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HomeMy WebLinkAboutAGENDA REPORT 2004 0526 CC SPC ITEM 04AMOORPARK CITY COUNCIL AGENDA REPORT iTEm ®4. q. Axe- T : u 74, TO: Honorable City Council FROM: Steven Kueny, City Manager YC/— DATE: May 25, 2004 (Special CC Meeting of 5/26/04) SUBJECT: Consider Proposed Operating and Capital Improvement Budgets for Fiscal Year 2004/2005 Refer to Budget Binder distributed at the City Council meeting of May 19, 2004. Attachment: Staff Report 000001 MOORPARK CITY COUNCIL AGENDA REPORT ij TO: Honorable City Council FROM: Steve Kueny, City Manager DATE: May 12, 2004 (City Council Meeting of May 19, 2004) SUBJECT: Consider Proposed Operating and Capital Improvement Budgets for the Fiscal Year 2004/2005 The City Manager's recommended budgets for the City of Moorpark and the Moorpark Redevelopment Agency for fiscal year 2004/2005 will be presented to the City Council for it's consideration on May 19, 2004. It is recommended that the City Council receive the recommended Operating and Capital Improvement Budgets for FY 2004/2005 and set a date for a budget workshop. RECOMMENDATION Receive the budgets and set a workshop for May 26, 2004. 000002 ITEM R • G . CITY OF MOORPARK AGENDA REPORT To: Honorable City Council From: Steven Kueny, City Manager rl Cindy Borchard, Administrative Services Director Ob Date: May 19, 2004 Subject: City Manager's Budget Message for Fiscal Year 2004/05 The City Manager's recommended budget for the City of Moorpark and the Moorpark Redevelopment Agency for fiscal year 2004/05 are presented to the City Council and Agency Board for consideration. The total proposed budget is summarized below. As currently proposed, all funds are balanced either with estimated revenues exceeding appropriations or through transfers in from surpluses in other funds except the General Fund which as a result of the proposed $263,886 two year contribution to the State Budget deficit has a projected $151,235 shortfall. iiti City City of of Moorpark Moorpark Expenditure Moorpark All Other Redevelopment Total All Category General Fund Funds Agency Funds Personnel $3,269,537 $2,350,502 $201,945 $5,821,984 Operations $6,120,783 $3,952,870 $2,195,590 $12,269,243 Sub -Total $9,390,320 $6,303,372 $2,397,535 $180091,227 Capital Outlay /Impr $257,701 $26,367,977 $1,138,969 $27,764,647 Debt Service $0 $0 $1,484,586 $1,484,586 Transfers to Other Funds $1,368,995 $2,577,786 $1,061,973 $5,008,754 Total $11,017,016 $35,249,135 $6,083,063 $52,349,214 As currently proposed, all funds are balanced either with estimated revenues exceeding appropriations or through transfers in from surpluses in other funds except the General Fund which as a result of the proposed $263,886 two year contribution to the State Budget deficit has a projected $151,235 shortfall. iiti City Manager's Budget Message May 19, 2004 Page 2 of 26 This can be addressed by using a portion of the General Fund reserve or selected expenditure reductions. 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 will- continue to have an impact on the City. On January 9, 2004, the Governor released a proposed FY 2004 -05 State Budget that proposed to take $1.3 billion in property tax revenues from cities, counties, special districts and redevelopment agencies on an on -going basis to the ERAF accounts in each county to help defer the state's obligation for K -12 education funding. This proposed increase was on top of the $6 billion in property taxes already being shifted to ERAF accounts ($250,000 estimated in FY 04/05 for Moorpark). The $1.3 billion cut included a $135 million cut to local redevelopment agencies and $188.6 million cut to cities. This represented a loss to the City of Moorpark estimated at $342,143 for FY 2003 -04 and another $446,248 in fiscal year 2004 -05. The Governor's revised budget proposal released on May 13th proposes that the cities, counties, special districts and redevelopment agencies make a two -year contribution to solving the state's budget deficit of $1.3 billion per year. This is an alternative to his January budget, which proposed a permanent $1.3 billion annual increase in the ERAF property tax shift. This proposal has been evaluated by a working group of the Board Members of the League of California Cities and a recommended allocation method for the cities' $350 million contribution to the state budget deficit has been proposed to the Governor and Legislature. This recommended allocation method would be allocated one -third on the basis of cities' proportionate share of the VLF, property tax and sales tax with no contribution more than 40 or less than 2% of a cities general revenues. Over two years cities will pay in $700 million, but in the third year they will get back $520 million, for a net three -year cost of $180 million. Future contributions would be prevented by the amendment. The centerpiece of the proposal is a permanent 111 I .I City Manager's Budget Message May 19, 2004 Page 3 of 26 reduction of the VLF rate from 2% to 0.65% (its current effective rate). This would trigger the elimination of the VLF backfill (approximately $4 billion) which would be replaced with a like amount of property taxes, dollar- for - dollar, except for a two year "contribution" by cities and counties of $700 million ($350 million each) in both 2004 -05 and 2005 -06. In the: third year, cities and counties would receive the full amount of the new property tax in exchange for the VLF backfill, and it would grow as property tax grows in the future. This would increase every city's and every county's share of the property tax. In exchange, the Governor pledges to lead a campaign to secure legislative- and voter support in November 2004 for a constitutional amendment with revenue and mandate protections equivalent to or better than the LOCAL initiative. In the absence of an agreement, the Governor