9 Resolution of the City Council of the City of Livingston Approving the Recommended 2015-16 City of Livingston Mid-Year Budget Revisions.

Note from TheGardeningSnail: This page may have been produced by running a PDF Image File through a program that converts Image to Text. My apologies for any Textual Gremlins that may have crept in. I may also have broken up longer paragraphs.

Meeting Date February 16, 2016

STAFF REPORT

AGENDA ITEM: Resolution of the City Council of the City of Livingston Approving the Recommended 2015-16 City of Livingston Mid-Year Budget Revisions.

MEETING DATE: February 16, 2016

PREPARED BY: Odi Ortiz, Interim City Manager/Finance Director & Staff

REVIEWED BY: Odi Ortiz, Interim City Manager/Finance Director

clip_image001

RECOMMENDATION:

Adopt Resolution No. , approving the City of Livingston recommended 2015-16 Mid-Year Budget Revisions.

BACKGROUND:

The City of Livingston continues to recover from the recent recession. Livingston has improved its overall financial conditions in last two years. Great efforts have been dedicated at eliminating the deficit spending trend that existed for almost a decade in certain operational areas. The economic downturn after 2008 created material fiscal impacts for Livingston and many governmental entities in the United States. Those fiscal impacts included, but not limited to, the following: depletion of fund and cash balances to un-reasonable levels, impacts to staffing levels and overall City’s service levels.

The local economy is slowly recovering as we continue to see increases in property and sales tax revenues. The City was successful in attracting a few commercial projects in 2015, Rancho San Miguel, CVS pharmacy and AutoZone, which are now contributing towards the efforts devoted in economic development. These developments have created a few jobs, addition shopping options for residents, and are contributing property and sales tax revenues towards City’s general fund operations.

City management, key staff and the City Council have also focused on controlling cost, improving efficiencies and maintaining good customer service levels to our community. Our bargaining groups have supported the initiatives of balancing the City’s operating budget and have directly contributed towards cost reduction measures implemented in recent years which have and overall positive impact on City’s financial condition.

The City of Livingston accomplished a general fund surplus of over $500,000 in 2013-14 and a net surplus of nearly $900,000 last fiscal year 2014-15. The revised 2015-16 general fund projections reflect a surplus in the neighborhood of $429,000 if all assumptions are met and final operating results are within budget.

Adoption of higher utility rates (water and sewer) in 2014 has improved the financial conditions in those operational areas. The City accomplished an operating surplus of over a $1 million in its water enterprise fund last fiscal year 2014-15. This has been the first net operating surplus in several years. This material surplus has improved related fund and cash balances. Revised water fund budget projections reflect a surplus of $345,000 for current fiscal year.

The State’s water conservation mandate has had a fiscal impact on the City’s water service revenues. The year-to-date impact between July 2014 through January 2015 has been manageable.

Original revenue projections adopted reflect expected fiscal impact and certain expenditures were modified to offset possible decrease in annual revenues. The State’s water conservation mandate has been extended through October 2016, therefore further analysis will be performed in the next fiscal year’s budget cycle.

A $232,000 net operating surplus was accomplished for the first time in several years in the City’s Domestic Wastewater fund in 2014-15. This surplus has improved the fund and cash balances. The revised 2015-16 Domestic Wastewater budget projections reflect a $140,000 net operating surplus.

As it relates to our third enterprise fund, the Sanitation Fund has been improving since adoption of new service rates in 2013. The City accomplished a minor positive surplus of $4,500 in 2012-13, followed by a $300,000 surplus in 2013-14, a $301,000 surplus in 2014-15 and revised 2015-16 budget projections reflect a $253,000 operating surplus.

2015-16 MID-YEAR BUDGET REVISIONS/AMENDMENTS:

Due to transition in key management positions, limited resources and other priorities, a high level analysis was performed. Based on readily available information the recommended revisions are considered to have a reasonable material impact to the annual operating budget.

SECTION 1:

General Fund Revenue Revisions:

Latest revised projections and annual report received in January from HDL Companies on property tax and sales tax revenues are positive. These revised projections show an increase in property tax values of just over 7.9%. The City expects an increase of property tax revenues in the amount of $55,000 with an additional increase of $45,000 from property tax in-lieu of vehicle license fees. The increases are associated with Prop 8 parcel re­ assessments. Over 140 parcels are being modified in the 2015-16 tax rolls and direct contributions from new developments like Rancho San Miguel, CVS, AutoZone and improvements/additions by Foster Farms.

