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HomeMy WebLinkAboutCity Council Resolution 14-014 Resolution Approving Mid Year Budget AdjustmentsRESOLUTION NO. 14-014 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SARATOGA AMENDING THE ANNUAL BUDGET FOR FISCAL YEAR 2013/14 TO ADJUST REVENUE AND EXPENDITURE APPROPRIATIONS TO REVISED LEVELS WHEREAS, the City of Saratoga's FY 2013/14 General Fund Operating Budget revenues and expenditures were reviewed at mid -year and projected through year -end to determine estimated activity for the fiscal year, and; WHEREAS, it was determined that estimated revenues and expenditures would exceed budgeted revenues and expenditures in several funds and; WHEREAS, it was determined that this would result in actuals exceeding budget, and; WHEREAS, the City Council desires to adopt revenue, expenditure, transfers, and /or use of fund balance appropriations at the revised projection levels to reflect accurate planning levels, and; WHEREAS, it is necessary to amend the City of Saratoga's FY 2013/14 budget to adjust revenue and expenditure appropriations where necessary 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 2013/14 Operating and Capital Budgets as described in the Council's Mid Year Budget Status Report; 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 5th day of March, 2014 by the following vote: AYES: Mayor Emily Lo, Vice Mayor Howard Miller, Council Member Manny Cappello, Chuck Page, Jill Hunter NOES: None ABSENT: None ABSTAIN: None Emily Lo, Mayor TEST: Womwt DATE: % l CrykJ1 Bothelio, City Clerk SARATOGA CITY COUNCIL MEETING DATE: March 5, 2014 AGENDA ITEM: DEPARTMENT: Finance & Administrative Services CITY MANAGER: Dave Anderson PREPARED BY: Mary Furey DIRECTOR: Mary Furey SUBJECT: FY 2013/14 Mid -Year Budget Status Report and Budget Adjustment Resolution RECOMMENDED ACTION: Review the FY 2013/14 budget status report and proposed budget adjustments, and adopt resolution approving the City's FY 2013 /14 mid -year budget amendments. REPORT SUMMARY: After a financial turnaround in the housing market, the FY 2012/13 year end finished with higher than anticipated General Fund revenues and with indications that property tax and development revenues would continue their upwardly mobile trend into the next year and near future. DataQuick, a leading property data firm, provided recent information supporting this strengthening market trend analysis in Santa Clara County for the year ended December 2013. Their data shows Santa Clara County home prices increased 13.21 %, and foreclosures declined by 58.11% for the year. However, information also shows home sales have begun to slow and they warn the rapid "pace of home price growth was not sustainable, given the fairly weak underlying economic drivers." In fact, their data shows December homes sales fell to a six year low: "A total of 6,714 new and resale houses and condos sold in the nine - county Bay Area last month. That was the lowest for any December since 2007, when 5,065 homes sold." On the positive side, DataQuick information states 332 homes sold for over $1 million dollars in Saratoga during 2013, with the most expensive home selling for $12.3 million. Overall, this market recovery has added to the property tax base, provided additional supplemental tax, document transfer tax and property tax -in -lieu revenues, and triggered the reinstatement of previously reduced assessed values. Rising market values have also prompted an uptick in home tear -down and rebuild activity, thereby boosting development revenues. Together, these changes will result in higher than anticipated General Fund Revenue for FY 2013 /14, leading again to an improved financial position for the City at mid -year. The remaining funds, such as the Landscape and Lighting District Funds, Internal Service Funds, and the Capital Project Funds operate within restricted financial resources, therefore financial activity is more structured and workload does not fluctuate widely due to changes in the economy. These other Fund's revenues and expenditures are determined at budget adoption, are more limited in nature, and as a result, financial activity generally follows along a planned path. Budget adjustments occur occasionally, most often from unknown factors at the time budget is prepared and adopted. As a result, the mid -year budget update report is primarily focused on General Fund activity. GENERAL FUND With the advantage of closing last year's books and being mid -way into this budgeted fiscal year, it has become evident that a number