Document elcerrito_gov_doc_45f747fb3c

21 SECTION 1: BUDGET OVERVIEW The City of El Cerrito serves, leads, and supports our diverse community by providing exemplary and innovative services, public places and infrastructure, ensuring public safety and creating an economically and environmentally sustainable future. EL CERRITO PROFILE The City of El Cerrito is a general law city that was incorporated in 1917. El Cerrito is located in western Contra Costa County and forms part of the highly urbanized area along the eastern shore of San Francisco Bay. El Cerrito has a population of 24,087 and covers an area of 3.9 square miles. It is a community of highly educated residents due primarily to the proximity to UC Berkeley and the San Francisco Bay Area high-tech economy. It is known for its temperate climate and breathtaking views of San Francisco Bay and the Golden Gate Bridge from the hillside areas. Interstate Highway 80 passes near the western boundary of the community, while the crest of the Berkeley Hills and Wildcat Canyon Regional Park define the eastern boundary. The community is served by AC Transit and the Bay Area Rapid Transit (BART) system, with stations near both the northern (El Cerrito Del Norte station) and southern (El Cerrito Plaza station) boundaries of the city. In addition, several transit agencies including Golden Gate Transit, Fairfield-Suisun Transit, Vallejo Transit, and WestCAT also serve the El Cerrito Del Norte BART station. The combination of services from these agencies provides excellent public transportation to the entire Bay Area. The City is organized as a Council-Manager form of local municipal government. The City Council consists of five members elected at large for four-year, overlapping terms. The Council selects the Mayor for a one-year term from among its members. The Mayor and City Council provide community leadership, develop policies to guide the City in delivering services and achieving community goals, and encourage citizen understanding and involvement. The Council Members also serve as the governing body of the El Cerrito Employees’ Pension Board (PB), and the El Cerrito Public Financing Authority (PFA). The City Manager is appointed by the City Council and is responsible for administration of municipal affairs. All municipal departments operate under the supervision of the City Manager. Through the City Manager, City staff uses the resources appropriated by the Council in the budget to achieve desired service results in the community and carries out the policies of the Council. The City Council also appoints the City Attorney to advise them and City staff on legal affairs, to see that all laws are effectively enforced and, when necessary, to defend the City in litigation. The City provides police and fire services as well as recreation, streets and roads, recycling, economic development, public improvements, building, planning and zoning, and general administrative services. Residents are provided water by East Bay Municipal Utility District and sewer services through Stege Sanitary District. Garbage collection service is provided by East Bay Sanitary, and both Comcast and AT&T provide video, internet and telecommunication services. ---PAGE BREAK--- 22 ORGANIZATIONAL OVERVIEW Chart 1-1 provides a graphical overview of the structure of City Government: Chart 1-1 El Cerrito City Government Organization Chart Overall Position Listing Table 1-1 shows the authorized Citywide position listing for permanent positions. The listing reflects interdepartmental transfers. The listing does not include hourly or non-permanent part-time positions. Table 1-1 Citywide Position Listing FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16 City Council 5.00 5.00 5.00 5.00 5.00 City Management 9.80 9.80 9.00 9.00 9.00 Finance Department 6.00 6.00 6.00 6.00 6.00 Community Development* 15.00 15.00 13.50 13.50 13.50 Police Department 56.55 56.55 56.40 56.40 56.40 Fire Department 37.00 37.00 37.00 37.00 37.00 Public Works Department 23.25 23.25 23.80 22.80 22.80 Recreation Department 24.00 24.00 23.00 23.00 23.00 Total 176.6 176.6 173.7 172.7 172.7 *Formerly Environmental and Development Services Residents of El Cerrito City Council City Attorney City Manager City Management Fire Department Finance Police Department Community Development Public Works Recreation Boards and Commissions ---PAGE BREAK--- 23 STRATEGIC PLAN Successful organizations need to have a clear vision of where they are going and how they intend to achieve their mission. The City’s vision was crafted by the community during the City of El Cerrito 2013-2017 Strategic Plan process. This Plan provides a framework for linking identified priorities to the budget process, capital improvement program, important policy considerations, economic development initiatives, and the organization’s desire for continuous improvement. OUR VISION The City of El Cerrito is a safe, connected, and environmentally focused Bay Area destination with vibrant neighborhoods, businesses and public places, and diverse cultural, educational and recreational opportunities for people of all ages. OUR MISSION The City of El Cerrito serves, leads and supports our diverse community by providing exemplary and innovative services, public places and infrastructure, ensuring public safety, and creating an economically and environmentally sustainable future. OUR VALUES Our values drive behavior and support effective implementation of the mission, vision, and goals. The City’s values include: ƒ Ethics and Integrity ƒ Fiscal Responsibility ƒ Inclusiveness ƒ Innovation and Creativity ƒ Professional Excellence ƒ Responsiveness ƒ Transparency and Open Communication In 2012, the City kicked off the process to create the Strategic Plan. Approximately 500 citizens participated in focus group discussions, community workshops, study sessions and online surveys and forums. Together, participants offered ideas and comments about issues currently facing El Cerrito and hopes and desires for the City’s future. The entire plan is available at www.el-cerrito.org. The Plan includes the City’s vision, mission statement and values, six goals and over forty strategies to achieve the goals. The goals are: A. Deliver Exemplary Government Services B. Achieve Long-term Financial Sustainability C. Deepen a Sense of Place and Community Identity D. Develop and Rehabilitate Public Facilities as Community Focal Points E. Ensure the Public’s Health and Safety F. Foster Environmental Sustainability Citywide ---PAGE BREAK--- 24 Community Engagement To build upon the momentum achieved in the Strategic Plan process, and to allow staff and the City Council to gather feedback on the financial challenges the City faces in the upcoming fiscal years, the City held Community Budget Meetings in March 2014. For the first time, these meetings were held in neighborhoods throughout the City and allowed residents and neighbors to learn about the budget and provide input on allocating resources according to the priorities outlined in the Strategic Plan. The meetings were well attended and residents provided thoughtful and valuable feedback for City staff to consider for this budget. Additionally, the City provided a new online forum called Open El Cerrito (www.el-cerrito.org/openelcerrito) that mirrored the presentation and activities from the community meetings and allowed people to participate if they were not able to attend the meeting in person. Participants were invited to engage in an activity that put a "value" on the Strategic Plan goals for the City to focus on by spending a 'theoretical' $500. Participants could distribute the funds evenly to all of the choices or spend the money toward one area. The idea was that how participants allocated the $500 would show what programs and services were most important and to assist in prioritizing the City’s limited resources. 77 $500 budgets were submitted in person and online, and Chart 1-2 shows the average dollar amount allocated by participants to each Strategic Plan goal. Chart 1-2 Average Dollar Amount per Strategic Plan Goal (Total of $500) The allocations, as well as the comments provided in person and online, reflect the goal of Ensure the Public’s Health and Safety as the top priority. Comments reflected the desire to maintain the current level of public safety, police, fire, and emergency services, and understood the challenges that the City has faced in recent years, especially the economic downturn and the the loss of Redevelopment and other State takeaways. Feedback also reflected the desire to Develop and Rehabiliate Public Facilities as Community Focal Points, and in particular residents noted the need for maintaining and improving infrastructure, parks, playfields, open space, and developing a new Library building. Budget Alignment City staff used the goals outlined in the Strategic Plan as well as the data gained from the community meetings to inform the development of their departmental budgets for the next two fiscal years. In order to best determine the resources to allocate to the goals and strategies in the Plan, the departments submitted information tailored toward aligning programs and services to the Strategic Plan goals. $44 $63 $63 $65 $113 $154 $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 Goal A Goal B Goal C Goal F Goal D Goal E ---PAGE BREAK--- 25 Each department evaluated their programs and services and analyzed related data to determine a baseline amount of resources to allocate to the goals of the Strategic Plan. The departments considered several data sets, including personnel necessary to provide the program or service, additional costs (such as consultants or contractors, supplies and equipment, and other purchased services), and whether the program or service is required by law or City policy. Departments were realistic about the objectives that could be achieved in the upcoming fiscal years, and set priorities to allocate resources accordingly. Chart 1-3 depicts the percentages of the total departmental budget alignment of programs and services to each of the Strategic Plan goals. It shows that consistent with previous budgets, survey data, and the desires of the community, the highest priority has been placed on Ensure the Public’s Health and Safety. The goal of Deliver Exemplary Government Services was given high priority as well, as many departments identified programs or services as directly related to strategies within this goal, such as ensuring City programs and services are inclusive of people of diverse backgrounds, utilizing data-driven analysis to allocate resources, and providing excellent customer service. Chart 1-3 Departmental Budget Alignment to Strategic Plan Goals (All Funds) Further detail on the programs and services as aligned to the Strategic Plan goals and strategies are outlined in the department sections, beginning on page 59. Additional information on the quality of services provided by the City is gauged through citizen surveys. The City conducted the National Citizen Survey in April 2012 to gauge citizens’ satisfaction with the community and local government services. This was the City’s fourth National Citizen Survey. The full report is posted, along with the results from previous surveys, on the City’s website at www.el-cerrito.org. 18% 14% 11% 6% 47% 5% Goal A: Exemplary Services Goal B: Financial Sustainability Goal C: Sense of Place & Identity Goal D: Public Facilities Goal E: Public Health & Safety Goal F: Environmental Sustainability ---PAGE BREAK--- 26 BUDGET PROCESS The annual budget is the City’s service and financial plan for the fiscal year: a planning tool that matches the services desired by the community to the resources required in order to provide those services. The development, adoption, and implementation of the City budget compose a major decision-making process with several phases. This year, the budget process began with a series of community budget meetings in various neighborhoods throughout