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HomeMy WebLinkAboutAGENDA REPORT 2003 0528 CC SPC ITEM 04AM� 5 a8 03 AC; �-ins *maces -J9 Sc ,d.,lL /ldiiir�,a -r Juej & Aod , �, Irzez- P&LA ka BY: dAdb= D R A F T ITEM ji. A . CITY OF MOORPARK OPERATING AND CAPITAL IMPROVEMENTS BUDGET FISCAL YEAR 2003 — 2004 City Council PATRICK HUNTER, Mayor KEITH F. MILLHOUSE, Mayor Pro -Tem CLINT HARPER, Councilmember JANICE PARVIN, Councilmember ROSEANN MIKOS, Councilmember City Staff STEVEN KUENY, City Manager HUGH RILEY, Assistant City Manager BARRY HOGAN, Community Development Director CYNTHIA BORCHARD, Administrative Services Director DEBORAH TRAFFENSTEDT, ATCM /City Clerk KEN GILBERT, Public Works Director MARY LINDLEY, Community Services Director Draft Budget will not be scanned into Questys ITEM q. G MOORPARK CITY COUNCIL AGENDA REPORT b�` TO: The Honorable City Council FROM: Steven Kueny, City Manager Siz- DATE: May 15, 2003 (CC Meeting of 5 -21 -2003) SUBJECT: Consider Proposed Operating and Capital Improvement Budgets for the Fiscal Year 2003/2004 The City Manager's recommended budgets for the City of Moorpark and the Moorpark Redevelopment Agency for fiscal year 2003/2004 will be presented to the City Council for its consideration on May 21, 2003. It is recommended that the City Council receive the recommended Operating and Capital Improvement Budgets for FY 2003/2004 and set a date for a budget workshop. STAFF RECOMMENDATION: Set budget workshop for May 28, 2003. SK:db S: \City Manager \Everyone \ccagenda \Budget 2003 -2004 Agenda Rpt 0521 2003.doc ITEM 9-G. CITY OF MOORPARK AGENDA REPORT To: Honorable City Council From: Steven Kueny, City Manager Cindy Borchard, Administrative Services Qft Date: May 21, 2003 Subject: City Manager's Budget Message for Fiscal Year 2003/04 The City Manager's recommended budget for the City of Moorpark and the Moorpark Redevelopment Agency for fiscal year 2003/04 are presented to the City Council and Agency Board for consideration. The total proposed budget is summarized below. With the exception of the Community Development Fund, the budgets are balanced with estimated revenues sufficient to cover requested appropriations. This has been an especially difficult result to achieve this year. City City of of Moorpark Moorpark Expenditure Moorpark All Other Redevelopment Total All Category General Fund Funds Agency Funds Personnel $2,876,565 $2,228,807 $227,812 $5,333,244 Operations $5,795,372 $4,172,426 $2,197,885 $12,165,683 Sub -Total $8,671,937 $6,401,233 $2,425,757 $17,498,927 Capital Outlay /Impr $50,862 $30,907,579 $1,468,478 $32,426,919 Debt Service $0 $0 $1,671,825 $1,671,825 Transfers $684,968 $2,433,057 $7,208,881 $10,326,906 (Net) Total $9,407,767 $39,741,869 $12,774,941 $61,924,577 With the exception of the Community Development Fund, the budgets are balanced with estimated revenues sufficient to cover requested appropriations. This has been an especially difficult result to achieve this year. City Manager's Budget Message May 21, 2003 Page 2 As a reminder, the City's Budget serves as a spending plan for the upcoming fiscal year. The Operating Budget and Capital Improvement Program Budget are adaptable documents which can be changed during the year. When needed, budget adjustments are submitted to City Council for unforeseen and /or unanticipated events which take place during the year. Fiscal Environment The current State Budget crisis in Sacramento will have an impact on the City. On January 10, 2003, the Governor released a proposed FY 2003 -04 State Budget which projected an unprecedented State General Fund budget shortfall of $34.6 billion. In order to reduce this staggering budget shortfall, the Governor's proposed State Budget included major reductions in local government revenues, such as Vehicle License Fees, Public Library Funds, Unfunded State Mandate Reimbursements, Local Street & Road Rehabilitation /Maintenance Funds, and Redevelopment Agency Property Tax Increment Revenues. The impacts on Moorpark of the Governor's proposed State Budget are significant as the following analysis shows: General Fund Vehicle License Fees $1,300,000 Property Tax ERAF Shift 227,324 Redevelopment Agency Affordable Housing Funds 280,000 On May 14, the Governor issued his May revisions to the proposed State budget for the coming year. The deficit facing the State for the 2003/04 fiscal year has risen to $38.2 billion, considerably more than earlier projections. This deficit is a result of several factors: an economic slowing throughout the State, along with declines in the stock market and capital gains income, resulting in revenue losses; and unanticipated expenses chiefly from costs related to the energy crisis of 2000 and reductions in consumer spending. Additionally, from FY 1993/94 to FY 2000/01, State spending more than doubled, from $39 billion to $79 billion. The result of these converging factors is that the State has a significant structural deficit that will not disappear without corrective action. City Manager's Budget Message May 21, 2003 Page 3 The Governor's fiscal projections indicate that the economy will start to recover during 2004. Personal income is projected to increase 6.2% in 2003 and the number of jobs will increase by 2.7% during that same period. However, even assuming the economy recovers as predicted, State revenues will not increase immediately, and it will take several years to fully recover from the current deficit equivalent to 30% of the State's General Fund. The Governor's May budget revision includes numerous recommendations to resolve the budget deficit next year, including state program budget reductions, loans from other funds, debt restructuring, increased cigarette tax and a temporary one -half cent sales tax. Previously, we had advised the Council that the most vulnerable revenue source for local government is the motor vehicle license fee. As you know, the State reduced the motor vehicle license fee paid by car owners, then backfilled this loss of revenue to local governments. The City receives approximately $2 million in VLF fees each year, of which $1.3 million is backfilled by the State. In his May budget revision, the Governor proposes to suspend