The Triple-Flip methodology in Cities obtaining property tax in-lieu of sales tax ends this fiscal year 2015-16. Cities are expected to collect triple-flip funding through its third quarter and true-up payments in the fourth quarter and possibly through August 2015 in the form of sales tax. Per revised HDL projections, the net adjustment to these two types of revenues is an increase of $92,000(adjust sales tax by $198K increase and a decrease of $106K to property tax in-lieu of sales tax-triple flip).

Construction fees including encroachment fees need to be modified to reflect modest development activity. A $62,000 increase in those areas is recommended based on year-to-date activity and expected activity through June 2015.

Other miscellaneous revenue areas reflect an increase of approximately $87,000. These areas include $50,000 revision to State Mandate Cost Reimbursements. The State froze this funding program for several years and is now approving and releasing reimbursement towards old claims. In last two years the City has received reimbursements from claims submitted between 2000-2010. These are one-time revenues.

The City paid 50% or $350,000 of the $700,000 City/ RDA loan repayment requested by the State in September 2015. The City receives approximately 18% back into its general fund via the re-distribution process at the County level. A $35,000 increase to RDA Residual tax revenue is recommended.

Recommended revised general fund revenues are projected at $5.5 million with a $341,000 increase to adopted budget (please see Exhibit A Section 1 for details).

General Fund Expenditure Revisions:

The recommended general fund expenditure revisions in the amount of $233,00 (increase) are summarized as follows:

Personnel cost increase associated with recent union negotiations $64,000. A $25,000 net increase to contract/consulting services from all general fund departments (includes Housing Element project).

Additional funds for critical equipment replacements $89,000. Items needing immediate attention are: obsolete and non­ compliance power generator servicing fire department, city hall and council chamber, city-wide network server, new police security camera, storm preparedness and other equipment for public works, computer equipment, and funds for an electronic bulletin board.

Staff is currently searching for grant opportunities to possibly fund some of these needs. Requesting additional $20,000 for a new SUV patrol vehicle for PD. A grant opportunity is being considered through USDA for this item. A net increase of $35,500 for operational O & M cost for all departments.

The costs are associated with efforts in preventative maintenance, storm preparedness, general maintenance, adjustment to community event cost. Management will focus on cost efficiencies associated with community events. Partnerships with non-profit organizations, county/state agencies including the Sheriff s department will create good opportunities in controlling related expenditures(City’s contributions).

Total anticipated general fund expenditure revisions for 2015-16 are $233,000. Assumptions include, no extraordinary activities will transpired by end of fiscal year. There’s a good probability of cost savings from current vacant positions.

Recommended revised general fund expenditures are projected at $5.09 million with an increase of $233,000 from adopted projections (please see Exhibit A Section 1for details).

Revised General Fund net operating results for 2015-16 are estimated at a surplus of $429,000 with a Fund Balance of $2million at year-end.

SECTION 2:

Special Revenue Funds:

Revenue Revisions: Based on modest development activity and lack of development agreements on Motel 6, Gallo and other possible developers, outlining impact fee commitments, the following adjustments are recommended; decrease in developer impact fees of $90K, an increase of $87,500 is recommended on reimbursements/refunds for an insurance reimbursement to replace the vandalized playground structure at Don Meyer park and for a vehicle/equipment purchase by PD. The anticipated replacement cost of playground structure is near $95,000 (see adjustment#51) less a $25K deductible.

Expenditure Revisions: Additional funds are requested for the following areas; vehicle purchase (new SUV patrol vehicle for PD) $31,000, equipment purchases $30,000 to replace heater unit & replacement of PD server at police building. A $65,000 cost allocation is expected to the Benefit Assessment District(BADs) to complete the Scada system upgrades project at the Wastewater treatment plant and five lift stations.

SECTION 3:

Enterprise Funds ( Water, Sewer, and Sanitation):

Water Operations Fund:

No anticipated revisions to revenue projections. Adopted original revenue projections reflect reasonable fiscal impacts that could be associated with the State’s water conservation mandate. Per high level review through January 2016, the current revenue progress is within expectations. The third water rate increase took effect January 1, 2016. The State extended the water conservation mandate through October 2016 in early February. Net expenditures revisions totaling a decrease in operating cost of $73,000 are recommended. This includes adjustments to salaries, contract cost, equipment purchases, miscellaneous expenditures and an expected decrease in water wells O & M in the amount $150,000. The media replacement for well# l6 is not expected to be addressed this fiscal year.