is expected to oppose the LOCAL initiative. The Local Taxpayers and Public Safety Protection Act is an initiative sponsored by the League of California Cities, the California State Association of Counties and the California Special District Association. Planned for the November 2004 statewide ballot, the measure is intended to increase local control over local tax dollars, so that funding for critical local services is more dependable and predictable. The initiative would require a majority vote of the people before the state government would be allowed to take and use local government funds. It also strengthens existing law that says when the state mandates a program, service or added cost to local governments, the state must reimburse the local governments in a timely manner for the cost of providing that program or service. It should be noted that assuming the initiative qualifies, it will be on the November ballot until an alternative in a form acceptable to the LOCAL Coalition is approved by the Legislature. The estimated impact of the $350 million "contribution" by cities developed by the League based on information obtained from the State Controller's Office for the City of Moorpark is $263,886 in FY 04/05 and FY 05/06. Redevelopment agencies across the State were also impacted in fiscal year 2003 -04 by a one -time shift in property tax revenues totaling $135 million statewide. The impact to the City of Moorpark Redevelopment Agency in FY 03/04 is $135,608 and an estimated $251,000 in FY 04/05 and 05/06. 1' 1 `IZ1Z1� r City Manager's May 19, 2004 Page 4 of 26 Budget Message The other part of the state's recovery plan includes the adoption of Propositions 57 and 58 in March which will provide for financing to partially fund the deficit and a balanced budget requirement. "Triple Flip" - On March 2, 2004, voters approved a statewide ballot measure (Proposition 57) to issue $15 billion in deficit reduction bonds. These bonds will be paid off over seven to nine years based on the revenue stream that will fund them from the "triple flip ". The "triple flip" suspends one- quarter percent of the Bradley -Burns sales and use tax for cities and counties, replaces the lost revenues on a dollar - for - dollar basis with funds set aside from the countywide property tax revenues (primarily ERAF), and increases the State's sales and use tax by one - quarter percent with the State increase dedicated to repayment of the bond measure. Though a lawsuit has been filed challenging the reduction in the Bradley -Burns sales tax, the triple flip is set to go into effect on July 1, 2004. The impact to the City of Moorpark will be on cash flow and the subsequent reduction in interest income due to biannual (catch- up payments) rather than monthly sales tax payments. In addition, there is the risk of not being made completely "whole ". As is customary, the Governor's proposed budget may be modified during the next several weeks during deliberations by the state legislature. Therefore, the City's recommended budget may require additional adjustments after the State budget is adopted by the legislature and signed by the governor. Future Projections for the California Economy The Governor's fiscal projections indicate improved labor markets and stronger output growth are expected in 2004 and 2005. California personal income increased for the sixth consecutive quarter in the second quarter of 2003. Also encouraging, exports of made -in- California merchandise began to increase again in the third quarter after falling for nearly three years, and taxable sales posted a fifth consecutive year - over -year gain. While indicators suggest that modest reform is projected for 2004, job growth throughout the state will be tempered due to the relatively high cost of doing business in California. Recent changes to the State's workers' compensation system by the legislature should aid in reducing employer costs. City Manager's Budget Message May 19, 2004 Page 5 of 26 Locally, the UCSB Economic Forecast for Ventura County projects: • After a cyclical downturn in 2003, Ventura County is expected to bounce back in 2004, but like the nation, this will be a recovery with slow job growth. A 0.4 percent job growth in Ventura County is expected in 2004. • As with the national economy, the consumer was the only source of spending support in Ventura County in 2003. An increase of real retail sales growth is predicted to be 2.2 percent in 2004. • The median single - family home price value for December 2003 was $488,700. The annual value was an increase of 21.7 percent over 2002, or 18.5 percent in real terms. A slowdown in median home price growth is predicted for 2004 -on. • Ventura County issued 3,646 residential building permits in 2003 compared with 2,499 in 2002. The increase in 1,147 units was comprised of an increase of 1,088 multiple - family units. 2004 building activity will be smaller than 2003 but larger than 2002. General Fund Reserves The Council will recall that, as part of the last three 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 June 30, 2003, is $264,220. Of this amount, we anticipate that $222,997 will be spent in the 2003/04 fiscal year, leaving a balance of $41,223. The original purpose of the "800" fund was to provide funding for needed positions until General Fund Revenue had increased to fund them. Since sufficient 2004/05 FY projected General Fund revenue is available to fund these projects and programs this year, it is recommended that the tracking of these expenditures within the General Fund be terminated and on -going funding be provided from the annual General Fund revenues effective 6/30/04. A recap of the General Fund for last year and this year is as follows: 11111 City Manager's Budget Message May 19, 2004 Page 6 of 26 The projected deficits for FY 02/03 and FY 03 /04-were absorbed by the "800" fund