the backfill payments for 2003 -04 and restore the tax, leaving local government revenues at current levels. However, it is unclear if the legislature will agree to this tax increase and we continue to be concerned about the possible loss of these revenues. The recommended budget assumes these revenues continue without reduction; however, there is risk that this backfill will be eliminated, reducing General Fund revenues by 14 %. Until the true impacts of the State Budget cuts are known, staff has prepared a proposed FY 2003 -04 Operating Budget which assumes that the State will continue to fund allocated local revenues to local government. The proposed Budget provides funding to maintain existing service levels. New service levels, programs or positions are not requested. If, however, the actual funding to local government is reduced further than what is contained in this document, staff will submit a revised Operating Budget with applicable department /program appropriation adjustments including short and long -term recommendations. City Manager's Budget Message May 21, 2003 Page 4 General Fund Reserves The Council will recall that, as part of the last two annual budgets, unspent appropriations and unanticipated revenues from the 1999/00 fiscal year (the "800 fund ") were set aside for special projects and programs. The balance of these funds at Tune 30, 2002, is $456,049. Of this amount, we anticipate that $202,977 will be spent in the 2002/03 fiscal year and $233,864 is included in the recommended budget for the 2003/04 fiscal year, leaving $19,208. The original purpose of the 11800" fund was to provide funding for needed positions until General Fund Revenue had increased to fund them. Since sufficient additional revenue is available in the General Fund surplus to fund these projects and programs this year, it is recommended that the tracking of these expenditures within the General Fund be terminated and funding be provided on a long -term basis from the annual General Fund revenues effective 6/30/03. All or a portion of the estimated $233,864 plus $19,208 in conjunction with other potential funds can be used to fund the Community Development Fund projected 2002/03 FY deficit. Council will receive a recommendation on this at its June 4, 2003 meeting. "800 Fund" Program Si mmary Total costs through 2001/02 fiscal year Total estimated costs for 2002/03 fiscal year Needed to continue funding through 2003/04 fiscal year New parks maintenance worker 69,395 47,064 52,227 Pickup tcucri for parks maintenance worker 23,063 New Sr. Mgmt Analyst 20,832 New Info. Systems Manager 67,784 77,739 88,394 Increase Deferred Comp be-ie_ its (00 /01) 10,000 One -Lime reduction -Parks Assessments (00 /01) 140,000 Teen Programs /Teen Coordinator 70,299 51,622 Additional staffing hours at Arroyo Vista 6,651 _46,265 User Fee Study 5,000 Repaint Community Center 14,855 Fencing at Country Trail Park 6,786 Resolve Day I.,aborer issues 20,000 Fencing aL Tierra Rejada park 19,341 Open Space Acquisition 19,072 Additional fundirg for Sr. Games 1, "789 GASD 34 Compliance funding 10,000 5,000 New Part Time Rec. Coordinator at Sr. Center 8,514 21,909 11,621 Generator connection for City hall annex 9,970 Ofrset loss of FRAF relief funds (01 /02) 93,000 Alternate energy capabilities at Arroyo Vista $202.977 $233,864 Totals $581,351 City Manager's Budget Message May 21, 2003 Page 5 A recap of the General Fund for last year and this year is as follows: We are predicting that revenues in the General Fund during the 2002/03 fiscal year will exceed expenditures by $558,756. We are recommending that these funds remain in the General Fund reserve bringing the total General Fund reserve to $12.3 million. In the event the State reduces or eliminates the VLF backfill, the combined savings of $1.7 million will be used to offset the VLF revenue loss. This will allow sufficient time to explore revenue enhancement and /or expenditure reduction opportunities for implementation during the 2004/05 fiscal year. HISTORY OF GENERAL FUND BALANCE AND SURPLUS Fiscal Years 1992 -93 Thru 2001 -02 FISCAL YEAR 2001/02 FISCAL YEAR 2002/03 Adopted $12 Adopted ---- - - - - -. Projected Budget Actual Variance Budget Projected Variance Revenue $8,723,383 $9,2C7,559 $ 484,176 58,863,288 $9,308,856 $ 445,568 Expenditures $6 ---- - - - - -- - - - - -- - $9,331,360 $8,051,917 $1,279,443 $9,041,221 $8,750,100 $ 291,121 Surolus $0 (Deficit) $(607,977) 1 $1,155,642 1 $1,763,619 $(177,933) 1 $ 558,756 1 $ 736,689 We are predicting that revenues in the General Fund during the 2002/03 fiscal year will exceed expenditures by $558,756. We are recommending that these funds remain in the General Fund reserve bringing the total General Fund reserve to $12.3 million. In the event the State reduces or eliminates the VLF backfill, the combined savings of $1.7 million will be used to offset the VLF revenue loss. This will allow sufficient time to explore revenue enhancement and /or expenditure reduction opportunities for implementation during the 2004/05 fiscal year. HISTORY OF GENERAL FUND BALANCE AND SURPLUS Fiscal Years 1992 -93 Thru 2001 -02 $14 $12 - - - - -- ----- - - - -.- - ---- - - - - -. - $10 - -- - - - - -- - - - -- - - -- - N$8 --- - - - - -- - - - -- - -- -- - - - - -- - - - -- -- $6 ---- - - - - -- - - - - -- - $2 $0 -$2 1992- 1993- 1994- 1995 1997- 1998- 1999- 2000- 2001- 93 94 95 96 11996- 97 98 99 00 01 02 FUND BALANCE 4.2359 4.3192 4.5267 5.4605 5.8637 6.57951 7.4987 8.5361 10.598 11.754 t SURPLUS -0.085 0.025 0.2075 0.9339 0.4032 0 7158 0.9192 1 0374 1.6236 1.1556 City Manager's May 21, 2003 Page 6 Budget Message The General Fund Revenue Picture for the Coming Year General - purpose revenues such as property and sales taxes are anticipated to increase slightly in the 2003/04 fiscal year. Property Tax Distribution City of Moorpark ERAF 14.30% 7.40% Ventura County 20.3976 Special School Districts Districts 16.00% 41.90% Source: Hd1 Corers i Cone Property tax revenues are expected to increase approximately 10% for the coming year, to $2.5 million. While many new homes have recently been built and sold in Moorpark, they do not generate substantial amounts of property tax revenue for the