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HomeMy WebLinkAboutAGENDA REPORT 2023 0524 CCSA SPC ITEM 05ACITY OF MOORPARK, 
CALIFORNIA City Council Meeting of May 24, 2023 ACTION Consensus of the Council to receive the City Manager’s Budget Proposed Operating and Capital Improvements Budget presentation for Fiscal Year 2023/24, and to schedule for Fiscal Year 2023/24 Budget for adoption at the June 7, 2023, regular meeting. BY A. Hurtado. A.Receive and Discuss City Manager’s Proposed Operating and Capital Improvements Budget for Fiscal Year 2023/24. Staff Recommendation: Discuss the proposed budget for Fiscal Year 2023/24. (Staff: Troy Brown) Item: 5.A. MOORPARK CITY COUNCIL AGENDA REPORT TO: Honorable City Council FROM: Troy Brown, City Manager DATE: 05/24/2023 Special Meeting SUBJECT: Receive and Discuss City Manager’s Proposed Operating and Capital Improvements Budget for Fiscal Year 2023/24 SUMMARY CITY MANAGER BUDGET MESSAGE I am pleased to present the proposed City of Moorpark Fiscal Year (FY) 2023 /24 Annual Operating and Capital Improvements Project Budget. As the City reaches 40 years of cityhood this year, we find ourselves at a turning point in our history. With many long- anticipated City Capital Improvement projects now underway and several others nearing completion of the design phase, we will be facing lower fund balances across many funds requiring us to think strategically about where we place our limited resources. As a result of our efforts to invest in our infrastructure, Moorpark is viewed very positively through the eyes of private investors. Hundreds of millions of dollars in private investment are currently underway funding projects that will provide opportunities for advancement of residents. Investment in the City to support housing is evidenced by Hitch Ranch, High Street Depot, Vendra Gardens, and other projects that will bring a variety of housing opportunities for current and future residents while simultaneously enhancing the City’s infrastructure by adding miles of roads, sidewalks, trails, and landscaping. It is important for the City to stay ahead of the service demands that are certain to increase as a result of the commercial and residential development occurring. We will need to pave roads and provide police and recreation services, while simultaneously meeting the day-to-day needs of residents and businesses. All of this will occur in an uncertain economic environment which is contracting and fending off a potential recession. In order for the City to continue meeting the needs of residents and bu sinesses, we must invest in people. The proposed FY 2023/24 Operating Budget is the manifestation of this and represents a strategic investment in our people in a manner that allows us to meet tomorrow’s needs. Item: 5.A. Honorable City Council 05/24/2023 Special Meeting Page 2 BUDGET OVERVIEW The proposed FY 2023/24 Operating Budget and Capital Improvement Budget appropriates $67.1 million in expenditures across all funds. This total expense is approximately $19 million more than was budgeted in FY 2022/23 with the largest expenses impacting Special Revenue Funds for Capital Improvement Projects. Overall, we should expect the citywide fund balance to decrease substantially as the Princeton Avenue Improvement Project and City Hall relocation project near completion. Moving forward, the City will have fewer resources for capital improvement projects. As such, the ability to initiate new capital projects will be very limited. Rather, the future focus of the City will be to replenish its fund balances through new development which is the primary source of revenue for many capital projects. The table below depicts City surplus amounts of General Fund and non-General Fund sources through FY 2022/23. Shifting to the General Fund, the proposed budget anticipates approximately $22 million in expenses and is balanced. When compared to FY 2022/23, this represents a modest 2% increase in total expenditures. While the modest increase is responsible budgeting given the current economic environment, it is important to remember that as a contract city which relies on private industry to provide many services, our operating expenses are increasing at unprecedented rates due to cost escalations resulting from the extraordinary high inflationary drivers which are reflected in the Consumer Price Index, shown in the chart below. Honorable City Council 05/24/2023 Special Meeting Page 3 Chart 1. Over-the-year percentage change in CPI-U, Los Angeles-Long Beach-Anaheim, CA April 2020 – April 2023 In analyzing the FY 2022/23 budget, revenues from property taxes represent 40% of total General Fund sources and are budgeted at $9.2 million including $4.4 million in Vehicle License Fee backfill. Property taxes have been a steady source of revenue for the City since recovering from the subprime mortgage crisis of 2009. This is the result of property values in the City remaining strong, coupled with the recapturing of revenues lost through Proposition 8 reductions following the housing crisis. Although property taxes are maintaining their viability, the City has not issued many new residential building permits over the past several years; therefore, little expansion to the property tax base is occurring. The growth we see in property taxes is largely attributable to the strength of valuations and the Proposition 13 induced cap on growth of no more than 2%. 