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Home My WebLink About1998-10-20 City CouncilCity of Palo Alto City Manager’s Report .TO:HONORABLE CITY COUNCIL ATTENTION: FROM: FINANCE COMMITTEE CITY MANAGER DEPARTMENT:ADMINISTRATIVE SERVICES DATE: SUBJECT: OCTOBER 20, 1998 CMR: 399:98 PROPOSED GUIDELINES FOR PREPARATION OF THE 1999-2001 OPERATING AND CAPITAL BUDGET RECOMMENDATION Staffrecommends that the Finance Committee review the recommended 1999-2001 budget guidelines and forward them with any changes to the City Council for approval. DISCUSSION The proposed 1999-2001 Budget will be prepared in accordance with the guidelines listed below. Staff recommends that the City return to the tradition of a two-year budget. Staff is prepared to integrate the programmatic and capital elements of the new Comprehensive Plan into the Budget. In addition, staff plans to include the first two years of capital projects contained in the Council-approved Int~astructure Management Plan. These two documents will serve as road maps, guiding the physical development of the City of Palo Alto for the next 10 to 12 years. The 1999-2001 Budget will also reflect the changes recommended by the City’s consultant regarding the methodology for Utility Fund transfers to the City’s General Fund. Staffhas prepared a preliminary 1999-2001 General Fund Summary (Attachment A) using the most recent revenue and expenditure data. The revenues reflected in the attachment have been adjusted, based on preliminary receipts for 1998-99 and indicate projected trends for 1999-2000 and 2000-2001. Based on revenue and expenditure projections, the General Fund should have a surplus for 1999-2000 and 2000-2001. Any financial surplus would be handled in accordance with the Council-approved General Fund reserve policy, which includes contributions to the Infrastructure Reserve Fund. CMR: 399:98 ,Page li~of 4 Overall Guidelines The Operating Budget will be a tw0-year budget. Revenues in several areas have begun to show signs of somewhat slower growth; therefore, overall growth in expenditures should be held to a minimum. Operating and Enterprise Budgets will include integration of the approved Comprehensive Plan. The changes to the methodology for Utility Fund transfers to the General Fund will be applied to the 1999-2001 Operating Budget. Salaries and benefits have been established for certain bargaining groups. These will be included in the 1999-2001 Budget, with the goal of keeping the City a competitive employer with surrounding jurisdictions. Multi-year Memorandum’s of Understanding have been negotiated with the Palo Alto Police Officers Association and Service Employees International Union. General Fund Guidelines Human Service contract funding will be increased by the amount of the Bay Area Consumer Price Index (CPI). All other non-salary expenditure increases will be carefully scrutinized for merit within the constraints of sufficient overall revenues. Proposed staffing additions to the 1999-2001 Budget must result from health and safety issues, legal and regulatory mandates, or responses to Council-approved programs. Changes to the General Fund Budget required due to the passage of Proposition 218, the Jarvis Initiative, will continue to be implemented with the 1999-2001 Budget. The proposed Budget will include an expansion of the Palo Alto Unified School District (PAUSD) Fields program as appropriate, depending on the status of the PAUSD Building For Excellence Program and the availability of matching funds from PAUSD. Portions of the Historical Regulations Program will be included in the 1999-2001 Budget as part of the Planning and Community Environment Department Budget. The Public Safety Building project is on a timeline that is outside of the budget process. CMR: 399:98 Page 2 of 4 As information is available from the Palo Alto Medical Foundation/South of Forest Avenue (PAMF/SOFA) coordinated area plan, recommendations for both operating and capital budget programs will be included in the proposed Budget. Enterprise Fund Guidelines The proposed Operating Budget for the Enterprise Funds will include continuing recommendations regarding any changes in rate structures or programs in the affected funds caused by the passage of Proposition 218. Rate adjustments for the Refuse,. Water, Storm Drainage and Wastewater Collection Funds may be proposed, taking, into account the restrictions imposed by Proposition 218. If negotiations for revision and renewal of the agreement for solid waste and recycling collection are completed, the 1999-2001 Budget will include the outcome.of those negotiations. Capital Improvement Program The 1999-2001 Capital Improvement Program (CIP) for General Fund departments will focus on the implementation of the new