City. The City receives only about 7.4% of property tax paid by homeowners in the City - including the small portion that formerly was allocated to the Mosquito Abatement District before the City assumed this responsibility. For every $400,000 new home sold, the City will only receive approximately $296 per year in property tax revenues. Additionally, if the home is in the redevelopment project area, that new revenue is channeled to the redevelopment agency and not the City General Fund. Sales Tax Distribution 7.25 Cents per Dollar Ventura County City of Moorpark 1 cent County Transit -Jr ^4nts 6 cents Sourm state Board o1 Equafi auon Sales tax revenues are anticipated to decrease during the 2002/03 fiscal year, from nearly $1.8 million in 2001/02 to $1.7 million. While we will see only modest growth in the economy, new retail development will result in an increase of about 9% for a total of $1.85 million for the 2003/04 fiscal year. This is primarily due to the Moorpark Marketplace development which is projected to generate 689 new jobs and over City Manager's Budget Message May 21, 2003 Page 7 $600,000 /year in sales tax with nearly full occupancy in FY 2004/05. The third major source of revenue in the General Fund is Motor Vehicle License Fees, estimated to be $2.0 million next year, up nearly 6% over current year levels. VLF is an annual fee on the ownership of a registered vehicle in California, levied in place of a property tax on vehicles. These fees are collected by the State and distributed to local jurisdictions on a per- capita basis. Total revenues are allocated 61% to the State, 27% to counties, and 12% to cities. The local portion of the VLF is constitutionally protected as to allocation formula. As noted previously, up to $1.3 million of this annual revenue is at risk as a result of the State's budget deficits. General purpose revenues, such as taxes and motor vehicle fees are the only significant source of revenue the City receives which do not have restrictions on how they may be used. These discretionary revenue sources are used to support a variety of programs and services that do not have other dedicated revenue sources. As inflation and the demand for services grow, the future of those services depend on increases in these discretionary revenues. Most significantly, in the 2003/04 fiscal year, 67% of the revenues from these three sources (sales tax, property tax, and motor vehicle license fees) will be spent on law enforcement services. Over the past five years, the City's cost to provide law enforcement services has increased at a higher rate each year than the General Fund revenues available to provide these services. Law enforcement services now account for 44% of all General Fund revenues. Interest earnings are projected to remain low in the coming year. As interest rates have dropped, interest earnings have also dropped, with revenues to the General Fund estimated at $278,000 in the coming year. The General Fund also receives interest earned by the Endowment Fund in excess of 2 %. This is expected to generate only $27,000 in revenue to the General Fund in the coming year. As the Endowment Fund is expended, interest revenues to the General Fund will be reduced even further and will continue until interest rates increase. City Manager's May 21, 2003 Page 8 Budget Message The increase in revenue over the FY 02/03 projection is primarily due to a projected increase in property tax ($225,000); sales tax ($150,000); and motor vehicle license revenue ($111,000). The expenditure increase is primarily due to one -time expenditures for the $80,000 hydrology GIS data; $25,000 for Questys scanning; $25,000 for reconfiguration of the public counter; and overall projected salary and benefit increases. While General Fund revenue is projected to increase, expenditures are projected to increase at a larger rate. Also as stated above, we are still not sure of the State budget deficit impact on our projected revenues. The recommended General Fund budget is balanced; anticipated revenues exceed anticipated expenses, including the former "800" fund expenses, by $360,939. These funds are needed to fund the projected Community Development Fund deficit of $401,006 for FY 2003/04 unless other sources discussed below are used. Staff is evaluating revenue enhancements, fee adjustments, service efficiencies, better cost accounting and charges to other funds where appropriate and will come back in the third quarter of 03/04 with an update. Cost Increases Anticipated for the 2003/04 Fiscal Year Staffing Expenses The City Council has consistently attempted to ensure that employees are compensated at competitive and market rate levels to retain existing employees and attract the highest quality employees. The Consumer Price Index has increased from April last year to this year by 2.6 %. The proposed Budget provides sufficient appropriations to cover increases provided for in the MOU with employees. 02/03 Projected 03/04 Budget $ Increase % Increase Revenue $9,308,856 $9,768,706 $459,850 4.9% Expenditures $8,750,100 $9,407,767 $657,667 7.5% Surplus $558,756 $360,939 The increase in revenue over the FY 02/03 projection is primarily due to a projected increase in property tax ($225,000); sales tax ($150,000); and motor vehicle license revenue ($111,000). The expenditure increase is primarily due to one -time expenditures for the $80,000 hydrology GIS data; $25,000 for Questys scanning; $25,000 for reconfiguration of the public counter; and overall projected salary and benefit increases. While General Fund revenue is projected to increase, expenditures are projected to increase at a larger rate. Also as stated above, we are still not sure of the State budget deficit impact on our projected revenues. The recommended General Fund budget is balanced; anticipated revenues exceed anticipated expenses, including the former "800" fund expenses, by $360,939. These funds are needed to fund the projected Community Development Fund deficit of $401,006 for FY 2003/04 unless other sources discussed below are used. Staff is evaluating revenue enhancements, fee adjustments, service efficiencies, better cost accounting and charges to other funds where