162 173 88 88 36 0 7 4 3 14 0 100 200 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Residential Building Permits By Calendar Year Residential Permits Honorable City Council 05/24/2023 Special Meeting Page 4 In the proposed FY 2023/24 budget, sales taxes are budgeted at $5.3 million, which is equivalent to FY 2022/23 projections. Sales taxes are more sensitive to economic conditions and fluctuate greatly on a year over year basis. Moorpark’s sales tax portfolio does not rely on large sectors such as auto and retail malls to generate significant resources for the City. Having significant business in these sectors can provide extensive resources; however, having a heavily weighted sales tax portfolio in one sector can also result in major expenditure reductions when that sector does not perform as expected due to changing consumer habits. Rather, the City’s sales tax portfolio is balanced with General Consumer Goods making up the largest portion of sales taxes, followed by funds received from County and State Pools, restaurants, and hotels. Source: HdL, City of Moorpark 2022 Fourth Quarter Sales Tax Newsletter Revenues from sales taxes, when taken together with property taxes represent a combined total of 64% of General Fund revenues. These revenues are monitored closely, and efforts must be expended to expand on the se sectors. This can be accomplished by doubling down on our business attraction, retention, and expansion efforts, as well as ensuring a robust stock of new housing starts to come online. The proposed budget contains resources in both areas to ensure aggressive steps are being taken on both of the aforementioned revenue fronts. The chart on the following page depicts major revenue sources for the proposed FY 2023/24 Operating and Capital Improvements Budget. Honorable City Council 05/24/2023 Special Meeting Page 5 Property Taxes $ 9,935,000.00 43.83% Sales & TOT Taxes $ 5,746,000.00 25.35% Charges for Services, Fines, Fees $ 2,473,073.00 10.91% Intergovernmental $ 2,152,232.00 9.50% Franchise Fees $ 1,325,600.00 5.85% Grants & Donations $ 591,976.00 2.61% Miscellaneous $ 440,850.00 1.95% Grand Total $ 22,664,731.00 100.0% Budget Drivers/Inputs The purpose of expanding efforts in these areas is driven by factors that include resident input, but more importantly the need to ensure sustainability of infrastructure and services throughout the community. To garner resident input, the City completed its second National Community Survey which was sent to 2,800 Moorpark randomly selected households in November 2022. A total of 465 completed surveys were obtained, providing an overall response rate of 17%. One of the key findings indicates that Moorpark’s economy is on the rise. Many results related to the economy showed significant growth since 2020, with 61% of residents rating the overall economic health of the City as excellent or good which represents a 15% increase since 2020. Close to 3 in 10 residents positively rated the vibrancy of downtown/commercial areas, a 12 -point increase since the 2020 survey results. When asked what impact, if any, the economy would likely have on their family income in the next six months, only 20% of residents expected the impact to be somewhat or very positive, on par with the national benchmark. The survey also indicates most residents feel a strong sense of safety in Moorpark. High ratings of importance (92% essential or very important) and quality (93% excellent or good) were given for the overall feeling of safety in Moorpark, suggesting that safety remains a priority and a strength for the community. Close to 9 in 10 felt safe in the City’s 43.83% 25.35% 10.91% 9.50% 5.85% 2.61%1.95% General Fund Revenue, FY2023-24 Property Taxes Sales & TOT Taxes Charges for Services, Fines, Fees Intergovernmental Franshise Fees Grants & Donations Miscellaneous Honorable City Council 05/24/2023 Special Meeting Page 6 downtown/commercial area and from violent crime. The responses signify that residents care deeply about safety in the City. This value is reflected in our continued investment in Public Safety