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27 SECTION 2: FINANCIAL OVERVIEW FY 2013-14 Financial Summaries The following section provides additional details and discussion on the City’s primary funding sources: the General Fund and several of the City’s key special funds. Each department has reviewed its budget and made decisions proposing how funds should be allocated, what new programs or activities should continue or begin, and what programs or activities should be changed. Proposed expenditure changes were only included if supported by annual revenues and/or the availability of fund balance for special funds. 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. Following is a discussion on the major revenue categories received by the City; the assumptions included in the FY 2013-14 fiscal year as well as issues the City will have to consider in the future. Taxes Property taxes are an Ad Valorem Tax imposed on real property (which is defined as land and permanently attached improvements), as well as tangible personal property (which is movable property). Property tax is calculated on the assessed value of the property. Proposition 13, passed in 1978, created a cap on real property so that the tax would not exceed one percent of the full cash value of the property. The one percent is shared by the county, cities, school districts and special districts. Out of every $1.00 collected in property tax, El Cerrito receives only 22 cents. Assessed value of a property is determined by the purchase price and with the exception of an annual 2% increase allowed for inflation, does not change until there is a change in title, major construction or the Assessor determines overall assessed values have decreased, as was the case last fiscal year in which the increase could be lower. If there is a significant drop in market value, the owner can request a reevaluation. Improvement in the housing market in El Cerrito has continued in FY 2013-14. Sales prices continue to improve each month and while this improvement has been consistent, the County Assessor’s Office continues to take a very conservative approach to the assessed value of properties that received a reduction in FY 2012-13. The assessment on these properties is not anticipated to change with the exception of the annual 2% increase. This represents a significant loss of revenue to the City from prior years. Other complexities in the projections of property tax have grown with the implementation of the “Triple Flip”. In 2004, the State of California needed a revenue stream to tie to the Economic Recovery Bonds and created a program where ¼ cent of the sales tax collected for a jurisdiction, along with the vehicle license fee backfill funds, was kept by the State. That amount was paid by the County to jurisdictions out of Educational Revenue Augmentation Funds (ERAF) as Property Tax and Motor Vehicle in Lieu funds but in June 2011 legislation was passed without any opportunity for hearings or discussions that terminated the allocation of the Motor Vehicle in Lieu fund funds to cities and counties. This legislation reduced revenue for El Cerrito by approximately $75,000 annually. ---PAGE BREAK--- 28 Additional problems have arisen from this program in that the County has traditionally used the total assessed valuation and related ad valorem taxes as the basis for their administrative fees. Adding the amount disbursed to the jurisdictions as ad valorem taxes has significantly increased the amount the County receives in administrative fees from every jurisdiction without adding much in the way of additional effort. This method was protested but cities were not successful in changing the method of calculating the fee. Sales Taxes are taxes imposed on the total retail price of any tangible personal property. In 1955 the State Legislature passed the Bradley-Burns Uniform Local Sales and Use Tax Law authorizing the State Board of Equalization to collect 1% to support the State General Fund. As of April 1, 2013, the current standard statewide Sales and Use Tax is 7.5%; in El Cerrito, the Sales andUseTaxis9.5%and includes the following: • Statewide Sales and UseTax: 7.5% • Local jurisdiction: 1%--MeasureJ-Transportation & BART • Local measures: 1% - Measure A & Measure R On February 5, 2008 El Cerrito’s voters approved the ½-cent Measure A-Street Improvement Sales Tax which resulted in the sale of $11,750,000 of Sales Tax Revenue Bonds on June 3, 2008 to be used for the Street Reconstruction and Repair Project. It is anticipated that collection next fiscal year will be approximately $1.5 million with $750,000 being used for debt service payments and the remainder for street maintenance. Collection began on July 1, 2008. In November 2010, El Cerrito voters approved Measure R, a seven-year ½-cent Sales Tax that will be used to maintain services, including police, fire, recreation, parks, facilities and other programs that were in jeopardy without these additional funds. Collection began in April 2011. Utility User Taxes were initially approved by the voters in 1991 and when language changes in the ordinance were required, voters again approved the ordinance in 2004. The ordinance calls for an 8% tax to be assessed on gas, electric, water and telephone utilities as a revenue measure necessary to pay the usual and current expenses of conducting the municipal government of the City. Other Taxes include Business License Taxes, Transient Occupancy Taxes (TOT) and Franchise Taxes. In El Cerrito the base for Business License Taxes is the number of employees. The revenue from Business Licenses for the last four years has generated approximately $600,000 - $670,000 annually. The Transient Occupancy Tax rate is 10%. El Cerrito has two fairly small hotels and revenue from the TOT has stayed relatively flat in prior years. Over the last year, revenues from Business Licenses and the Transit Occupancy Tax have improved. This trend is projected to continue and this increase is included in the FY 2013-14 revenue budget. Intergovernmental Revenues include, Gas Taxes, Abandoned Vehicle Abatement and other revenues and grants that are distributed by the County, State and Federal Government. Revenue projections received from the state indicate a slight increase in Gas Taxes and is included in the estimated revenue for FY 2013-14. ---PAGE BREAK--- 29 Charges for Services are the revenues generated by providing specific services to individuals or businesses instead of services to the general population such as police and fire or public works. These specific services include, but are not limited to, child care fees, recreation class participation fees and encroachment permits. The Council policy directs that Charges for Services shall be established at a level related to the cost of providing such service except where the City Council has determined there is a public benefit to subsidize the service with tax based revenue. The Master Fee Schedule details all of the City’s fees and is adopted each year in conjunction with the annual budget. On May 7, 2013, the City Council approved a 3% increase for most fees effective FY 2013-14, to coincide with increased costs to provide these services. Other Revenues include Licenses & Permits, including parking permits that are issued to certain neighborhood residence that are near BART stations; Fines & Forfeitures such as a portion of traffic tickets; and Use of Money and Property which includes interest earnings and rental income on City facilities. FY 2013-14 Major Revenue Assumptions Revenue estimations were determined by evaluating past years’ trends and receipts and applying that information to current year anticipated activity and economic conditions. Some of the major assumptions related to projecting Citywide revenues for FY 2013-14 are: • General Fund revenues decline by approximately $900,000 from FY 2012-13 projected revenues • Licenses & Permits decrease of $63,936 is attributable to Building Fees • The budget amount for Fines and Forfeitures has been adjusted to more closely match with actual collections • Charges for services include an approved 3% fee increase for most fees Table 2-1 presents the City’s overall revenues and inter-fund transfers in. Table 2-1 Citywide Revenues by Classification Revenue Category FY 2010-11 Actual FY 2011-12 Actual FY 2012-13 Amended FY 2013-14 Proposed Taxes Property Taxes 10,758,992 $ 8,396,623 $ 6,819,452 $ 6,322,213 $ Sales Taxes 5,131,749 6,560,971 6,840,000 6,093,750 Utility User Tax 3,188,260 3,163,978 3,500,000 3,605,000 Local Parcel Taxes 1,908,127 1,908,237 1,908,000 1,908,000 Franchise Taxes 982,799 1,020,930 1,050,000 1,177,000 Business License Tax 673,257 691,948 675,000 750,000 Other Taxes 635,883 592,386 662,321 702,015 Total Taxes 23,279,067 22,335,073 21,454,773 20,557,978 Licenses & Permits 562,760 518,276 669,936 606,000 Fines and Forfeitures 267,673 215,336 265,000 306,500 Use of Money and Property 490,511 494,979 483,780 451,682 Intergovernmental Revenues 9,084,889 7,958,811 10,470,357 10,157,375 Charges for Services 6,069,034 6,274,008 7,113,224 6,729,404 Other Revenues 467,454 1,751,600 499,400 266,431 Total Revenues before Transfers 40,221,388 39,548,083 40,956,470 39,075,370 Interfund Transfers 10,553,909 11,271,935 4,424,926 4,359,990 Total 50,775,297 $ 50,820,018 $ 45,381,396 $ 43,435,360 $ ---PAGE BREAK--- 30 Chart 2-1 depicts the projected percentage of Citywide revenues before transfers attributable to each classification for FY 2013-14. Chart 2-1 Citywide Revenues by Classification FY 2013-14 Table 2-2 presents the Citywide