Infrastructure Management Plan. Ftmding for the CIP has been increased from approximately $5.1 million annually to $7.5 million, including $1 million that continues to’ be dedicated to street improvements. Certain ongoing projects, such as streets resurfacing, sidewalk repairs, and funding for playgrounds, irrigation, and amenity improvements in the parks are proposed to continue to receive funds. The CIP will continue to utilize the Town Design Consultant to incorporate aesthetic and design improvements in projects. Emphasis will be placed on mitigating the physical impact of a project, and providing estimates of the cost of aesthetic improvements. The Utility Funds will not be subject to the same General Fund CIP-recommended guidelines. The 1999-2004 Utility Funds CIP will be prepared as a traditional five- year CIP. RESOURCE IMPACT The fiscal impact of the guidelines is unknown at this time. CMR: 3~):98 Page 3 of 4 POLICY IMPLICATIONS The budget guidelines are used by staffto construct the proposed Budget. recommended, guidelines are a number of policy directions. Contained in the ENVIRONMENTAL REVIEW There is no environmental assessment required to adopt the guidelines. ATTACHMENTS Attachment A: Attachment B: 1999-2001 Projection General.Fund Summary 1999-2001 General Fund Summary Assumptions PREPARED BY: Gigi Harrington, Budget Manager DEPARTMENT HEAD APPROVAL: CARL YEATS Director,Services CITY MANAGER APPROVAL: Manager CC: n/a CMR: 399:98 Page 4 of 4 Attachment A 1999-2001 Projection General Fund Summary ($000’s) Revenues Sales Taxes Property Taxes Utility Users Tax Transient Occupancy Tax Other taxes, fines & penalties Service fees and permits ’Charges to Other Funds Rental Income Other Revenues Total Revenues Plus Operating Transfers In From Infrastructure Reserve Total Source of Funds Expenditures Administrative Services Community Services Fire Planning Police Public Works Non-Departmental Total Expenditures Operating Transfers Out Total Use of Funds 1998-99 1998-99 1999-00 2000-01 Adopted Projected Budget Increase/ % of Budget Increase/ % of Budget Budget Guidelines Decrease Chany~_e_ Guidelines Decrease Change 20,200 20,300 20,700 400 2.0%21,100 400 1.9% 8,600 8,900 9,120 220 2.5%9,300 180 2.0% 5,607 5,675 5,780 105 1.9%5,940 160 2.8% 5,871 5;930 6,350 420 7.1%7,100 750 11.8% 5,861 6,196 6,320 124 2.0%6,450 130 2.1% 8,856 9,106 9,364 258 2.8%9,364 0 0.0% 8,280 8,280 8,448 168 2.0%8,620 172 2.0% 10,104 9,872 10,179 307 3.1%10,484 305 3.0% 9,433 9,433 9,713 280 3.0%9,713 0 0.0% 82,812 83,692 85,975 2,283 2.7%88,072 2,097 2.4°/o 0 0 12,844 12,84.4 12,769 (75)-0.6%12,769 0 0.0% 402 402 2,300 1,898 472.1%2,300 0 0.0% 96,058 96,938 101,044 4,106 103,141 2,097 13,747 14,349 13,920 (429)-3.0%13,937 17 0.1% 19,123 19,146 18,946 (200)-1.0%18,976 30 0.2% 13,761 14,111 13,744 (367)-2.6%13,744 0 0.0% 5,159 .5,355 5,401 46 0.9%5,401 0 0.0% 16,690 16,690 16,660 (30)-0.2%16,660 0 0.0% 11,403 11,516 11,368 (148)-1.3%11,368 0 0.0% 9,190 10,697 11,043 346 3.2%13,104 2,061 18.7% 89,073 91,864 91,082 (782)-0.9%93,190 2,108 2.3% 6,175 6,175 8,975 2,800 45.3%8,991 16 0.2% 95,248 98,039 100,057 2,018 2.1%102,181 2,124 2.1% Net Surplus/(Deficit)810 (1,101)987 2,088 960 (27) Attachment B Revenues 1999-2001 General Fund Summary Assumptions ¯ Sales Taxes 2.0 percent growth rate over projected 1998-99 tax receipts. Property Taxes 2.5 percent growth rate over projected 1998-99 tax receipts. Utility Users Tax Consistent with latest projected Utility rate changes and projected sales. Telephone revenues are expected to increase by 2.7 percent over projected 1998-99 receipts while utility user tax receipts are anticipated to remain at the same level as projected 1998-99 receipts. Transient Occupancy Tax Transient occupancy taxes are anticipated to grow by 7.1 percent over projected 1998-99 tax receipts. This includes an estimate for revenue generated by the opening of new hotel facilitieS. Other Taxes and Fines This category includes the documentary transfer tax, motor vehicle in-lieu tax, and City violation and f’me revenue. Overall, this revenue category is anticipated to increase by 2.3 percent over 1998-99 projections. The transfer tax is projected to increase by 2.7 percent; the motor vehicle tax by 2 percent; and fines and penalties by 8.9 percent. Service Fees and Permits Increase of 2.8 percent over 1998-99 projections. Charges to Other Funds 2.0 percent growth rate over the 1998-99 Budget. Rental Income Increase of 3.1 percent over projected 1998-99 revenues. Other Revenues 3.0 percent growth rate over the 1998-99 Budget, which includes new revenues from the renovation of the golf course. Operating Transfers Equity transfers continue to be held at 1996-97 levels, pending review of the Utility Fund transfer methodology.