which has made Moorpark among the safest cities in California since 2018. Despite this value, costs for police services continue to rise . The City contracts Police Services with the Ventura County Sheriff’s Office. Beyond the everyday work the department does in community policing, they also focus on commercial truck enforcement on Los Angeles Avenue (SR-118), traffic enforcement, and partner with residents and business on a variety of crime prevention activities. The cost of this crucial service has been steadily rising over the years, and for the first time since incorporation in 1983, expenses for Police Services are expected to surpass $8 million accounting for 37% of all General Fund expenses in the proposed FY 2023/24 operating budget. The results of the 2022 National Community Survey also indicate resident concerns around the economy and economic development within the City. Twenty-nine percent (29%) of respondents rated vibrancy of the downtown commercial area as excellent or good and only thirty-eight percent (38%) of respondents rated the City’s economic development efforts as excellent or good. Economic development plays a major part in creating a sustainable local economy that offers a balance of employment and shopping opportunities. The City Council has put much emphasis on economic development over the past decade and most recently allocated resources to hire a dedicated staff member to focus solely on business attraction and retention. Efforts in economic development often take years to come to fruition; however, the City has made significant progress over the past two years as the region has emerged from the pandemic. As we look forward to the future, it is important that we continue our focus here as we expect new service demands and retail trends to emerge from the community. This will require the City to seek ways to build resiliency into our local economy. Honorable City Council 05/24/2023 Special Meeting Page 7 The FY 2023/24 Budget – Investment in People Given the current landscape our community faces, the proposed FY 2023/24 budget includes investments in our most valuable asset for service delivery, our people. As a municipal service-oriented corporation, the City does not produce a product, rather it provides services. The service demands of the organization are met by our employees, represented through salaries and personnel expenses. Salaries and benefits in th e proposed FY 2023/24 Operating Budget total $5.7 million. Personnel expenses typically increase through salaries and other non-controllable factors such as medical, vision, and retirement benefits offered through the California Public Employee Retirement System (CalPERS). Therefore, resources dedicated here must be allocated in a way that anticipates service demand increases while simultaneously being fiscally responsible and strategic about where to place our valuable dollars. The following chart depicts proposed General Fund expenses by department including the contract for Public Safety service. Department Recommended GF Budget % Public Safety $ 8,632,224.00 39.22% Parks, Recreation & Community Services $ 6,294,091.52 28.59% Finance/Administrative Services $ 2,274,963.70 10.34% Public Works $ 1,732,882.00 7.87% City Manager $ 1,675,032.00 7.61% Community Development $ 1,100,786.00 5.00% City Council $ 201,603.00 0.92% City Attorney $ 100,000.00 0.45% Grand Total $ 2,011,582.22 100.0% 39.22% 28.59%10.34% 7.87% 7.61% 5.00% 0.92%0.45% General fund Spending by Department FY2023-24 Public Safety Park & Recreation Services Finance/Admin Srvs Public Works City Manager Community Development City Council City Attorney Honorable City Council 05/24/2023 Special Meeting Page 8 The proposed budget does not include funding for Cost-of-Living Adjustments (COLA) for salaries for employees. The City negotiates a Memorandum of Understanding with one union representing competitive employees, Service Employees International Union (SEIU) Local 721. Negotiations are underway and the amount of funding needed to meet the terms of agreement between the City and SEIU are unknown at this time. The proposed FY 2023/24 Operating Budget anticipates an ending fund balance of $653,149 to address COLAs negotiated with the SEIU; this was intentional. To achieve this flexibility, staff thoughtfully analyzed each department budget to create savings for COLAs. Special attention was given to budgeting for employee classifications which were significantly reduced by not fully funding vacation payouts for each empl oyee, reducing funding levels for benefits to actuals rather than fully budgeting each position at a certain salary “step” or level, and by reducing departmental services and supplies where possible. With extraordinarily high Consumer Price Indexes