HomeMy WebLinkAboutStaff Report 290-05J
,I'
TO:
BUDGET
'05 -'07
HONORABLE CITY COUNCIL
FROM: CITY MANAGER DEPARTMENT: ADMINISTRATIVE
SERVICES
DATE: JUNE 20, 2005 CMR: 290:05
SUBJECT: APPROVAL OF AN ORDINANCE ADOPTING THE 2005-06
BUDGET, INCLUDING THE 2005-06 CAPITAL IMPROVEMENT
PROGRAM, CHANGES TO THE MUNICIPAL FEE SCHEDULE,
UTILITY RATES AND CHARGES, AND CHANGES TO
COMPENSATION PLANS AND ADOPTION IN-CONCEPT OF
THE 2006-07 BUDGET
RECOMMENDATION
Staff recommends that the City Council approve the following:
1. The Budget Adoption Ordinance (Attachment 1), which includes:
a. The City Manager's 2005-07 Proposed Budget(Exhibit A -previously distributed).
b. All changes detailed in the Amendments to the City Manager's 2005-07 Proposed
Budget (Exhibit B).
c. 2005-06 Proposed Municipal Fee Schedule (Exhibit C -previously distributed).
d. Revised pages to the Table of Organization (Exhibit D).
e. Amendments to the 2005-06 Proposed Municipal Fee Schedule (Exhibit E).
2. Resolution Amending Utility Rate Schedules to affect an electric rate increase (Attachment 2).
3. Resolution Amending Utility Rate Schedules to affect a gas rate increase (Attachment 3).
4. Resolution Amending Utility Rate Schedules to affect a wastewater collection rate increase
(Attachment 4).
5. Resolution Amending Utility Rate Schedules for various refuse service rates (Attachment 5).
6. Resolution Amending the Compensation Plan for Management and Professional Personnel and
Council Appointed Officers (Attachment 6).
7. Resolution Amending the Compensation Plan for Classified Personnel (Attachment 7).
CMR:290:05 Page 1 of 11
BACKGROUND
The City Manager's 2005-07 Proposed Operating Budget was submitted to the Finance
Committee on May 3,2005 and the 2005-06 Proposed Capital Budget was submitted on May 12,
2005. During the month of May, the Finance Committee held hearings and reviewed the
Proposed Budget, including the General Fund and Enterprise Fund Capital Improvement
Programs and the Municipal Fee Schedule. A total of eight public hearings were held on May 3,
5, 10, 12, 17, 19,26, and 31 at which the committee reviewed and discussed the City's operating
and capital expenditures for the next two years. The Finance Committee also reviewed several
proposed rate adjustments within the Enterprise Funds.
As a result of the hearings, the Finance Committee and staff have recommended changes to the
Proposed Budget as detailed in Exhibit B. It is worth noting that the 2006-07 fiscal year budget
is adopted "in-concept" with the attached ordinance (Attachment 1). This spending plan will be
reviewed and modified as necessary during the interim budget cycle next year.
DISCUSSION
This staff report focuses on the financial changes recommended by the Finance Committee and
the adjustments suggested by staff that have a fiscal impact. Please note that all non-financial
recommended changes to the proposed budget are described in Appendix 4, which was
distributed to the Finance Committee on May 31, and will be incorporated into the 2005-07
Adopted Budget document.
, The following is a list of motions by the Finance Committee, directing staff to report back on
various items during the 2005-06 fiscal year:
• The Finance Committee directed staff to report, one year from the date of implementation
of the day use fee, on the possibility of expanding the fee to include the Baylands
Preserve. This report shall also include an analysis of the payment of the day use fee by
residents and non-residents.
• The Finance Committee directed staff to present alternatives, by mid-year 2005-06, on
how to slow the increase of employee benefits and lessen their impact on the ability to
fund infrastructure and other City priorities.
The following is a list of follow-up items that, while not approved by a Finance Committee
motion, staff has committed to report back on during the 2005-06 fiscal year:
• In response to a suggestion to add a benchmark to evaluate all staff, staff will present a
report in 2006 outlining a work plan to improve and monitor the performance evaluation
system.
• The Fire Department will provide Council with an update in fiscal year 2005-06 on the
revenues and expenses of the basic life support service (BLS) program.
• The Police Department is compiling data on the trial Wellness Program. Staff will share
the results with other departments and prepare an informational CMR measuring the
success and determining the future of the program.
CMR:290:05 Page 2 of 11
\,
details of this reduction are presented under the staff-recommended changes section of
this report.