actual revenue summarized by fund, including transfers in, for the past two fiscal years, the budget for FY 2012-13, and the proposed budget for FY 2013-14. Taxes 52.6% Intergovernmental Revenues 26.0% Charges for Services 17.2% Use of Money and Property 1.2% Licenses & Permits1.6% Fines and Forfeitures 0.8% Other Revenues 0.7% ---PAGE BREAK--- 31 Table 2-2 Revenue Summary by Fund FY2010-11 FY2011-12 FY 2012-13 FY2013-14 Fund Name Actual Actual Amended Proposed General Fund $30,338,740 $29,298,213 $29,192,110 $28,479,079 Special Revenue Funds Street Improvements 2,256,548 1,607,920 1,425,000 2,517,000 Low & Moderate Income Housing 998,750 2,672,157 City Low & Moderate Income Housing 306 781,152 Gas Tax 721,846 949,256 1,323,000 1,150,336 National Pollution Discharge Elimination 332,826 356,515 441,715 454,625 Landscape and Lighting Assessment 1,181,050 1,165,763 1,366,000 1,316,000 Measure J Return to Source 477,974 430,370 495,421 519,615 Measure J Storm Drain 697,882 697,571 698,000 698,000 Measure A Parcel Tax 439,623 439,446 624,400 439,400 Federal, State and Local Grants 477,765 1,483,879 538,799 203,498 Asset Seizure 415 32,564 2,000 2,000 Vehicle Abatement 23,124 47,307 21,000 21,000 Park in Lieu 34 21 500 50 Public Art 48,051 50 Total Special Revenue Funds 7,607,836 9,931,125 7,716,987 7,321,574 Capital Projects Funds RDA Capital 4,032,433 4,071,828 RDA Bond-A Capital 1,973 Capital Improvements 2,584,407 1,735,759 4,579,616 3,160,245 Senior Center Construction Total Capital Projects Funds 6,618,812 5,807,586 4,579,616 3,160,245 Debt Service Funds Storm Drain Debt Service 515,613 1,543,350 100 495,100 RDA Debt Service 787,135 107,419 RDA A&B Debt Service 1,151,070 325,692 Financing Authority Measure A 363,604 365,090 362,605 359,158 Financing Authority Civic Center 596,165 597,399 599,300 596,408 Financing Authority Street Improvement 744,154 737,659 741,000 740,100 Total Debt Service Funds 4,157,741 3,676,609 1,703,005 2,190,766 Internal Service Funds Vehicle/Equipment Replacement 136,455 95,994 146,100 128,832 Enterprise Fund Integrated Waste Management 1,766,247 1,868,721 1,931,078 2,042,364 Fiduciary Fund Employees' Pension Trust 149,466 141,769 112,500 112,500 Total Funds $50,775,297 $50,820,018 $45,381,396 $43,435,360 ---PAGE BREAK--- 32 CITYWIDE EXPENDITURES Overall expenditures and activity of the City remains fairly flat; no new material programs or services are proposed. However, the budget does include organizational changes in the Community Development and Public Works departments that are reflected in the proposed department budgets for FY 2013-14 as highlighted below: • The Community Development department, formerly Environmental & Development Services Department, has been reorganized. The Economic Development & Housing Division has moved from City Management to the newly formed Community Sustainability division within the Community Development department. • Recycling and solid waste management functions housed in the Environmental Services Division have moved to the Public Works department. The Operations and Environmental Services Division (OESD) is a new division of Public Works that includes maintenance as well as recycling and waste management services. • Janitorial services previously housed in both the Public Works and Recreation departments have now been moved entirely to a newly created division within the Recreation department. In addition to the organizational changes, development of the proposed budget includes a set of expenditure assumptions that include, but are not limited to the following: Personnel Assumptions • Increase in PERS rates by approximately 2% • Increase in health rates by 13% & dental rates by 4% • COLA increases per collective bargaining agreements; SEIU 3.25%, PEA 3% (average), IAFF 1% (average) • 19 positions have been eliminated over time; 10 positions will remain vacant • Significant salary savings of $570,000 in the Police Department based on current and likely future vacancies. Should the Department recruit and retain more personnel than assumed in the projections, the budget may need to be modified to reflect the reduced salary savings and higher than anticipated headcount. • 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) Non-Personnel • Approximately $600,000 of economic development-related expenses are offset by a prior grant from the Municipal Services Corporation • Liability and property insurance cost increase of approximately $270,000 • Increase in debt service payments for solar project offset by like decrease in utility costs • Capital projects funded outside of the General Fund will progress as planned and minimal General Fund contributions are included for capital • Contracted services in certain areas will continue or increase until revenues stabilize