surplus within the General Fund. Revised projections during the preparation of the FY 03/04 budget projected a General Fund surplus for FY 02/03 of $558,756. At the time, it was recommended that the surplus remain in the reserve to fund the projected VLF revenue loss. As noted above, the actual audited surplus for FY 02/03 turned out to be $1,702,133. This was primarily due to operational savings and capital improvement projects not being completed. We are predicting that revenues in the General Fund during the 2003/04 fiscal year will exceed expenditures by only $6,834 though historically the surplus has exceeded projections as departmental projects are not fully completed by fiscal year end. In addition, the projected revenue is less than anticipated due to the $625,476 VLF "loan" in FY 03/04. HISTORY OF MOORPARK'S GENERAL FUND BALANCE AND SURPLUS Fiscal Years 1993 -94 Thru 2002 -03 �rrr FISCAL YEAR FISCAL YEAR 2002/03 2003/04 Adopted Adopted Budget Actual Budget Projected Revenue $8,863,288 $9,686,636 $ 9,820,706 $9,261,550 Expenditures $9,041,221 $7,984,503 $10,010,597 $9,254,716 Surplus (Deficit) $(177,933) $1,702,133 $ (189,891) $ 6,834 The projected deficits for FY 02/03 and FY 03 /04-were absorbed by the "800" fund surplus within the General Fund. Revised projections during the preparation of the FY 03/04 budget projected a General Fund surplus for FY 02/03 of $558,756. At the time, it was recommended that the surplus remain in the reserve to fund the projected VLF revenue loss. As noted above, the actual audited surplus for FY 02/03 turned out to be $1,702,133. This was primarily due to operational savings and capital improvement projects not being completed. We are predicting that revenues in the General Fund during the 2003/04 fiscal year will exceed expenditures by only $6,834 though historically the surplus has exceeded projections as departmental projects are not fully completed by fiscal year end. In addition, the projected revenue is less than anticipated due to the $625,476 VLF "loan" in FY 03/04. HISTORY OF MOORPARK'S GENERAL FUND BALANCE AND SURPLUS Fiscal Years 1993 -94 Thru 2002 -03 �rrr City Manager's Budget Message May 19, 2004 Page 7 of 26 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 2004/05 fiscal year. Property Tax Distribution Sources Hdl Coren 6 Cone Property tax revenues are expected to increase approximately 5% for the coming year, to $2.8 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% (6.7% after ERAF) of property tax paid by property owners 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 I cent County Transit ^ents s cents Source: State Board of Equalization Sales tax revenues are anticipated to increase during the 2003/04 fiscal year, from nearly $1.7 million in 2002/03 to $2 million. While we will see only modest growth in the economy, new retail development will result in an increase of about 8% for a total of $2.16 million for the 2004/05 fiscal year. This is primarily due to the Moorpark Marketplace development which is projected to generate 689 new jobs and over III I'I City Manager's Budget Message May 19, 2004 Page 8 of 26 $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 $2.3 million next year, up nearly 6% over FY 02/03. As noted previously, the VLF backfill "gap" for FY 03/04 ($625,476) is a loan to the State due to be paid back in FY 06. 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. 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 depends on increases in these discretionary revenues. Most significantly, in the 2004/05 fiscal year, 61% 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 six 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 48% of all General Fund revenues (after deducting the cost allocation reimbursement). 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 only $150,000 in the coming year. The General Fund also receives interest earned by the Endowment Fund in excess of 2 %, however, no revenue is budgeted to be received by the General Fund in the coming year due to rates not expected to exceed 2 %. Below is a comparison of the General Fund budget projections for FY 03/04 compared to the proposed FY 04/05 budget. 03/04 Projected 04/05 Budget $ Increase % Increase Revenue $9,261,550 $11,129,667 $1,868,117 20.2% Expenditures $9,254,716 $11,017,016 $1,7621300 19.0% Surplus $6,834 $112,651 City Manager's Budget Message May 19, 2004 Page 9 of 26 The increase in revenue over the FY 03/04 projection is primarily due to a projected increase in property tax ($130,250); sales tax ($160,000); and motor vehicle license revenue ($922,034) as well as an increase in the cost allocation plan reimbursement. It should be noted that the FY 03/04 VLF revenue projection reflects the $625,476 reduction for the "loan" to the State thereby explaining the "large" increase in FY 04/05 over FY 03/04. A summary of revenue and expenditure assumptions is included in an appendix in the Budget document. The expenditure increase is primarily due to one -time expenditures of $34,000 for the Hazardous Mitigation Plan and Emergency Preparedness Handbook; $110,000 for Marquee Signs; $25,000 for reconfiguration of the city hall public counter; $28,000 for City Hall computer room fire suppression; $24,000 for Civic Center driveway redesign; and, increased Police Services Contract costs and overall projected salary and benefit increases. While General Fund revenue is projected to increase, expenditures are projected to increase at a similar 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 would be balanced (anticipated revenues exceed anticipated expenses by $112,651) except as previously indicated the projected $263,886 proposed ERAF loss in FY 04/05 will cause the General Fund to have a projected deficit of ($151,235). This ERAF shift is in addition to the ERAF shift that began in FY 92/93 costing the City of Moorpark approximately $260,000 in FY 04/05 and over $2 million dollars to date. Cost Increases Anticipated for the 2004/05 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 information for April was released May 14, 2004 and reflects a 2.3% increase over the prior year. CalPERS health insurance premiums have significantly increased over the past few years. The City experienced an average increase of approximately 18% effective January 2004. Rates are 000011 City Manager's Budget Message May 19, 2004 Page 10 of 26 anticipated to continue to rise and we have included a 20% increase in the 04/05 budget effective January 1, 2005. Cal PERS staff has indicated that information on the new rates won't be available until mid -June. 