PUBLIC HEARING ON FISCAL YEAR BUDGET

Transcription

1 PUBLIC HEARING ON FISCAL YEAR BUDGET Presenter: Greg Nyhoff, City Manager June 21, 2016

2 KEY MILESTONES TO DATE MILESTONES DATE Council and Executive team held a priority setting workshop October 29, 2015 Council s Strategic Priority areas and business plans adopted to guide budget process May 17, budget workshops were held to discuss department budgets June 14, 15, & 21, 2016 CAFR released June 16, 2016 Presentation to Measure O Committee June 16, 2016 Presentation to Council of CAFR June 21, 2016 Public Hearing June 21, 2016 Budget Adoption June 28,

3 Budget Presentation Outline 1 FY Budget Recap FY Proposed Budget Overview Measure O Utilities Summary Council Strategic Priorites Summary & Next Steps 3

4 INTRODUCTION Rebuilding Human Resources and Finance Departments Downtown Revitalization: A vision with funding Vacancy Rate and Employee Retention/ Turnover Stabilization Year Council Strategic Priorities Recycled Water Fiscal Health/Organizational Health 4

5 FY BUDGET RECAP 5

6 FY BUDGET CHALLENGES 1. Our structural imbalance required difficult financial decisions, in recent years, the City s expenses have outpaced regularly recurring revenues 2. Substantial deficit spending compounded the City s financial challenges. 3. Cash Reserve Depleted in nearly all areas 4. The decline of special Public Safety retirement tax revenue 5. Revenue shortfalls in the City s Water and Wastewater funds that require rate increases 6. The City managed through FY budget and previous periods of financial instability largely through: Service-level reductions that touched nearly all areas of the organization, from parks and libraries to public safety; Use of one-time resources, including a significant draw down of reserves, most notably Measure O fund, and use of temporary Measure O sales tax revenues to fund ongoing operations, including a $16M Measure O loan in FY to close the General Fund budget gap. 6

7 FY BUDGET CHALLENGES ORGANIZATIONAL ASSESSMENT focused on Finance, Human Resources and City Manager s Office 128 recommendations. INDEPENDENT FINANCIAL AUDIT system wide failures in appropriate financial management. VACANCY RATES REACHED 15% - HR has continued to expend significant time and efforts into recruitments but promotions and 11% retirement rate made little impact on the total number. Over the past 30 days we have made some excellent headway which we believe will continue into 16/17. Through this difficult past of budgetary cuts, audit and financial uncertainty, and position eliminations our employees have stepped up by taking on additional responsibilities and improving necessary internal controls to ensure we carryout the fundamentals with efficiency and accuracy. I salute them for their efforts, and will challenge them to continue our quest to move from good to great. 7

8 GENERAL FUND BALANCE HISTORICAL OVERVIEW & FORECAST If we do nothing.. 8% Min. Reserve

9 GENERAL FUND BALANCE HISTORICAL OVERVIEW & FORECAST With Budget Adjustments.. 8% Min. Reserve 16

10 FY PROPOSED BUDGET OVERVIEW 10

11 PROPOSED 16/17 BUDGET OVERVIEW The new budget signals stabilization from the current year, The City s FY Proposed General Fund Budget estimates total revenues at $122.1 million and total expenditures at $122.4 million. This budget includes targeted staffing enhancements. City Council established four Strategic Priority Areas as a first step in moving the City toward priority-based budgeting. The FY Budget includes continuing Wastewater rate increases as approved in FY and rate increases for both Water and Wastewater in FY This budget does not have a Capital Improvement Plan Budget. Staff will come back to Council in the Fall after our audit is complete and we have a more complete picture of available resources and outstanding need. 11