of FY 2013/14 revenues will end the year higher than budgeted. For next year's budget planning purposes, staff recommends adjusting the current year's revenue appropriations to more accurately reflect the anticipated revenues, prior to beginning the next budget development cycle. In addition, staff requests a number of budgeted expenditure appropriations be approved to provide for unfunded workload, equipment, and service costs. Revenue Budget Adjustments In FY 2012/13, total Property Tax revenue grew by $508,568 (6.14 %), (with the exclusion of a one -time Property Tax Administrative Fee reimbursement) and Planning and Building fees grew by $301,712 (14.94 %) from the year before. This growth exceeded year -end budget expectations, and as a result, FY 2013/14 budgeted revenues were estimated too low. In addition, continued economic strengthening during the current year has resulted in further increases. Property Tax — Last year's closing numbers revealed total General Fund Property Tax revenue came in more than $500,000 over budget, even after adjusting budgeted revenues at mid -year. This fiscal year, Secured Property Tax revenue is again tracking higher than adopted in the budget, by approximately $350,000. Property Tax -In -Lieu is also tracking higher, with $155,000 expected over budget. Increasing budget appropriations for these two property tax revenues will account for the majority of the General Fund's anticipated additional property tax revenue and align budget with anticipated receipts. Building Fees — The Community Development Department has seen a rise in development activity levels over this fiscal year. While a number of development revenues may exceed budget by a small amount at year -end, only the Plan Check and Building Permit revenues are anticipated to be significantly above budget. A revenue budget increase of $50,000 is requested for Plan Check Fees, and a budget increase of $80,000 is requested for Building Permit Fees. Sheriff Contract Reimbursement - During the 2012 /13 fiscal year, the Sheriff's Office was able to minimize the City's share of operating costs. As a result, after the year closed, the City was reimbursed $41,533 of the $4.15 million estimated contract. As the amount of the annual reimbursement cannot be anticipated during budget development (or even if one will occur), an adjustment to increase General Fund revenue budget in the full amount is typically requested at mid -year. Hakone Gardens Claim Reimbursement - The City received a $156,884 claim reimbursement from the Association of Bay Area Government (ABAG) Insurance JPA for the December 2012 damage to the Hakone Gardens Driveway Entrance. As the claim reimbursement was not anticipated at the time the FY 2013/14 budget was prepared, a budget adjustment is requested to appropriate the additional revenue. The reimbursement funding will be returned to the General Fund Hillside Stability Reserve Fund as part of the year -end close. General Fund Revenue Adjustments Adopted Proposed Adjusted ProposedRewnue Budget Adjustments Budget Increase Budget Secured Property Taxes 5,300,000 350,000 5,650,000 Property Tax-in-Lieu 2,650,000 155,000 2,805,000 Building Permit Fees 900,000 80,000 980,000 Building Plan Check Fees 360,000 50,000 410,000 Sheriff Reimbursement - 41,533 41,533 Hakone Gardens Claim Reimbursement - 156,884 156,884 Total ProposedRev`nue Budget Adjustments 833,417 Expenditure Budget Aduustments On the General Fund expenditure side, the majority of expenditures are tracking in line with the budget, although a few expenses are expected to exceed budget by year -end due to either unforeseen needs, or increases in services. These adjustments are small; however due to the reductions in budget over the past recession years, very little flexibility is available to absorb the added costs in programs within the operating budget. Hence, a total of $39,000 is requested to increase five operating expenses as follows: CDD: Records Management — The increase in building activity is directly resulting in an increase in records management expense. All current building documents are sent out to be converted to digital format on an ongoing basis and funded within the Operating Budget. The adopted budget of $10,000 will not be sufficient to accommodate the increase in activity therefore an expenditure budget increase of $5,000 is requested. Historical documents and microfilm are converted as part of the Records Management Capital Project, and are not paid for out of the CDD Operating Budget. CDD: Annexation Workplan Funding — The