at a sustainable level • No use of unrestricted General Fund reserves ---PAGE BREAK--- 33 Table 2-3 presents the Citywide expenditures and transfers by Department: Table 2-3 Citywide Department Expenditures and Transfers Department FY 2010-11 Actual FY 2011-12 Actual FY 2012-13 Amended FY 2013-14 Proposed City Management 2,557,086 $ 2,685,267 $ 2,574,294 $ 2,762,692 $ Finance 3,269,461 4,333,064 3,022,493 3,466,881 Police 9,236,699 10,106,417 10,981,313 10,507,068 Fire 7,330,512 10,708,768 10,041,459 8,146,261 Public Works 5,129,460 5,311,382 5,630,489 4,424,688 Community Development 5,523,711 2,983,548 2,789,943 2,200,594 Recreation 4,099,377 4,168,183 4,177,180 4,175,483 Capital Outlay 8,950,897 1,709,469 5,214,663 5,763,815 Total Before Transfers 46,097,203 42,006,098 44,431,834 41,447,482 Transfers 16,539,590 10,229,261 4,424,926 4,359,990 Total Expenditures 62,636,794 $ 52,235,359 $ 48,856,760 $ 45,807,472 $ Chart 2-2 depicts the percentage allocations of each activity based on the new departmental structure: Chart 2-2 Citywide Expenditures by Department FY 2013-14 City Management 6.0% Finance 7.6% Police 22.9% Fire 17.8% Public Works 9.7% Community Development 4.8% Recreation 9.1% Capital Outlay 12.6% Transfers 9.5% ---PAGE BREAK--- 34 Table 2-4 presents the Citywide expenditure summary by fund, including transfers out for the past two fiscal years, the budget for FY 2012-13, and the proposed budget for FY 2013-14. Table 2-4 Expenditure Summary by Fund FY2010-11 FY2011-12 FY2012-13 FY2013-14 Fund Name Actual Actual Amended Proposed General Fund $26,887,550 $32,524,916 $29,090,923 $28,453,592 Special Revenue Funds Street Improvements 3,323,956 1,180,708 1,754,232 3,015,684 Low & Moderate Income Housing 3,125,976 4,432,142 City Low & Moderate Income Housing (5,411,570) 1,013,134 140,838 Gas Tax 930,353 960,014 1,304,324 1,253,937 National Pollution Discharge Elimination 346,819 402,333 440,933 454,725 Landscape and Lighting Assessment 1,281,248 1,185,858 1,310,864 1,314,327 Measure J Return to Source 564,566 434,702 499,814 518,741 Measure J Storm Drain 659,799 739,426 646,335 951,402 Measure A Parcel Tax 687,246 414,544 477,305 624,970 Federal, State and Local Grants 486,251 3,032,462 3,029,402 914,783 Asset Seizure 14,212 36,220 Vehicle Abatement 19,908 59,276 10,000 11,000 Park in Lieu 5,000 Public Art Total Special Revenue Funds 11,445,334 7,466,115 10,486,343 9,200,407 Capital Projects Funds RDA Capital 9,293,591 2,762,120 RDA Bond-A Capital 2,220,243 Capital Improvements 4,109,629 1,488,907 4,674,852 3,478,220 Senior Center Construction 61,000 Total Capital Projects Funds 15,684,463 4,251,026 4,674,852 3,478,220 Debt Service Funds Storm Drain Debt Service 518,263 1,545,418 523,974 521,530 RDA Debt Service 776,571 803,190 RDA A&B Debt Service 1,093,343 1,137,546 Financing Authority Measure A 370,233 367,453 557,050 365,308 Financing Authority Civic Center 596,158 599,988 600,000 596,308 Financing Authority Street Improvement 744,153 738,733 738,653 736,780 Total Debt Service Funds 4,098,719 5,192,326 2,419,677 2,219,926 Internal Service Funds Vehicle/Equipment Replacement 460,834 681,672 48,017 168,532 Enterprise Fund Integrated Waste Management 3,910,427 1,977,534 2,024,449 2,174,295 Fiduciary Fund Employees' Pension Trust 149,466 141,769 112,500 112,500 Total Funds $62,636,794 $52,235,359 $48,856,760 $45,807,472 ---PAGE BREAK--- 35 Inter-Fund Transfers Table 2-5 shows transactions between all funds and the purpose for the City’s $4.4 million in inter-fund transfers. This schedule details the amount of transfers, the funds that are exchanging funds and the purpose for the transfer. The cost recovery transfers have been adjusted for inflation at a rate of 3% over the previous year’s transfer and the debt service, pension funding and subsidy amounts are to repay specific charges of the City. The amounts transferred to Capital Projects are to more clearly account for life-to-date activity within the Capital Improvements Fund. Table 2-5 Transfers Summary Fund Receiving Transfer Fund Making Transfer Purpose Transfer Amount General Fund Gas Tax Cost Recovery 108,845 General Fund NPDES Cost Recovery 109,840 General Fund LLAD Cost Recovery 146,861 General Fund Measure J-Return to Source Cost Recovery 60,550 General Fund Integrated Waste Mgmt Cost Recovery 323,700 Gas Tax Measure J-Return to Source Project Funding 274,000 Gas Tax Storm Drain Project Funding 180,000 NPDES Storm Drain Project Funding 111,000 LLAD Gas Tax Project Funding 545,000 Pension General Fund Pension Funding 112,500 Capital Improvement Measure J-Return to Source Various CIP Projects 35,000 Capital Improvement General Fund RecWare Project 22,600 Capital Improvement Street Improvement Various CIP Projects 85,145 General Fund Measure A Solar Lease Debt Service 