appropriate and will come back in the third quarter of 03/04 with an update. Cost Increases Anticipated for the 2003/04 Fiscal Year Staffing Expenses The City Council has consistently attempted to ensure that employees are compensated at competitive and market rate levels to retain existing employees and attract the highest quality employees. The Consumer Price Index has increased from April last year to this year by 2.6 %. The proposed Budget provides sufficient appropriations to cover increases provided for in the MOU with employees. City Manager's Budget Message May 21, 2003 Page 9 CalPERS has announced significant increases in health insurance rates effective January 1, 2004. While the new rates vary between the plans, we are anticipating an overall 20% increase in health insurance costs, increasing our costs by $81,216 overall, including $46,115 in the General Fund. Staff will be following the proposed long -term solutions to the crisis facing the health care system. An evaluation of whether or not to remain in PERS must be made by 6/30/04 in order to become effective January 2005. In addition, in the last two years, the City's cost for insurance coverage, particularly general liability and worker's compensation, has increased significantly. For 2003/04, we are anticipating a 15% increase in worker's compensation insurance and a 4% increase in general liability. The worker's compensation expense has been allocated to each individual department this year as opposed to the Central Services Internal Service Fund which would then be allocated through the cost allocation plan. A combination of declining investment returns in a poor performing stock market the last few years and changes in actuarial methodology has reduced the value of our assets held with CalPERS to fund retirement costs. The City's required contributions to CalPERS for retirement benefits will be 3.581 %, up from 1.102% in the current year. This is increasing costs to the City by $110,214, including about $59,664 in the General Fund. Rates are expected to increase again, to approximately 8 %, in the 2004/05 fiscal year. The City also pays the employees contribution of 7% of salary. Other Expenses Three years ago, the City implemented a comprehensive cost allocation plan in compliance with federal regulations. This plan allocates certain General Fund "overhead" costs to other funds, including the Redevelopment Agency, Gas Tax Fund, and others. As a result of this, in the 2003/04 fiscal year, the General Fund will receive $1.275 million from other funds as payment for services provided by the General Fund departments. Potential budget reductions in Non - General Fund funded departments and the MRA could reduce this source of funds for the General Fund. City Manager's Budget Message May 21, 2003 Page 10 The Equipment Replacement Fund was created many years ago to set aside funds that would be needed to replace equipment, including automobiles, as necessary. A one -time contribution of approximately $402,000 was made during the 2001/02 fiscal year, fully funding this account. However, the recommended budget includes purchases from this account without setting aside additional funds to maintain an adequate reserve in this fund. To maintain adequate levels, a deposit of $270,206 would be needed in the coming year. After the FY 2002/03 audit, staff will recommend this be funded out of a portion of the projected General Fund 02/03 surplus. Goals and Objectives The City Council has established a number of goals and objectives for the coming year, including their top ten priorities. The recommended budget includes funding for these top ten goals. The priorities, goals and objectives will be further discussed as part of the budget workshops. Police Services The recommended budget assumes that the State Supplemental Law Enforcement Grant (SLESF) will remain the same for the coming year, with anticipated revenues of $100,000. These revenues accompanied with funds left over from 2002/03 are used to fund a 40 -hour Patrol Officer. In fiscal year 2001/02 the City received and allocated $39,908 of California Law Enforcement Equipment Program (CLEEP) monies. In FY 02/03 the City received $20,475 to be spent by 6/30/04. Although it is anticipated that we will continue to receive these funds in the coming year, funds have not been included in the proposed budget. Should the Governor's budget fund the continuation of these funds, staff will request appropriation and recommendation for the use of these funds. The current contract between the County of Ventura and the Deputy Sheriff's Association expires on July 1, 2005. within the contract, salary increases are expected on July 6, 2003 of 4% and on July 4, 2004 of 3 %. The unknowns for this recommended City Manager's Budget Message May 21, 2003 Page 11 budget are whether or not the worker's compensation costs will increase, as they did this current budget year. Contract rates are projected to increase an average of 12% with the worker's compensation increase. As previously reported to the Council, modification in the deployment at the Moorpark Police Station resulted in a change to the costs for this service. Since September 1, 2002, Sheriff's staffing for a portion of the east County unincorporated areas have been stationed at Moorpark. This includes 4 sergeants, 14 deputies, 2 senior deputies and a records clerk. With this shift, the overhead cost for the City positions increased. In addition to the deployment referenced above, other adjustments included the following: • 50% of the cost of the Captain; • 100% of the cost of City's Administrative Sergeant; • 25% of the Detective Sergeant; and • 50% of the Deputy position assigned to the 3- person Detective Unit are now not charged to the City. These changes recognize the shared costs of these positions with the County unincorporated positions. In addition, for FY 2002/03 the Administrative Assistant position was deleted and replaced with an additional Cadet position. After the initial year of the High School Resource Officer (HSRO) program, Moorpark Unified School District (MUSD) has funded 40% of the position and the City 60% plus the cost of the car. For 2003/04 fiscal year the