12 ALL FUND COMPARISON FY 15/16 VS. PROPOSED FY 16/17 FUND FY 2015/16 Revised FY 2016/17 Proposed Budget General Fund $115.5 $122.6 Measure O $10.9 $15.2 Assessment Districts $4.5 $4.5 Community Facility Districts $10.4 $10.2 Debt Service $6.0 $7.0 Golf Course $5.6 $5.3 Impact Fees $2.1 $1.7 Internal Service $26.3 $26.6 PACC $1.5 $1.7 Public Safety Retirement $10.5 $10.4 Solid Waste/Environmental Resources $42.9 $43.0 Special Revenue Funds $23.9 $17.0 Stormwater -0- $1.2 Wastewater $33.3 $34.1 Water $63.1 $60.5 Housing Authority (Non-City) $24.8 $25.0 Total All Funds $381.3 $

13 FY 2016/2017 BUDGET OVERVIEW Housing Authority, $25.0 FY Recommended Budget (All funds) $385.9M (in Millions) General Fund Internal Service Funds, $26.6 Special Revenues, $41.5 General Fund, $122.6 Public Safety Carman Override Measure O 1/2 Cent Tax Enterprise Funds Internal Service Funds Special Revenues Housing Authority Enterprise Funds, $144.6 Public Safety Carman Override, $10.4 Measure O 1/2 Cent Tax, $15.2

14 FY 2016/17 ENTERPRISE FUND EXPENDITURES Golf Course, $5.3 FY Proposed Budget Enterprise Funds $144.6M PACC, $1.7 (in Millions) Water, $60.5 Environmental Resources, $43.0 Golf Course PACC Environmental Resources Wastewater Water Wastewater, $

15 FY Staffing Levels - Citywide City Clerk Economic Community Development City Attorney City Manager City Treasurer Human Resources Other Recreation Information Systems Library Finance Development Services Housing General Services Environmental Resources Fire Utilities Police Citywide FTE in FY Proposed Budget 1,170.5 Authorized Full-Time Equivalents (FTE) by Department FY Proposed Budget

16 POSITIVE ECONOMIC INDICATORS 10.0% 9.0% 8.0% 7.0% Oxnard s median home sales price increased to $425K in March 2016, 7% higher than previous year. Oxnard s unemployment rate as of April 2016 was 5.2%, the lowest unemployment rate achieved in the post-recessionary period as shown in the table below. Riverpark, WagonWheel and North Shore developments will see growth into the next year 9.4% 7.9% City of Oxnard Historical Unemployment Rates (April) 6.6% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 5.7% 5.2% 0.0% April 2012 April 2013 April 2014 April 2015 April 2016 (Most Recent) Source: California Employment Development Department, Unemployment Rate as of April 2016 (Preliminary); US Census Bureau, American Community Survey, 2014 and Year Estimates.. 16

17 GENERAL FUND BUDGET OVERVIEW 17

18 General Fund Revenues FY Proposed Budget General Fund Revenues by Source (in Millions) Property Tax, $52.2 Sales Tax, $30.1 All Other, $1.6 Franchise Fees, $3.7 Intergovernment, Internal Service, Cost Allocation, $12.5 Fees, Fines, Forfeitures, $12.0 Business License Tax, $5.2 Transient Occupancy Tax, $4.8 Note: Property Tax ($51.5M) includes Property Tax in-lieu of Vehicle License Fees ($17.4M). 18

19 General Fund Revenues: Key Assumptions Source Key Assumptions FY 16/17: MAJOR +4.7% increase GF REVENUE in VLF in-lieu ASSUMPTIONS Property Taxes +11.4% property tax increase over projected FY actuals Sales Taxes +3.8% sales tax increase in General Fund +3.4% increase in Measure O sales taxes Fees, Fines, Forfeitures -7.4% reduction over projected FY actuals. Franchise Fees +3.1% increase Transient Occupancy Tax +1.9% increase Business License & Property Transfer Taxes +2.0% increase, consistent with mainstream inflation expectations. 19

20 General Fund Expenditures by Type FY Proposed Budget General Fund Expenditures by Source (in Millions $) Personnel, $85.5 Transfers Out, $9.0 Cpaital Outlay, $0.2 O&M Expense, $