50,912 General Fund IWM Solar Lease Debt Service 3,671 Financing Authority-City Hall General Fund City Hall Debt Service 596,308 Street Improvement Debt Service Street Improvement Street Debt Service 740,000 Storm Drain D/S Storm Drain Storm Drain Debt Service 495,000 Financing Authority Measure A Measure A Debt Service 359,058 Total $4,359,990 ---PAGE BREAK--- 36 FUND BALANCE Table 2-6 summarizes the effects of the projected FY 2012-13 year end balance in relation to the FY 2013-14 Budget. Estimating year-end fund balance provides the amount of fund balance anticipated and available for appropriation at the start of the new fiscal year. Fund balance may be used to offset annual expenditures when those costs exceed the revenue generated in a given fiscal year. Use of fund balance that reduces the General Fund reserve below 10% requires City Council approval. The proposed FY 2013-14 General Fund budget does not include the use of fund balance; however fund balance is used on 1-time basis to offset annual expenditures in some of the City’s special funds as discussed later in this section. Table 2-6 Projected Fund Balance Projected Revenues & Expenditures Net Est. Balance Fund Description at June 30, 2013 Contributions Transfer In Transfer Out Change at June 2014 Nonspendable Restricted Fund Balance Restricted MSC Pre-Funding Contribution Unassigned Fund Balance 2,909,552 2,935,03 101 Sub-total Total General Fund Balance 2,909,552 $27,674,700 $27,722,184 $804,379 $731,408 $25,487 2,935,03 201 Gas Tax Fund 104,517 696,336 600,092 454,000 653,845 (103,601) 91 202 NPDES 855 343,625 344,885 111,000 109,840 (100) 75 203 Landscape and Lighting 1,210 771,000 1,167,466 545,000 146,861 1,673 2,88 204 Measure J Return to Source 19 519,615 149,191 369,550 874 89 206 Measure A Parcel Tax 440,094 439,400 215,000 409,970 (185,570) 254,52 208 Asset Seizure 156,570 2,000 2,000 158,57 209 Vehicle Abatement 149,134 21,000 11,000 10,000 159,13 210 Park In Lieu Fund 12,015 50 50 12,06 211 Street Improvement Fund 523,985 2,517,000 2,190,539 825,145 (498,684) 25,30 213 Art in Public Places 48,151 50 50 48,20 221 Federal, State and Local Grants 754,317 203,498 914,783 (711,285) 43,03 232 City LMI Housing 118,308 140,838 (140,838) (22,53 2,309,174 5,513,574 5,733,794 1,110,000 2,515,211 (1,625,431) 683,74 301 Capital Improvements (48,449) 3,017,500 3,478,220 142,745 (317,975) (366,42 205 Measure J Storm Drain 52,273 698,000 165,402 786,000 (253,402) (201,12 3,824 3,715,500 3,643,622 142,745 786,000 (571,377) (567,55 401 Storm Drain Debt Service 29,086 100 521,530 495,000 (26,430) 2,65 834 Finance Authority- Measure A 259,165 100 365,308 359,058 (6,150) 253,01 835 Financing Authority-City Hall 599,779 100 596,308 596,308 100 599,87 836 Financing Authority-Street Imp 741,528 100 736,780 740,000 3,320 744,84 1,629,558 400 2,219,926 2,190,366 (29,160) 1,600,39 501 Integrated Waste Management 630,253 2,042,364 1,846,924 327,371 (131,931) 498,32 601 Vehicle/Equipment Replacement 124,233 128,832 168,532 (39,700) 84,53 754,486 2,171,196 2,015,456 327,371 (171,631) 582,85 701 Employees' Pension Trust Fund 112,500 112,500 112,500 112,500 Total $7,606,594 $39,075,370 $41,447,482 $4,359,990 $4,359,990 (2,372,112) $5,234,4 Operating Transfers Fiscal Year Ending June 30, 2014 ---PAGE BREAK--- 37 GENERAL FUND OVERVIEW The General Fund is the City’s primary operating fund and represents approximately 62% of the total Citywide operating 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 taxes with property and sales taxes representing the largest percentage. Unfortunately, like most surrounding cities, El Cerrito has experienced significant loss in property tax over the last few years and we are projecting a decline in sales tax in FY 2013-14. Revenue received on an annual basis is used to fund ongoing expenditures; however, the City Council has adopted a policy to maintain 10% of projected General Fund operating expenses in reserves. The reserve policy requires that the amount of the reserves not fall below 10%, except in case of financial emergency or some other unanticipated event. The City’s policy also seeks to increase reserves to 15%. In the event the City Council were to authorize reserves to dip below 10%, a ten-year financial plan must be developed to project when the amount will return to 10% and eventually 15% of overall expenditures. The FY 2013-14 Proposed Budget projects ending the year with a 10.32% reserve, consistent with City Council policy. General Fund Revenues Table 2-7 and Chart 2-3 depict the revenue by category in the General Fund: Table 2-7 General Fund Revenues FY 2010-11 FY 2011-12 FY 2012-13 FY 2013-14 Actual Actual Amended Proposed Taxes Property Taxes 5,780,491 $ 5,685,841 $ 6,038,300 $ 6,322,213 $ Sales Taxes 3,755,921 5,014,429 5,455,000 