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. 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 contribution to Ca1PERS for retirement benefits is 3.581% in FY 03/04, up from 1.102% in FY 02/03. Rates are increasing again for FY 04/05 to 8.136 %. This is increasing costs to the City by $171,797, including over $100,000 in the General Fund. Rates are expected to increase again, to approximately 9 %, in the 05/06 fiscal year. After several years of significant increases for general liability insurance, we are seeing a leveling off of rates. Projections indicate our cost for general liability insurance will decrease over 25 %, however, workers compensation is expected to increase over 25% for FY 04/05. It is anticipated that workers compensation costs will gradually level out with the Governor's reform package. Other Expenses Four 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 2004/05 fiscal year, the General Fund will receive $1.8 million from other funds as payment for services provided by the General Fund departments. FY 2004/05 COST ALLOCATION PLAN SUMMARY FUND OVERHEAD CONTRIBUTION Community Development $553,922 L & L Assessment Districts 113,922 Park Maintenance Fund 352,730 Local Transit 121,045 Solid Waste AB 939 65,850 Gas Tax Fund 229,022 MRA- Low /Mod Housing 141,639 MRA- Operations 261,621 TOTAL $1,839,731 000012 City Manager's Budget Message May 19, 2004 Page 11 of 26 This is an increase of $564,415 or 440 over the overhead allocation for FY 03/04 due to the additional workload generated by other departments in FY 02/03 on the General Fund and the overhead being fully distributed. It should be noted that the City also allocates "general" overhead costs identified in the non - departmental central services and information services divisions budgets of the General Fund for actual costs for shared supplies, utilities, network services, insurance, etc. based on the number of FTE's and computer users in city hall. 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. This year's budget includes the replacement of various computer monitors and cpu's in the amount of $17,800. The fund balance projected at FY 04/05 year end is $375,156. Based on our projected fixed asset annual accumulated depreciation, we should maintain a minimum of $350,000 in this fund. 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. City Council Our cost for Local Agency Formation Commission for 2004/05 is estimated to be $4,175. In addition, funding in the amount of $6,550 has been included for VCOG membership; $2,950 for SLAG and $10,525 for League of California Cities membership. City Manager Public Information Although not included in the FY 2004/05 budget, negotiations with Adelphia Communications for a new franchise agreement are 000013 City Manager's Budget Message May 19, 2004 Page 12 of 26 nearly complete and the agreement will include sufficient grant funding to make the needed improvements to the Cable Channel 10 Broadcast System including: 1. Core equipment update 2. Purchase an automated Playback /BBS System 3. Complete audio system upgrade 4. Complete lighting system upgrade, and 5. Presentation facilities upgrade. These improvements will provide quality and creative presentation programming on the City's Public from Adelphia over the life of provide the necessary resourc facilities in the new City Hall. a marked improvement in the of broadcasts and information Access Channel. The grants the new franchise will also es for establishing these Also, although not included in the budget at this time, grant funds can be used to provide live Council meetings over the internet including searchable archives and long -term record keeping. Emergency Management New items in this budget in response to the City's After - Action Report for the "Simi Fire" include funding for a City Employee Photo Identification Card System and four satellite phones. The budget also supports a significant increase in staff training and includes funds for training to establish a Community Emergency Response Team (CERT) and an Emergency Preparedness Handbook for Moorpark residents and businesses. The City is eligible and will receive state and federal grant funding to support many of these expenditures. Redevelopment Agency The Governor's May budget revision proposes about a $250 million cut in redevelopment funding for each of the next two fiscal years. The Agency's ERAF shift for fiscal year 02/03 was $84,000, $135,608 for fiscal year 03/04 and another $251,000 is projected in both FY 04/05 and FY 05/06. The additional $115,392 is not included in the recommended budget and adjustments will be required if the legislature agrees with this recommendation. City Manager's Budget Message May 19, 2004 Page 13 of 26 A Secretary I position was not filled in FY 03/04 and the position has been eliminated in FY 04/05. It is not anticipated that there will be sufficient operating surplus to fund this position in the near future. Economic Development - Funding for Business Assistance loans has been eliminated due to the increasing ERAF obligation to the State. The budget includes funds for professional services