Police Department
• Reinstate support for the Wildlife Rescue program -During the Finance Committee
meeting held on May 5, support for the Wildlife Rescue program was reinstated through
the provision of free rent. This change will reduce rental revenue in the General Fund by
$20,652 in 2005-06 and 2006-07.
Enterprise Funds
• Utilities expense reduction -As a result of changes to utility rates the utility expenses in
the enterprise funds are revised as detailed in Exhibit B.
Electric Fund
• Change in Net Sales -During the Finance Committee meeting held on May 26, a change
was made to the electric rate increase reducing it from 19.5% to 11.5%. Due to this
change, net sales is reduced as follows: from $90,390,184 to $84,669,184 in 2005-06 and
from $100,761,256 to $95,557,256 in 2006-07.
• Commodity Purchases -This change will result in an, increase of $4.2 million in the
2005-06 projected beginning balance of the electric supply rate stabilization reserve to
reflect the refund the City will receive in fiscal year 2004-05 from an escrow account in a
settlement relating to services claimed by PG&E. The $4.2 million represents the
remaining balance of the escrow account after payment of the settlement amount to
PG&E. This transaction was recorded in 2004-05.
Wastewater Collection Fund
• Change in Net Sales -During the Finance Committee meeting held on May 19, a change
was made to the sewer rate increase reducing it from 17% to 12%. Due to this change,
net sales is revised as follows: from $14,265,652 to $13,678,652 in 2005-06, and from
$14,352,652 to $14,397,652 in 2006-07.
Water Fund
• Change in Net Sales -During the Finance Committee meeting held on May 26, the 5%
water rate increase was eliminated. Due to this change, net sales is reduced as follows:
from $24,408,951 to $23,288,951 in 2005-06, and from $25,633,951 to $23,288,951 in
2006-07.
Storm Drainage Fund
• Changes resulting from approval of fee increase -During the Finance Committee
meeting held on May 17, a number of changes were made as a result of the recent
approval of the Storm Drain fee increase. These changes are detailed in Exhibit Band
include, among other changes, the addition of 1.0 FTE engineering position at a cost of
$126,475 and the reallocation of 0.6 FTE related to environmental compliance, at a cost
of $61,517, from the Wastewater Treatment Fund. These changes will result in a change
to the table of organization. In addition, a number of CIP projects were added and the
CMR:290:05 Page 4of11
I.
.oj
amended CIP pages and the changes to the associated financial tables are presented in
Appendix 3.
• The 2005-06 budget includes revenue from the General Fund for the fund's portion of
storm drain fees. The plan for General Fund payments of storm drain fees after 2005-06
will be presented to the City Council during the 2005-06 fiscal year. At that time, the
revenue received from the General Fund in 2006-07 and future years will be presented.
In the 2006-07 Storm Drainage Fund in-concept budget, staff has designated a
placeholder in the amount of $529,000 for this planned revenue, which may be revised
once the payment plan is determined.
Capital Budget
• CharlestoniArastradero Corridor Capital Improvement Project (CIP) (PL-05002) -
During the Finance Committee meeting held on May 12, $100,000 was included as a
placeholder to establish the Charleston! Arastradero CIP. The source of funding will be
determined at a later time and recommended when the project returns to the City Council
for approval 2005-06.
Municipal Fee Schedule (Exhibit E)
• Revise the proposed day use fee -During the Finance Committee meeting held on May
31 the addition of the day use fee was revised. This change will result in the Community
Services Department fee applying to only Foothills Park and Arastradero Preserve. The
fee will not apply to the Baylands Preserve as originally proposed. This motion will
reduce revenue in the Community Services Department by $40,000 in 2005-06 and 2006-
07. The Municipal Fee Schedule has been revised to clarify this change.
Staff-Recommended Changes to the City Manager's Proposed Budget
General Fund
• Decrease in the General Fund transfer to the Storm Drainage Fund -This change
transfers $81,000 in funding associated with watershed work of the San Francisquito
Creek Joint lbwers Agreement (JPA) and the San Francisquito Watershed Council in
2005-06 and 2006-07. This change is made in accordance with a recommendation by the
Blue Ribbon Storm Drain Committee that creek-related expense should not be funded
through the Storm Drainage Fund. The General Fund transfer to the Storm Drainage
Fund is reduced by $81,000 and an associated expense increase is reflected in the Public
Works Department operating budget, resulting in no net change to the General Fund
budget.