21 General Fund Expenditures by Department FY Proposed Budget General Fund Expenditures by Department (in Millions $) Public Works $10.24 Cultural Services $8.57 Administrative Services $13.05 Development Services $7.43 Economic Development $1.55 Housing $0.54 Non-Departmental (including Transfers Out) $12.59 Police $52.54 Fire $15.92 Note: Administrative Services includes City Manager. City Clerk, City Attorney, Human Resources, Finance and Treasurer. Public Safety costs shown do not include Public Safety Retirement tax ($10.4M) and Public Safety share of Measure O revenues ($8.6). 21

22 General Fund Summary. FY 15/16 Revised Budget FY 15/16 Projected Actuals FY 2016/17 Budget REVENUES: Property Taxes $47.2 $47.9 $52.1 Sales Tax (Inc. Prop 172) Other Revenues Internal Service/Intergovernmental Total Revenues $ $ $ EXPENDITURES: City Attorney City Clerk City Council City Manager City Treasurer Human Resources Finance Cultural Services Development Services Economic Development Housing Fire Police Public Works Non-Departmental Total Expenditures $ $ $ Net Change in Balance (3.16) 1.70 (0.33) Beginning Balance Ending Balance $16.16 $

23 Key Cost Drivers Impact on Ongoing Expenses Employee Wages CalPERS Pension GF Support to LMD s & Assessment Districts PACC Operating Deficit Golf Operating Deficit Animal Shelter Contract Increases Repayment to Measure O GF Impact for Storm Water Operations 23

24 Pension Costs Squeeze Available Resources CalPERS pension costs are increasing at rates that outpace both general inflation and revenue growth, and these costs are largely outside of the City s direct control. 60% Oxnand Forecast CalPERS Employer Rate (Composite Rates) FY through FY % 40% 41.2% 38.7% 42.6% 40.5% 45.2% 42.4% 46.6% 48.0% 45.0% 47.6% 50.9% 50.0% 49.5% 48.9% 48.2% 47.8% 30% 20% 14.4% 15.9% 16.9% 18.2% 19.5% 20.8% 20.9% 21.4% 10% 0% FY FY FY FY FY FY FY FY Police Miscellaneous Fire Sources: CalPERS Police & Miscellaneous Actuarial Valuation Reports, October

25 General Fund Budget Augmentations Mandatory Items included in the FY Proposed Budget 1. PEMHCA Employer Contribution (Ongoing) $389, Animal Control Increases (Ongoing) $180, Golf Course Subsidy (Water & Operational) (Ongoing) $600, GF Impact for Storm Water Operations (Ongoing) $664, IRS Audit (1st of 3 Year Repayment Plan) $560, Internal Audit Function (Ongoing) $100,000 Total Mandatory Ongoing Items $2,493,967 Policy Priorities Consistent with Council s Strategic Priority Areas 1. Fleet/IT/Building Maintenance Investment (Ongoing) $700, FY 16/17 Recommended GF Augmentations to Base Budget (Ongoing) $1,989, % Performance Merit Increases (Other bargaining units have 5% contractual merit increases) $224, FY 16/17 General Fund Augmentation Requests (One-Time) $358,793 Total Policy Priorities $3,273,020 25

26 MEASURE O OVERVIEW 26

27 MEASURE O : CURRENT ONGOING PROJECTS PROJECT/ PROGRAM FY PROJECTED Community Policing Enhancement $ 3,001,998 CAD Police $ 787,947 Fire Station Operational $ 3,080,790 Fire Station 8 Lease Debt (Construction of Station 8) $ 1,357,600 Fire Ladder Truck Lease $ 169,182 Spanish Interpretation at Council Meetings $ 50,000 City Corps Townkeeper $ 550,000 Preschool to You $ 135,000 Senior Nutrition Program $ 40,000 Homework Center $ 21,178 Mobile Activity Center $ 30,000 College Park Measure O $ 466,527 Library Integrated System $ 50,000 PAL Operational $ 147, Lease Revenue Street Bond $ 1,674,200 Subtotal: $11,562,024 27