Anticipated operating net results for 2015-16 is a $345,000 surplus. Domestic Wastewater Fund:

There are no anticipated revisions to service fees. A $160,000 adjustment(increase) to Reimbursements/Refunds

is recommended to account for a State reimbursement of $120K on the CalPop sewer energy efficient project completed last year. Foster Farms will also reimburse the City $40K towards the construction of a discharge station. Total revised revenue projections are $2,184,000.

Operating expenditures are being amended as follows; $180,000 transfer out to Sewer capital fund to fund the Scada system upgrade project, $40,000 to construct the discharge station for Foster Farms use, $23,000 to account for the developer reimbursement towards prior years’ infrastructure improvements, a decrease of

$29,000 in retirement cost and contract cost, and $10,000 in other miscellaneous expenditures.

Anticipated operating net results for 2015-16 is a $139,000 surplus.

Domestic Wastewater Capital Fund:

Transfer-in Revenues from Operating Fund will be increased by $180,000 to fund the Scada System upgrade project. Same funds are being assigned under the expenditures. The Scada System upgrade project is highly recommended to be addressed to improve system reliability, efficiencies and to better monitor operations.

Anticipated net results for 2015-16 are $0 (break-even) and no impact to fund balance/reserves. Sanitation Enterprise Fund:

The original projections of $1.29 million in User Fee Revenues will be adjusted by $14,000 to $1.30 million

primarily due to increase in services. Operating expenditures are expected to increase by $3,000 to account for possible uncollectible activity from prior years.

Anticipated net results for 2015-16 is a $253,000 operating surplus. DISCUSSION:

Approve the FY15-16 recommended mid-year budget revisions and/or provide direction to management.

FISCAL IMPACT:

The fiscal impact of the mid-year revisions is contained in the budget reports attached Exhibits A & B. Management will continue to review & discuss the pay-out of the remaining $350,000 City to RDA loan amounts due to the Successor Agency per State’s demand.

ATTACHMENTS:

1. Resolution of the City Council of the City of Livingston Approving the City of Livingston Mid-Year Budget Revisions for Fiscal Year 2015/2016.

2. Recommended Budget Revisions Report Exhibits A & B

3. General Fund Revenue and Expenditure Line Chart Trend 2008-2016 (Exhibit C)

4. General Fund Revenues Line Chart Trend by Category 2008-2016 (Exhibit D)

1. Resolution of the City Council of the City of Livingston Approving the City of Livingston Mid-Year Budget Revisions for Fiscal Year 2015/2016.

RESOLUTION NO. 2016-

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LIVINGSTON APPROVING THE RECOMMENDED MID-YEAR BUDGET REVISIONS FOR FISCAL YEAR 2015-2016

WHEREAS, the City Council of the City of Livingston adopted the Fiscal Year 2015-2016 on July 21, 2015; and

WHEREAS, the Finance Department, in cooperation with current department heads and key City staff, have performed a high level mid-year budget review on revenues and expenditures; and

WHEREAS, relevant variables and assumptions that could materially affect city’s operating budget have been revisited; and

WHEREAS, City Management and the City Council understands the importance of performing a mid­ year budget review; and

WHEREAS, it is the intention of the City Council to approve recommended mid-year budget revisions for the Fiscal Year 2015/2016 as presented on Exhibits A and B.

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LIVINGSTON AS FOLLOWS:

1. The City Council hereby approves the recommended mid-year budget adjustments for the Fiscal Year 2015/2016 (July 1, 2015 -June 30, 2016), as reflected on Exhibits A and B and summarized in the Staff Report.

Passed and adopted this 16th day of February, 2016, by the following vote: AYES:

NOES:

ABSENT:

ABSTAIN:

clip_image001[4]

Rodrigo Espinoza, Mayor of the City of Livingston

ATTEST:

I, hereby certify that the foregoing resolution was regularly introduced, passed and adopted at a regular meeting of the City Council of the City of Livingston this 16th day of February, 2016.

clip_image002

Betty Cota, Deputy City Clerk of the City of Livingston

2. Recommended Budget Revisions Report Exhibits A & B

image

image

image

image

image

image

3. General Fund Revenue and Expenditure Line Chart Trend 2008-2016 (Exhibit C)

image

4. General Fund Revenues Line Chart Trend by Category 2008-2016 (Exhibit D)

image

Advertisements