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Home My WebLink About0591.093November IS, 1993 HONORABLE CiTY COUNCIL Palo Alto, California Attention: Financ~ Committee Membe rs of the Counc i I : 19art in Brier On September 21, tbe Finance Committee reviewed staff's discussion of the various eleaents of revenues and exper.ditures that will constitute the 1994-95 budget .. Based. on the Committee's cOJUilents, stafz has drafted proposed budget guidelines. Attached to this report are updated forecasts for the General Fund, including a preliminary General Fund summary for 1994-95, and an Economic Future Study (EFS) ten-year. forecast. Also attached are tiJ.e assumptions that went into both. Preliminary es'timates are that, qiven current service levels and assuming no additional state or county revenue shifts, General Fund revenues will be SUfficient to cover expected expenditures. propoa~ 1"4-9' Budget Guidelines 1.. If revenues permit, salaries and benefits will be establisheQ for the 1994-95 budqet with the 90a1 of keeping the City a competl ti ve employer 'Wi tl1 s'olrrounding jurisdictions, al thouq.h there would be no qua~antee that salaries_would keep up with the Bay Area rate of inflation. 2~ New services or service level augmentation will be considered if: CMR: 591:93 ~-"----- o The propos~d service level is mandated by other govern ment or regulatory aqencies; o The ~roposQd service is supportea by nc'W or increased. re'VEl-nueSi c ~he proposed service supports a Council ~riority. 3. A Ca.pital Improve.ment Program {CIP) for the General Fund will maintain at least the same level of cO%llmitment to the city's investment ih its infrastructure and other capital assets as has been shown in previous budget years.. Th.e elF will continue the implementation of the Parks Ten-¥ear Renovation Plan, initiated in the 1993-94 crp. ". Staff will calcu.late a Water Fund e.quity tr-ansfer to t,he General Fund consistent with the plan approved by Council durinq the 1993-94 budget hearings, in which the Water Fund equity transfer would be wramped· up, vith the full transfer level being re~ched in fiscal year 1995-964 s. Departments will continue to a9gressive~y pursue increased cost recovery in those areas which are appropriate accordinq to the 198? User Fee/Cost Recovery study methodology, adopted by the council. Departments will carefully examine their fee levels cc~pared ~ith &urrounding communitie6~ as well as tee levels for residents versus non-resident&. 6. No n"' non-fee revenue sources will be included in the budqet~ 7. The current level of assistance to East Palo Alto will be cO:1tinued. 8. The reeo%llmendations ot the organization review will be incor porated into the 1994-95 budget as appropriate, once they have been reviewed and approved for implementation by the full council. 9. Rate increases for tbe ElIterprise FUnds are anticipated in 1994-95 to fund accelerated infrastructure work in the Cas and Wastewater Collection Funes, participation in the SMaRT Station in the Refuse Fund, and bond financinq to continue: storm. Drainage Fund capital ilDProvement.a. Prelilb.inary' projec tions indicate rate increases for 1994-95 tor Gas, Wastewater Collection, Refuse and stonn Drainage. Finally, if the drought does not recur, the current inverted water rate structure 'Will continue to tran,s.ition to'Wards n.orma~ water pricing, that is, a rate structure including less 6teeply inverted pric8s~ ~O. A reserve of $6.1 million has been created for AS 702 funds. including $4.77 .iIlion tor the General Fund~ Those funds CKR:591;93 2 'Will continue to be rese.rved until Cour:cil establishes .a policy on their disposition. Council haas given direction that staff develop a recommendation for the use of the AS 702 credit, in accordance ~ith the tolloYinq criteria: 1) This is a one-t~me rebate and should be used in a one time way, not to create or al.lgment ongoing progra.ms. 2) The application of the money should be somethinq related to employees, preferably to funding eXisting obligations such a.s post-retiremen't benefits or the unfunded PERS liability. 