prevalent in the economy and the need to attract and retain talent in the workforce, we can anticipate COLAs being higher than traditionally agreed upon in the City. As reflected in the 2022 National Community Survey and codified by the City Council as a stated goal for many years, Economic Development must continue to be an area of focus for the City. The proposed FY 2023/24 budget allocates funding to reclassify the Economic Development Management Analyst position to an Economic Development Manager classification. The current Management Analyst position primarily involves data analysis and making recommendations. Conversely, an Economic Development Manager role requires strong leadership skills, strategic planning, and the ability to develop and implement policies that facilitate economic growth. A Manager position better aligns with the Council's goals and strategic direction for the City’s future Economic Development Strategic Plan. The total cost of this reclassification for FY 2023/24 is approximately $4,500.00. The proposed FY 2023/24 budget also reflects the previously re-constituted Administrative Services Department formed in FY 2022/23 as the Finance/Administrative Services Department. The Finance Department had been under an enormous amount of change over the past five years with three different Directors serving as Finance Director. Each Director made staff augmentations to improve service yet, in sum, this resulted in a flat organization with no clear pathways for succession. Additionally, staff in the Finance Department experienced moderate turnover, providing opportunities to reclassify staff on an ad hoc basis. Solid Waste and Emergency Services, previously housed in the Finance Department, no longer meets the needs of the organization in that location. Rather, these divisions have been moved to the Parks, Recreation and Community Services Department where there are synergies between their purposes. There are no costs associated with moving Solid Waste and Emergency Services to Parks, Recreation and Community Services. Honorable City Council 05/24/2023 Special Meeting Page 9 The Ventura County Sheriff’s Office/Moorpark Police Department has included an additional 20 hours for a second Police Cadet. The Cadet program decreased a bit during the pandemic as applicant pools suffered. The Department has identified a need to have a second cadet involved in Parking Enforcement after hours and weekends, when enforcement is most needed. Adding this second cadet restores the program back to pre-pandemic levels and frees up the other cadet to assist with traffic collision incidents and administrative work. The cost of the additional 20 hours for the second cade t is $51,686.00 annually. Over the last 15 years, the Parks, Recreation and Community Services (PRCS) Department has experienced significant growth across several divisional areas without adding staff to manage the increase in workload. Addition ally, the primary role of PRCS has changed over the years. The department is now responsible for the management of major Capital Projects. Some of these projects include the design and construction of the new City Library, the acquisition of the property at 323 Science Drive and construction of the tenant improvements for the future City Hall building, as well as a variety of other noteworthy projects, such as the Inclusive Playground at Tierra Rejada Park, the update to the Parks and Recreation Master Plan, and the Arroyo Simi Trail Master Plan . The Department also manages several new divisional areas, such as Contractual Risk, Emergency Management, and Solid Waste and Recycling, in addition to Sustainability, Arts in Public Places, and management of the Active Adult Center and City Library. PRCS staff also manage three legislative bodies (Parks and Recreation Commission, Art Commission, and Library Board) as well as the Joint Powers Authority (JPA), Moorpark Watershed, Parks, Recreation and Conservation Authority, which is responsible for management of open space owned by the JPA outside of City limits. In order to manage the expansion of responsibilities across the Department, the budget includes funding for additional staffing, and to assign a higher level of responsibility to several current positions. A significant consequence related to the expansion of responsibilities is the increase in administrative workload. Over the last 10 years, the number of agreements and contract documents managed by the Department has increased by approximately 460%. To help manage this administrative challenge, the Administrative Assistant II position in the Finance Department was assigned to the Parks, Recreation and Community Services Department in FY 2022/23. Along with this new assignment, staff has included