Community Services
• Increase Children's Theatre ticket fee revenue -This change will increase revenue in the
Community Services Department by $28,480 in 2005-06 and 2006-07. The department
will be charging the fee in the higher fee range in the published Municipal Fee Schedule.
• Reinstate 0.75 FTE Parks/Open Space Assistant position -This change increases salary
and benefit expense by $22,109 in 2005-06 and 2006-07.
CMR:290:05 Page 5 of 11
Library Department
• Create volunteer coordinator -This will result in a change to the table of organization by
dropping on.e existing Library position and adding a Coordinator of Library Programs.
This change will not increase the dollar amount of the Library Department budget.
Planning and Community Environment
• Restructuring in the Planning Department Transportation Division -This change will
result in a $85,051 decrease in expense in the Planning Department in 2005-06 and 2006-
07. This reduction is made up of the following: reclassification of 1.0 FTE Traffic
Engineer to 1.0 FTE Transportation Project Manager, a reduction of $17,268;
reclassification of 1.0 FTE Engineer to 1.0 FTE Engineer Tech II, a reduction of $46, 140;
and elimination of $30,000 in expense for contracts. These reductions are offset by an
expense increase of $8,357 associated with the reclassification of 1.0 FTE Chief Planning
Official to 1.0 FTE Deputy Director/Chief Planning Official.
Public Works
• Transfer from the Storm Drainage Fund -This change transfers $81,000 in funding
associated with watershed work of the San Francisquito Creek Joint Powers Agreement
(JPA) and the San Francisquito Watershed Council in 2005-06 and 2006-07. The Public
Works budget is increased by $81,000 and an associated decrease is reflected in the
General Fund transfer resulting in no net change to the General Fund budget.
• Reclassification of Manager of Maintenance Operations -This change will increase
salary and benefit expense in the Public Works Department General Fund by $15,783 in
2005-06 and 2006-07. The reclassification is part of a restructuring plan associated with
a retirement and will result in the reallocation of 0.12 FTE Manager of Maintenance
Operations from the Public Works Refuse Fund to Public Works General Fund. This
represents a change to the table of organization. The cost savings from the retirement
was reflected in the proposed budget.
• Drop 1.0 Account Specialist and add 1.0 Staff Secretary -This change will result in a
change to the table of organization, but will not change the dollar amount of the budget.
Capital Fund
The Finance Committee approved changes to the 2005-07 Capital Budget on May 12 (Appendix
5). Amended pages to the capital budget document are attached and funding adjustments have
been incorporated into the associated financial tables (Appendix 3). The following are the
amended projects with the Capital Fund in 2005-06:
• Children's Library Improvements (P E-040 10) -This change corrects a staff omission by
adding expense in 2005-06 of $3,000 for the electrical improvements with the revenues
source identified as a $3,000 from the Friends of the Library as part of a grant received
from Cable Co-op.
• Building Systems Improvements (PF-OI003) -This change makes a correction to show
construction costs in 2005-06 of $63,000 with the revenue designated as a grant in the
amount of $63,000 from the Friends of the Library as part of a grant received from Cable
Co-op.
CMR:290:05 Page 60f11
• Open Space Day-Use Fee Collection Center (OS-06008) -This project is included as
part of the implementation of the new day use fee in the Community Services
Department. Funding of $25,000 is provided from the General Fund for this project.
Other CIP
• Amended capital projects in the Technology Fund are detailed in Appendix 3.
Enterprise Funds
• Reallocation of positions -This change will correct a staff error and reallocate 1.5 FTE
from the Wastewater Collection Fund evenly to the Electric, Gas, and Water funds.
• Capital Project changes -The Finance Committee approved changes to the 2005-06
Capital Budget on May 12 (Appendix 5). The amended pages of the enterprise fund
capital projects and the associated changes to the financial tables are detailed in
Appendix 3.
Electric Fund
• Street Cut Fees -This change will decrease internal street cut fees expenditures from
$79,350 to $11,000 in 2005-06 to reflect proper allocation among the Utilities funds.
• Supply Rate Stabilization Reserve -This change will decrease the 2005-06 projected
beginning balance of the reserve by $18,060,000 to reflect the settlement agreement with
Enron. This change reflects the budget amendment ordinance (BAO) that was approved
in 2004-05.
• Program and Project Consultants expense -This change will result in a $500,000
expense reduction to realize a move of the power plant feasibility study from the
operating budget to the CIP budget. .