3) The recommendation selected sho~ld have th~ ~most salutary effect· on the General Fund. ·Salutary" Qoes not necessarily mean monetar"J. but a high priority is placed on General Fund long-term financial health. S~ft requests Finance Committee recomm~nd to the full C~uncil the adoption of the. above bu.dqet guidelines for-199-4-95. Approved guideiines will be ~rou9ht to the full Council in December 1993. and will be used by staff in preparinq the one-year 1994-95 budqet. submitted, General Fund Financial Summary for S: Assumptions for the 199-4-95 Financial Suaaa~f c: Updated Economic Futures Study (EFS) Model and Assumptions Related Staff Reports: CKR:484:93 CJ!R: 591: 93 J '~ ., /'" . ArrACHMENT A Preliminal)' General Fund Summar), 1994·95 Adopted Budget 1993·94 Raven ...... Sales taxes 14,917 Property taxes 6,965 Utility users tax 5,738 Transient Occupancy T <IX 2,997 Other taxes, fines, end penaHia. ~,423 Subtotal; Taxes 35,040 Se<vice fees & permits 7,484 Joiot Service Agreements (Stanford) 3,956 Interest earnings 2,134 O1her revenues 2,846 Tota/Revenues 51,400 PI ... Operating Transfen In 17,481 TOTAL SOURCE Of FUNDS $68,M1 ElqHncfrtures Salaries & Benefits 47,076 Conttact Services 5,441 Sup¢es & Materials 2,398 General Expef1se 8,473 R_, Leas..." & Equipment 1,148 Ailoc:a1ed Charges (Nel) (425) Contingencies 387 Total Expenditures 64,500 PI ... OpeqtIng Transf .... Out 4,658 TOTAL USE OF FUNDS $69,168 NET OPERATING SURPLUSljDEFICITI =~V2n • Estimated Budgot 1994:9-L- 14,064 7,802 5,988 3,184 4,501 35,539 7,612 4,075 1,759 3,~3 52,448 18,500 $70,~ 49,127 4,876 2,370 8,455 1,11 I (69) 387 66,257 4,M8 $71,205 ($2571 /'. r '--..r -"---. "¥; '. ", . . ~~:~~~-- Basie -..umptions tor the pr.~iaiD~ry 1994-'5 G.~.ral FUD4 lumaary S&l •• 'fA][ Year-end actuals for 1992-93 were used as a base, ~nd adjusted for one-time and ongoing events; a reallocation aw~y from palo Alto Que to & State Board of Equali~&tion ruling, a reduction to reflect the aerospace d~cision, a large business relocation, and the repeal of the tax on snack food. The amount was increased for expected revenues due to the passaqe of the half cent sales ta~ for public safety~ Total sales tax growth is assumed to be 1 percent during fiscal year 1994-95. Property 'l'e.x Year-end 1992-93 actuals ~ere used as a base, and increase~ a total of 2.S percent for 1993-94, which reflects the recant slow growth in assessed valuation. That base was again incre~sed Qy 5 percent for 199~-95, assuming a modest increase in property sales. Finally, $1.1 million from State property tax shifts were incor porated along with a reduction due to the Teeter Plan chanqe in the county I s tax apportionment method ~ Actuals for 1992-93 Palo Alto clo8ure~ percent per year~ were used as a base and reduced by the Hyatt This amount was then increased a total of 2 Motor Vehicle in Lieu F ••• Year-end 1992-93 actuals were used as a base and was increased by the Consumer Price Ind~x (CPI) , assumed to be 3 percent. Property tax groW+-h assumptions were used. 7 ill •• Tllis was determined. assWlling current collections continue, includinq year-round, two-hour parking and CPI growth. Service P ••• Actuals for 1992-93 were used as a base and increased due to tne addition of a paramedic unit~ This Ulount was grown :by the Consumer Price Index (CPI), assumed