the City in March, as well as an online forum at www.el-cerrito.org/openelcerrito, in order to gather input and feedback on the budget. In April, the City Council held a budget study session to provide better direction to staff in preparing this document. The City is presenting a biennial budget, which will encompass the next two fiscal years. A biennial budget provides a high emphasis on long-term planning and forecasting, gives more time than an annual budget to ensure the budget is being efficiently followed and properly funded, allows greater opportunity to focus on how well programs and services are working over time and complying with the Strategic Plan, and reduces resources associated with annual budgeting. At the initial stage of the budget process, department heads and division managers propose to the City Manager those programs designed to provide essential services that meet the City Council’s expression of community goals. Beginning this year, these proposals will cover FY 2014-15 and FY 2015-16. Staff also prepares estimates of available revenues for the same period. The City Manager and department directors balance the requested program expenditures with the anticipated resources, and develop a proposed budget and financial forecasts. The proposed document is reviewed by the Financial Advisory Board, and their recommendations and revisions are incorporated during the budget process, as appropriate. After presentation of the staff-prepared, proposed budget, the City Council holds public meetings on the budget to review the staff recommendations and is anticipated to adopt the proposed document with whatever changes are required by the fiscal year end. The City’s fiscal year is from July 1 through June 30. The City Council receives public testimony and reviews the service, expenditure, and revenue proposals contained in the proposed budget. After discussing and making amendments, if any, to the proposed budget, the City Council adopts the budget for the next fiscal year and establishes appropriations. The appropriations are the legal authority to spend money. Copies of the various resolutions adopting this budget are provided in the Appendix of the final adopted budget document. While the budget document incorporates two fiscal years, the City Council is required per the El Cerrito Municipal Code to adopt and appropriate an annual budget for each fiscal year. During the time period covered by this document, the City Council will do so prior to June 30, 2014 and June 30, 2015. The next proposed budget document will be prepared prior to FY 2015-16. ---PAGE BREAK--- 27 Table 1-2 Budget Calendar DATE DESCRIPTION March, 2014 Community Budget Meetings x March 13: Harding School x March:15 Arlington Clubhouse x March 25: Senior Center x March 31: Canyon Trail Art Center March 18, 2014 City Council Meeting x Mid-Year Budget Review April, 2014 Budget Kickoff x Payroll budgets sent to Departments x New World System (NWS) baseline budget entered and ready for data entry (revenues and non-personnel expenses) by Departments x Word and Excel files ready for revision by Departments x Strategic Plan Alignment Worksheets to be completed by Departments April 22, 2014 City Council Meeting – Budget Study Session x FY 2013-14 Update x Preview FY 2014-15 and future forecasts x Align Budget Goals with Strategic Plan x Discuss priorities, challenges, and potential balancing measures x Master Fee Schedule x First Reading on Measure A Parcel Tax Ordinance May 1, 2014 Department Budgets completed and reviewed with City Manager x Revenue and Expenditures Changes x Personnel and vacant positions x Part Time and Overtime Requests x Capital Improvement Project Requests (if any) x Review completed Department Narratives x Alignment of goals and objectives with Strategic Plan May 6, 2014 City Council Meeting to consider: x LLAD Resolution of Intent x Second Reading Measure A Parcel Tax Ordinance x Capital Improvement Program Study Session May 20, 2014 City Council Public Hearings x LLAD Hearing & adoption of confirming resolution x Storm Drain Fees resolution May 28, 2014 Park and Recreation Commission Capital Improvement Program Study Session June 9, 2014 City Council Meeting Proposed Budget Introduction and Study Session June 10, 2014 Financial Advisory Board meeting- x Discuss & provide comments on proposed budget June 17, 24, and 30, 2014 City Council Budget Hearings/Adoption x Budgets and Budget Policies x Capital Improvement Program x Appropriations limit Budget Authority Model During each fiscal year, the adopted budget is implemented through the provision of City services and the City’s daily fiscal operations. The budget provides legal spending limits and a planned allocation of resources, within which the City’s managers are expected to provide services and make the best use of public resources. The City Council provides staff with the authority to raise and expend monies ---PAGE BREAK--- 28 within specific funds. The City Manager has the authority to shift resources within funds, but typically not across funds. From time to time throughout the year, the City Council receives periodic progress reports on how well the actual service and financial experience are conforming to the adopted service and financial plan, as expressed in the budget. Under certain circumstances, the City Council may adjust the budgeted appropriations for reasons unforeseen at the time of the adoption of the original budget. Such amendments are made by Council resolutions. Gann Limit Proposition 4, known as the Gann Initiative, was approved by the voters in November, 1979. This measure requires that the City adopt an appropriations limitation each fiscal year. In June of 1990, the voters passed Proposition 111, which modified the previous appropriations limitation requirements of Proposition 4, as follows: The total annual appropriations subject to limitation of the State and of each local government shall not exceed the appropriations limit of the entity of government for the prior year adjusted for the change in the cost of living and the change in population. Now chaptered in Article XIIIB of the California Constitution and Government Code §7900-7914, these two measures specify that the new limit be based on the prior year’s appropriations limit, adjusted for cost of living and population. Each year, every city must select from two alternatives methods for each of these two adjustment factors, as follows: Cost of Living California Constitution Article XIIIB “Change in the cost of living” for an entity of local government, other than a school district or a community college district, shall be either the percentage change in California per capita personal income from the preceding year, or the percentage change in the local assessment roll from the preceding year for the jurisdiction due to the addition of local nonresidential new construction. Population Government Code §7901(b): A city or special district may choose to use the change in population within its jurisdiction or within the county in which it is located. These factors are applied to the established FY 1986-87 appropriations limit, as adjusted annually to determine subsequent year limits. Therefore, each year’s limit becomes the base for computing the succeeding year’s limit. To assist with these computations, the California Department of Finance produces in May of each year the population changes of all cities and counties, as well as the Statewide change in per capita income. In 1991, the California State Board of Equalization asked all County Assessors to compute the annual change in nonresidential new construction. For Contra Costa County, the Auditor-Controller’s Office provides cities with these figures. ---PAGE BREAK--- 29 Analysis For FY 2014-15 the respective State and County offices have provided the City with the following optional factors to be used in the Gann limit computation: Cost of Living: California Per Capita Personal Income = -0.23% Population: Population Change, City of El Cerrito = 0.59% Population Change, County of Contra Costa = 0.98% Using the California Per Capita Personal Income factor and the percentage of Population Change in County of Contra Costa the City’s appropriations limit will grow from to $111,892,904 to $112,294,200. Appropriations limits apply only to tax revenues, not to revenues such as fees that cover the costs of operations. For FY 2014-15, only $18,646,650 of the City’s $30,473,601 projected General Fund and Street Improvement Fund revenues, net of operating transfers, are subject to the Gann limit. Therefore, the City will be $93,767,550 under the Gann limit. Accounting and Evaluation The City of El Cerrito manages its finances according to Generally Accepted Accounting Principles (GAAP). During the fiscal year, expenditures and revenues are carefully documented to ensure compliance with the adopted budget. After the close of the fiscal year, an independent, professional auditor performs an audit, and the City publishes General Purpose Financial Statements, which are included in the Comprehensive Annual Financial Report (CAFR). The CAFR documents the City’s budgetary performance and the financial health of each fund, which offers managers and policy makers the opportunity to evaluate the City’s financial condition and assess the degree to which the City’s use of its resources has met the community’s goals and policies. The insights gained from this evaluation then can be used in future financial planning and budget decisions. ---PAGE BREAK--- 30 ---PAGE BREAK--- 31 SECTION 2: FINANCIAL OVERVIEW FY 2014-15 and FY 2015-16 Financial Summaries The following section provides additional details and discussion on the City’s primary funding sources: the General Fund and many of the City’s special operating funds. Each department has reviewed its budget and proposed how funds should be allocated, what new programs or activities should continue or begin, and what programs or activities should be changed. These changes are reflected in the financial summaries. CITYWIDE REVENUES City programs are supported by a variety of revenue sources. The process of projecting revenues in the various categories can be difficult, but is critical in developing an appropriate spending plan in the current year as well as planning for future years. Table 2-1 provides a summary of the major revenue categories received by the City across all funds, including the General Fund. Proposed revenues over the next two fiscal years are projected to remain relatively flat. Projections represents an overall decline from prior years primarily due to one-time revenues received in previous years for specific purposes such as grants to purchase specialized equipment or other external funding sources for capital improvement projects such as the installation of solar panels on several City facilities. Table 2-1 Citywide Revenues Revenue Category FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16 Actual Actual Amended Proposed Proposed Taxes Property Taxes $8,396,623 $5,467,008 $6,322,213 $6,442,256 $6,636,620 Sales Taxes 6,560,971 6,251,355 6,093,750 6,003,000 6,319,960 Utility User Tax 3,163,978 3,066,580 3,605,000 3,677,100 3,750,642 Local Parcel Taxes 1,908,237 1,908,470 1,908,000 1,908,000 1,908,000 Franchise Taxes 1,020,930 1,065,858 1,177,000 1,393,175 1,434,970 Business License Tax 691,948 660,931 750,000 770,495 785,905 Other Taxes 592,386 681,582 702,015 807,728 829,725 Total Taxes $22,335,073 $19,101,784 $20,557,978 $21,001,754 $21,665,822 Licenses & Permits $518,276 $516,703 $606,000 $531,000 $593,000 Fines and Forfeitures 215,336 288,781 306,500 341,500 341,500 Use of Money and Property 494,979 473,706 451,682 485,943 495,272 Intergovernmental Revenues 7,958,811 10,187,663 14,190,858 8,442,405 8,094,330 Charges for Services 6,274,008 6,842,104 6,839,538 6,819,370 7,163,061 Other Revenues 1,751,600 512,435 266,431 891,231 479,567 Total Revenues before Transfers $39,548,083 $37,923,176 $43,218,987 $38,513,203 $38,832,552 Interfund Transfers $11,271,935 $9,517,061 $5,486,390 $2,852,533 $2,815,683 Total $50,820,018 $47,440,236 $48,705,377 $41,365,736 $41,648,235 ---PAGE BREAK--- 32 Taxes represent approximately $21 million of the City’s total budget with about $17.5 million budgeted in the General Fund generated by property, sales, utility users tax and franchise fees. The remaining $3.5 million in tax revenues are budgeted special operating funds and are used to support maintenance and improvements in landscape, lighting, streets, the storm water system and the City’s swim center. Tax revenues are projected to increase by $1.1 million in FY 2015-16 as a result of conservative increases in property and sales taxes. Some growth is also expected in other tax revenues. Licenses and Permits revenues are generated by permits issued for improvements related to building, electrical, mechanical and plumbing. These revenues have fluctuated in the past, but have remained fairly consistent in the last few years. Some revenue growth is projected due to several large building projects anticipated by FY 2015-16. Use of Money & Property is primarily related to rental of City facilities, mostly in the Recreation department. The use of rental facilities is expected to increase in addition to an approved 4% fee increase in FY 2014-15. Intergovernmental Revenues are revenues paid to the City by other agencies for providing services such as fire protection services for the Kensington Fire District and school resources officers at Portola Middle School and El Cerrito High. These also include in lieu fees by the state for various takeaways as well as different allocations for street maintenance, transportation and environmental programs. Many one-time allocations such as grants are also programmed in this revenue category and as such revenue can vary dramatically from year to year. The last two fiscal years have included one-time allocations that have now been partially or completely spent and revenues are projected return to prior year levels with minimal increases in FY 2014-15 and FY 2015-16. Charges for Services include fees for planning and inspections, weekly curbside collection of recyclables and fees for various recreation programs. A 4% increase was approved for some recreation and planning and inspection fees in FY 2014-15 and an 8% fee increase was approved for the integrated waste management fees for recycling. Other Revenues include revenues from various sources including donations. As most of these revenues are not known in advance, actual revenues received can be different each year and it can be difficult to accurately project these revenues. The projected revenue in FY 2014-15 is higher due to the anticipation of one-time revenue related to a capital improvement project. Inter-fund Transfers reflects transfers planned between funds. These include the transfers from special funds to the General Fund for overhead charges, transfers from various funds for payments to be made from debt service funds, and one-time loans made between special funds in FY 2014-15 and FY 2015-16. Charts 2-1 and 2-2 depict the projected percentage of Citywide revenues before transfers attributable to each category for FY 2014-15 and FY 2015-16, respectively (percentages may not total 100% due to rounding). ---PAGE BREAK--- 33 Chart 2-1 Citywide FY 2014-15 Revenues by Category Chart 2-2 Citywide FY 2015-16 Revenues by Category Taxes 54.5% Intergovernmental Revenues 21.9% Charges for Services 17.7% Use of Money and Property 1.3% Licenses & Permits 1.4% Fines and Forfeitures 0.9% Other Revenues 2.3% Taxes 55.8% Intergovernmental Revenues 20.8% Charges for Services 18.4% Use of Money and Property 1.3% Licenses & Permits 1.5% Fines and Forfeitures 0.9% Other Revenues 1.2% ---PAGE BREAK--- 34 Table 2-2 presents the Citywide revenue summarized by Fund. It includes revenues for the past two fiscal years, the amended budget for FY 2013-14, and the proposed budgets for FY 2014-15 and FY 2015-16. Note that FY 2011-12 revenues appear overstated relative to subsequent years as it was the last year of tax revenues to the various funds of the former El Cerrito Redevelopment Agency. Any remaining funding is now reflected as revenue in the El Cerrito Redevelopment Agency Successor Agency’s Redevelopment Obligation Retirement Fund (RORF), which is not a City fund subject to the City’s budget authority, and therefore is not reflected on this table. Table 2-2 Revenue Summary by Fund FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16 Actual Actual Amended Proposed Proposed General Fund $29,298,213 $29,366,108 $28,809,734 $29,341,458 $30,304,024 Special Revenue Funds Street Improvements 1,607,920 1,170,832 2,517,000 2,033,000 1,431,000 Low & Moderate Income Housing 2,672,157 City Low & Moderate Income Housing 306 1,149 75,284 250,000 City Housing Trust 2,860,000 Gas Tax 949,256 1,137,288 1,150,336 605,712 617,826 National Pollution Discharge Elimination 356,515 419,202 454,625 372,000 315,000 Landscape and Lighting Assessment 1,165,763 1,311,289 1,316,000 859,000 781,000 Measure J Return to Source 430,370 494,038 519,615 406,052 414,173 Measure J Storm Drain 697,571 698,257 698,000 698,000 726,500 Measure A Parcel Tax 439,446 624,880 439,400 439,400 439,400 Federal, State and Local Grants 1,483,879 2,979,546 1,826,059 138,498 C.O.P.S. Grant 100,000 100,000 Asset Seizure 32,564 26,647 2,000 2,000 2,000 Vehicle Abatement 47,307 26,125 21,000 21,000 21,000 Park in Lieu 21 10 50 10 50 Public Art 48,051 39 50 6,050 6,050 Paratransit 146,052 146,052 Total Special Revenue Funds $9,931,125 $8,889,300 $11,804,135 $5,902,058 $5,250,051 Capital Projects Funds RDA Capital $4,071,828 Capital Improvements 1,735,759 2,874,698 3,617,046 2,008,233 1,790,813 Total Capital Projects Funds $5,807,586 $2,874,698 $3,617,046 $2,008,233 $1,790,813 Debt Service Funds Storm Drain Debt Service $1,543,350 $495,100 RDA Debt Service 107,419 RDA A&B Debt Service 325,692 Financing Authority Measure A 365,090 2,850,575 359,158 369,574 368,139 Financing Authority Civic Center 597,399 597,412 596,408 597,768 598,246 Financing Authority Street Improvement 737,659 739,058 740,100 737,408 738,228 Total Debt Service Funds $3,676,609 $4,187,045 $2,190,766 $1,704,750 $1,704,613 Internal Service Funds Vehicle/Equipment Replacement $95,994 $128,169 $128,832 $128,533 $128,832 Enterprise Fund Integrated Waste Management $1,868,721 $1,882,659 $2,042,364 $2,166,728 $2,355,926 Fiduciary Fund Employees' Pension Trust $141,769 $112,257 $112,500 $113,976 $113,976 Total Funds $50,820,018 $47,440,236 $48,705,377 $41,365,736 $41,648,235 ---PAGE BREAK--- 35 CITYWIDE EXPENDITURES The FY 2014-15 and FY 2015-16 Proposed Budget includes a reduction in recurring Citywide expenditures totaling approximately $4 million. These changes, affecting all funds in both years, are the result of changes in resource needs as well as proposed balancing measures that close the projected deficits for FY 2014-15 in the General Fund and in some of the special operating funds. Even with significant reductions and restructuring in the special funds, deficits in the General Fund, National Pollutant Discharge Elimination System (NPDES) and the Landscape and Lighting Assessment District (LLAD) are projected in FY 2015-16 and will require additional balancing measures if additional revenue is not identified. Table 2-3 provides a summary of Citywide expenditures across the major expense categories. It includes expenditures for the past two fiscal years, the adopted and amended budget for FY 2013-14, and the proposed budgets for FY 2014-15 and FY 2015-16. Note that FY 2011-12 expenditures appear overstated relative to subsequent years as it was the last year of expenditures in the various funds of the former El Cerrito Redevelopment Agency. Expenditures by the El Cerrito Redevelopment Agency Successor Agency are reflected in the Redevelopment Obligation Retirement Fund (RORF), which is not a City fund subject to the City’s budget authority, and therefore is not reflected on this table. Table 2-3 Citywide Expenditures by Category FY 2011-12 Actual FY 2012-13 Actual FY 2013-14 Adopted FY 2013-14 Amended FY 2014-15 Proposed FY 2015-16 Proposed Personnel $25,296,496 $25,430,585 $25,288,500 $25,475,967 $25,290,126 $26,324,445 Professional Services 3,003,635 3,429,087 2,802,725 3,480,386 2,734,300 2,719,300 Purchased Property Services 2,831,692 4,126,128 7,580,457 8,654,877 5,663,153 4,749,523 Other Services 1,237,193 1,439,634 1,519,458 1,519,458 1,434,658 1,465,498 Supplies 892,887 865,537 849,850 842,646 854,250 871,050 Property & Capital 1,218,871 2,124,614 313,500 1,349,481 264,300 342,800 Financing Costs 6,240,162 5,138,635 3,092,992 3,092,992 2,608,937 2,604,722 Other Financing Uses 11,514,424 8,043,755 4,359,990 8,877,542 2,852,533 2,815,683 Total $52,235,359 $50,597,975 $45,807,472 $53,293,349 $41,702,257 $41,893,021 Personnel costs for FY 2014-15 remain relatively flat in spite of increases in benefit costs. The proposed personnel costs assume several assumptions, some of which are still subject to negotiations that are currently in progress. Assumptions include the following: x Fifteen vacancies will remain vacant for the year, saving a total of $1.9 million. x An increase by non-public safety management and unrepresented professional staff in their employee pension contributions from 4% to the full 8% employee share. x Overall salary savings of approximately $539,000 in Police based on current staffing levels and the need to maintain vacancies to balance the budget. The three sworn positions will be re-evaluated at mid-year and allowed to be filled should additional revenues be identified through a ballot initiative. x The Fire Department, while fully staffed operationally with three recent hires, will rely on overtime rather than fill the three authorized “coverage” positions, similar to recent years (results in approximate $150,000 in savings). Personnel costs in FY 2015-16 increase by approximately $1 million, the result of growth in the cost of medical benefits and pensions. ---PAGE BREAK--- 36 Professional Services decrease with the exception of contractual annual increases and the addition of $50,000 for public information costs associated with a possible ballot initiative in November. Purchased Property Services, which includes contract services for maintenance and construction, decrease by approximately $2 million in FY 2014-15, the majority related to the completion of several capital projects. Capital projects being undertaken outside of the General Fund will progress as planned, but as in the previous fiscal year, no General Fund contributions are included for facility improvements or capital, except a small reimbursement for Recreation software. In addition, to construction services contracts, landscape and other maintenance services have been reduced to align expenses with the available revenue. Other Services decrease in FY 2014-15 and FY 2015-16, as the costs for insurance and utilities decline. Supplies, which is used for to account for costs such as fuel, uniforms, and other operating supplies, assumes minimal changes in FY 2014-15 and FY 2015-16. Property & Capital expenses will return to the FY 2013-14 Adopted budget levels. There were increases in previous year due to one-time grants used to purchase specialized equipment in the Fire and Police departments. Financing Costs are reduced in FY 2014-15 and going forward due to the payoff of the storm drain bonds in FY 2013-14. Other Financing Uses includes transfers made between funds. This amount has been reduced in FY 2014-15 and FY 2015-16 due to the elimination of several transfers that occurred in the past between Public Works special revenue funds. Expenses that had been previously funded through inter-fund transfers are now being budgeted in and charged directly to the appropriate fund. Table 2-3 displays the allocation of expenditures by departments over the last two fiscal years, current fiscal