10 Resolution of the City Council of the City of Livingston Approving the City of Livingston Budget for Fiscal Year 2016-2017.

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Meeting Date: October 18, 2016

STAFF REPORT

AGENDA ITEM: Resolution of the City Council of the City of Livingston Approving the City of Livingston Budget for Fiscal Year 2016-2017.

MEETING DATE: October 18, 2016

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

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

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RECOMMENDATION:

Adopt Resolution No. 2016-_, approving the City of Livingston Budget for Fiscal Year 2016-2017.

BACKGROUND:

Finance is currently working on year-end closing procedures for 2015-16 and an annual operating surplus in the general fund is expected of over $550,000. This will bring general fund reserves/fund balance to over $2 million or 38% of annual operating expenditures. Proposed 2016-17 budget reflects an operating surplus of approximately $64,000.

Fiscal year 2010-11 appears to have been the bottom line fiscal year where the City achieved the lowest annual revenues in its general fund since the economy collapsed. Revenues have recovered in last two fiscal years.

General fund revenues are programmed to be just over $5.7 million in 2016-17 with over $1 million increase since 2014. Proposed budget does reflect one time construction/building fee revenues for Motel 6, Panda Express and about 40 new housing units along with other minor development activity.

The City adopted new utility rates for water and sewer services in mid July 2014 and sanitation rates in 2013. These recent rates adopted have increased the level of revenues by nearly 90% in the water fund compared to rates in place in 2013-14. A 38% increase in sewer revenue has been realized since original rate increase in 2014.

Utility rates for water and sewer are scheduled to increase every January through year 2018. Sanitation annual revenues have increased by 33% as a result of rate increases in 2013. Adopted utility rates are expected to cover annual operating expenditures, fund certain water capital improvement projects to improve water supply and water quality in the next two remaining years.

Some uncertainties are present due to drought condition and State’s continued mandate on water conservation. Despite the drought challenges, good levels of operating revenues are expected in all three enterprise funds in 2016-17; a $328K surplus in water, a modest $47K surplus in sewer and $168K in sanitation fund.

Increases in annual revenues have created good opportunities to address a few staff positions.

One police officer position previously on hold for over a year has been backfilled, a mechanic previously on hold for over a year has been filled, an office assistant position in finance in 2015, part-time dispatcher position was added and one full-time office assistant position in police is budgeted for 2016-17.

A new position continues to be considered to assist in water/sewer operations.

All prior years accumulated deficits in the enterprise funds have been eliminated. Reasonable levels of reserves/fund /cash balances are projected by end of fiscal year 2016-17 including the general fund.

The economy is recovering at modest levels here in Livingston. Recent housing market activity shows increases in property values. Merced County will continue to modify property values on those Prop 8 parcels that were impacted when the housing economy collapsed.

DISCUSSION:

The proposed fiscal year budget reflects an overall 6.4% increase in general fund revenues compared to revised budget in 2015-16. The proposed budget has been covered in parts at two (2) public City Council budget workshops.

The budget document includes all critical components of the proposed budget; executive summary statement, employee census by department, and operating budgets for all City funds/departments. Management will require a few more weeks to finalize the budget packet for distribution.

Staff recommends adoption of the FY16-17 Proposed Budget.

FISCAL IMPACT:

The fiscal impact of the budget is contained in the budget document. See executive summary section and budget revenue & expenditure summary by Fund.

ATTACHMENTS:

1. Resolution of the City Council of the City of Livingston Approving the City of Livingston Budget for Fiscal Year 2016/2017.

2. Proposed Annual Budget for Fiscal Year 2016/2017.

RESOLUTION NO. 2016-

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LIVINGSTON APPROVING THE CITY OF LIVINGSTON BUDGET FOR

FISCAL YEAR 2016-2017

WHEREAS, City Management of the City of Livingston has submitted to City Council a Proposed Budget for the Fiscal Year July 1, 2016 through June 30, 2017 ("Proposed Budget"); and

WHEREAS, the economic challenges related to recession during fiscal years 2008 through 2013 have resulted in many agencies having to make difficult decisions in order to balance revenues and expenditures; and

WHEREAS, the City has faced continuous operating deficits for nearly a decade in its general fund; and

WHEREAS, the City’s fund balance (reserves) and cash balances have been depleted below reasonable and recommended levels; and

WHEREAS, the economic activity for recent years and financial decision making reflect modest levels of financial recovery in Livingston; and

WHEREAS, the Proposed Budget reflects modest operating surpluses on City’s primary funds; and

WHEREAS, the Proposed Budget reflects an anticipated general fund operating surplus of $64,000, water operating fund surplus of $328,000, sewer operating fund surplus of $47,000 and sanitation operating fund surplus of $168,000; and

WHEREAS, after examination, deliberation and due consideration, the City Council of the City of Livingston has approved the same with modifications; and

WHEREAS, it is the intention of the City Council to adopt said budget as modified and amended by the City Council of the City of Livingston as the Final Budget for the Fiscal Year 2016/2017.

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

1. The City Council hereby adopts the Budget for the Fiscal Year 2016/2017 (July 1, 2016 – June 30, 2017), on file in the office of the City Clerk, entitled "CITY OF LIVINGSTON

-BUDGET FISCAL YEAR 2016/2017," which is hereby referred to and incorporated herein by reference as though fully set forth herein verbatim, as modified and amended by the City Council of the City of Livingston at the Council meeting on October 18, 2016.

2. From and after the operative date of this resolution the several amounts stated in the Final Annual Budget hereinafter referred to as adopted expenditures shall become and thereafter be appropriated to the offices, departments, accounts, objects and purposes stated therein for fiscal year to which said budget is to apply and said monies are hereby authorized to be expended for the purposes and objects specified in said budget.

3. All resolutions and parts of resolutions in conflict herewith, including, but not necessarily limited to, such resolutions or parts of resolutions relating to compensation, allowances or benefits as may be in conflict herewith are hereby expressly repealed.

4. This resolution shall be effective immediately upon adoption, but shall be operative as of July 1, 2016.

Passed and adopted this 18th day of October, 2016, by the following vote: AYES:

NOES:

ABSENT:

ABSTAIN:

Gurpal Samra, Mayor Pro-Tern 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 18th day of October, 2016.

Antonio Silva, City Clerk of the City of Livingston