4,593,750 Utility User Tax 3,188,260 3,163,978 3,500,000 3,605,000 Franchise Taxes 982,799 1,020,930 1,050,000 1,177,000 Business License Tax 673,257 691,948 675,000 750,000 Other Taxes 169,373 172,544 179,900 194,900 Total Taxes 14,550,101 15,749,670 16,898,200 16,642,863 Licenses & Permits 562,760 518,276 669,936 606,000 Fines and Forfeitures 267,673 215,336 265,000 306,500 Use of Money and Property 301,328 283,951 331,080 315,700 Intergovernmental Revenues 4,592,543 4,770,474 4,818,362 4,900,128 Charges for Services 4,312,389 4,432,452 5,210,896 4,701,362 Other Revenues 331,258 111,151 273,700 202,147 Interfund Transfers 5,420,688 3,216,904 724,936 804,379 Total Revenues 30,338,740 $ 29,298,213 $ 29,192,110 $ 28,479,079 $ Revenue Category ---PAGE BREAK--- 38 Chart 2-3 General Fund FY 2013-14 Revenue Percentages by Category Following are some of the major General Fund revenue assumptions for FY 2013-14: • Property Taxes citywide are projected to increase and include the approved 2% annual increase; • Sales Taxes are projected to decrease due to a 1-time payment related to prior year activity. This represents significant revenue loss to the City in FY 2013-14, but is not anticipated in future years. • Utility user taxes also increase as both EBMUD and PG&E have announced projected rate increases for next fiscal year. • Business License Taxes, Transient Occupancy Taxes and Franchise Taxes increase by $165,000 • Licenses & Permits decrease of $63,936 is attributable to Building Fees Taxes 58.4% Intergovernmental Revenues 17.2% Charges for Services 16.5% Interfund Transfers 2.8% Licenses & Permits 2.1% Fines and Forfeitures 1.1% Use of Money and Property 1.1% Other Revenues 0.7% ---PAGE BREAK--- 39 General Fund Expenditures Table 2-8 and Chart 2-4 depict the expenditures in the General Fund. Table 2-8 General Fund Expenditures By Department Department Actual FY2010-11 Actual FY2011-12 Amended FY2012-13 Proposed FY2013-14 City Management 2,490,143 $ 2,614,045 $ 2,504,659 $ 2,631,140 $ Finance 876,950 923,606 660,566 1,119,705 Police 9,075,229 9,910,485 10,604,313 10,384,068 Fire 7,134,729 7,935,101 7,965,445 7,977,729 Public Works 997,709 986,862 836,890 392,225 Community Development Services 1,598,718 1,432,331 1,776,809 1,326,688 Recreation 3,957,215 4,010,750 4,008,141 3,890,629 Transfers 756,858 4,711,737 734,100 731,408 Total 26,887,550 $ 32,524,916 $ 29,090,923 $ 28,453,592 $ Chart 2-4 General Fund Expenditures – Percent By Department City Management 9.2% Finance 3.9% Police 36.5% Fire 28.0% Public Works 1.4% Community Development 4.7% Recreation 13.7% Transfers 2.6% ---PAGE BREAK--- 40 Chart 2-5 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 2-5 Variance of General Fund Expenditures (Before Transfers) As Chart 2-6 shows, approximately 80% of the expenditures are related to Personnel. 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 last year, 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 COLA’s. The FY 2013-14 doesn’t include any additional changes in employee concessions other than the ongoing changes implemented in last year’s budget, but the City will need to revisit this issue very soon as a dramatic increase in PERS costs are expected in FY 2015. 35% 36% 37% 37% 27% 29% 28% 29% 15% 14% 14% 14% 6% 5% 6% 5% 10% 9% 9% 9% 3% 3% 2% 4% 4% 4% 3% 1% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Actual FY2010-11 Actual FY2011-12 Amended FY2012-13 Proposed FY2013-14 Percentage of Expenditures Public Works Finance City Management Community Development Recreation Fire Police ---PAGE BREAK--- 41 Chart 2-6 Proposed General Fund Spending Of the remaining General Fund expenses, very little are discretionary. For example, within Purchased Professional & Technical Services, expenditures of approximately $2.3 million, over $1.3 million of those expenses are for contracted 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, staff estimates that nearly 95% of the General Fund is non-discretionary (including staff at current levels). Personnel 78.0% Professional Services 8.1% Property/Other Services 8.3% Supplies 2.2% Property/Capital 0.8% Transfers 2.6% ---PAGE BREAK--- 42 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 $17.6 million, or approximately 38%, of the total resources used to support the City’s $46 million operating budget. These funds can be described in these broad categories: Special Revenue and Grant Funds Special revenue and grant funds are revenue sources legally restricted to a specific purpose, service or program and include tax-based revenues. • Gas Tax Fund • National Pollutant Discharge Elimination System (NPDES) Fund • Measure J Return to Source (Formerly Measure C) Fund • Grants Fund • Low & Moderate Income Housing Asset Fund Special Assessment Funds Special assessment funds account for