Report Prepared by: Stephanie Dietz, City Manager and Venus Rodriguez, Finance Officer
Title
SUBJECT: Public Hearing to Allow the Interested Public an Opportunity to Provide Input on the Content of the City Council, Public Financing and Economic Development Authority and the Parking Authority Fiscal Year 2022-23 Proposed Budget and After Hearing all Comments Continue the Public Hearing to June 21, 2022
REPORT IN BRIEF
Public Hearing to afford the interested public an opportunity to provide input on the content of the 2022-23 City Council, Public Financing and Economic Development Authority, and Parking Authority Proposed Budget.
RECOMMENDATION
City Council/Public Financing and Economic Development Authority/Parking Authority - It is recommended that the City Council/Authorities conduct the Public Hearing and provide direction to the City Manager on the content of the Fiscal Year 2022-23 Budget; and adopt a motion continuing the Public Hearing to the June 21, 2022 Council Meeting.
Body
ALTERNATIVES
1. Approve, as recommended by staff; or
2. Approve, subject to other than recommended by staff (identify specific findings and/or conditions amended to be addressed in the motion); or,
3. Deny; or.
4. Refer to staff for reconsideration of specific items (specific items to be addressed in the motion); or,
5. Continue to a future meeting (date and time to be specified in the motion).
AUTHORITY
Charter of the City of Merced, Section 1104.
DISCUSSION
Fiscal Year 2022-23 Proposed Budget
The City of Merced’s economic outlook looks strong. Sales Tax and Property Tax receipts are outperforming current year projections, and total General Fund revenues are budgeted to include a projected 8% increase based on mid-year revised estimates. Single-family and multi-family construction continues to be robust. With the county’s unemployment improving to 8.3%, over 11.4% in 2021.
The proposed budget adheres to the prudent principals established by the City Council including the following: 1) maintaining existing services and programs; 2) planning for one-time investments in parks and public spaces throughout the City; and 3) increasing funding to reserves and contingencies to protect against uncertainty.
On May 16, 2022, staff presented the City Council with the City Manager recommended budget for Fiscal Year 2022-2023. The total City proposed budget for FY 2022-23 is $383.4 million. It includes the deletion of 6 positions and adds 12 positions, totaling 520 full-time positions. Two positions in the City Attorney’s office have been unfunded in order to mitigate the cost of the City Council approved City Attorney agreement.
As proposed, the General Fund estimated revenue is $51.9 million and estimated total operating expenditures is $51.9 million, which leaves an operational deficit of $220,231. The General Fund FY 2022-23 budget also includes non-operating expenditure recommendations for a general election, purchase of three replacement vehicles for parks, phase 3 of the City Hall HVAC replacement, and continued set-aside funding for the Enterprise Resource Planning system, Economic Development Opportunity Fund, Trust 115-Pension, and the General Fund Reserve.
In November 2020, the City Council adopted the General Fund Reserve Policy and Reserve. The adopted policy sets the reserve at 35% of annual operating expenses. For Fiscal Year 2022-23, 35% of annual operating expenses equals $18,179,138, of which 30% is $15,582,118 to be set-aside in a separate fund. Fund 004-General Fund Reserve currently has $13,974,083. In order to meet the required level of reserve an additional transfer of $1,608,035 has been included in the proposed budget. The remaining General Fund Reserve of 5%, equaling $2,597,020 will remain in the General Fund for contingency purposes but not available for spending.
Based on the method of allocation per adopted City Council policies, the amount proposed to be allocated for future planning in next year’s budget are as follows:
|
Future Planning Resources |
Amount |
|
General Fund Reserve |
$1,608,035 |
|
Economic Development Opportunity Fund |
$ 756,000 |
|
Trust 115-Pension |
$1,404,000 |
Staff presented the City Manager recommended FY 2022-23 budget to the Measure C committee for approval on May 10, 2022. The Measure C proposed budget includes the reduction of 2 fire personnel and 2 police personnel, which were transferred to the CFD’s. The proposed budget includes a total of 10.3 fire and 18.49 police authorized positions. There is the purchase of a new fire truck of $875,000 and $1 million for phase 1 of the Safe Streets (streetlight upgrades) project also included in the Measure C Budget. The proposed fund balance meets the GFOA recommended minimum per City Council policy.
The City Council requested additional funding be allocated in the General Fund during the May 16, 2022 City Council Meeting and prior meetings that due to timing were unable to be captured in the City Manager Recommend budget include the following:
• Community Funding $30,000
• Affordable Housing Trust Fund $500,000
• City Attorney Agreement $66,000
• Arts Projects $100,000
• Bicycle Race $26,000
The City Council also gave direction to not increase the water rates and to continue discussions with the Police Chief regarding the request to add a Deputy Police Chief and deleting a Police Captain.
The water rate changes would be effective July 1, 2022. The resolution required for Council approval in order to not increase the rates will be included for action under a separate agenda item. The water operations budget as proposed includes no water rate increases but does factor growth in number of accounts only. Therefore, no budget changes are needed in water operations.
There were additional discussions with the Police Chief and it was determined to keep the current administrative staffing levels. By keeping staffing the same, operational costs in the General Fund will be reduced by $23,354.
Unfortunately, after the last City Council meeting the Stephen Leonard Park Building had n electrical short which caused a fire. There is severe damage to the building. Staff is requesting to add $100,000 from the General Fund as a one-time non-operating cost into next year’s budget for clean-up and repairs.
An additional $798,646 ($42,646 operating and $756,000 non-operating) in appropriations will be added to the General Fund budget. These adjustments will also change the GF reserve slightly.
After final direction, staff will bring back a revised version of the budget with an Errata list to the City Council on June 21, 2022 for final approval.
ATTACHMENTS
1. City Manager Budget Message
2. June 6, 2022 Budget Presentation
3. May 16, 2022 Budget Presentation