to complete the preparation of a new Five -Year Implementation Plan (2004 -2009) which is a statutory requirement and to complete an amendment to the Redevelopment Plan restoring eminent domain authority for the Agency to acquire commercial or industrial properties for redevelopment. Funds have also been included to implement the Graphic Identity Marketing Plan. Housing - 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: 0 1999 Tax Allocation Refunding Bonds $763,369 • 2001 Tax Allocation Bonds $601,216 It should also be noted that $20,400 has been included in the General Fund from the Vintage Crest PILOT Agreement annual payment. Community Development Block Grant Public Services Sub gran 2004/05 budget. Balances for land acquisition and Services Complex. Legal Services Litigation and othE declined in the 1 remain low in the of legal services i past, funding for appropriated by the t funding remains constant in the FY of funding allocation will be budgeted design development of the new Human r legal costs paid from the General Fund have ist year and staff projects these costs to coming year. Whenever appropriate, the cost s charged to development projects. As in the litigation above a cumulative $25,000 is Council separately as the need arises. 000015 City Manager's Budget Message May 19, 2004 Page 14 of 26 City Clerk For the City Clerk's division, staff intends to continue to focus on records retention with an allocation of $10,000 to hire a qualified consultant to update the City's Records Retention Schedule and conduct training on legal requirements for records retention. Funds for the November 2004 estimated election costs have been included. At this time the election expenses for the North Park project if approved have not been included. However, if needed, these expenses would be developer funded. Administrative Services Administration The recommended budget includes $25,000 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. Information Systems During 2002/03, staff initiated the redesign of the City's website which has recently been completed. Phase II of the project is proposed to be completed in fiscal year 2004/05 and is projected to cost approximately $30,000 which will be carried over from fiscal year 2003/04. 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 (Pentamation) and hardware, including a new Windows server to replace our Unix server. Also, we have included funds ($7,500) to cover the cost (hardware, software and connection) to host the internet server currently being hosted off -site. This will be more cost efficient as we will also be able to host the GIS system and provide a faster internet connection and more control. Community Development As predicted in the 2003/04 budget, the Community Development Department is projecting a deficit in the Community Development Fund. After several years of significant construction permit -111 t City Manager's Budget Message May 19, 2004 Page 15 of 26 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 2004 -05. The Associate Planner and Secretary II positions have been eliminated and additional staff time (25 %) for the Senior Management Analyst is being charged to the Traffic System Management Fund to reflect time needed to manage the recently approved Council program. The current projections for fiscal year 2004/05 indicate that spending in the Community Development Fund will exceed revenues by $719,230, creating a fund balance of ($469,208) at June 30, 2005. 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. An hourly rate study was recently conducted by staff and approved by Council to increase fees to the appropriate levels. It appears, as stated in the FY 03/04 budget message, that on a long -term basis the General Fund will need to contribute funds to staff the department to serve our citizens. The budget does include the preparation of a much needed Master Plan of Trails and Bikeways in the amount of $100,000 fully funded by Traffic System Management fees. Community Services Administration The proposed 2004/05 fiscal year general fund budget includes funding ($15,000) to hire a consultant to assist with the development of a Park Master Plan. The plan will include 1111 City Manager's Budget Message May 19, 2004 Page 16 of 26 existing park facilities and identify future park locations and amenities based on population and recreation trends. The City received a funding request from the New West Symphony for $12,950. Their request stated that the funds would be used to send 3rd and 4th grade students in the Moorpark Unified School District to a "Symphonic Adventure" program. The proposed 2004/05 fiscal year budget does not include funding for this request. Animal /Vector Control In the 2004/05 fiscal year it is anticipated that the animal /vector control division will be faced with an increased demand for animal control service requests and the need to step up mosquito surveillance as concerns about the West Nile Virus are heightened. Despite pending future demands, there are no significant budget changes proposed in the 2004/05 fiscal year for the division over the current year, with the exception of the planned cancellation of the division's property lease. The City currently has a ground lease for the site of the animal /vector control office building, which expires on June 30, 2004. Division staff will move into the vacated fire station across from City Hall until the Corporate Yard construction has been complete. This will generate a savings of approximately $6,000. In fiscal year 2004/05, the County proposes a number of budget cuts impacting the Ventura County Animal Regulation Department. To offset some of the budget cuts, the Department increased some of its fees including licensing. The licensing and shelter fees collected from Moorpark residents are used to cover approximately half of the total cost of