City will fund only 25% of the cost plus the cost of the car. MUSD is hopeful of receiving a new grant for this purpose. For the current year (2002/03 FY), MUSD did not have the grant funding it had for the first three years of the program. MUSD has informed the City that it will not fund the Middle School Resource Officer (MSRO) position in the 2003/04 FY. Historically this position was funded 35% by the school district and 65% by the City plus the cost of the car. It is recommended that the estimated $80,000 in savings be used to begin to fund a portion of the Community Development Department staff within the General Fund. If the Council desires to retain this position, City Manager's Budget Message May 21, 2003 Page 12 desires to retain this position, Captain Diaz has indicated it would be his intent to shift the position to detectives. This would cost about $60,000 more than in the 2002/03 FY. This can be evaluated over the next two years to have a better analysis of work loads with the combined deployment at the Moorpark Station and available City funds. MUSD has informed the City it cannot fund the 5 L h grade DARE officer but promises to evaluate their budget to look for at least a portion of its historical 40% share ($52,000) and to apply for grants, if available. As you will recall, the City funded 1000 of this position in the current fiscal year. The City (Mayor Hunter and Councilmember Harper) and MUSD (Board Member Pollock and Yarras) ad hoc Committees discussed the desire to evaluate the DARE program over the next year and determine if a different utilization of the assigned deputy could be more effective and perhaps have time available for deployment at the middle schools. Despite the 25% reduction in Detectives, overheading of the Administrative Sergeant, 50% split for the Captain and removal of the Middle School Officer, the FY 2003/04 contract still reflects an estimated increase of $335,959 (9.6 %) over 2002/03 FY. The only other budget increases are for the replacement of one Kawasaki motorcycle that should reach replacement mileage around April 2004 (funded from the Equipment Replacement Fund) and the City of Moorpark's pro -rated share of one Deputy District Attorney to review misdemeanor cases and conduct training for station officers. This position is supported by the City of Thousand Oaks and will provide an assigned deputy district attorney 3 days a week in the east County. Community Development For the fiscal year 2003/04 budget, the responsibility for administration of the City Engineer agreement with Charles Abbott Associates has been transferred from the Public Works Director to the Director of Community Development. Funding in the amount of $25,000 has also been included in Building and Safety (General Fund) to cover the cost of document imaging. City Manager's Budget Message May 21, 2003 Page 13 As predicted in the 2002/03 budget, the Community Development Department is projecting a deficit in the Community Development Fund. After several years of significant construction permit revenue increases, the City started in fiscal year 2002/03 to experience a falling off of revenues tied to new development. As the City approaches build -out, fewer large -scale commercial, industrial, and residential projects will be pursued. Also, until FEMA and the County complete the Flood Control Study some developments with about 400 residential units cannot proceed which further contributes to the projected deficit in the Community Development Fund. There are a few previously- approved projects which will generate revenues but those are projected to decrease in FY 2003 -04. While included in the budget, it is recommended that the vacant Associate Planner position be eliminated and the approximate $70,000 be used to offset the projected Community Development Fund deficit. Although the 2002/03 fund balance is positive, this was accomplished by proposed transfers in the amount of $300,000 from various funds to cover development- related administrative expenses. The details of these proposed transfers will be discussed in a report to Council on June 4, 2003. The current projections for fiscal year 2003/04 indicate that spending in the Community Development Fund will exceed revenues by $422,885, reducing the fund balance to $(401,006) at June 30, 2004. In past years, staff vacancies have led to cost savings in both salaries /benefits and planned projects that could not be completed. However, with staffing at normal levels, and anticipated projects planned for the coming year, departmental revenues will not be sufficient to cover expenses. Obviously, the department cannot continue to operate in a negative position and we are researching options to resolve this problem. In the 2003/04 fiscal year the GIS Hydrology Data from the County has been budgeted in the General Fund as opposed to the Community Development Fund. Other options include transferring cash from other funds that have been served by the Community Development Department in the past two years, such as the Traffic System Management, Citywide Traffic Mitigation, Redevelopment Agency, Affordable Housing and Area of Contribution Funds. An internal analysis of this will be completed, but preliminary estimates indicate that about City Manager's Budget Message May 21, 2003 Page 14 $200,000 may be available to the Community Development Fund which will help balance the Fund for FY ending 2003 -04. It appears on a long -term basis the General Fund will need to contribute approximately $350,000 per year to staff the department to serve our citizens. This is equivalent to the Director, Administrative Secretary and Code Enforcement Officer's salaries and benefits ($285,779) including code enforcement operating and legal costs for FY 2003/04. Other ideas under consideration are to require participating landowners to help fund the update of the General Plan and to complete an hourly rate study to determine if user fees are at appropriate levels. If the fund remains in a deficit position after these actions and after we determine actual operating results for the current year, we will return to the City Council with a recommendation to transfer General Fund reserves to cover the deficit and a plan to repay the General Fund in future years. Staff will be conducting a long -term analysis of department revenues and expenditures to determine if reductions in Community Development expenditures and how much General Fund support may be required in the future. Administrative Services Administration The recommended budget includes $20,000 to remodel the reception area of City hall. This project would create a more efficient workspace for the Receptionist, create an additional work area, and improve the design /atmosphere to better serve the public. 