to lower sales tax receipts, or increases in State fees for administering the Prop 172 allocation program. We are also seeing increased State administration fees in the VLF program, so these tax receipts too have been reduced. We are recommending a reduction in Prop 172 Sales Tax revenues of $25,000, and in VLF fees of $15,000. Transient Occupancy Tax earnings are also reflecting lower than anticipated receipts, and staff is recommending a $10,000 budget reduction. Construction Tax is charged as a percentage of building permits. This revenue shortfall is directly related to the reduction in building activity, and staff is recommending a budget decrease of $15,000. Of particular note, is the impact this economic downturn has had on interest earnings. In FY 2006/07, the City earned $715,000 in interest when rates hovered around 5.1%. In FY 2007/08, the City earned $616,000 as rates dropped to an average of 4.4%, and in FY 2008/09, interest earnings dropped to $341,000 as rates continued to drop further to an average of 2.2%. For this year, we are now expecting approximately $170,000 in earnings as interest rates have dropped to an average of .75% as of mid-year. This extreme reduction in interest earnings is due in part to historic low rates, but it is also due to the reduction in revenue receipts, the delays in state and county payments, and ongoing operating and capital expenditures, which all contribute to decreasing fund balances. In summary of the above discussion, General Fund budgeted revenue are proposed to be reduced in the following categories: Revenue Shortfalls: Planning Design Review 50,000 Building Permits 240,000 Engineering Review 10,000 Engineering Subdivision Plan Check 20,000 Recreation Classes 60,000 Recreation Camps 10,000 Prop 172 Sales Tax 25,000 Sales Tax 25,000 TOT 10,000 Construction Tax 15,000 VLF Fees 15,000 Interest Income 150,000 Total General Fund Revenue Budget Reductions 630,000 To align budgeted expenditures with the reduction in budgeted revenues, staff assessed the current year’s departmental budgets to find appropriate areas in which cuts could be made that would not significantly affect current operations, or where expenditures could be delayed. Budget cuts include General Fund reductions in supplies, materials, fees, and services, the elimination of budgeted salary and unemployment costs that will not be used, and an overall tightening of the belt across all departments. Internal Service Fund appropriations were reduced where available to reduce the charge-back fees to the General Fund. For example, the budget cuts will delay vehicle replacements, and reduce funding for some building maintenance services. The $480,000 of budget cuts are shown by category groups in the schedule on the following page. The recommended budget adjustment also includes a $50,000 transfer from the IT Equipment Replacement Fund to the General Fund as a result of the telephone upgrade project costing significantly less than the funding that was available for the project. These funds were originally transferred into the IT Equipment Replacement Fund from the General Fund several years ago for the IT upgrade project, therefore it is recommended they be transferred back into the General Fund. Additionally, the FY 2009/10 budget