these services to the City. The remaining 50 percent is funded by the City's General Fund. Since the City performs routine animal control services in- house, the budget reductions will not be noticeable to most Moorpark residents. If the County's budget reductions are approved, most animal control services to the surrounding unincorporated areas will be eliminated. It is unknown at this time whether the City will notice an impact. Staff will continue evaluating the feasibility of 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. Additionally, staff will begin to explore options for licensing 1`111 City Manager's Budget Message May 19, 2004 Page 17 of 26 animals in -house rather than relying on the County to perform the service. Transit The bus purchase included in the current budget will be carried over to the 2004/05 fiscal year. The purchase of two new buses will be funded from a federal transportation grant at the time the federal legislature approves the final transportation budget authorization. When the new buses arrive, staff intends to surplus the City's oldest bus and use another as a back -up bus. The FY 2004/05 budget also includes TDA funding to install more bus shelters and bus route holder signs. Bus service to the Ventura County Fair has been eliminated in the FY 2004/05 budget. There has been very little interest in this service, which has been offered for the past two years. With the revisions to the Urbanized Area boundaries, the City's transit system was re- categorized from a rural /urban system to an urban system. This changes the City's farebox goal from 14.9 percent to 20 percent. The City has three years in which to achieve the new goal. If the City is unable to achieve the goal it may reduce its bus service or subsidize the costs. Solid Waste Effective July 1, 2004, the County will increase the surcharge fee at the Simi Valley Landfill by $1.65 per ton which equates to an approximately 22G increase per month to the residential refuse rate. The staff is negotiating with the City's franchise haulers to delay assessing Moorpark customers for the increase until January 1, 2005, to avoid a mid -year rate increase. The City Council will receive a report on this in June. Additionally, the California imposed by the County on all will be decreased by 45� per which equates to approximate refuse rates. Staff proposes haulers to the City. Active Adult Center Integrated Waste Management fee refuse haulers in Ventura County ton. This is a pass- through fee :ly 2� per month to residential that this fee be remitted by the One of the potential budget cuts the County is considering in fiscal year 04/05 is a reduction or, elimination of the Senior Nutrition Program. The City hosts a Senior Nutrition Congregate 1� # �1 11 K City Manager's Budget Message May 19, 2004 Page 18 of 26 Meal Site where a noon meal is served each weekday and a Home Delivered Meal Site where meals are assembled for delivery to homebound senior citizens. The City contributes $10,000 to this program to support the cost of a meal site coordinator. The final outcome of the County's budget will not be known until after the City adopts its budget. In the event the program is eliminated, the City Council may wish to revisit this issue. At the Council's direction, the level of CDBG funding for the City's Active Adult Center in FY 2004/05 has been reduced from $12,000 in the current fiscal year to $5,500. The General Fund will fund the remaining cost for the three part -time employees. Facilities Funds are included in the amount of $28,000 to install a fire suppression system for the City Hall computer room. This is a non -water based system that in the event of a fire will activate prior to the code - required sprinkler system activation which would have a devastating impact on the City's main computer server. Recreation Funds to implement an on -line registration system in the amount of $16,500 have been included in the FY 2004 /05 budget. The recreation division has completed an evaluation of the software options and is prepared to move forward. Youth Recreation Programs - The recreation division plans to continue promoting the Youth Scholarship Program, implementing the Council's recommendation to encourage donations to the program through the quarterly recreation brochure. The new budget also includes funding to hire a consultant to assist with the development of a Youth Master Plan in the amount of $7,000. Teen Programs - In the current fiscal year the Teen Travel Camp program unexpectedly required assistance from the General Fund in the amount of $9,000. The intent was that camp fees would cover all of the direct and indirect costs for this program. For FY 2004/05 the recreation division has revised the fees and trip schedule in an effort to sufficiently cover costs. To protect the General Fund, promotional materials for this program will include a cancellation statement notifying families that the program will be cancelled if the anticipated participation numbers do not materialize. City Manager's Budget Message May 19, 2004 Page 19 of 26 In cooperation with the Moorpark Boys and Girls Club, the recreation division will implement a couple of changes to the Moorpark After Dark program in FY 2004/05. The changes are being made in response to cost increases, in particular the increased cost in police services. The dances will end at 9:30 p.m. rather than 10:00 p.m. and there will be a nominal cost for pizza. These changes should keep the program financially stable. Special Event Programs - The division is not proposing any new special events, but it has incorporated the Council's and the Parks and Recreation Commission's recommendation to add a man- - made snow component to the Hometown Holiday Event at a cost of $3,000 making the total for the event $4,000. The division is also recommending the elimination of the