to be 3 percent. CMR:591:93 ,~-. Intereat qrowth on the city's portfolio is expected to be 5.4 percent tor the 1993-94 fiscal year and 5 percent for 1994-95. other Revenues Actuals for 1992-93 were used as a base and increased due to the additional revenue generated by ~~e Police Department contra~ting with other cities to provide animal control services. This amount vas grown by the Consumer Price Index (CPI) # assumed to be 3 p.ercen.t~ oper1lU"9 nanafero In The most recent staff projections were used tor th~ growth of the utilities capital ~sset base to calculate the equity transfers fro= the Utility Funds~ The 1993-94 budgeted re~t vas increased by C~I (3 percent). The 1994-95 wate.r Equity transfe.r is consistent 'With gui<ielines given by Council during last year t s budget hearin9's~ rhat transfer is $1.6 million# which is $.2 million below a full transfer • .. lazi •• aDd B .... rit. Tbe 1993-94 budqet was \isee. as a base. and all salaries and benefits were increasea by CPI, with the exception of a larger (3 percent over CPI) increase assumeQ for health care costs. A $4 million CIP is assumed for 1994-95. CKR,591:93 .~ 1 , ; !a~!~ ~ ~!: §N ~ ~I ~ ~i;i~-~§ ! ~ -I r~~ ~. .;~ ~ ;1 ~~: ~illf";", ~"" t ~.,.; ... ~~..: -;i '\ N ., I , 1 " I " ! 1 ; Ui!!.ii.~ ii. H ;3 5 -I Ii ~O"'\"'~~;:::~i g. l ~ l!:. ::I, i .... !iOl.~.N .... + ~~ !: g~ .... ~ 0:.. ::i .; -...,,,,c_ -y ~1 N, . - , , i I ; ~f:.~.i{! •• g.~ i" ~ !I' ~ f;~~li!~;;J ; ~ Ii ! J ~ .:~ ~1 •• + • "I. _ "n ::!=:,....., <I oY ::I ~>n .... ~_ ri • , I I ~! III 1 It=i.7;~~~~ H~~~ ~. ~a. ~! G ~i ~ Y g Ii ~ i ~ , :!; 0. """"I Y •• :Jl.;:-..... !..: "'!C-If 111 ! I ~ nIHil 5 ~~ ~~ ~ -I i ""l!I::& .... ..,8' .... :E: ~ • 31 ! ~ ~, i~;;!~e~g ~ ~1 i'l! ':1 • .0 ... ..;.;. .. ., 0( 0\ l' ::i NI f ~j • I J !it Uq!:i! ........................ ;;:; !I ~ ~ ~~ 5~ ~ ~ ~::;;:.:$:!::t~:;; ~ ! ~ :; "i :!;_oc .... ..... ~~'"' .. +..: -~ :I , • it I J I ; ~~~~~ ~ O~ ~! ~ ~ -"-I'!;a~! ~ ! ilj • :1 ll-~ ;;; ~ p.:~ -j i~~ .. ·::;."'·"" :-.... Ii "I "'I ~i ED! I I 1 II ~l • ; E;f;;5=l1iii ~j = UH~ ~ N_ ~! i • § 5 ~ • ~; ~ I ::! ............. :i ~1 fl ~·.M.;..: -- 1 ~ I ri i ~ r;i!~ltg a. u ~! i. ~I i ,..~b::~~~'"fi • ! ; I ~;;;:i;';:-~"'~ N. ;i ~ :.cwiri ~ r-0 ..,--.' II l -I ~I i ~ 1 ; i!Jii.i.~.~ ~ !.i. ~! i ~ !.~.~;.~! • ! ~ • ~ ,. !:l .. W! .... ~~ Sf . ' II ; ......... --I ~I ~ I i i , 1 " 1 5 • t ~ '" i c .) ~ ~ I I .=1 .. 1 • .!! ~ !Ii j L j ~ c ! ~ I,IJ ~ .. l ~ ~ :! !'~'E~ 1 J " • .&: • i . I " ~ ~ '" i i! ! ~ .. !~ ~H c i 4 <'! PI • hi ·H~ ~ ! i I~Hr E ~ ! .l-f ~ .J • i I j Hi! 1 .. ~. ~Io-I "! ~ I " -' • ~ -' ! .. ~ ) "'1~ i ... :; < 1 ,;!"::~H ~ ~ < • ~. J I j ~ ~ ... ! j ~n oil ~ ~"-!.!.-g J 5 jl~jo ~~Jgl~~~ i ~ ., z ! '! ATI'ACHMENTC ECONOMIC FUTIJRE STUDY ASSUMPTIONS FOR 1996-2002 All auumption, fur the 1994-95 fiscal year in the Eronomic Future Study mood are detailed in Attachment B. VlritbJe CPI Tolal Salary and Benefit Growth SllInfonl Shopping Cen~ ExponsiOO HOld CIosme Bu.siness-to-Business Sales Growth 1995-96 1996-2002 Retail Sales Grow,,'> 1995-96 1996-2002 Aerospace Decision Proper!:; Tax Growth Utility salcs inaease Property Trarufer Tax Interm Earning' 1995-96 1996-2002 Eaterprise Fund Rent 1995-96 1996-2002 Eruelprise Fund Equity Transfer PAUSD Lease Cost CIP Spending Steady State Assumption 3.0% O.5!11: above CPI No E~pansiOT1 Net Loss of $5()K per y= 2.7" lotal growth 5.4" total growth per year l. 7" tota1 growth 3.3" tota1 growth per year Net r.o... of $12SK per y= for 6 years 2.9:1\ above cpr Coosi_t with Ia!est projected Utility IlIk· changes Same growth as Property tax 5.5'" annual yield 6.0" annual yield S7.6M CPI growth Growth of approJ<ima1ely 3.2" per y= Grows by CPi 54.0M per y=