was adopted in June with budgeted revenues appropriations exceeding budgeted expenditure appropriations by $150,000 as a buffer to offset the revenue instability we were experiencing. The recommended budget adjustment utilizes $100,000 of the budgeted offset, with $50,000 of the offset remaining as a buffer through year-end. Expenditure Cuts: General Fund Salary / Temp 43,900 General Materials & Supplies 68,375 Maintenance Materials & Supplies 3,000 Services Fees – bank fees, legal publications 7,200 Dues & Memberships 2,270 EDD Unemployment Charges 10,000 Records Management Services 18,000 GIS Services 5,500 Street Sweeping, Tree & Trail Maintenance, Turf Top 54,000 Environmental Services 2,000 Financial and Audit Services 12,400 Legal Services 5,000 Engineering Consultants 20,500 Meetings & Events 12,450 Training & Conferences 26,995 Other Miscellaneous 18,410 Total General Fund Budget Cuts 310,000 Internal Service Funds Offices Stores 17,000 Equipment Maintenance 17,000 Building Maintenance 46,000 Vehicle & Equipment Replacement 90,000 Total Internal Service Fund Budget Cuts 170,000 TOTAL Expenditure Cuts 480,000 Transfer to General Fund: IT Equip Repl Fund Balance 50,000 Reduce General Fund Budget Offset: Rev > Exp 100,000 NET BUDGET ADJUSTMENT 630,000 FISCAL IMPACTS: Upon Council approval, revenue and expenditure operating budget appropriations will be amended. CONSEQUENCES OF NOT FOLLOWING RECOMMENDED ACTION: Revenue and expenditure budget appropriations will not be amended as recommended ALTERNATIVE ACTION: Council could provide alternative direction FOLLOW UP ACTION: Staff will post budget adjustment ADVERTISING, NOTICING AND PUBLIC CONTACT: N/A ATTACHMENTS: Attachment A – Resolution Attachment B – Budget Appropriation Details ATTACHMENT - A RESOLUTION NO. 2010-___ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SARATOGA AMENDING THE ANNUAL BUDGET FOR FISCAL YEAR 2009/10 TO ADJUST REVENUE, EXPENDITURE, AND TRANSFER APPROPRIATIONS TO REVISED LEVELS WHEREAS, the City of Saratoga FY 2009/10 General Fund revenues were reviewed at mid-year and projected through year-end to determine estimated revenues for the fiscal year, and; WHEREAS, it was determined that a number of the revenues receipts would not be sufficient to meet budgeted revenue estimates, and; WHEREAS, the City Council desires to adopt revenue, expenditure, and transfer budget appropriations at the revised projection levels, and; WHEREAS, it is necessary to amend the City of Saratoga FY 2009/10 budget to reduce revenue and expenditure appropriations and to increase transfer appropriations to be in alignment with the revised projections; NOW THEREFORE, BE IT RESOLVED, that the City Council of the City of Saratoga hereby amends the Fiscal Year 2009/10 Operating & Capital Budget as shown in the following attached appropriation adjustments in the Mid-Year Budget Status Report – Attachment B; AND BE IT FURTHER RESOLVED, that the Finance and Administrative Services Director is directed to record these changes into the City’s accounting records in accordance with appropriate accounting practices. The above and foregoing resolution was passed and adopted at a regular meeting of the Saratoga City Council held on the 3rd day of February, 2010 by the following vote: AYES: NOES: ABSENT: ABSTAIN: ______________________________ Kathleen King, Mayor ATTEST: _____________________________ Ann Sullivan, City Clerk ATTACHMENT - B PROGRAM ACCOUNT ACCOUNT TITLE BUDGET REDUCTION GENERAL FUND REVENUE PROJECTED SHORTFALL 1114101 44443 DESIGN REVIEW 50,000 1114201 43471 BUILDING PERMITS 240,000 1115101 44511 ENGINEERING REVIEW 10,000 1115101 44515 ENGINEERING SUBDIVISION PLAN CHECK 20,000 1116101 44611 CLASSES & SPECIAL PROGRAMS 60,000 1116101 44612 CAMP FEES 10,000 1117101 42431 PROP 172 SALES TAX 25,000 1118101 41211 SALES TAX 25,000 1118101 41311 TOT 10,000 1118101 41511 CONSTRUCTION TAX 15,000 1118101 42411 VLF FEES 15,000 1118101 46111 INTEREST INCOME 150,000 TOTAL GENERAL FUND REVENUE REDUCTIONS 630,000 GENERAL FUND BUDGET CUTS CITY COUNCIL 1111101 61111 OFFICE SUPPLIES 500 1111101 62212 SILICON VALLEY JOINT VENT 500 1111101 66112 COUNCIL MTG EXPENSES 4,000 1111101 66211 TRAINING & CONFERENCES 3,195 1111101 66212 TRAVEL & LODGING 1,000 1111101 66213 MILEAGE REIMBURSEMENT 500 CITY COMMISSIONS 1111201 61162 TRAFFIC SAFETY COMMITTEE 350 1111201 61164 HPC COMMITTEE 2,200 1111201 61165 YOUTH COMMITTEE 500 1111201 66131 COMM RECOGNITION DINNER 600 CITY MANAGER'S OFFICE 1112101 51112 TEMP HOURS 1,900 1112101 51200 VACATION BUY-BACK 17,000 1112101 61111 OFFICE SUPPLIES 500 1112101 66111 MEETING EXPENSES 2,500 1112101 66211 TRAINING & CONFERENCES 2,550 1112101 66212 TRAVEL & LODGING 4,000 CITY CLERK 1112201 61111 OFFICE SUPPLIES 1,000 1112201 64112 RECORDS MANAGEMENT SVCS 18,000 1112201 64141 CODIFICATION SERVICES 1,500 HUMAN RESOURCES 1112301 62162 REPORT/STUDY FEES 200 1112301 64161 FINGERPRINTING SERVICES 350 1112301 64162 SALARY SURVEY SERVICES 600 1112301 66111 MEETING EXPENSES 300 1112301 66121 EMPLOYEE RECOGNITION PGM 2,500 1112301 66122 EMPLOYEE EVENTS 2,200 1112301 66212 TRAVEL & LODGING 2,000 1112301 66213 MILEAGE REIMBURSEMENT 250 1112301 66311 RECRUITMENT ADVERTISING 2,850 1112301 66321 ORAL BOARD EXPENSES 300 1112301 66322 TESTING MATERIALS 100 ATTACHMENT - B PROGRAM ACCOUNT ACCOUNT TITLE BUDGET REDUCTION FINANCIAL SERVICES 1113101 61111 OFFICE SUPPLIES 1,000 1113101 61123 PRINT STOCK-LH/FORMS/CHKS 2,500 1113101 61172 OFFICE FURNITURE < $10K 10,000 1113101 62111 BANK FEES & CHARGES 3,000 1113101 65131 FINANCIAL AUDIT SERVICES 2,400 1113101 65133 OTHER AUDIT SERVICES 10,000 1113101 66211 TRAINING & CONFERENCES 2,500 1113101 66212 TRAVEL & LODGING 1,250 1113101 66214 TUITION REIMBURSEMENT 1,500 DEVELOPMENT REVIEW 1114101 61112 POSTAGE 4,000 1114101 61113 SUBSCRIPTION/PUBLICATIONS 1,000 1114101 61114 COMPUTER SUPPLIES 200 1114101 62132 LEGAL PUBLIC NOTICES 2,000 1114101 64341 GIS SYSTEM SERVICES 500 1114101 65254 LEGAL- APPLICANT SERVICES 5,000 1114101 65511 TRAFFIC ENGINEERS 500 1114101 66211 TRAINING & CONFERENCES 1,000 1114101 66214 TUITION REIMBURSEMENT 2,000 CODE COMPLIANCE 1114103 61111 OFFICE SUPPLIES 500 BUILDING & INSPECTION 1114201 61112 POSTAGE 400 1114201 61113 SUBSCRIPTION/PUBLICATIONS 1,275 1114201 66211 TRAINING & CONFERENCES 1,000 1114201 66212 TRAVEL & LODGING 500 GENERAL ENGINEERING 1115101 61112 POSTAGE 1,000 1115101 62233 VTA CONGESTION MGMT DUES 1,520 1115101 62251 PROFESSIONAL ASSOC DUES 250 1115101 64341 GIS SYSTEM SERVICES 2,500 1115101 65511 TRAFFIC ENGINEERS 20,000 1115101 66111 