Visit with Santa Event since it serves a very small segment of the community. Library Depending on the outcome of the State budget cuts, the Moorpark library may be under funded by approximately $2,000. If this should occur, the City may be asked to make up the difference from its Library Facility Fee Fund balance. However, impacts to the Moorpark Library's hours of operation are not anticipated. Park Maintenance The total operational cost to maintain the City's parks is projected to be $1.46 million for the 2004/05 fiscal year. Special assessments paid by property owners will pay approximately $552,000 of this amount leaving the General Fund to fund the remaining $914,000. This is an increase over FY 03/04 level by approximately $150,000. The increase is a result of rising costs for staff and overhead charges and a projected 8 percent increase in contract maintenance costs. Capital Improvement Projects proposed for the FY 04/05 include: • Design work for the expansion of the gym at AVRC • Expansion of the office space at AVRC • Design and partial construction of Poindexter Park • Design of the new park at the corner of Magnolia and Charles Street • Replacement of playground equipment at Virginia Colony Park • Construction of restrooms at Glenwood Park 1I M 1 City Manager's Budget Message May 19, 2004 Page 20 of 26 In addition, several projects that were not completed in the current fiscal year will be carried over into the new year including completion of AVCP Phase II and replacement of playground equipment at Mountain Meadows. It should be noted that the landscape costs to maintain the new areas is projected to be $33,144 annually which has not been included in the FY 04/05 budget. This includes the cost for approximately 11 acres of landscaping, restroom, playlot and hardscape. Public Works Administration It should be noted that no additional monies have been requested for efforts related to the further development of Public Works GIS applications. Staff is looking into possible development of this resource. Any future recommendation requiring additional funding will be brought forward to the City Council. Engineering With the hiring of the new City Engineer in FY 2003/04, responsibility for the administration of the contract engineer agreement with Charles Abbott Associates was transferred from the Community Development Department to the City Engineer. It should be noted that the engineering and traffic retainer is now accounted for within the Engineering Department funded 12.5% from the General Fund and 87.5% from the Community Development Fund and the traffic retainer is funded 50% Community Development and 50% Gas Tax Fund. Council will recall that the funding for the City Engineer position was initially proposed to be funded by a combination of the General Fund reserve, project related funds (including the Los Angeles Avenue AOC), Citywide Traffic Fund, Traffic System Management Fund and $100,000 paid by Pacific Communities for processing of Los Angeles Avenue improvements. To date, the position has been funded from the General Fund. Charges will be identified from the other funding sources to reimburse the General Fund for FY 03/04 and 04/05 costs. City Manager's Budget Message May 19, 2004 Page 21 of 26 It should be noted that a study services will be completed by recommendations to be brought back Lighting and Landscaping District of engineer and public works early 2005 with further to Council at that time. 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. Last November the City Council approved fund transfers from the General Fund and the Gas Tax Fund in an aggregate amount of $71,936 in order to "balance out" the FY 02/03 year -end deficits for certain of the Assessment District Funds. In a staff report from the Public Works Director dated May 5, 2004, the City Council was advised that a like fund transfer of about $27,000 will again be requested next November to "balance out" the anticipated FY 03/04 year -end Assessment District Fund deficits. This transfer is included in the FY 04/05 budget. That staff report also mentions that the projected aggregate deficits for year -end FY 04/05 is about $91,000. 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 2004/05 fiscal year, we will continue to limit these charges to only those zones with fund balances in excess of $25,000. It is anticipated that upon paym Cypress Land Company, there will b to proceed with the design and landscaping on Tierra Rejada Road should be noted, however, that the landscaping maintained by the Cit deficit in the Citywide Landscape 1 to increase. This will also be the north of New LA Avenue. Street /Signal Maintenance ent of future AOC fees by adequate funding available construction of the median east of Spring Road. It addition of this area to the ;y will cause the expected Maintenance Fund (Fund 2300) case for Spring Road median It is the intent of staff to seek bids for a new Traffic Signal Maintenance Contract based on new, more comprehensive rrrr City Manager's Budget Message May 19, 2004 Page 22 of 26 maintenance specifications and requirements. Additional funds have been budgeted for an anticipated increase in the cost for this service. Costs related to changing the name of Los Angeles Avenue (East) to Princeton Avenue are expected to be minor and will be absorbed by the budget for sign maintenance. NPDES Although NPDES requirements and efforts continue to grow, the budget amount for this program (Division 8320) in the amount of $34,248 remains basically the same as last year. At this point, no large cost increases are anticipated. 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 are used to partially 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. The State budget did not fund the continuation of these funds for FY 03/04 or FY 04/05. 