7 nanr ,a The Government Accounting Standards Board (GASB) recently issued rulings that require local government agencies to significantly change the way they value and present financial information about the City. There are primarily two areas of interest. First, the City must determine and present a value for infrastructure assets, including streets. Second, the City must completely change the way financial information is presented in the annual reports. In order to meet these requirements by the deadline of June 30, 2003, the City Council approved contracts in May, 2003, with Harris & Associates to assist staff with valuations of the City's infrastructure assets and our auditors, City Manager's Budget Message May 21, 2003 Page 15 Vavrinek, Trine & Day to restructure the financial statements. The recommended budget includes $5,000 to cover any updates needed for 2003/04 fiscal year. Information Systems During 2002/03, staff initiated the redesign of the City's website. The consultant is currently assembling the department information which should be completed by June 30, 2003. Phase II of the project is proposed for fiscal year 2003/04 and is projected to cost approximately $30,000. This will include developing custom applications into the existing website to give the user the ability to purchase online, complete applications online and schedule appointments with different departments within the City. For the coming year, funding is also recommended to upgrade financial software (cash receipts) and hardware, including an additional encoding computer for Council and Commission meetings and additional licensing requirements for Microsoft Office XP and RntiVirus software. Finally, $20,000 has been included in the budget to continue the implementation of a Geographic Information System. This will be used to purchase data from the County, provide hosting, system updates and support and website access as well as additional information layers. Community Services Park Maintenance The total operational cost to maintain the City's parks is projected to be $1.3 million for the 2003/04 fiscal year. Special assessments paid by property owners will pay approximately $534,000 of this amount, and other revenues will cover $2,000, leaving the General Fund to fund the remaining $764,000. This is an increase over the current year level by approximately $116,000. The increase is a result of rising costs for staff and overhead charges, a 3 percent increase in contract maintenance costs and an increase in tree maintenance activity. City Manager's Budget Message May 21, 2003 Page 16 There are fewer new park capital projects proposed in the 2003/04 fiscal year, than were budgeted during the current budget. Such projects consist of the construction of a canine park at College View Park, addition of landscape vine pockets along the eastern block wall of the parking lot and speed humps along the AVCP road. There were several large capital projects in the current fiscal year budget that have not been completed and will be carried over into the new year. These projects include completion of AVCP Phase II, playground and basketball court improvements at Villa Campesina Park, playground improvements at Mountain Meadows Park, and ADA improvements at College View Park. Recreation The recreation division continues to explore various on -line registration software options. The options range from upgrading the division's current registration software program for approximately $15,000 to securing the services of the consultant upgrading the City's homepage for a lesser unknown amount. Staff continues to explore the options and it is anticipated that the Council will be asked at a later time to consider a recommendation and appropriate funds. Youth Recreation Programs During the 2003/04 fiscal year, the recreation division plans to implement a youth scholarship program designed to financially assist children from the City's low income families pay for certain programs. Initially, the program will be available to summer youth camp and teen travel camp participants. Once fully established, the plan is to offer scholarships for youth sports leagues and possible recreation classes where a fee is charged. Teens The division proposes offering the Teen Travel Camp program for the second year, in addition to the other well established successful teen programs. Teen Travel Camp is fully funded by participant fees. During the current fiscal year, staff added cost for police presence at the larger teen events such as Moorpark After Dark, Band Jams, and the Battle of the Bands event. This practice has been continued in the fiscal year 2003/04 proposed budget. City Manager's Budget Message May 21, 2003 Page 17 Communitv Events Costs for the 3rd of July Fireworks Event decrease in the 2003/04 fiscal year over the current year budget as a result of the one- time -only expenditures for the City's 20th year anniversary. The new fiscal year budget includes one new event - Christmas Tree Lighting Ceremony. The event was held in the past, but discontinued several years ago. The division plans to combine the event with the annual Santa Train sponsored by Metrolink. The department proposes that the three -day Apricot Festival continue for a second year. Transit The proposed 2003/04 fiscal year budget includes the purchase of two (2) new buses to be funded from the City's Traffic System Management Fund. This will bring the City's fleet to a total of four (4) buses. Over the past couple of years, staff has received requests for bus service on minor City observed holidays. As a result, the proposed budget includes