28 FY 16/17 MEASURE O FUNDING RECOMMENDATIONS FUNDING CATEGORY/PROJECT ONE TIME Colonia Gym Facility Repairs $18,000 PACC Auditorium & other Repairs $350,000 Fire Standards of cover Study 50,000 Breathing Apparatus 100,000 Fiber Master Plan $100,000 Body Cameras $220,000 Public Safety Vehicle Replacement $450,000 Police-Efficient Workforce Scheduling Software $60,000 Animal Shelter Feasibility Study $25,000 SUBTOTAL (SPECIFIC PROJECTS): $1,373,000 Facilities Maintenance and Repairs $500,000 Neighborhood Parks Improvements $500,000 Community Parks Improvements $750,000 Sidewalk Repairs $500,000 SUBTOTAL (CATEGORIES): $2,250,000 TOTAL FY 16/17 RECOMMENDED FUNDING: $3,623,000 28

29 MEASURE O SUMMARY MEASURE O FUND SUMMARY TOTAL Measure O Beginning Fund Balance FY 2015/16 $2,747,613 Forecasted FY 2015/16 Revenue $15,301,932 Total Measure O Projected Actual Expenditures ($14,709,633) Projected Ending Fund Balance FY 2015/16 Projected Measure O Revenues FY 2016/17 Subtotal Revenue and Fund Balance FY 2016/17 Current Measure O Projects (Ongoing) FY 16/17 Recommended Projects (One Time) $3,339,912 $15,821,171 $19,161,083 ($11,562,024) ($3,623,000 ) Total FY 16/17 Measure O Proposed Projects (15,185,024) Measure O FY 16/17 Ending Fund Balance $3,976,059 29

30 FY UTILITIES SUMMARY 30

31 Water Fund Operating Budget Summary In Millions ($) $80.00 $70.00 $59.62 $59.76 $60.53 $60.00 $50.73 $47.47 $52.52 $50.00 $40.00 $30.00 $20.00 $10.00 $0.00 FY 2014/15 Actual FY 2015/16 Projected Actual FY 2016/17 Proposed Budget Revenues Expenditures 31

32 Waste Water Operating Budget Summary In Millions ($) $50.00 $40.00 $31.71 $31.52 $28.58 $35.44 $34.64 $34.10 $30.00 $20.00 $10.00 $0.00 FY 2014/15 Actual FY 2015/16 Projected Actual FY 2016/17 Proposed Budget Revenues Expenditures 32

33 Environmental Resources Operating Budget Summary In Millions ($) $60.00 $50.00 $43.44 $43.23 $40.67 $39.75 $44.75 $43.01 $40.00 $30.00 $20.00 $10.00 $0.00 FY 2014/15 Actual FY 2015/16 Projected Actual FY 2016/17 Proposed Budget Revenues Expenditures 33

34 CITY COUNCIL S STRATEGIC PRIORITIES 34

35 ORGANIZATIONAL EFFECTIVENESS QUALITY OF LIFE 1. Improve community safety and quality of life through a combination of prevention, intervention, and suppression efforts that address crime and underlying issues. 1. Foster a healthy and accountable corporate foundation by strengthening the support functions, which include Finance, Information Technology, and Human Resources. 2. Address homelessness through the development and implementation of a multi-tiered strategy Strengthen neighborhood development, and connect City, community, and culture. Increase transparency with Council, community, and staff related to the City s budget and financial management processes. 3. Create a culture of learning and talent development that will lead to a quality workforce which meets the needs of our community. ECONOMIC DEVELOPMENT INFRASTRUCTURE & NATURAL RESOURCES 1. Create vibrant and economically sustainable commercial, industrial, and retail industries. 1. Ensure Master Plans (MP) are current, synchronized, and consistent with the General Plan. 2. Enhance business development Enhance business retention and attraction. 4. Implement a one stop shop effort at the City s Service Center. Develop asset management program that includes fleet, facilities, parks, streets, water, wastewater, & stormwater Revitalize Oxnard s downtown and pursue economic development opportunities Ensure funding is adequate to meet the goals of the MP. 4. Ensure proper construction and maintenance of infrastructure to provide maximum benefit with lowest life cycle cost following CIP plans. 5. Ensure orderly development and long-range conservation and management of our natural resources and coastal assets