potential annexation of the STG -05 area (Glen Una) into Saratoga has generated the unanticipated need to obtain survey work and a roadway assessment to determine the condition of the area's roadway system. A $15,000 budget adjustment is requested for this work. Engineering: Record of Survey at Historic Park — A $5,000 budget adjustment is requested to establish and install property line monuments at Historic Park, and for a Record of Survey to be prepared and recorded with the County. Parks: Repairs and Maintenance — Congress Springs Park is requiring some costly semi- emergency repairs this year which will impact the operating repair budget. Approximately $3,000 was spent for security cameras after the snack shack break -in and theft. Another $4,500 will be spent on a replacement scoreboard which has been out of service for over a season now. A total budget adjustment of $7,500 is requested to fund the unplanned equipment costs. Parks: Tree Pruning /Maintenance — Due to higher than expected fire danger this year, staff would like to clean up the lot next to the Historical Park this spring, before the fire danger escalates further. Work would include pruning the eucalyptus and oak trees, and removal of brush and weed debris. Pruning will cost approximately $4,000 and debris removal will cost approximately $2,500. A total budget adjustment of $6,500 is requested for this work. General Fund Expenditure Adjustments Adopted Proposed Adjusted Proposed Ekpenditure Budget Adjustments Budget Increase Budget CDD: Records Management 10,000 5,000 15,000 CDD: Annexation Workplan Funding - 15,000 15,000 Engineering: Record of Survey Historic Park - 5,000 5,000 Parks: Repairs and Maintenance 57,000 7,500 64,500 Parks: Tree Pruning Maintenance 30,000 6,500 36,500 Total Proposed EKpenditure Budget Adjustments 39,000 General Fund Net Operations The Adopted General Fund Budget includes a net operations surplus of $237,676 (total funding sources less total funding uses), which by itself is sufficient to fund the above proposed expenditure budget increases. Adopting the proposed revenue budget adjustments would further increase the net operations surplus. In total, if Council adopts all of the General Fund's proposed revenue and expenditure budget adjustments, the budgeted net operations surplus would increase by $794,417, bringing the total budgeted General Fund surplus to $1,032,093. WORKERS COMPENSATION FUND ABAG Wellness Grant — The Association of Bay Area Government (ABAG) Insurance JPA provides grants to its member agencies for the purpose of promoting employee wellness. Agencies are allowed to carry any unexpended grant funds to the next year. The City's $15,000 grant for FY 2012/13 was not used, therefore both revenue and expenditure budget adjustments are requested to appropriate the grant funding and expense for use in FY 2013/14. Workers Compensation Fund Adjustments Adopted ProposedBudget Adjustments Budget Proposed Increase Adjusted Budget Wellness Grant Revenue - 15,000 15,000 Wellness Grant Expenditure - 15,000 15,000 Total Proposed Budget Adjustments 30,000 20,990 CAPITAL PROJECT FUNDS Big Basin Way Grant Match — A $163,000 STP OBAG grant was awarded to the City for FY 2013/14 to repair and replace sidewalk, curb, and gutter on an as- needed basis along Big Basin Way to reduce tripping hazards and beautify the village. At the time the CIP project budget was adopted, staff understood the project to be fully funded by the grant. Later information identified a City match of $20,990 was required. A budget resolution to fund the City match with Gas Tax Funds is requested. The Budget Adjustment Schedule below summarizes the funding requirements: Gas Tax CIP Project Fund Adjustment Adopted Proposed Budget Adjustments Budget Proposed Incr (Deer) Adjusted Budget Annual Street Resurfacing - Gras Tax Revenue 481,908 (20,990) 460,918 Big Basin Way SWCG CIP -Gas Tax Revenue - 20,990 20,990 Big Basin Way SWCGCIP -Gas Tax Expenditures - 20,990 20,990 Total Net Proposed Budget Adjustments 20,990 FISCAL IMPACTS: Upon Council approval, the proposed revenue and expenditure 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 to financial records ADVERTISING, NOTICING AND PUBLIC CONTACT Pursuant to Government Code 54954.2, this item was properly posted as a City Council agenda item and included in the packet made available on the City's website in advance of the meeting. A copy of the agenda packet is also made available at the Saratoga Branch Library each Monday in advance of the Council meeting. ATTACHMENTS: Attachment A — Resolution