Title:
Title
Fiscal Year (FY) 2018/19 Midyear Budget Report
End
FileID
File ID: 2019-00173
Location
Location: Citywide
Recommendation:
Recommendation
Adopt a Resolution approving the FY2018/19 Midyear Budget Report.
Contact: Dawn Holm, Director, (916) 808-5574; Daniel Choe, Interim Budget Manager, (916) 808-5049, Department of Finance
Body
Presenter: Daniel Choe, Interim Budget Manager, (916) 808-5049, Department of Finance
Attachments:
01-Description/Analysis
02-City Budget Priority Memo
03-Measure U Implementation Update
04-Resolution
05-Exhibit A - FY2018/19 Midyear Report
06-Exhibit B - Budget and Staffing Adjustments
07-Exhibit C - Reclassification Requests
08-Exhibit D - Position Changes
09-Exhibit E - Amended FY2018/19 Measure U Programming
10-Exhibit F - City Budget Priorities
Description/Analysis
Issue Detail: The FY2018/19 midyear review is intended to update the City Council on major changes since the adoption of the Approved Budget and includes recommendations necessary to implement the City’s financial plan for the remainder of the fiscal year. The FY2018/19 Midyear Report (Midyear Report) provides detailed information on the changes summarized in this report and is included as Exhibit A.
As presented in the FY2017/18 Comprehensive Annual Financial Report (CAFR), revenues and expenditures during fiscal year ending June 30, 2018 resulted in one-time General Fund budgetary resources of $15 million. As detailed in the CAFR report the primary reason for the budgetary results is departmental expenditure savings and the receipt of revenues above budget. It is important to note that since significant revenue increases were included in the Approved Budget, staff is recommending only minor changes in this report to reflect a decline in the Utility User Tax (UUT) revenues. Further, as departments fill vacancies, expenditure savings will diminish.
A significant portion of the midyear resources are necessary to replenish prior use of fund balance and administrative contingency, consistent with prior Council adopted direction.
Preparation of the midyear budget included a review of citywide and department operating revenues and department expenditures as well as discussions on operational changes necessary to reflect priority workload. The following provides details on recommended General Fund budget adjustments necessary to address departmental operational needs and critical equipment/capital improvements.
In November 2018 the voters of Sacramento approved Measure U, a 1 cent discretionary sales tax, effective April 1, 2019. This tax replaces the existing Measure U ½ cent sales tax that expires on March 31, 2019. The fourth quarter Measure U FY2018/19 sales tax receipts are projected to be $21.7 million for the full 1 cent. The California Department of Tax and Fee Administration (CDTFA) continues to process a backlog of returns from prior periods which could affect the sales tax distributions over the next few quarters. Staff will continue to monitor monthly data received from the CDTFA and will revise the five-year Measure U forecast during the FY2019/20 budget development process. This report is recommending the use of $9.1 million in Measure U resources to address prior Council discussions and direction to identify resources since budget adoption. The following chart provides details on these recommendations:
The midyear review included an analysis of all City funding sources as well as identified operational needs. Exhibits A-F provide detailed information on recommended changes to revenues, expenditures and positions in the General Fund that are fully offset, as well as changes to the City’s other funds supported.
Policy Considerations: This report is consistent with Council’s direction and adopted budget principles to use one-time resources strategically, maintain a fiscally sustainable balanced budget and keep the Council informed on the fiscal condition of the City.
Economic Impacts: None
Environmental Considerations:
Environmental Considerations, California Environmental Quality Act (CEQA): This report concerns administrative activities and government fiscal activities that do not constitute a “project” as defined by the CEQA Guidelines sections 15378(b)(2) and 15378(b)(4) and are not subject to the provisions of CEQA (CEQA Guidelines section 15060(c)(3)). CEQA review for any project, which utilizes funds allocated in this report, has been or will be performed in conjunction with planning, design, and approval of each specific project as appropriate.
Sustainability: Not applicable.
Committee Action: The FY2018/19 Midyear Report was presented to the Budget and Audit Committee (Committee) on Tuesday, January 29, 2019. The Mayor introduced a memo outlining City Budget Priorities (Attachment 2) for investments in our community. The City Manager was directed to include these recommendations in the Midyear Report following a discussion by the Committee and the public. The Midyear Report will be forwarded to the City Council for approval on February 5, 2019.
Rationale for Recommendation: The actions recommended in the midyear report address the adjustments necessary to implement the City’s financial plan for the remainder of the current fiscal year.
Financial Considerations: The five-year General Fund forecast based on the FY2018/19 Approved Budget is reflected below.
FY2018/19 Approved General Fund Forecast
While the CAFR provided one-time resources, the midyear revenue review reflected that revenues are on track with budget. However, staff is recommending increasing Property Tax In-Lieu of Vehicle License Fees (VLF) on a one-time basis by $2.5 million and decreasing the UUT by $2.5 million based on revenue received to date. We will continue to monitor the UUT revenue stream throughout the FY2019/20 budget development process.
The five-year forecast presented below has been revised to reflect the FY2017/18 one-time year end resources as well as the priority funding adjustments recommended in this report. The forecast has also been updated to include funding for the City Budget Priorities as discussed at the Budget and Audit Committee meeting on January 29, 2019.
Council’s commitment of resources for future year pension and approved labor growth as reflected below will provide a foundation for right-sizing the General Fund budget over the long-term.
FY2018/19 Midyear General Fund Forecast
The following chart provides an updated Measure U forecast, a detailed Measure U expenditure plan is included as Exhibit E.
FY2018/19 Measure U Forecast
Measure U program updates are included as Attachment 3.
Detailed information on all requested adjustments in the General Fund, Measure U and other funds are included in Exhibits A-F.
Local Business Enterprise (LBE): No goods or services are being purchased under this report.