revenues and expenditures related to the financing of public improvements or services. • Landscaping and Lighting Assessment District Fund • Measure J Storm Drain Fund • Measure A Swim Center Fund • Street Improvement Fund 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. • Integrated Waste Management Fund FORECASTS This section contains five-year financial forecasts for nine of the City’s key operating funds. Several of these funds face shortfalls, partially as a result of statutory "caps" on their revenue sources. Nonetheless, expenditures within these funds are projected to increase 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 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 affects the revenue to these funds nominally as different tax or assessment rates may apply to a newly developed or redeveloped property. 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. ---PAGE BREAK--- 43 Gas Tax Fund (201) 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. Fund Forecast 2010-11 Actual 2011-12 Actual 2012-13 Amended 2012-13 Projected 2013-14 Proposed 2014-15 Projected 2015-16 Projected Starting Balance 220,310 11,541 783 783 104,517 916 (1,755) Revenues 721,584 949,256 1,323,000 1,345,000 1,150,336 1,258,226 1,278,743 Taxes 561,584 670,256 660,000 700,000 696,336 717,226 738,743 Transfer in (Measure C) 160,000 214,000 278,000 260,000 274,000 271,000 266,000 Transfer in (Storm Drain) 0 65,000 385,000 385,000 180,000 270,000 274,000 Expenses 930,353 960,014 1,304,324 1,241,266 1,253,937 1,260,897 1,278,366 Personnel 280,723 365,686 457,349 384,960 456,492 470,187 484,292 Non-Personnel 140,022 96,731 146,300 140,631 143,600 143,600 143,600 Transfer out (LLAD) 410,000 395,000 595,000 610,000 545,000 535,000 535,000 Overhead Transfer 99,609 102,597 105,675 105,675 108,845 112,110 115,474 Annual Surplus/(Shortfall) (208,769) (10,758) 18,676 103,734 (103,601) (2,671) 377 Ending Balance 11,541 783 19,459 104,517 916 (1,755) (1,378) Revenue Assumptions • Gas tax revenues are sensitive to the price and volume of motor fuel purchases and fluctuate from year to year. There is an assumed growth of 3% per year. • Revenues are 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. Expenditure Assumptions • Personnel costs increase of 3% per year. • Transfers are made to the Landscape and Lighting Assessment District Fund for medians, rights-of-way, street trees and street lighting. ---PAGE BREAK--- 44 NPDES Fund (202) 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. 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. Fund Forecast 2010-11 Actual 2011-12 Actual 2012-13 Amended 2012-13 Projected 2013-14 Proposed 2014-15 Projected 2015-16 Projected Starting Balance 9,600 (4,393) (50,049) (50,049) 855 755 4,596 Revenue 332,826 356,678 441,715 461,620 454,625 343,625 343,625 Assessment 327,826 320,678 334,715 341,620 343,625 343,625 343,625 Transfer in (Storm Drain) 5,000 36,000 107,000 120,000 111,000 0 0 Expenses 346,819 402,333 440,933 410,716 454,725 339,785 347,983 Personnel 69,887 130,712 148,892 148,696 155,485 160,150 164,954 Non-Personnel 176,413 168,086 185,400 155,379 189,400 66,500 66,500 Overhead Transfer 100,519 103,535 106,641 106,641 109,840 113,135 116,529 Annual Balance/(Shortfall) (13,993) (45,656) 782 50,904 (100) 3,840 (4,358) Ending Balance/(Shortfall) (4,393) (50,049) (49,267) 855 755 4,596 237 Revenue Assumptions • Nominal change from new development. • Amount withheld from revenue for the County Clean Water Program assumed flat, but could vary. • Supplemental funding from the Storm Drain Fund used for specialized maintenance of the storm drain facilities, key to the Clean Water Program. Future subsidies eliminated due to higher priority projects. Expenditure Assumptions • Personnel cost increase of 3% per year. • Future program expenditures have been reduced by about $125,000 annually due to insufficient revenue. ---PAGE BREAK--- 45 Landscaping and Lighting Assessment District Fund (203) 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. Fund Forecast 2010-11 Actual 2011-12 Actual 2012-13 Amended 2012-13 Projected 2013-14 Proposed 2014-15 Projected 2015-16 Projected Starting Balance 63,327 (36,871) (56,966) (56,966) 1,210 2,883 10,630 Revenue 1,181,050 1,165,763 1,366,000 1,381,000 1,316,000 1,306,000 1,306,000 Taxes 771,050 770,763 771,000 771,000 771,000 771,000 771,000 Transfer in (Gas Tax) 410,000 395,000 595,000 610,000 545,000 535,000 535,000 Expenses 1,281,248 1,185,858 1,310,864 1,322,824 1,314,327 1,298,254 1,314,761 Personnel 376,269 448,824 496,295 490,709 387,366 398,987 410,957 Non-Personnel 770,580 598,604 671,985 689,531 780,100 748,000 748,000 Overhead Transfer 134,399 138,431 142,584 142,584 146,861 151,267 155,805 Annual Balance/(Shortfall) (100,198) (20,095) 55,136 58,176 