36 FY Staffing Augmentations - Summary Dept. City Clerk City Manager s Office Finance Council Priority Area Organizational Effectiveness Organizational Effectiveness Organizational Effectiveness Description Converted 1.0 FTE (Admin Assistant to an Assistant City Clerk) to support City Clerk with all aspects of the office s functions including elections support and agenda preparation. Add 2 administrative assistant positions and reclassify current administrative assistant to management analyst. Add 4 new positions including Financial Analyst, Purchasing Officer, Assistant CFO, Payroll Coordinator, and Temporary PT Assistant (costs allocated across GF and Special Funds for all position) to enhance corporate accountability and support inter-departmental operations. Housing Quality of Life Add Homelessness Assistance Program Coordinator to provide technical assistance with grant programs and work with regional partners to create a safe and vibrant community for all of Oxnard s residents. Human Resources Organizational Effectiveness Add 1.0 FTE to oversee City-wide Training and Development Program and 1.0 FTE to administer Leave Program. IT Organizational Effectiveness + Infrastructure & Natural Resources Add 2.0 Computer Network Engineer III s. One to complete critical projects related to Technology solutions consistent with City-Wide Fiber Master Plan & Security Master Plan and the other assigned to the City s help desk to support city services and other essential functions. Police Quality of Life Add 1 Police Officer I/II to act as Homeless Liaison Officer and 1.0 Police Officer I/II to act as Crisis Intervention Officer to work with the City s mentally ill that interact with Oxnard PD. Dev. Services Quality of Life Add 1 FTE Code Compliance Inspector to administer rental inspection program. Public Works Infrastructure & Natural Resources Add 1 Park Services Manager. Economic Development Economic Development Add 1.0FTE Project Manager to provide economic development and downtown revitalization project management functions. NO GENERAL FUND IMPACT 36

37 SUMMARY 37

38 Fund Balance Trends General Fund reserve levels (unassigned fund balance) have been depleted to levels that are below City Council s established policy (18%). General Fund reserve projected to end FY at 12.9%. Water, Wastewater and Environmental Resources Funds not meeting Council approved reserve targets of 90 days for O&M expenditures and 180 days of debt service obligations. City needed to utilize $16 million of Measure O fund to stabilize City finances in FY 2015/16 More efforts are needed to restore fund balance to strategic levels to ensure resources are available to weather the next economic downturn without a decline to service levels. 38

39 Emerging Issues UTILITY RATE INCREASES Water & Wastewater Environmental Resources Capital Needs MAINTENANCE ASSESSMENT DISTRICTS General Benefit General Fund Impact Underfunded MADS Prop 218 Process SUSTAINABILITY OF ENTERPRISE PROGRAMS PACC and Golf both reliant on General Fund Subsidies CAPITAL NEEDS Deferred maintenance addressed in budget with Measure O funds City will present Capital Improvement Plan (CIP) to Council in September. 39

40 Summary Fiscal Year was extraordinarily challenging Getting our fiscal house in order. $12 million worth of reductions needed. Resetting our Finance, Staffing Levels and Service levels. Utility rate increases in Wastewater, pending increases in Water and Environmental Resources. Fiscal Year stabilization year Downtown Revitalization ($6 Million investment) Position us well into the future. Proposed same staffing levels some improvements in needed areas Funding for Fleet/IT/Building Maintenance recommended 1 st Step towards priority based budgeting: Council Strategic Priorities. Complete rebuild of Human Resources and Finance department. Fiscal Year transitioning year Begin discussion regarding weaning off of Measure O. Over $10 million of ongoing Measure O expenditures. Continue implementation of priority-based budgeting. Continue to improve fund balance reserves. 40

41 Next Steps June 21 st Public Hearing on Proposed Budget June 28th Council Adoption of FY Budget Summer/Fall Year CIP Budget Presented to Council Access the Proposed FY 16/17 Budget on the City s website at Click on the City Budget Documents section. 41

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