• Capital improvement project changes -This change is due to revised CIP projects, as
presented in Appendix 3. The revisions change the amount of reimbursement from
various enterprise funds back to the Electric Fund. As a result the transfers to the Electric
Fund are changed to show the following amounts:
Transfer From 2005-06 2006-07
Water Fund $340,150 $81,400
Gas Fund $155,800 $90,000
WWCFund $3,021 $22,824
Storm Drainage Fund $900 $6,800
Refuse Fund $5,400 $40,800
Total $505,271 $241,824
Gas Fund
• Street Cut Fees -This change will increase internal street cut fees expenditures from
$148,120 to $194,000 in 2005-06 to reflect proper allocation among the Utilities funds.
• Supply Rate Stabilization Reserve -This change will decrease the 2005-06 projected
beginning balance of the reserve by $3,440,000 to reflect the settlement agreement with
Enron. This change reflects the BAO that was approved in 2004-05.
• Capital improvement project changes -As a result of various CIP changes, as presented
in Appendix 3, the amount of transfer from Gas Fund to the Electric Fund is $155,800 in
2005-06 and $90,000 in 2006-07.
CMR:290:05 Page 7 of II
Wastewater Collection Fund
• Street Cut Fees -This change will decrease internal street cut fees expenditures from
$153,410 to $125,000 in 2005-06 to reflect proper allocation among the Utilities funds.
• Capital improvement project changes -As a result of various CIP changes, as presented
in Appendix 3, the amount of transfer from Wastewater Collection Fund to the Electric
Fund is $3,021 in 2005-06 and $22,824 in 2006-07.
Water Fund
• Street Cut Fees -This change will increase internal street cut fees expenditures from
$148,120 to $199,000 in 2005-06 to reflect proper allocation among the Utilities funds.
• Capital improvement project changes -As a result of various CIP changes as presented
in Appendix 3 the amount of transfer from Water Fund to the Electric Fund is $340,150
in 2005-06 and $81,400 in 2006-07.
Refuse Fund
• Palo Alto Sanitation Company (PASCO) expense -As part of the annual review of the
PASCO budget, from which the cost to the City of the PASCO agreement is derived,
expense is increased by $70,833 in 2005-06 and 2006-07. This will reduce the rate
stabilization reserve from $2,094 million to $2,023 million. Staff inadvertently omitted
this increase in the proposed budget.
• Capital improvement project changes -As a result of various CIP changes as presented
in Appendix 3, the amount of transfer from Refuse Fund to the Electric Fund is $5,400 in
2005-06 and $40,800 in 2006-07.
Wastewater Treatment Fund
• Reallocation of position -This change is related to the approved increase in the storm
drainage fee and will result in 0.6 FTE reallocated to Storm Drainage Fund for
environmental compliance at a cost of $61 ,516.
Storm Drainage Fund
• Capital improvement project changes -As a result of various CIP changes as presented
in Appendix 3, the amount of transfer from Storm Drainage Fund to the Electric Fund is
$900 in 2005-06 and $6,800 in 2006-07.
Compensation Plans
Several classification changes are requested in the Management and Confidential, and Classified
Compensation Plans. New or changed classifications are included, along with the accompanying
resolutions in Attachments 6 and 7.
Table of Organization
Amended pages to the 2005-07 Table of Organization are included with this report (Exhibit D).
The table has been revised to reflect the staffing changes presented in this report. Changes
reflected in the table of organization will be incorporated into the relevant department
organization charts and the revised organization charts will be published in the adopted budget.
CMR:290:05 Page 8 of 11
Municipal Fee Schedule
Certain pages of the Municipal Fee Schedule have been revised to reflect the following:
• An updated explanation to the increase in the plan check fee is provided (Exhibit E).
This change updates the original explanation as presented in the report that transmitted
the Municipal Fee Schedule to the Finance Committee on May 31 (CMR:241 :05).
• An amended page is attached showing the revision to the day use fee description in the
Community Services Department. The fee applies to only Foothills Park and the
Arastradero Preserve (Exhibit E).
• Fees have been added in the Fire Department for advanced life support (ALS) services.
These fees have been added to allow the department to charge for ALS services as part of
its revenue generating paramedic service (Exhibit E).
• A note will be added to relevant pages of the adopted Municipal Fee Schedule identifying
documents that are available on the City's web site.