year and the Proposed FY 2014-15 and FY 2015-16 budgets, and shows that proposed expenditures ahave considerably decreased. Table 2-3 Citywide Department Expenditures and Transfers Department FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16 Actual Actual Amended Proposed Proposed City Management $2,685,267 $2,822,685 $2,762,692 $2,646,502 $2,622,912 Finance 4,333,064 5,737,757 3,466,881 2,773,386 2,849,109 Police 10,106,417 10,546,965 10,519,445 10,690,226 11,292,173 Fire 10,708,768 11,037,456 9,350,128 8,270,229 8,563,769 Public Works 5,311,382 5,284,964 4,484,688 4,600,229 4,655,934 Community Development 2,983,548 2,673,464 6,178,746 1,964,298 1,946,516 Recreation 4,168,183 4,143,703 4,175,483 4,185,592 4,328,846 Capital Outlay 1,709,469 2,945,720 6,868,896 3,719,262 2,818,079 Total Before Transfers $42,006,098 $45,192,714 $47,806,959 $38,849,724 $39,077,338 Transfers $10,229,261 $5,405,261 $5,486,390 $2,852,533 $2,815,683 Total Expenditures $52,235,359 $50,597,975 $53,293,349 $41,702,257 $41,893,021 ---PAGE BREAK--- 37 Table 2-4 Expenditure Summary by Fund FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16 Actual Actual Amended Proposed Proposed General Fund $32,524,916 $30,319,042 $29,985,255 $29,252,065 $30,396,301 Special Revenue Funds Street Improvements $1,180,708 $1,322,527 $3,026,284 $1,929,454 $1,310,219 Low & Moderate Income Housing 4,432,142 City Low & Moderate Income Housing -5,411,570 995,342 671,990 111,538 147,072 City Housing Trust 2,860,000 Gas Tax 960,014 1,137,186 1,253,937 540,792 593,483 National Pollution Discharge Elimination 402,333 414,807 454,725 390,934 424,063 Landscape and Lighting Assessment 1,185,858 1,311,295 1,314,327 901,542 899,610 Measure J Return to Source 434,702 493,245 518,741 407,178 413,637 Measure J Storm Drain 739,426 536,722 951,402 556,710 742,369 Measure A Parcel Tax 414,544 413,178 624,970 686,436 534,951 Federal, State and Local Grants 3,032,462 3,449,924 1,938,387 173,498 12,000 C.O.P.S. Grant 100,000 100,000 Asset Seizure 36,220 12,377 Vehicle Abatement 59,276 38,844 11,000 11,000 11,000 Paratransit 127,316 129,075 Total Special Revenue Funds $7,466,115 $10,113,071 $13,638,140 $5,936,398 $5,317,479 Capital Projects Funds RDA Capital $2,762,120 Capital Improvements 1,488,907 2,790,087 4,994,701 2,188,601 1,830,551 Total Capital Projects Funds $4,251,026 $2,790,087 $4,994,701 $2,188,601 $1,830,551 Debt Service Funds Storm Drain Debt Service $1,545,418 $520,686 $521,530 RDA Debt Service 803,190 RDA A&B Debt Service 1,137,546 Financing Authority Measure A 367,453 3,009,062 365,308 369,574 368,089 Financing Authority Civic Center 599,988 600,088 596,308 597,768 598,246 Financing Authority Street Improvement 738,733 740,158 736,780 737,408 738,228 Total Debt Service Funds $5,192,326 $4,869,993 $2,219,926 $1,704,750 $1,704,563 Internal Service Funds Vehicle/Equipment Replacement $681,672 $287,453 $168,532 $128,533 $168,532 Enterprise Fund Integrated Waste Management $1,977,534 $2,106,072 $2,174,295 $2,377,934 $2,361,619 Fiduciary Fund Employees' Pension Trust $141,769 $112,257 $112,500 $113,976 $113,976 Total Funds $52,235,359 $50,597,975 $53,293,349 $41,702,257 $41,893,021 ---PAGE BREAK--- 38 Chart 2-4 depicts the expenditures by department as a percentage of total expenditures (percentages may not total 100% due to rounding). Chart 2-4 Citywide Expenditures by Department Inter-Fund Transfers Table 2-5 shows transactions between all funds and the purpose for the City’s $2.8 million inter-fund transfers. This schedule details the amount of transfers, the funds that are exchanging funds and the purpose for the transfer. Transfers are used to place appropriate revenues in the fund where the expense will be incurred. The cost recovery/overhead charges transfers have been adjusted for inflation at a rate of 4% over the previous year’s transfer and then reallocated between special funds. The debt service, pension funding, and subsidy amounts are set by various agreements. Table 2-5 Transfers Summary Fund Making Transfer Fund Receiving Transfer Purpose FY 2014-15 Transfer FY 2015-16 Transfer Gas Tax General Fund Cost Recovery $94,778 $97,621 NPDES General Fund Cost Recovery $68,866 $70,932 LLAD General Fund Cost Recovery $150,445 $154,958 Measure J-Return to Source General Fund Cost Recovery $58,931 $60,699 Storm Drain General Fund Cost Recovery $70,120 $72,224 Paratransit General Fund Cost Recovery $31,486 $32,430 Integrated Waste Mgmt General Fund Cost Recovery $336,648 $346,747 Integrated Waste Mgmt LLAD Advance to Fund $78,000 $0 LLAD Integrated Waste Mgmt Repayment of Advance $0 $39,000 Storm Drain NPDES Advance to Fund $57,000 $0 NPDES Storm Drain Repayment of Advance $0 $28,500 Gas Tax CIP Project Funding $0 $41,500 Integrated Waste Mgmt Public Art Project Funding $6,000 $6,000 Grants General Fund Project Funding $35,000 $0 General Fund Pension Pension Funding $113,976 $113,976 Measure A General Fund Solar Lease Debt Service $50,912 $50,912 Integrated Waste Mgmt General Fund Solar Lease Debt Service $3,671 $3,671 General Fund Financing Authority-City Hall City Hall Debt Service $593,768 $594,246 Street Improvement Financing Authority-Streets Streets Debt Service $733,408 $734,228 Measure A Financing Authority-Swim Measure A Debt Service $369,524 $368,039 Total $2,852,533 $2,815,683 City Management 6.3% Finance 6.7% Police 25.6% Fire 19.8% Public Works 11.0% Community Development 4.7% Recreation 10.0% Capital Outlay 8.9% Transfers 6.8% ---PAGE BREAK--- 39 FUND BALANCE Table 2-6 summarizes the projected year-end balances by Fund and the effect of the FY 2014-15 Proposed Budgets on the year end balances by June 30, 2015. Estimating the year-end fund balance provides the amount available for appropriation at the start of the new fiscal year. It is the City’s goal to fund ongoing operations with ongoing revenue. In general, fund balance should only be used for one-time expenditures when the annual costs exceed the revenue generated in a given fiscal year. Projected ending fund balances for FY 2014-15 declines by $337,000 across all funds. While the total of all balances decline, mainly the result of one-time use, most of the City’s primary operating funds are projected to remain unchanged indicating annual expenditures are aligned annual revenue. Table 2-6 Projected Fund Balance Description Projected at June 30, 2014 Revenues Expenditures Operating Transfers In Operating Transfers Out Net Change Est. Balance at June 30, 2015 General Fund Balance $1,568,773 $28,440,601 $28,544,321 $900,857 $707,744 $89,393 $1,658,166 Gas Tax Fund ($58,100) $605,712 $446,014 $94,778 $64,920 $6,820 NPDES 19,209 315,000 322,068 57,000 68,866 (18,934) 275 Landscape and Lighting 42,687 781,000 751,097 78,000 150,445 (42,542) 145 Measure J Return to Source 70,561 406,052 348,247 58,931 (1,126) 69,435 Measure A Parcel Tax 456,254 439,400 266,000 420,436 (247,036) 209,218 Asset Seizure 154,747 2,000 2,000 156,747 Vehicle Abatement 184,537 21,000 11,000 10,000 194,537 Park In Lieu Fund 12,010 10 10 12,020 Street Improvement Fund 33,238 2,033,000 1,196,046 733,408 103,546 136,784 Art in Public Places 48,129 50 6,000 6,050 54,179 Paratransit 19,370 146,052 95,830 31,486 18,736 38,106 Federal, State and Local Grants 35,380 138,498 138,498 35,000 (35,000) 380 C.O.P.S. Grant 149,369 100,000 100,000 149,369 City Housing Trust City LMI Housing 25,286 75,284 111,538 (36,254) (10,968) Subtotal Special Revenue Funds $1,192,679 $5,063,058 $3,786,338 $141,000 $1,593,350 ($175,630) $1,017,049 Capital Improvements ($616,700) $2,008,233 $2,188,601 ($180,368) ($797,068) Measure J Storm Drain (91,298) 698,000 429,590 127,120 141,290 49,992 Subtotal Capital Funds ($707,998) $2,706,233 $2,618,191 $127,120 ($39,078) ($747,076) Finance Authority- Measure A $209,436 $50 $369,574 $369,524 $209,436 Financing Authority-City Hall 598,054 4,000 597,768 593,768 598,054 Financing Authority-Street Imp 740,112 4,000 737,408 733,408 740,112 Subtotal Debt Service Funds $1,547,602 $8,050 $1,704,750 $1,696,700 $1,547,602 Integrated Waste Management $329,031 $2,166,728 $1,953,615 $424,319 ($211,206) $117,825 Vehicle/Equipment Replacement 36,860 128,533 128,533 36,860 Subtotal Enterprise Funds $365,891 $2,295,261 $2,082,148 $424,319 ($211,206) $154,685 Employees' Pension Trust Fund $113,976 $113,976 Subtotal Fiduciary Funds $113,976 $113,976 Total All Funds $3,966,946 $38,513,203 $38,849,724 $2,852,533 $2,852,533 ($336,521) $3,630,425 ---PAGE BREAK--- 40 GENERAL FUND OVERVIEW The General Fund is the City’s primary operating fund and represents approximately 71% of the total Citywide budget. The General Fund supports critical services such as public safety, community development, recreation and general city management. In addition to these services, due to the unrestricted nature of the fund, services not supported by special funds must be paid by the General Fund. The City’s ability to maintain City services relies heavily on tax revenue with property and sales taxes representing the largest percentage and both have slowed during the economic downturn. Like most cities, El Cerrito has struggled to balance increasing expenses due in large part to health and pension costs with sluggish revenues that have not kept pace with the increase in expenditures. In addition, some revenues have been permanently lost as in the case of redevelopment. Staff estimates that about a $1 million annually has been lost as a result of redevelopment dissolution. Faced with rising costs, the loss of significant ongoing revenue and diminished reserves, the General Fund faced potential deficits in both fiscal years 2014-15 and 2015-16, approximately $2 million between both fiscal years. Table 2-7 provides a summary of the General Fund forecast that shows a balanced budget in FY 2014- 15. This includes some increases in revenue, a reduction in expenditures and approximately $1.4 million in salary savings due to unfilled positions vacant for the year. However, increases in health and pension costs that the City has little to no control over increase costs in FY 2015-16 in excess of available revenues and the fund is projected to have a $92,000 deficit in FY 2015-16. Additional balancing measures will be required to bring the fund into balance. Discussions currently underway with labor groups and or a potential new revenue measure will have a significant impact and will change the projected deficit. In previous budget documents, the City has included a 10-year forecast for the General Fund. Due to impact on the budget resulting from ongoing negotiations and discussions, this forecast only includes the addition of two additional fiscal years, FY 2014-15 and FY 2015-16. Once these have concluded, the forecast will include an additional two fiscal years and reflect a five year forecast for the General Fund rather than ten years. Table 2-7 General Fund Forecast General Fund Summary FY 2012-13 Actual FY 2013-14 Adopted FY 2013-14 Amended FY 2013-14 Projected FY 2014-15 Proposed FY 2015-16 Proposed Beginning Restricted Fund Balance $598,957 $0 $1,059,976 $1,059,976 Beginning Unassigned Fund Balance $2,608,745 $2,909,552 $1,281,566 $1,281,566 $1,479,380 $1,568,773 Total Revenues $29,366,108 $28,479,079 $28,809,734 $29,054,141 $29,341,458 $30,304,024 Total Expenses $28,947,137 $28,453,592 $28,929,497 $28,860,545 $29,252,065 $30,396,301 Personnel $22,728,201 $23,649,427 $23,836,894 $22,180,815 $24,151,835 $25,161,615 Salary Savings ($28,480) ($1,467,048) ($1,467,048) ($22,858) ($1,532,693) ($1,608,952) Non-Personnel $6,247,416 $6,271,213 $6,559,651 $6,702,589 $6,632,923 $6,843,638 Annual Balance/Shortfall $418,970 $25,487 ($119,763) $193,596 $89,393 ($92,277) Transfer Out Grant $598,957 $598,957 Transfer Out - Solar CIP $1,134,584 $456,801 $456,801 Total Transfer out of Restricted Funds $1,134,584 $0 $1,055,758 $1,055,758 $0 $0 Ending Fund Balance/Deficit $2,492,088 $2,935,039 $1,166,021 $1,479,380 $1,568,773 $1,476,496 Unassigned Ending Fund Balance/Deficit $2,492,088 $2,935,039 $1,166,021 $1,479,380 $1,568,773 $1,476,496 Ending Unassigned Reserve Percent 8.6% 10.3% 4.0% 5.1% 5.4% 4.9% ---PAGE BREAK--- 41 General Fund Revenues Table 2-8 and Chart 2-5 depict the revenue by category in the General Fund. While property and sales taxes are now expected to improve, franchise taxes, business license taxes, and others will experience minimal growth. Following is a more in-depth discussion on each of the major revenue categories and the issues addressed in the FY 2014-15 and FY 2015-16 Proposed Biennial Budget. Table 2-8 General Fund Revenues Revenue Category FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16 Actual Actual Amended Proposed Proposed Taxes Property Taxes $5,685,841 $5,467,008 $6,322,213 $6,442,256 $6,636,620 Sales Taxes 5,014,429 5,109,397 4,593,750 4,605,000 4,893,960 Utility User Tax 3,163,978 3,066,580 3,605,000 3,677,100 3,750,642 Franchise Taxes 1,020,930 1,065,858 1,177,000 1,393,175 1,434,970 Business License Tax 691,948 660,931 750,000 770,495 785,905 Other Taxes 172,544 201,097 194,900 269,124 283,000 Total Taxes $15,749,670 $15,570,870 $16,642,863 $17,157,150 $17,785,097 Licenses & Permits $518,276 $516,703 $606,000 $531,000 $593,000 Fines and Forfeitures 215,336 288,781 306,500 341,500 341,500 Use of Money and Property 283,951 317,008 315,700 344,900 353,840 Intergovernmental Revenues 4,770,474 5,027,113 5,120,649 5,183,962 5,266,191 Charges for Services 4,432,452 5,008,433 4,811,496 4,660,442 4,853,935 OtherRevenues 111,151 289,671 202,147 221,647 220,267 Interfund Transfers 3,216,904 2,347,528 804,379 900,857 890,194 Total $29,298,213 $29,366,108 $28,809,734 $29,341,458 $30,304,024 Chart 2-5 General Fund Revenue Percentages by Category Taxes 58.5% Intergovernmental Revenues 17.7% Charges for Services 15.9% Interfund Transfers 3.1% Licenses & Permits 1.8% Fines and Forfeitures 1.2% Use of Money and Property 1.2% Other Revenues 0.8% ---PAGE BREAK--- 42 Discussion of Major Revenue Categories Property Taxes are an ad valorem tax levied on real and personal property based on their assessed values as determined by the County Assessor. It is also levied on certain business properties that cross county boundaries (such as railroads), based on their assessed values as determined by the State Board of Equalization. They represent the single largest tax revenue to the City’s General Fund, totally between $5 million and $6 million annually. Proposition 13, passed by the voters in June 1978, significantly changed property tax revenues to local governments. It capped the property tax rate that can be imposed at 1% of the assessed value, unless a higher rate to pay for indebtedness is approved by the voters. To implement Proposition 13, county auditors adopted a system of allocating the 1% property taxes to local governments based on their share of countywide property taxes collected in the mid 1970s. State shifts of local property taxes in order to backfill its school funding cuts reduced the City’s share of the 1% property taxes, which is currently about 22%. The City has no additional ad valorem property tax levies, although other agencies do levy additional ad valorem property taxes in El Cerrito. Proposition 13 also changed the method of assessing property values for taxation. Specifically, it rolled back the assessed values for FY 1978-79 to 1975 levels and restricted annual increases over that base value to a specified inflation factor, not to exceed 2% per year. It allowed decreases in values when that inflation factor is negative. It also prohibited reassessment of a property to a higher base value except upon change in ownership or completion of new construction. In most years, this assessment process results in a property’s market value being greater than its assessed value. Moreover, the market value of properties in the City as a whole is significantly greater than the City’s overall assessed value, as a large majority of properties in El Cerrito have not been reassessed to current market value since the passage of Proposition 13. Proposition 8, passed by voters in November 1978, further changed the property assessment process to address real estate market declines. It requires county assessors to conduct “decline in value reviews” to ensure the assessed value of properties are set at a lower rate if the market value of the properties has declined. When a property is assigned a lower value, this is referred to as a “Prop 8 Reduction.” The real estate boom leading up to 2008 followed by the Great Recession resulted in a large number of Prop 8 Reductions in El Cerrito and significant decline in property tax revenues to the City. Starting in FY 2009-10, there were over 1,000 properties with Prop 8 Reductions. The City’s overall assessed value increased that year, however, masking the $139 million loss in assessed value from these initial Prop 8 Reductions. The impact reached its peak in FY 2011-12 when there were more than 2,000 properties with Prop 8 Reductions, reducing the City’s assessed value by more than $357 million, a loss that was not counterbalanced by increases in assessed value on other properties. As a result, the City’s property tax revenues, which had been approaching $6 million annually in FY 2008-09, dropped to about $5.5 million in FY 2012-13. The City’s assessed values and property tax revenues for FY 2013-14 have increased, as the County Assessor has dropped the number of Prop 8 Reductions General Fund property tax revenues for FY 2013-14 are projected to total nearly $5.9 million. This trend is expected to continue, as El Cerrito real estate sales are strong thus far in 2014. Therefore, the assessed value lost from Prop 8 Reductions is projected to be recaptured by the end of 2015, resulting in a return to prior levels in property tax revenues to the General Fund by FY 2015-16. Sales Taxes are imposed on the total retail price of tangible personal property purchased in the City. The total sales tax rate in El Cerrito is 9.5%, which includes: ---PAGE BREAK--- 43 Rate Purpose 6.00% State Funds 0.50% Contra Costa County Transportation Authority 0.50% Bay Area Rapid Transit District 0.50% County health and social services, public safety, and transportation 0.25% Economic Recovery Fund 0.75% City General Fund 0.50% El Cerrito Measure A (Streets) 0.50% El Cerrito Measure R (General Fund) The City’s General Fund receives about $4.5 million in sales tax revenues annually, including the general sales and use tax; Measure R, a seven-year, half-cent sales tax approved by the voters to maintain City services; reimbursement from the State for local sales tax revenue borrowed in prior years through the Economic Recovery Fund portion of sales tax; and a share of the County sales tax designated for public safety. Sales taxes are a significant revenue source to the City’s General Fund, but are more cyclical and volatile than property tax revenues. The economic downturn between 2007 and 2011 resulted in a drop in retail sales statewide and a corresponding drop in sales tax revenues. The City was able to compensate somewhat for the downturn by passing Measure R in 2010. Unfortunately, the greater overall downturn in sales tax revenue was hidden by a misallocation of sales taxes collected by the Richmond Home Depot to El Cerrito for several years. This misallocation has been corrected for FY 2013-14 and going forward projections are based on accurate allocations and a projected increase in retail sales as the economy recovers. The City will generally see an increase in the sales tax revenues being allocated to El Cerrito, but there is an outstanding liability to the City of Richmond that will be addressed over the next few fiscal years, potentially impacting revenue. Utility User Taxes were initially approved by the voters in 1991 and revised with voter approval of the ordinance in 2004. The tax generates between $3 million and $3.5 million in revenues annually for the General Fund. The ordinance calls for an 8% tax to be assessed by providers of gas, electricity, water, telephone and video services to all El Cerrito customers and then remitted to the City. These revenues are subject to changes in market conditions, weather, and/or pricing in the sectors subject to the utility user tax ordinance. Although use of these services is generally declining, prices and rates are generally increasing on these services. Therefore a slight increase in overall utility user revenues is projected for coming fiscal years. Franchise Taxes are paid by utilities based on various methodologies and represent over $1 million in General Fund revenue. They are projected to increase over the next few years. Business License Taxes are imposed on certain types of businesses in El Cerrito and reflect about $750,000 of General Fund revenue annually. The tax is based on factors such as a business’s number of employees or vehicles, its annual gross receipts, or a property owner’s number of residential rental units. A slight increase is projected in the next few years. Other Taxes includes the Transient Occupancy Tax, a 10% tax on room rates for hotels and motels, and other minor taxes. These are a minor General Fund revenue sources, projected to increase over the next few years. ---PAGE BREAK--- 44 General Fund Expenditures The Proposed FY 2014-15 General Fund expenditure budget totals $29.3 million, a decrease of approximately $700,000 from the FY 2013-14 Amended budget. In FY 2015-16, the budget is projected to increase by about $1.1 million, with costs in health and pension benefits representing about $900,000 of that increase. Non-personnel costs decrease by approximately $1 million in FY 2014-15 in large part due to a one- time transfer related to capital expenditure for solar installation and a grant from the Municipal Services Corporation that will be completed in FY 2013-14. There is a slight increase, about $210,000 in FY 2015-16 related to expected increases in contract services. Approximately 77% of the General Fund expenditures are related to personnel costs. Within Personnel, salaries and benefits have traditionally been governed by the City Council’s policy to provide median compensation, which is intended to act as a ceiling for salaries and benefits as agreed upon in the memorandums of understanding with the various benefit groups. Beginning two years ago, efforts to curb ongoing cost increases for salaries and retirement benefits were implemented through increased staff contributions to PERS and the give back of approved cost-of-living increases. The FY 2014-15 proposed budget includes an assumption of increased contributions by the management and unrepresented employees, as well as several of the bargaining units, some of which are still in negotiations. The result of these negotiations could change the assumptions in the proposed budget in FY 2014-15 and forward. Of the remaining General Fund expenses, very little are discretionary and include costs related to contract services such as Public Safety dispatch, Animal Control services, legal services, independent audit services, election services and criminalist services that the City could not provide as efficiently as other organizations can on its behalf. When other non-discretionary items are factored in such as insurance, medical supplies, utilities, vehicles, and a minimal level of supplies, nearly 95% of the General Fund is non-discretionary. Table 2-9 General Fund Expenditures By Category FY 2011-12 Actual FY 2012-13 Actual FY 2013-14 Amended FY 2014-15 Proposed FY 2015-16 Proposed Personnel $22,619,755 $22,699,729 $22,369,846 $22,619,142 $23,552,663 Professional Svcs 2,185,665 2,339,754 2,464,700 2,446,700 2,501,700 Purchsased Property Services 884,228 1,020,152 856,562 1,055,233 1,097,235 Other Services 1,130,385 1,316,895 1,346,820 1,306,825 1,362,495 Supplies 660,926 662,994 632,946 617,700 633,150 Property & Capital 229,826 232,649 238,500 262,800 301,300 Financing Costs 102,395 181,900 218,073 235,921 239,536 Other Financing Uses 4,711,737 1,864,968 