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 4, 2004 of 3 %. For FY 04/05 the estimated increase for contract rates are projected to be 14 %. The major contributors to this increase are salaries ( +3 %), retirement ( +54 %), and worker's compensation ( +12 %). This increase is on top of the approximate 16% increase in FY 03/04. Below is a sampling of positions and the most recent percentage increases. City Manager's Budget Message May 19, 2004 Page 23 of 26 POSITION FY 02/03 FY 03/04 PERCENTAGE INCREASE FY 04/05 PERCENTAGE INCREASE Captain 176,699 208,289 17.9% 237,449 14.0% Sergeant -Det. 145,772 165,950 13.8% 189,183 14.0% Senior Deputy -Det 125,122 141,817 13.3% 161,671 14.0% 40 -hr. Traffic Motor w/o relief 129,841 154,753 19.2% 176,418 14.0% 84 hr. Patrol n/a 353,376 n/a 402,849 14.0% 24 hr. Patrol 647,425 706,752 9.2% 805,697 14.0% The projected increased cost for 75% of the HSRO Officer funded by MUSD will be $11,387.28 annually and although not included in the budget at this time will be included in the final document. 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. About this same time the deployment for most patrol deputies transitioned to a 12 hour shift. This resulted in the creation of an 84 hour patrol instead of a 56 hour patrol. With these shifts, the overhead cost for the City positions increased. Also, overtime costs are projected to increase in FY 04/05 to $37,364 from $9,800 in FY 03/04 for additional transportation to Ventura due to East Valley Jail closing and special events because County CSU disbanded. Also, included is $7,500 additional for car mileage and $21,600 per year for modems in car. 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. City Manager's Budget Message May 19, 2004 Page 24 of 26 As in FY 03/04, MUSD continues to fund 75% of the cost of the High School Resource Officer (HSRO). The City funds 100% of the 5th grade DARE officer. The FY 03/04 rates recently adopted by the Board of Supervisors will result in a projected net surplus of $581,833 for Moorpark over the FY 03/04 adopted budget due to the reduction of one 84- hour car. The City was able to provide the same level of coverage with the change in 12 -hour shift. It is anticipated that the new Police Services Facility will be completed in Spring 2005 and rent for six months at the Flory location is budgeted and three months' operational costs for the new facility have been included in the FY 04/05 departmental budget. This includes estimated costs for electricity ($32,000), gas ($21,650), water and sewer ($650), and maintenance costs ($3,500). In addition, an office assistant position has been included at a cost of $14,000 for three months. Projected revenue for the California Highway Patrol lease for three months ($17,538) has also been included. The Budget Document The City Manager's Recommended budget has been reformatted this year to include summary and detail reports as well as support documentation in one binder. 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 2004/05 fiscal year will be adjusted after conclusion of the 2003/04 fiscal year, when actual project expenses to date are tallied. The City has proposed a very aggressive project list for fiscal year 2004 -05 totaling over $27 million dollars. Please refer to this document for more detailed information about each proposed capital improvement project. �r:rr City Manager's Budget Message May 19, 2004 Page 25 of 26 It should be noted that the following projects are proposed to be partially funded in FY 04/05 from the Endowment Fund: • Police Services Facility $5,350,000 • City Hall Facility $1,100,000 • Corporation Yard $4,318,230 Total $10,768,230 This will leave the Endowment Fund with a projected fund balance of $2,000,273. A portion of 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 $4.3 million. Summary The recommended budget includes no new programs or increased services (with the exception of a few very low -cost one -time items) and is basically status -quo from the 2003/04 fiscal year with the exception of the changes in sheriff staffing, the deletion of an associate planner and two secretary positions. 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, • increasing health care costs which have averaged over 12% the last three years, • PERS retirement cost increases projected to jump from 3.581% to 8.581% effective 7/1/04 and then again jump to 9% effective 7/1/05 costing the General Fund an estimated $108,000 in 04/05 and another $40,000 for 05/06, • long term street maintenance needs since Gas Tax provides only for staff and basic maintenance. We City Manager's Budget Message May 19, 2004 Page 26 of 26 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 ($1,839,731 for FY 04/05), • assessment ...district subsidies projected to be approximately $91,000 for FY 04/05. • three developer provided payments for FY 04/05 are anticipated from Toll ($750,000), Asadarian ($80,000) and Pardee ($300,000). The Toll payment is budgeted in the Endowment Fund, however, the Asadarian and Pardee payments have not been included and are subject to future Council direction. • potential trickle -down effect from the County as a result of the State budget hit. Already included are additional sheriff costs resulting from closing of the East Valley Holding Facility, elimination of CSU and rate increases almost 5 times higher than CPI, future animal control and senior services program costs. Continued uncertainty with the State Budget through at least the November 2004 elections makes the City's budget decisions somewhat difficult and will probably require a mid -year evaluation of the adopted budget. My thanks to the Department Managers and their support staff and finance staff for their outstanding work, interdepartmental cooperation and commitment in preparing this 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 2004/05 and set a budget workshop for May 26, 2004.