funding in the budget to reclassify the current position of Administrative Assistant II to an Administrative Specialist. The Administrative Specialist position will assist the department with a higher level of responsibility and oversight of all administrative functions, particularly related to procurement and contract management. Additionally, the budget includes funding to reclassify the Community Services Manager to Deputy Parks and Recreation Director. As mentioned previously, the Department is currently responsible for major Capital projects, which are individually complex and require a high degree of knowledge and technical proficiency. As the Department has grown, this position has already assumed the responsibility for several divisional areas, such as oversight of Library operations, Facilities, Community Events, Property Management, the disposition of all former Redevelopment Agency and surplus City properties, as well as Honorable City Council 05/24/2023 Special Meeting Page 10 Public Art and the Active Adult Center. The promotion will reflect the level of assigned divisional areas and allow for a higher level of oversight and management of assigned projects and program areas. Additionally, since approximately 2008, the acreage of Landscape Maintenance Districts (LMDs) has increased by 91%, the number of City-owned facilities has increased by 63%, and the City’s parks have increased by 17% with the construction of the Poindexter Park expansion project, Walnut Acres Park, and Mammoth Highlands Park. The department now manages over 275 acres of open space property, 13,000 street trees and approximately 30 additional properties acquired for affordable housing and street improvement projects. Currently, the LMDs, Parks, Open Space and street trees are managed by a Parks and Facilities Supervisor. However, this position has experienced high turnover in the last 10 years, as the workload has increased beyond the capacity of one individual. In order to manage these divisional areas, funding has been included in the budget for a new position, Landscape Maintenance Inspector. This position will be assigned to and funded through the LMDs and will report to the Parks and Facilities Supervisor, alleviating the daily inspection workload and contractor management responsibilities of the Supervisor. This will allow the Supervisor more time to responsibly manage the administrative aspects of their assigned divisional areas. The Recreation Division has also experienced significant growth over the last 10 years. The number of recreation classes, programs and community events offered by the Division has increased by 69% and participation has increased by 55%, representing over 42,000 individuals from Moorpark and surrounding communities that participated in recreation programs in 2022. However, the Recreation Division has not increased staffing levels for over 15 years and the current workload has exceeded current capacity. In order to manage the increased workload, the budget includes funding for one new position, Recreation Coordinator I. The addition of this position will allow for a redistribution of program areas throughout the Division, creating a more manageable and sustainable workload. This position will be funded through the General Fund. However, it should be noted that due to increases in participation, revenue from recreation programming and rentals has increased by 52% over the last 10 years and in 2022, the Recreation Division covered 100% of all costs incurred by the Division. CONCLUSION Budget development for municipal services is an exciting endeavor. Having the opportunity to meet the needs of the community while simultaneously implementing the will of the Council is a responsibility the organization and staff embrace. It is also very hard work undertaken by every department, but specifically staff in the Finance/Administrative Services Department who are tasked with compiling and organizing the budget. To that end, I want to recognize Daniel Kim, City Engineer/ Public Works Director; Yolanda Cunning, Finance/Administrative Services Director; Hiromi Dever, Budget and Finance Manager; Charan Bhamber, Accountant II; Daisy Amezcua, Senior Account Technician II; Donna Phipps, Account Technician II; and Teresa Ruiz, Account Technician II, for their hard work and dedication in preparing the proposed FY 2023/24 Operating and Capital Improvements Budget. Honorable City Council 05/24/2023 Special Meeting Page 11 Refer to the City Manager’s Draft Recommended Budget binder previously distributed to the City Council on May 12, 2023. The proposed budget is posted to the City’s website at: www.moorparkca.gov/RecommendedBudget2023-24 STAFF RECOMMENDATION Discuss the proposed budget for Fiscal Year 2023/24.