expanding the number of bus service days (6 days) to include minor City - observed holidays at a cost of $5,500. Fiscal year 2002;03 marked the City's third and final year of its expanded transit system demonstration program. As a result, the City needs to achieve a farebox ratio of 14.9 percent by the end of fiscal year 2002/03. The 2001/02 audit showed only 12.75 percent. The current farebox ratio is approximately 14 percent. If the farebox ratio is not met, the City could potentially be asked to make up the difference using General Funds or Traffic System Management Funds. This would cost approximately $8,000. Typically, if an operation is making a good -faith effort, they will be given additional years to attempt to reach their farebox goal and still be allowed to use their local TDA allocation to fund 100 percent of their bus operations. However, the City may want to consider reducing service by eliminating the first and last runs on both routes increasing the farebox ratio to approximately 16 percent and saving the City approximately $40,000 annually in TDA expenditures. The combined ridership on the four runs averages 20.45 riders per day. It is recommended that a smaller reduction in service be implemented by eliminating only the last run on Route 2 (6:10 p.m. start time), which averages 1.79 riders per day, increasing the farebox ratio to approximately 16 percent and saving the City approximately $10,000 annually. During fiscal year 2003/04, staff will City Manager's Budget Message May 21, 2003 Page 18 continue to work to increase ridership through promotional efforts. Animal /Vector Control There are approximately 1,609 Moorpark dogs and 208 cats licensed through Ventura County; however, it is estimated that the actual number of dogs and cats in Moorpark is significantly greater. Revenue generated by licensing fees are used to off- set the contractual costs to the County for shelter operations. The City spends approximately $45,000 a year on the County contract alone, and an additional $120,000 on in -house efforts, including 65 percent of two full -time employees. During the 2003/04 fiscal year, staff will be evaluating potential options for canvassing the City's dog and cat owners to increase the number of licensed pets as well as identifying methods to notify owners of annual renewals. It is anticipated that staff will present the Council with a program recommendation. No funds are being requested at this time. The City has a ground lease for the site of the Animal - Vector Control building. The City owns the building. In 1999, the City entered into a lease agreement with the County Water Works District #1 that expires on June 30, 2004. It calls for a 10% increase in the rent annually. The current lease payment is $352.72 per month, or $4,232.64 per year. In July, the monthly amount will increase to $387.99 per month, or $4,655.90 annually. There are sufficient funds in the proposed budget to pay for the increase in the rent /lease payments. Solid Waste As a result of the new refuse franchise agreements, the City will generate about a $15,000 increase in franchise revenue. Public Works Lighting and Landscaping District As reported by the Public Works Director, several of the Lighting and Landscaping (L &L) District zones continue to face deficit fund positions, as assessment revenues have not been adequate to pay all lighting and landscaping related expenses. As stated in a staff report from the Public works Director dated City Manager's Budget Message May 21, 2003 Page 19 April 25, 2003, last November the City Council approved fund transfers from the General Fund and the Gas Tax Fund in the aggregate amount of $92,340 to "zero -out" FY 01/02 year -end deficit amounts in certain of the assessment district funds. That staff report went on to state that a like action will be required in November 2003 (estimated aggregate amount = $40,230) and again in November 2004 (estimated amount = $60,045). Prior to the 2001/02 fiscal year, it had been our policy that the L &L District(s) would only be charged the direct cost of providing these services (electricity costs, landscape contract costs, etc.) However, beginning in the 2001/02 fiscal year, we began charging the larger assessment district zones for some of the staff time required to oversee the contracts and administer the districts. For the 2003/04 fiscal year, we will continue to limit these charges to only those zones with fund balances in excess of $25,000. City Clerk For the City Clerk's division, staff intends to continue to focus on records retention, including carrying over funds budgeted for the 2003 -03 fiscal year in combination with a 2003- 04 allocation of $5,000 to hire a qualified consultant to update the City's Records Retention Schedule and conduct training on legal requirements for records retention. The $30,000 shown under new programs for election expenses is expected to be developer funded, and is based on the estimated expenses for a special election if the North Park project is approved and a special election is required to comply with the City's "SOAR" ordinance. City Manager Redevelopment Agency In the Governor's May budget revision, he proposes about a $250 million cut in redevelopment funding with increasingly larger cuts every year for 15 years. This is the same as was proposed in January. The Agency's ERAF shift for fiscal year 02/03 was $84,000. For 2003/04, early estimates indicate that the funding cut would represent about 8% of the Agency's annual tax increment, or about $280,000 for the coming year. No provision City Manager's Budget Message May 21, 2003 Page 20 for this has been made in the recommended budget and adjustments will be required if the legislature agrees to this recommendation. Economic Development - The Agency budget includes recommendations for $10,000 to continue the Business Enhancement Program; $30,000 for the preparation of a new Five -Year Implementation Plan (2004 -2009) which is a statutory requirement and to conduct a comprehensive review of the Redevelopment Agency and the project. Funds have also been included for services to maintain current agency reporting obligations and programs. Housing - $4,000 is recommended