Title:
Title
Fiscal Year (FY) 2019/20 Midyear Budget Report
End
FileID
File ID: 2020-00077
Location
Location: Citywide
Recommendation:
Recommendation
Adopt a Resolution approving the FY2019/20 Midyear Budget Report
Contact: Tara Filipich, Budget Manager, (916) 808-5078; Dawn Holm, Director, (916) 808-5574, Department of Finance
Body
Presenter: Tara Filipich, Budget Manager (916) 808-5078, Department of Finance
Attachments:
01-Description/Analysis
02-Measure U Implementation Update
03-Resolution
04-Exhibit A - FY2019/20 Midyear Report
05-Exhibit B - Budget and Staffing Adjustments
06-Exhibit C - Reclassification Requests
07-Exhibit D - Position Changes
08-Exhibit E - Amended FY2019/20 Measure U Programming
09-Exhibit F - Interfund Loan from the Risk Fund
Description/Analysis
Issue Detail: The FY2019/20 Midyear Budget Report (Midyear Report) is intended to update the City Council (Council) on major changes following budget approval and includes recommendations necessary to implement the City’s financial plan for the remainder of the fiscal year. The Midyear Report provides detailed information on the changes summarized in this report and is included as Exhibit B.
After a review of citywide revenues (property tax, sales tax, enterprise fund general tax, and cable-commission fees), staff is recommending a $12.9 million revenue increase. In response to Council discussions related to mission-critical programs and after working with the departments, an additional $2.2 million (net) in expenditures is being recommended.
As presented in the FY2018/19 Comprehensive Annual Financial Report (CAFR), revenues and expenditures during fiscal year ending June 30, 2019, resulted in one-time General/Measure U Fund budgetary resources of $27 million. Additionally, the Mayor has been working with the State Controller on the City’s 2017 gas tax audit finding. On January 9, the Mayor was able to obtain a letter from the State Controller’s Office confirming that the City (General Fund) is not required to repay $2 million to the Gas Tax Fund.
The following table provides a summary of the changes in available fund balance.
The following provides details on recommended General/Measure U Fund budget adjustments necessary to address departmental operational needs and critical equipment/capital improvements.
The following provides details on recommended non-General/Measure U Fund budget adjustments necessary to address departmental operational needs and critical equipment/capital improvements.
Convention and Cultural Services Department
The Department requested the addition of 1.0 FTE (Events Services Manager), which will be funded by the Community Center Fund (Fund 6010). This position is necessary to oversee the construction and operation of the convention-center complex as recommended in the study completed by Conventional Wisdom in 2019.
Natomas Basin Habitat Conservation Plan (NBHCP)
The NBHCP, adopted in 1997 and revised in 2003, was designed to promote biological conservation along with economic development and continuation of agriculture in the 53,341-acre Natomas Basin. The Natomas Basin is located in the northern portion of Sacramento County and the southern portion of Sutter County. The Natomas Basin Conservancy (TNBC) is the “Plan Operator” for the NBHCP. TNBC is an IRS section 501(c)(3) nonprofit public-benefit corporation that is independent of the City. TNBC is responsible for the acquisition, operation, and management of mitigation lands needed to meet the requirements of the NBHCP. All mitigation lands must be within the Natomas Basin.
In 2002, the City approved a no-interest line of credit with TNBC for up to $4 million (Agreement No. 2002-523). At the discretion of the City, the line of credit may be used by TNBC to acquire habitat-mitigation lands in the Natomas Basin. The line of credit has not been used since originally approved in 2002. However, the TNBC is now requesting access to funds as land acquisition is of critical importance to the City’s compliance with the NBHCP and reduces the risk that planned development will be challenged because of insufficient mitigation lands to satisfy the NBHCP.
Staff is recommending that a $2 million interfund loan from the Risk Fund to the General Fund be approved. These resources will be used to provide the funding necessary to fund the line of credit with TNBC. At an estimated Pool A rate of 2.20%, the estimated cost of accrued interest to the General Fund is approximately $44,500 annually. Additional information on the interfund loan is included in Attachment F.
Midyear Review
The midyear review included an analysis of all operating departments and funds. Recommendations for staffing changes, net-zero revenue and expenditure adjustments, multi-year-project budget adjustments, and other minor corrective actions are detailed in the Midyear Report. Exhibits B through E provide additional detailed information on these changes.
Policy Considerations: This report is consistent with the Council’s direction to keep the Council informed on the City’s fiscal condition.
Economic Impacts: None
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 and thus are not subject to CEQA (14 Cal. Code Regs. §§ 15060(c)(3), 15378(b)(2), and 15378(b)(4)). CEQA review for any project that uses funds allocated in this report has been or will be performed in conjunction with planning, design, and approval of the project as appropriate.
Sustainability: Not applicable.
Commission/Committee Action: The FY2019/20 Midyear Report was presented to the Budget and Audit Committee (Committee) on Tuesday, January 28, 2020. The Committee discussed the report and voted to forward it to Council.
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 and provide additional resources for mission-critical programs and services.
Financial Considerations: The Midyear Report includes changes to the current budget resolution, as well as future resolutions, necessary to clarify authority and establish the authority needed to manage grants, reconcile year-end revenues with associated expenditures, accept funding from community partners for the City’s efforts on homelessness, authorize an interfund loan, and to address potential funding shortfalls in the START Fund.
The five-year General/Measure U Fund forecast has been updated to reflect the following:
• FY2018/19 year-end adjustments
• Council actions after budget adoption
• Revenue changes based on current estimates
• Department augmentations and changes
Local Business Enterprise (LBE): No goods or services are being purchased under this report.