MEETING EXPENSES 250 1115101 66211 TRAINING & CONFERENCES 1,000 1115101 66212 TRAVEL & LODGING 50 ENGINEERING DEVELOPMENT 1115102 64341 GIS SYSTEM SERVICES 2,500 ENVIRONMENTAL 1115103 64531 STREET SWEEPING SERVICES 10,000 1115103 64733 STORM WATER TESTING 2,000 STREETS & STORM DRAINS 1115201 64544 TREE MAINTENANCE SERVICES 12,000 1115201 64545 PEST & WEED ABATEMENT 4,500 PARK & LANDSCAPE SERVICES 1115301 61341 LANDSCAPE SUPPLIES 3,000 1115301 62611 EQUIPMENT RENTALS 400 1115301 64532 REFUSE CONTAINER SERVICES 2,000 1115301 64542 N. CAMPUS LANDSCAPE SERV 2,000 1115301 64553 TURF TOP DRESSING SERV.15,000 1115301 64555 TRAIL MAINT. SERVICES 8,500 1115301 66212 TRAVEL & LODGING 100 ATTACHMENT - B PROGRAM ACCOUNT ACCOUNT TITLE BUDGET REDUCTION RECREATION 1116101 61111 OFFICE SUPPLIES 2,000 1116101 61171 OFFICE TOOLS & EQUIP < $10K 1,750 1116101 62112 CREDIT CARD FEES 2,000 1116101 62461 ASCAP FEES 160 1116101 62621 OFF-SITE FACILITY RENTAL 500 1116101 64121 PRINTING/BINDING SERVICES 2,000 1116101 64134 GRAPHIC/LAYOUT SERVICES 300 1116101 64161 FINGERPRINTING SERVICES 450 1116101 66111 MEETING EXPENSES 100 1116101 66214 TUITION REIMBURSEMENT 1,000 TEEN SERVICES 1116102 61111 OFFICE SUPPLIES 250 1116102 61112 POSTAGE 50 1116102 66211 TRAINING & CONFERENCES 300 FACILITY RENTALS 1116201 61111 OFFICE SUPPLIES 200 1116201 61112 POSTAGE 100 1116201 61133 FACILITY SUPPLIES 100 1116201 64121 PRINTING/BINDING SERVICES 200 1116201 66211 TRAINING & CONFERENCES 200 1116201 66213 MILEAGE REIMBURSEMENT 100 1116201 66214 TUITION REIMBURSEMENT 1,000 GENERAL ADMINISTRATION 1118101 51000 VACATION BUY-BACK 25,000 1118101 61111 OFFICE SUPPLIES 2,000 1118101 61115 CM GENERAL SUPPLIES 25,000 1118101 61172 OFFICE FURNITURE <$10K 10,000 1118101 62311 EDD UNEMPLOYMENT CHARGES 10,000 1118101 64121 PRINTING/BINDING SERVICES 3,000 COMMUNITY BUILDING EVENTS 1118302 68512 TASTE OF SARATOGA 700 1118302 68521 COMMUNITY EVENTS - GENL 3,800 1118302 68525 SISTER CITY CELEBRATION 1,200 TOTAL GENERAL FUND BUDGET CUTS 310,000 INTERNAL SERVICE FUND BUDGET CUTS OFFICE STORES PROGRAM 6213102 61111 OFFICE SUPPLIES 2,000 6213102 61112 POSTAGE 1,000 6213102 62613 POSTAGE MACHINE LEASE 14,000 EQUIPMENT MAINTENANCE 6235202 61362 FUEL 15,000 6235202 64611 VEHICLE REPAIR & MAINT 2,000 BUILDING MAINTENANCE 6246202 61111 OFFICE SUPPLIES 600 6246202 61133 FACILITY SUPPLIES 5,000 6246202 62614 DRINKING WATER EQUIP RENT 1,000 6246202 63111 GAS & ELECTRIC 2,000 6246202 63112 WATER 3,000 6246202 63113 REFUSE COLLECTION 3,000 6246202 63211 TELEPHONE 500 6246202 63212 CELL PHONES 400 ATTACHMENT - B PROGRAM ACCOUNT ACCOUNT TITLE BUDGET REDUCTION 6246202 64511 JANITORIAL/CLEANING SERV 5,000 6246202 64514 HVAC MAINTENANCE 2,000 6246202 64522 ROOF REPAIR SERVICES 4,000 6246202 64523 ELECTRICAL SERVICES 4,000 6246202 64524 PLUMBING SERVICES 3,000 6246202 64525 PAINTING SERVICES 5,000 6246202 64529 MISC BLDG REPAIR SERVICES 4,000 6246202 64545 PEST & WEED ABATEMENT 1,500 6246202 66111 MEETING EXPENSES 1,000 6246202 66214 TUITION REIMBURSEMENT 1,000 VEHICLE & EQUIPMENT REPLACEMENT 6315203 77111 AUTOMOBILES 90,000 TOTAL INTERNAL SERVICE FUND BUDGET CUTS 170,000 BUDGET TRANSFERS 6323202 99999 TRANSFER OUT - IT EQUIP REPLACEMENT 50,000 1118101 49999 TRANSFER IN - GENERAL FUND 50,000 BUDGET TRANSFERS IN 50,000