1,857,808 707,744 708,222 Total $32,524,916 $30,319,042 $29,985,255 $29,252,065 $30,396,301 ---PAGE BREAK--- 45 Chart 2-6 Proposed General Fund Expenditures Table 2-10 provides a summary of the General Fund expenditure budget by Department. While some reorganization has occurred, Department budgets have remained fairly consistent over the last few years. Table 2-8 General Fund Expenditures By Department Department FY 2011-12 Actual FY 2012-13 Actual FY 2013-14 Amended FY 2014-15 Proposed FY 2015-16 Proposed City Management $2,614,045 $2,752,049 $2,631,140 $2,584,245 $2,559,116 Finance 923,606 929,669 1,119,705 936,910 1,012,820 Police 9,910,485 9,982,363 10,384,068 10,567,226 11,169,173 Fire 7,935,101 8,323,854 8,157,992 8,141,696 8,395,237 Public Works 986,862 2,031,554 909,026 645,185 674,066 Community Development 1,432,331 1,604,559 1,491,688 1,726,262 1,799,444 Recreation 4,010,750 3,964,611 3,890,629 3,942,797 4,078,223 Transfers 4,711,737 730,384 1,401,007 707,744 708,222 Total $32,524,916 $30,319,042 $29,985,255 $29,252,065 $30,396,301 Personnel 77.3% Professional Services 8.4% Property/Other Services 8.9% Supplies 2.1% Property/Capital 0.9% Transfers 2.4% ---PAGE BREAK--- 46 Chart 2-7 General Fund Expenditures – Percentage By Department Chart 2-8 depicts a comparison in General Fund expenditures by Department over the past four fiscal years. The largest increase has occurred in the Police Department, reflecting the City’s continued commitment to Public Safety. Chart 2-8 Variance of General Fund Expenditures (Before Transfers) City Management 8.8% Finance 3.2% Police 36.1% Fire 27.8% Public Works 2.2% Community Development 5.9% Recreation 13.5% Transfers 2.4% 36% 34% 36% 37% 38% 29% 28% 29% 29% 28% 14% 13% 14% 14% 14% 9% 9% 9% 9% 9% 3% 3% 4% 3% 3% 5% 5% 5% 6% 6% 4% 7% 3% 2% 2% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2011-12 Actual 2012-13 Actual 2013-14 Amended 2014-15 Proposed 2015-16 Proposed Percentage of Expenditures Fiscal Year Public Works Community Development Finance City Management Recreation Fire Police ---PAGE BREAK--- 47 MAJOR OPERATING FUNDS In addition to the General Fund, City operations rely on a variety of funding sources. Special Funds, typically restricted for specific uses, contribute $10.1 million, or approximately 26%, of the total resources used to support the City’s approximately $38.8 million operating budget. These funds can be described in these broad categories: Special Revenue Funds Special revenues and grants are accounted for in separate funds and are legally restricted to a specific purpose, service, or program. Some special revenue funds receive tax-based revenues. Some account for revenues and expenditures related to the financing of public improvements or services funded by property assessments, fees or special taxes. Major special revenue funds, some of which are described in greater detail in the following section, are as follows: x Gas Tax Fund (201) x National Pollutant Discharge Elimination System (NPDES) Fund (202) x Landscaping and Lighting Assessment District Fund (203) x Measure J Return to Source Fund Transportation (204) x Measure A Swim Center Fund (206) x Street Improvement Fund (211) x Grants Fund (221) x C.O.P.S. Grant Fund (222) x City Housing Trust Fund (231) x Low & Moderate Income Housing Asset Fund (232) Capital Funds Funds are created to account for revenues and expenses related to capital projects, though sometimes include expenditures on operations. The major capital funds include: x Capital Improvement Program Fund x Measure J Storm Drain Fund (205) Enterprise Funds Enterprise funds are used to support the expenditures of a specific service or program and revenue is derived through the collection of the fees associated with providing the service/program. The major enterprise fund is Integrated Waste Management Fund (501). ---PAGE BREAK--- 48 FINANCIAL FORECASTS This section contains five-year financial forecasts for eight of the City’s major special revenue funds. The following five-year forecasts include a description of each fund, assumptions about revenues and expenditures, and analysis and projections of the revenue sources and uses. Any issues unique to a fund are also highlighted. While these key operating funds are summarized here, they are also integrated into the budgets of the departments responsible for managing the funds. Several of these funds have legal limits on increases to their revenue, but have continued to experience increases in expenditures as a result of many of the same factors that impact the General Fund salary cost-of-living increases, health benefit costs and retirement costs). Specifically, the Landscape and Lighting Assessment District (LLAD) Fund, National Pollutant Discharge Elimination System (NPDES) Fund, and the Measure J Storm Drain Fund have had their revenue growth limited by the passage of Proposition 218. The City can only increase revenues in these funds with voter approval. The Measure A Swim Center Fund is similar in that the maximum special tax cannot be increased without voter approval, but the City can increase revenues to the Fund with City Council approval, as the special tax rates have been set annually below the voter-approved maximum rate for several years. Property development also affects the revenue to these funds, as different tax, fee, or assessment rates may apply to a newly developed or redeveloped property, although changes would be nominal as minimal changes in development are expected. Public Works staff has evaluated its expenditures from special revenue funds and made adjustments to bring the funds into balance over the next two years. These balancing measures include: x reducing maintenance contract services in the LLAD Fund and NPDES Fund by a combined total of $400,000 x eliminating transfers between funds x shifting expenditures between eligible funding sources x adjusting overhead cost allocations between funds to reflect these changes x making short-term loans between funds x repaying Gas Tax-eligible expenditures from the Capital Improvement Program Fund in prior years Additionally, staff has been identifying those Special Revenue Funds that will continue to have deficits without the addition of new resources or reductions in service. In particular, current NPDES funding is insufficient to meet the ongoing requirements of clean water regulations. Also, the cost of landscape and lighting services has outstripped the revenues available from LLAD annual assessments for many years and will require additional new revenue, restored General Fund support, or service cuts. ---PAGE BREAK--- 49 Gas Tax Fund (201) Overview The Gas Tax Fund supports transportation activities, such as the construction and maintenance of streets, roads and bridges. The State of California allocates Gas Tax monies to cities and counties each year by formula, based on population, vehicle registration, assessed valuation, and population. This revenue has increased only over the past decade. Expenditures in this Fund are based on the Gax Tax model of road-related activities, including roads, sidewalks, traffic controls, drainage, lighting and landscaping. Gas Tax monies can be used for any street or road purpose, with the exception of Section 2107.5 monies, which must be used for engineering and administrative costs only. Revenues have previously been supplemented by transfers from the County Measure J Return-to- Source Fund for transportation activities, and from the City’s Measure J Storm Drain Fund for drainage functions within the streets and road system, and transfers have previously been made to the Landscape and Lighting Assessment District Fund for medians, rights-of-way, street trees and street lighting. Proposed budgets and projections have been restructured to have revenues and expenses balance within the fund, and eliminate the need for transfers. Fund Forecast Assumptions x Gas tax revenues are sensitive to the price and volume of motor fuel purchases and fluctuate from year to year. However, there is an assumed growth of 2% per year. x In FY 2014-15, overhead transfers are increased by but reallocated between special revenue funds, increasing 3% per year thereafter. x In FY 2015-16, expenses include transfers to the Capital Improvement Program Fund (301) to reimburse prior years’ expenditures on streets and transportation projects. x In FY 2016-17, personnel costs increase 5% per year and non-personnel costs increase 2% per year. 2011-12 Actual 2012-13 Actual 2013-14 Amended 2013-14 Projected 2014-15 Proposed 2015-16 Proposed 2016-17 Projected 2017-18 Projected Starting Balance $11,541 $783 $885 $885 ($58,100) $6,820 $31,163 $48,774 Revenues $949,256 $1,137,288 $1,150,336 $1,131,735 $605,712 $617,826 $630,183 $642,786 Taxes $670,256 $565,288 $696,336 $677,735 $605,712 $617,826 $630,183 $642,786 Transfer in (Measure C) $214,000 $270,000 $274,000 $274,000 $0 $0 $0 $0 Transfer in (Storm Drain) $65,000 $302,000 $180,000 $180,000 $0 $0 $0 $0 Expenses $960,014 $1,137,186 $1,253,937 $1,190,720 $540,792 $593,483 $612,572 $632,425 Personnel $365,686 $378,689 $456,492 $448,878 $227,414 $235,762 $247,550 $259,928 Non-Personnel $96,731 $115,822 $143,600 $133,997 $218,600 $218,600 $222,972 $227,431 Transfer out (CIP) $0 $0 $0 $0 $0 $41,500 $41,500 $41,500 Transfer out (LLAD) $395,000 $537,000 $545,000 $499,000 $0 $0 $0 $0 Overhead Transfer $102,597 $105,675 $108,845 $108,845 $94,778 $97,621 $100,550 $103,566 Annual Surplus/(Shortfall) ($10,758) $102 ($103,601) ($58,985) $64,920 $24,343 $17,611 $10,361 Ending Balance/(Deficit) $783 $885 ($102,716) ($58,100) $6,820 $31,163 $48,774 $59,135 ---PAGE BREAK--- 50 NPDES Fund (202) Overview National Pollutant Discharge Elimination System (NPDES) related activities as mandated by the 1975 Federal Clean Water Act are funded through an assessment collected by the County Flood Control District on all developed properties within the City. These funds are disbursed to the City annually to carry out Clean Water Program activities such as street sweeping, trash capture, storm drain and catch basin cleaning, illicit discharge and pollution prevention inspections of the City's storm drain system and creeks, public awareness and education about storm water pollution, and inspection of new development sites to ensure compliance with the City's Municipal Storm Water Permit (MRP). An assessment election by voters or property owners in El Cerrito could be considered to eliminate the need to subsidize clean water programs from other funds or to reduce future program activities. Supplemental funding from the Storm Drain Fund (205) has previously been used for specialized maintenance of the storm drain facilities, key to the Clean Water Program. Future transfers from Fund 205 have been eliminated. However, in FY 2104-15, the Storm Drain Fund will make a one-time loan of $57,000 to the NPDES Fund for eligible expenses related to storm drain maintenance; the NPDES Fund will pay back the full amount in the following two fiscal years. Additional funding sources will need to be identified starting in FY 2015-16 in order to meet regulatory requirements for Clean Water Program activities. Fund Forecast Assumptions x Revenues from assessments projected to remain flat based on uncertainty about new development and County Clean Water Program cost withholdings. x In FY 2014-15, overhead transfers are increased by but reallocated between special revenue funds, increasing 3% per year thereafter. x In FY 2016-17, personnel costs increase 5% per year and non-personnel costs increase 2% per year. x Annual shortfalls in future years demonstrate the amount of revenues from other sources that will be needed beginning in FY 2015-16 to meet Clean Water regulations. 