RESOURCE IMP ACT
The 2005-07 Proposed Budget as submitted to the Finance Committee resulted in an increase to
the General Fund Budget Stabilization Reserve (BSR) of $0.1 million in 2005-06 and $0.9
million in 2006-07. The changes resulting from the Finance Committee hearings and staff
recommendations resulted in a $0.1 million decrease to BSR funding in 2005-06 and a $0.2
million reduction in 2006-07 (Appendix 1). The projected ending balances for the BSR in 2005-
06 and 2006-07 are $21.4 million and $22.1 million respectively. As a result of the changes to
the capital budget the projected ending balances in the Infrastructure Reserve (IR) in 2005-06
and 2006-07 are $24 million and $16.8 million respectively. Additional changes to the
Enterprise Funds result in an approximate $1.1 million overall increase in reserve balances in
2005-06 and a $7.8 million decrease in 2006-07 from the proposed document (Appendix 2).
POLICY IMPLICATIONS
These recommendations are consistent with existing city policies.
ENVIRONMENTAL REVIEW
Adoption of the budget does not represent a project under California Environmental Quality Act
(CEQA).
CMR:290:05 Page 90f11
PREPARED BY:
DAVID RAMBERG
Budget Manager
DEPARTMENT HEAD APPROVAL:
CARL YEATS
Director of Administrative Services
CITY MANAGER APPROVAL:
ATTACHMENTS
EMILY HARRISON
Assistant City Manager
Attachment 1: Budget Adoption Ordinance with the following Exhibits:
Exhibit A: City Manager's 2005-07 Proposed Budget
Exhibit B: Amendments to the City Manager's 2005-07 Proposed Budget
Exhibit C: 2005-06 Proposed Municipal Fee Schedule
Exhibit D: Revised Pages in the 2005-06 Table of Organization
Exhibit E: Amendments to the 2005-06 Proposed Municipal Fee Schedule
Attachment 2:
Attachment 3:
Attachment 4:
Attachment 5:
Attachment 6:
CMR:290:05
Resolution of the Council of the City of Palo Alto Amending Utility Rate
Schedules E-l, E-I-G, E-2, E-2-G, E-4, B-4-G, E-4-TOU, &7, E-7-G, E-
7-TOU, &14, &16, &18, and &18-G of the City of Palo Alto Utilities
Rates and Charges Pertaining to Electric Rates
Resolution of the Council of the City of Palo Alto Amending Utility Rate
Schedules G-l, G-2, G-3, G-4, G-6, G-I0, G-ll, and G-12 of the City of
Palo Alto Utilities Rates and Charges Pertaining to Gas Rates
Resolution of the Council of the City of Palo Alto Amending Utility Rate
Schedule S-1 and S-2 of the City of Palo Alto Utilities Rates and Charges
Pertaining to Wastewater Collection Rates
Resolution of the Council of the City of Palo Alto Amending Utility Rate
Schedules R-l, R-2, and R-3 of the City of Palo Alto Utilities Rates and
Charges Pertaining to Refuse Collection and Amending the Rules and
Regulations Governing Utility Services
Resolution of the Council of the City of Palo Alto Amending the
Compensation Plan for Managerrent and Professional Personnel and
Council Appointees Adopted by Resolution No. 8455 to add a new
classification and to make a title change on classification title
Page 10 of 11
c.
.1
Exhibit A:
Attachment 7:
Exhibit A:
Appendix 1:
Appendix 2:
Appendix 3:
Appendix 4:
Appendix 5:
Related Staff Reports:
CMR:290:05
2005-06 Compensation Plan Changes for Management and Professional
Personnel
Resolution of the Council of the City of Palo Alto Amending the
Compensation Plan for Classified Personnel (SEIU) Adopted by
Resolution No. 8452, by changing three employee classifications and
changing one employee classification salary
2005-06 Compensation Plan Changes for SEIU Personnel
2005-07 General Fund Summary and Reserve Balances
2005-07 Utility Fund Summary and Reserve Balances
2005-10 Capital Improvement Fund Summaries and Amended Projects
May 31, 2005 Memorandum to Finance Committee detailing changes to
2005-07 City Manager's Proposed Budget to date
Memorandums distributed "at-places" during the Finance Committee
budget hearings including proposed changes to the budget, additional
department information and answers to Finance Committee questions
CMR:492:04;
CMR:204:05;
CMR:254:05;
CMR:241:05;
CMR:138:05;
CMR:246:05;
CMR:253:05;
CMR:288:05;
CMR:139:05;
CMR:256:05;
CMR:251:05;
CMR:278:05
CMR:206:05;
CMR:255:05;
CMR:257:05;
Page 11 of 11