for administration of the CalHome Mobile Home program. The Council had previously authorized the use of CDBG funds for this purpose; however, staff has since determined that redevelopment housing funds are more appropriate for these costs. As in past years, the Agency will pass through tax increment revenues on to MUSD and other agencies in the county. However, beginning in the 02/03 fiscal year, the Agency also returns approximately $1 million in tax increment revenues to the County in compliance with the Agency's pass- through tax agreements. This is an increase from approximately $600,000 in 01/02 fiscal year. The Agency will make principal and interest payments as follows: • 1999 Tax Allocation Refunding Bonds $915,252 • 2001 Tax Allocation Bonds $606,573 Leaal Services Litigation and other legal costs paid from the General Fund have declined in the last year and staff projects these costs to remain low in the coming year. Whenever appropriate, the cost of legal services is charged to development projects. As in the past, funding for litigation is appropriated by the Council separately as the need arises. City Council Our cost for Local Agency Formation Commission for 2003/04 is estimated to be $5,200. In addition, funding in the amount of City Manager's Budget Message May 21, 2003 Page 21 $4,255 has been included for VCOG membership; $2,810 for SCAG and $10,320 for League of California Cities membership. The Budget Document The City Manager's Recommended budget has been provided to each City Council Member in two binders. The first, labeled "City Manager's Operating and Capital Improvement Budget" contains this budget message, information about City revenues, several summary tables and graphs, a budget summary for each departmental budget unit, an organization chart and list of staff positions for each department, and a list of capital improvement projects. The second binder, also labeled "Support Documentation" contains only detailed information about recommended expenditures for each department. Capital Improvement Budget The Public Works Director has prepared a seven -year Capital Improvement Plan for street and related projects that will be presented to the City Council soon. The capital improvement projects included in this recommended budget are in compliance with the draft CIP being prepared for the City Council's consideration. Because capital improvement projects span many years, the budget appropriation for these projects is carried forward from year to year until the project is complete. The amounts shown for the 2003/04 fiscal year will be adjusted after conclusion of the 2002/03 fiscal year, when actual project expenses to date are tallied. The City has proposed a very aggressive project list for fiscal year 2003 -04 totaling $28.7 million dollars. Please refer to this document for more detailed information about each proposed capital improvement project. It should be noted that the following projects are proposed to be partially funded from the Endowment Fund: City Manager's Budget Message May 21, 2003 Page 22 • Police Services Facility $3,250,000 • City Hall Facility $1,100,000 • Corporation Yard $2,489,827 Total $6,839,827 This will leave the Endowment Fund with a projected fund balance of $3,384,672. The funding for the Police Services Facility will be a loan from the Endowment Fund and will be paid back over the next several years from police facilities fees. Buildout for residential is expected by 2020 and non - residential by 2025 with a projected police facilities fee at current rates totaling $3.1 million. The police facilities fee will be proposed to be increased during the 2003/04 fiscal year and thus the Endowment Fund should be fully repaid at buildout. Summary The recommended budget includes no new programs or increased services (with the exception of a few very low -cost items) and is basically status -quo from the 2002/03 fiscal year with the exception of the changes in sheriff staffing. Staff will continue to monitor both the on -going State Budget crisis and the City's local revenue receipts and expenditures on a monthly basis to maintain a balanced budget. Several points should be emphasized: There is a long term need for additional General Fund revenue to fund: • the maintenance of the new police, city yard and city hall facilities, • health care cost increases averaging 20% effective January 1, 2004 costing the General Fund an additional $46,115 annually, • PERS retirement cost increases projected to jump from 1.102% to 3.581% effective 7/1/03 and then again jump to approximately 8% effective 7/1/04 costing the General Fund $59,664 in 03/04 and approximately $108,000 for 04/05, City Manager's Budget Message May 21, 2003 Page 23 • at least some portion of the Community Development staff costs (Director, Secretary and Code Enforcement Officer positions are estimated to cost $350,000 in FY 03/04), • long term street maintenance needs since Gas Tax provides only for staff and basic maintenance. We currently use TDA and grant funds to fund slurry, overlay and reconstruction projects, • GASB 34 potential costs for long -term infrastructure replacement costs for parks, streets, etc., • the cost allocation plan, while appropriate does serve to drain dollars from other funds. The goal should be to have enough General Fund surplus to fund this cost ($1,275,318 for FY 03/04), • assessment district subsidies projected to be approximately $60,000 for FY 03/04. The City postponed the planned opinion survey on this matter in early 2003 when the State budget deficit projection worsened with concern that City revenues (VLF, ERAF shifts) would be negatively impacted. The City is fortunate to have professional and dedicated employees. My thanks to the Department Managers and their support staff and finance staff for their outstanding work, interdepartmental cooperation and commitment in preparing this balanced budget. As in the past, the Budget summary will be available on the City's website at www.ci.moorpark.ca.us. Recommendation It is recommended that the City Council receive the recommended Operating and Capital Improvements Budget for fiscal year 2003/04 and set a budget workshop for May 28, 2003.