2011-12 Actual 2012-13 Actual 2013-14 Amended 2013-14 Projected 2014-15 Proposed 2015-16 Proposed 2016-17 Projected 2017-18 Projected Starting Balance ($4,393) ($50,049) ($45,654) ($45,654) $19,209 $275 ($108,788) ($235,153) Revenue $356,678 $419,202 $454,625 $426,000 $372,000 $315,000 $315,000 $315,000 Assessment $320,678 $315,202 $343,625 $315,000 $315,000 $315,000 $315,000 $315,000 Transfer In Loan (205) $0 $0 $0 $0 $57,000 $0 $0 $0 Transfer in (205) $36,000 $104,000 $111,000 $111,000 $0 $0 $0 $0 Expenses $402,333 $414,807 $454,725 $361,137 $390,934 $424,063 $441,365 $430,968 Personnel $130,712 $145,533 $155,485 $150,294 $279,318 $289,381 $303,850 $319,043 Non-Personnel $168,086 $162,633 $189,400 $101,003 $42,750 $35,250 $35,955 $36,674 Loan Repayment (205) $0 $0 $0 $0 $0 $28,500 $28,500 $0 Overhead Transfer $103,535 $106,641 $109,840 $109,840 $68,866 $70,932 $73,060 $75,252 Annual Surplus/(Shortfall) ($45,656) $4,395 ($100) $64,863 ($18,934) ($109,063) ($126,365) ($115,968) Ending Balance/(Deficit) ($50,049) ($45,654) ($45,754) $19,209 $275 ($108,788) ($235,153) ($351,121) ---PAGE BREAK--- 51 Landscaping and Lighting Assessment District Fund (203) Overview The proceeds from this Landscaping and Lighting Assessment District (LLAD) provide funding for such services as street lighting (which improves pedestrian and vehicle safety) and maintenance of parks, park buildings, and landscaping in public areas. The LLAD was created in 1988 and was affirmed by a majority vote of El Cerrito’s citizens in November 1996. The assessment rates have not been increased since the LLAD’s creation in 1988. A proposed Assessment District with increased rates was presented to the City’s property owners during a ballot proceeding in March/April 2006, but a majority protest was filed and the increased assessment rates were not imposed. The current LLAD remains in place and will continue to be assessed. The basic rates remain $72 per year per single-family dwelling unit, $54 per year per apartment, condominium, or other multiple dwelling units, with various rates for commercial properties. The Gas Tax Fund (201) had previously provided supplemental revenue to the LLAD Fund to perform maintenance of median and right-of-way landscapes, street trees, and street lighting. Future transfers from Fund 201 have been eliminated. In FY 2014-15, the LLAD Fund will receive a one-time loan of revenues from the City’s sale of recyclables in the amount of $78,000; the LLAD Fund will pay back the full amount to the IWM Fund (501) in the following two fiscal years. Additional funding sources will need to be identified starting in FY 2015-16 in order to maintain current levels of landscaping and lighting services. Fund Forecast Assumptions x Revenues from assessments are projected to remain flat based on lack of anticipated new development in the near term. x In FY 2014-15, overhead transfers are increased by but reallocated between special revenue funds, increasing 3% per year thereafter. x In FY 2016-17, personnel costs increase 5% per year and non-personnel costs increase 2% per year. x Annual shortfalls in future years demonstrate the amount of revenues from other sources that will be needed beginning in FY 2015-16 to maintain current levels of landscaping and lighting services. 2011-12 Actual 2012-13 Actual 2013-14 Amended 2013-14 Projected 2014-15 Proposed 2015-16 Proposed 2016-17 Projected 2017-18 Projected Starting Balance ($36,871) ($56,966) ($56,971) ($56,971) $42,687 $145 ($118,465) ($263,986) Revenue $1,165,763 $1,311,289 $1,316,000 $1,340,000 $859,000 $781,000 $781,000 $781,000 Assessments $770,763 $774,289 $771,000 $771,000 $771,000 $771,000 $771,000 $771,000 Maint. Reimbursement $0 $0 $0 $70,000 $10,000 $10,000 $10,000 $10,000 Transfer In Loan (IWM Fund) $0 $0 $0 $0 $78,000 $0 $0 $0 Transfer In (Gas Tax) $395,000 $537,000 $545,000 $499,000 $0 $0 $0 $0 Expenses $1,185,858 $1,311,295 $1,314,327 $1,240,342 $901,542 $899,610 $926,521 $915,425 Personnel $448,824 $480,834 $387,366 $378,381 $262,097 $271,652 $285,235 $299,496 Non-Personnel $598,604 $687,877 $780,100 $715,100 $489,000 $434,000 $442,680 $451,533 Loan Repayment (IWM Fund) $0 $0 $0 $0 $0 $39,000 $39,000 $0 Overhead Transfer $138,431 $142,584 $146,861 $146,861 $150,445 $154,958 $159,607 $164,395 Annual Surplus/(Shortfall) ($20,095) $1,673 $99,658 ($42,542) ($118,610) ($145,521) ($134,425) Ending Balance/(Deficit) ($56,966) ($56,971) ($55,298) $42,687 $145 ($118,465) ($263,986) ($398,411) ---PAGE BREAK--- 52 Measure J Return to Source Fund (204) Overview This Fund accounts for the revenue received by the Measure C and its extension, Measure J (2004), a half-cent sales tax approved by the voters to fund transportations projects as well the para-transit program. Sales tax is collected at the County level and paid to the City. A portion of the Measure J Return to Source Fund is designated for street maintenance activities similar to those in the Gas Tax Fund (201), and the remaining portion is designated for para-transit operations. In prior years, expenses and revenues related to both street maintenance activities and para-transit operations were budgeted in Fund 204. Beginning FY 2014-15, a new fund has been created and all para-transit related revenues and expenditures are budgeted in the new Measure J Return to Source Fund Para-Transit Fund (214). The Measure J Return to Source Fund has previously supplemented the Gas Tax Fund for transportation activities. Future supplements to the Gas Tax Fund have been eliminated. Fund Forecast Assumptions x Tax revenues are a flat 20.1% of Measure J sales taxes collected. Measure J Return to Source revenues are sensitive to economic changes and therefore difficult to predict. However, there is an assumed growth of 2% per year. x Funds previously transferred to and held in the Capital Improvement Program Fund (301) for the Access Modification Program are being returned to the Measure J Return to Source Fund FY 2013- 14 and will be expended directly from the Fund J Fund in future years. This is in keeping with the restructuring of various Special Funds to have revenues and expenses balance within the fund, and eliminate the need for transfers. x In FY 2014-15, overhead transfers are increased by but reallocated between special revenue funds, increasing 3% per year thereafter. x In FY 2016-17, personnel costs increase 5% per year and non-personnel costs increase 2% per year. 2011-12 Actual 2012-13 Actual 2013-14 Amended 2013-14 Projected 2014-15 Proposed 2015-16 Proposed 2016-17 Projected 2017-18 Projected Starting Balance $4,876 $4,901 $9,644 $9,644 $70,561 $23,994 $24,530 $22,083 Maintenance Revenues $320,334 $376,114 $382,648 $428,089 $406,052 $414,173 $422,457 $430,906 Taxes $320,334 $376,114 $382,648 $382,648 $406,052 $414,173 $422,457 $430,906 Transfer In (CIP) $0 $0 $0 $45,441 $0 $0 $0 $0 Maintenance Expenses $320,309 $371,371 $381,975 $367,172 $452,619 $413,637 $424,904 $436,604 Personnel $0 $303 $0 $0 $121,547 $126,238 $132,550 $139,177 Non-Personnel $42,772 $36,675 $42,700 $27,897 $156,700 $156,700 $159,834 $163,031 Access Modification Program $35,000 $35,000 $35,000 $35,000 $115,441 $70,000 $70,000 $70,000 Transfer out (Gas Tax) $214,000 $270,000 $274,000 $274,000 $0 $0 $0 $0 Overhead Transfer $28,537 $29,393 $30,275 $30,275 $58,931 $60,699 $62,520 $64,395 Annual Surplus/(Shortfall) $25 $4,743 $673 $60,917 ($46,567) $536 ($2,447) ($5,698) Ending Balance/(Deficit) $4,901 $9,644 $10,317 $70,561 $23,994 $24,530 $22,083 $16,385 ---PAGE BREAK--- 53 Measure J Storm Drain Fund (205) Overview The Measure J Storm Drain Fund was created to account for funds associated with the passage of Measure J by the voters of El Cerrito in March 1993. The special revenue provides needed funds to maintain, repair, and reconstruct the City’s storm drains. All properties in the City (residential and commercial) are assessed annually based on equivalent residential units (ERU). The ERU rate remains $58 per year per single-family dwelling unit and $43.50 per year per apartment, condominium, or other multiple dwelling units. Fund 205 has historically provided supplemental funding to the Gas Tax Fund (201) and NPDES Fund (202) for drainage activities within the road system and contributing to Clean Water goals. With the exception of a one-time loan of $57,000 to the NPDES Fund in FY 2014-15, all future transfers have been eliminated. Future year’s expenses in the Storm Drain Fund include capital outlays for major maintenance and improvements to the City’s storm drain system, including sediment removal, storm pipe replacements, and a Storm Drain Master Plan. Additionally, with the final bond debt service payment in FY 2013-14, the Storm Drain Fund is now considered an operating fund, and is thus subject to administrative cost allocation through an overhead transfer to the General Fund. Fund Forecast Assumptions x Revenues from storm drain fees are projected to remain flat based on lack of anticipated new development in the near term. x In FY 2014-15, overhead transfers are increased by but reallocated between special revenue funds, increasing 3% per year thereafter. x In FY 2016-17, personnel costs increase 5% per year and non-personnel costs increase 2% per year. 2011-12 Actual 2012-13 Actual 2013-14 Amended 2013-14 Projected 2014-15 Proposed 2015-16 Proposed 2016-17 Projected 2017-18 Projected Starting Balance $41,887 $32 $161,567 $161,567 ($91,298) $49,992 $34,123 $80,770 Revenues $697,571 $698,257 $698,000 $698,000 $698,000 $726,500 $726,500 $698,000 Fees $697,571 $698,257 $698,000 $698,000 $698,000 $698,000 $698,000 $698,000 Loan Repayment $0 $0 $0 $0 $0 $28,500 $28,500 $0 Expenses $739,426 $536,722 $951,402 $950,865 $556,710 $742,369 $679,854 $698,136 Personnel $108,603 $115,696 $134,102 $131,059 $273,290 $283,845 $298,037 $312,939 Non-Personnel $13,273 $15,026 $31,300 $33,532 $56,300 $56,300 $57,426 $58,575 Debt Service Payments $516,550 $0 $495,000 $465,000 $0 $0 $0 $0 Capital Outlay $0 $0 $0 $0 $100,000 $330,000 $250,000 $250,000 1-Time Loan (NPDES) $0 $0 $0 $0 $57,000 $0 $0 $0 Transfer out (Gas Tax) $65,000 $302,000 $180,000 $180,000 $0 $0 $0 $0 Transfer out (NPDES) $36,000 $104,000 $111,000 $111,000 $0 $0 $0 $0 Overhead Transfer $0 $0 $0 $30,275 $70,120 $72,224 $74,390 $76,622 Annual Surplus/(Shortfall) ($41,855) $161,535 ($253,402) ($252,865) $141,290 ($15,869) $46,646 ($136) Ending Balance/(Deficit) $32 $161,567 ($91,835) ($91,298) $49,992 $34,123 $80,770 $80,634 ---PAGE BREAK--- 54 Street Improvement Fund (211) Overview This Fund is used to account for proceeds of the Measure A half-cent sales tax approved by El Cerrito voters on February 5, 2008. Expenditures from this Fund are to improve and maintain City streets and to pay debt service on the related 2008 bond issuance, for which the Measure A half-cent sales tax is a pledged revenue stream. Fund Forecast Assumptions x Sales tax revenues have been subject to adjustments by the Board of Equalization in prior fiscal years for misallocation of revenues by Home Depot. Revenue for FY 2014-15 has been adjusted downward to reflect the corrected amount. Thereafter, sales tax revenues are projected to increase by 2% annually. x Starting in FY 2013-14, personnel costs related to street improvement and maintenance expenditures not related to capital projects are being charged to the Street Improvement Fund. x In prior years, capital projects were charged both directly to the Street Improvement Fund and funded through a transfer to the Capital Improvement Program Fund (301). Starting in FY 2014- 15, projects funded with Measure A revenue will be tracked only in the Street Improvement Fund. Any previously transferred funds remaining in the Capital Improvement Program Fund will be expended from that fund. This is in keeping with the restructuring of various Special Funds to eliminate transfers. x In FY 2016-17, personnel costs increase 5% per year. 2011-12 Actual 2012-13 Actual 2013-14 Amended 2013-14 Projected 2014-15 Proposed 2015-16 Proposed 2016-17 Projected 2017-18 Projected Starting Balance ($77,443) $349,769 $198,074 $198,074 $33,238 $149,784 $290,303 $447,310 Revenues $1,607,920 $1,170,832 $1,500,000 $1,815,631 $2,033,000 $1,431,000 $1,462,500 $1,491,500 Taxes $1,546,542 $1,141,958 $1,500,000 $1,454,000 $1,398,000 $1,426,000 $1,455,000 $1,484,000 Grants $18,730 ($3,553) $0 $354,000 $630,000 $0 $0 $0 Misc $42,648 $32,427 $0 $7,631 $5,000 $5,000 $7,500 $7,500 Expenses $1,180,708 $1,322,527 $3,026,284 $1,980,466 $1,916,454 $1,290,481 $1,305,493 $1,307,414 Personnel $0 $0 $54,539 $53,246 $51,215 $53,253 $55,916 $58,711 Nonpersonnel $2,995 $2,175 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 Capital Outlay $440,131 $323,630 $2,143,600 $1,099,075 $1,128,831 $500,000 $509,500 $509,500 Transfer Out 301 $0 $260,000 $85,145 $85,145 $0 $0 $0 $0 Debt Service $737,583 $736,722 $740,000 $740,000 $733,408 $734,228 $737,078 $736,203 Annual Surplus/(Shortfall) $427,212 ($151,695) ($1,526,284) ($164,835) $116,546 $140,519 $157,007 $184,086 Ending Balance/(Deficit) $349,769 $198,074 ($1,328,210) $33,238 $149,784 $290,303 $447,310 $631,396 ---PAGE BREAK--- 55 Integrated Waste Management Fund (501) Overview This enterprise fund is used to account for the activities related to the recycling and waste diversion management programs. The Integrated Waste Management (IWM) Fund provides for services including weekly residential and commercial curbside recycling collection operations, management of waste management contracts and services, and operation of the City’s state-of-the-art LEED Platinum Recycling + Environmental Resource Center. Although the City historically included a ten-year plan in the annual budget, a short-term fund forecast format has been adopted to reflect a more suitable planning horizon. In the FY 2103-14 budget, the City Council approved annually designating a portion of the IWM Fund Balance as a reserve for future equipment purchases, in lieu of financing future equipment purchases via loans. Further analysis has indicated that reversing this assumption is less costly to ratepayers in the coming several years. Therefore, the current plan assumes the resumption of financing future equipment purchases as needed. Fund Forecast Assumptions x Revenues from IWM Fees are projected to increase by 8% in FY 2014-15 and FY 2015-16, and 5% thereafter. Other revenues from fixed contracts, state payments, on-site sales and fees are relatively stable. x The increase in non-personnel costs in FY 2013-14 is due to a new vehicle maintenance agreement that appropriately maintains the City’s recycling fleet, as well as a previously unanticipated need for pollution insurance. x In FY 2014-15, overhead transfers are increased by but reallocated between special revenue funds, increasing 3% per year thereafter. x In FY 2016-17, personnel costs increase 5% per year and non-personnel costs increase 2% per year. 2011-12 Actual 2012-13 Actual 2013-14 Amended 2013-14 Projected 2014-15 Proposed 2015-16 Proposed 2016-17 Projected 2017-18 Projected Starting Balance $814,405 $705,591 $478,678 $478,678 $329,031 $117,825 $112,132 $127,632 Revenue $1,868,720 $1,882,659 $2,042,364 $2,109,640 $2,166,728 $2,355,926 $2,486,555 $2,555,470 IWM Fees $1,554,293 $1,607,766 $1,742,292 $1,742,292 $1,877,478 $2,027,676 $2,158,305 $2,266,220 Recycling $276,442 $245,834 $273,000 $275,000 $260,200 $260,200 $260,200 $260,200 Grants $29,849 $26,348 $16,000 $26,348 $16,000 $16,000 $16,000 $16,000 Other $8,136 $2,711 $11,072 $66,000 $13,050 $13,050 $13,050 $13,050 Loan Repayment $39,000 $39,000 Expenses $1,977,534 $2,109,572 $2,324,295 $2,259,287 $2,377,934 $2,361,619 $2,471,055 $2,531,169 Personnel $895,357 $1,069,948 $1,201,413 $1,159,433 $1,200,165 $1,247,814 $1,311,456 $1,375,114 Non-Personnel $558,418 $341,009 $219,100 $346,072 $332,943 $337,022 $368,927 $350,983 Debt Service & Leases $221,575 $383,693 $426,411 $426,411 $426,507 $426,365 $426,384 $426,359 Overhead Transfer $302,184 $313,086 $323,700 $323,700 $336,648 $346,747 $360,617 $375,042 Solar Debt service $0 $1,836 $3,671 $3,671 $3,671 $3,671 $3,671 $3,671 Designated Reserve $0 $0 $150,000 $0 $0 $0 $0 $0 Transfer Out - Loan (LLAD) $0 $0 $0 $0 $78,000 $0 $0 $0 Annual Surplus/(Shortfall) ($108,814) ($226,913) ($281,931) ($149,647) ($211,206) ($5,693) $15,500 $24,301 Ending Balance/(Deficit) $705,591 $478,678 $196,747 $329,031 $117,825 $112,132 $127,632 $151,933 ---PAGE BREAK--- 56 Low & Moderate Income Housing Asset Fund (232) Overview Pursuant to the Dissolution Act, the City elected to serve as the Successor Housing Entity to the dissolved El Cerrito Redevelopment Agency, responsible for affordable housing projects and activities. In FY 2012, the City placed housing assets, including real estate and encumbered cash in the Low & Moderate Income Housing Fund (LMIHF), into the new Low & Moderate Income Housing Asset Fund. California Redevelopment Law requires the Fund be used to increase, improve and preserve the housing supply affordable to very low, low, and moderate income households. The Dissolution Act did not provide revenue for successor housing agencies, but allows them to collect payments on loans made from former agencies’ LMIHF. Money had been borrowed from the LMIHF to pay into the Educational Revenue Augmentation Fund (ERAF) and Supplemental ERAF. Repayment of these loans is an obligation of the El Cerrito Redevelopment Agency Successor Agency (see Section 10) and the only anticipated near-term revenues. Fund Forecast Assumptions x SERAF/ERAF payments resume in FY 2013-14 and are based on one half of residual Redevelopment Property Tax (RPT) after Redevelopment Successor Agency obligations are paid. x In FY 2013-14, the Successor Housing Entity received RPT, which is disbursed to fund loans for two affordable housing project pre-development loans. x Non-personnel expenses are minimized until FY 2015-16, when larger SERAF/ERAF loan payment revenues are expected. Non-personnel expenses include carrying costs for housing real estate assets and project-related costs. x In FY 2016-17, personnel costs increase 5% per year and non-personnel costs increase 2% per year. 2011-12 Actual 2012-13 Actual 2013-14 Amended 2013-14 Projected 2014-15 Proposed 2015-16 Proposed 2016-17 Projected 2017-18 Projected Starting Balance $0 $214,864 $110,671 $110,671 $25,286 ($10,968) $91,960 $189,197 Revenues $416,385 $1,149 $0 $559,605 $75,284 $250,000 $250,000 $250,000 SERAF/ERAF Loan $416,079 $0 $0 $24,803 $75,284 $250,000 $250,000 $250,000 Housing Obligations $0 $0 $0 $531,152 $0 $0 $0 $0 Misc $306 $1,149 $0 $3,650 $0 $0 $0 $0 Expenses $201,521 $105,342 $671,990 $644,990 $111,538 $147,072 $152,763 $158,705 Personnel $43,294 $89,602 $89,838 $89,838 $87,208 $91,652 $96,235 $101,046 Non-Personnel $8,577 $15,740 $51,000 $24,000 $24,330 $55,420 $56,528 $57,659 Loans & Grants $0 $0 $531,152 $531,152 $0 $0 $0 $0 Overhead Transfer $149,650 $0 $0 $0 $0 $0 $0 $0 Annual Surplus/(Shortfall) $214,864 ($104,193) ($671,990) ($85,385) ($36,254) $102,928 $97,237 $91,295 Ending Balance/(Deficit) $214,864 $110,671 ($561,319) $25,286 ($10,968) $91,960 $189,197 $280,492 ---PAGE BREAK--- 57 OTHER FUNDS The City has other funds, including minor operating funds, capital funds, other entities’ funds, debt service funds, internal service funds, and trust funds. They are as follows: Asset Seizure Fund (208) The Police Department acquires assets in the course of arresting suspects and a portion of these assets become the property of the City when a guilty verdict is awarded. Pursuant to the State Health and Safety Code, these funds are to be used by the Police Department to supplant but not supplement its operating budget. To assure correct usage, funds have been broken out into a separate fund. Vehicle Abatement Fund (209) This Fund accounts for monies received from the County to support programs that remove abandoned vehicles from City streets. Park In-Lieu Fund (210) This Fund accounts for funds received through negotiations with developers to be used for park improvements. Art in Public Places Fund (213) This Fund was established to account for the public art in-lieu contributions and any and all other revenues appropriated or received for public art and/or public arts and cultural programs, including donations from the public. Measure J Return to Source Paratransit (214) This Fund was created in FY 2013-14 to account separately for the portion of Measure J Return to Source revenues that fund the paratransit program. Grants Fund (221) This Fund accounts for projects and programs in various departments that are funded by one-time grants. Grants Fund (222) This Fund was created in FY 2013-14 to account for the ongoing C.O.P.S. grants received by the Police Department. Previously the revenues and expenditures for this program were accounted for in Fund 221. Municipal Services Corporation Fund (230) The Municipal Services Corporation is a separate nonprofit, public benefit corporation. Although it is considered a component unit of the City for accounting purposes, its activities are controlled and its budget is adopted by a separate board of directors, and therefore not included in this document. Its revenues are primarily related to real estate transactions, including leases and potentially disposition of developable land. It also received revenue from the former Redevelopment Agency, prior to its dissolution, pursuant to a Cooperation Agreement in order to implement economic development and redevelopment programs, but has not received any payments related to the agreement since the dissolution in 2012. Its expenditures are for economic development programs, redevelopment projects, property management. Capital Improvements Fund (301) This Fund is utilized to account for capital activities with one-time and multiple funding sources. Within the Fund, each project is accounted for separately on a life-to-date basis for internal and external reporting purposes. ---PAGE BREAK--- 58 Storm Drain Debt Service Fund (401) This Fund accounts for debt service payments on the Storm Drain Revenue Bonds using the proceeds of the Measure J Special Tax assessed for that purpose. No further expenditures are budgeted for this Fund, as the last debt service payment was made in FY 2013-14. Vehicle and Equipment Replacement Fund (601) The purpose of this Fund is to provide vehicles and equipment to the line departments and avoid financing costs associated with the acquisition of necessary capital assets. This Fund was originally created from a reserved portion of the City’s General Fund. Departments may purchase necessary vehicles or equipment from this Fund and then repay the Fund from their operating budgets over time. An ongoing charge to the operating department will cover the cost of the equipment plus a contribution toward future replacement of the equipment when such a replacement can reasonably be anticipated. The Fund’s primary objective is to provide financing for the purchase of equipment and vehicles with a cost of $5,000 and over and a useful life of three or more years. Currently, only the Fire Department is utilizing this Fund. Pension Fund Section 401A Trust Fund (701) The purpose of this Fund is to account for payments on retiree pensions that are an obligation of the City. Redevelopment Obligation Retirement Fund (780) The purpose of this trust fund is to administer the enforceable obligations of the El Cerrito Redevelopment Agency Successor Agency. Moneys received in this Fund are for specific payments approved by an oversight board and the California Department of Finance and the City’s authority is limited to making the approved payments. No budget is adopted for this Fund. Measure A Debt Service Fund (834) This Fund accounts for debt service payments on the Swim Center Bonds, which were used for the Swim Center Construction, using the proceeds of the Measure A Special Tax assessed for that purpose. City Hall Debt Service Fund (835) This Fund accounts for debt service payments on City Hall Lease Revenue Bonds using transfers from the City’s General Fund. Street Improvement Bond Debt Service Fund (836) This Fund accounts for debt service payments on the Street Improvement Revenue Bonds using the proceeds of the Measure A half-cent sales tax collected for that purpose.