1,673 7,746 (8,761) Ending Balance/(Shortfall) (36,871) (56,966) (1,830) 1,210 2,883 10,630 1,868 Revenue Assumptions • Nominal change from new development. • The Gas Tax Fund subsidizes the shortfall in the LLAD Fund to perform maintenance of median and right-of-way landscapes, street trees, and street lighting. Expenditure Assumptions • Personnel cost increase of 3% per year. • Slight reduction in future non-personnel expenditures due to anticipated reduction in subsidy from Gas Tax Fund. ---PAGE BREAK--- 46 Measure J Return to Source (Formerly Measure C) Fund (204) 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 paratransit program. Sales tax is collected at the County level and paid to the City. Fund Forecast 2010-11 Actual 2011-12 Actual 2012-13 Amended 2012-13 Projected 2013-14 Proposed 2014-15 Projected 2015-16 Projected Starting Balance 90,608 4,015 (317) (317) 19 893 593 Revenues 477,974 430,370 495,421 482,622 519,615 519,615 519,615 Taxes (Transportation) 380,110 320,334 383,000 374,122 382,648 382,648 382,648 Taxes (Paratransit) 86,484 99,421 99,421 95,000 124,467 124,467 124,467 Program Fees (Seniors) 11,381 10,615 13,000 13,500 12,500 12,500 12,500 Expenses 564,567 434,702 499,814 482,286 518,741 519,915 519,213 Maintenance Non-Personnel 43,134 42,772 45,000 38,000 42,700 42,700 42,700 Transfer out (Gas Tax) 160,000 214,000 278,000 260,000 274,000 271,000 266,000 Transfer out (Streets) 180,000 0 0 0 0 0 0 Transfer out (CIP) 55,000 35,000 35,000 35,000 35,000 35,000 35,000 Overhead Transfer 27,706 28,537 29,393 29,393 30,275 31,183 32,119 Paratransit Personnel 54,804 68,307 63,308 66,000 78,571 80,928 83,356 Non-Personnel 16,217 17,549 19,720 24,500 27,920 27,920 27,920 Overhead Transfer 27,706 28,537 29,393 29,393 30,275 31,183 32,119 Annual Balance/(Shortfall) (86,593) (4,332) (4,393) 336 874 (300) 402 Ending Balance/(Shortfall) 4,015 (317) (4,710) 19 893 593 995 Revenue Assumptions • Return-to-source is a flat 20.1% of Measure J sales taxes collected. Sales tax revenues are difficult to predict and are therefore projected to remain flat. • Measure J sales tax collections have increased, as has ridership on El Cerrito’s “Easy Ride” paratransit service, resulting in increased program funding. Expenditure Assumptions • Personnel cost increase of 3% per year. • Transfers to the Gas Tax Fund are used for street and road maintenance activity and to the Capital Improvement Fund for the annual Access Modification Program. • Increased paratransit expenditures reflect cost of expanded ridership. ---PAGE BREAK--- 47 Measure J Storm Drain Fund (205) 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 Forecast 2010-11 Actual 2011-12 Actual 2012-13 Amended 2012-13 Projected 2013-14 Proposed 2014-15 Projected 2015-16 Projected Starting Balance 3,740 41,823 (32) (32) 52,273 (201,129) 446 Revenues 697,882 697,571 698,000 698,000 698,000 698,000 698,000 Expenses 659,799 739,426 646,335 645,695 951,402 496,425 697,569 Personnel 95,801 108,603 118,035 117,395 134,102 138,125 142,269 Non-Personnel 43,391 13,273 36,300 23,300 31,300 31,300 31,300 Debt Service 515,607 516,550 0 0 495,000 0 0 Transfer out (Gas Tax) 0 65,000 385,000 385,000 180,000 270,000 274,000 Transfer out (NPDES) 5,000 36,000 107,000 120,000 111,000 Capital Outlay 57,000 250,000 Annual Balance/(Shortfall) 38,083 (41,855) 51,665 52,305 (253,402) 201,575 431 Ending Balance/(Shortfall) 41,823 (32) 51,633 52,273 (201,129) 446 877 Revenue Assumptions • Nominal change from new development. Expenditure Assumptions • Personnel cost increase of 3% per year. • Final debt service payment in FY 2014. • Prior year transfers to the Gas Tax and NPDES Funds are used for drainage activities within the road system and contributing to clean water. • Future transfers to Gas Tax Fund only. • Projected capital outlay is for high-priority capital projects and update to Storm Drain Master Plan. • A FY 2014 funding shortfall may require a one-time General Fund subsidy. ---PAGE BREAK--- 48 Measure A Swim Center Fund (206) The Measure A Swim Center Fund was created to account for funds associated with the passage of Measure A by the voters of El Cerrito in November 1999. The special revenue provides needed funds to pay for the renovation and reconstruction of the Swim Center and various other City recreational facilities. Expenditures for capital improvements at the Swim Center facility are allowed to be paid from this Fund. The maximum amount of the special tax that can be imposed each fiscal year is $58.46 per single family dwelling unit, $45.00 per year for each multifamily residential unit and $410.00 per acre for non-residential (non-vacant) property. The City Council has set the special tax lower than the maximum allowed rates over the last several years. Fund Forecast 2010-11 Actual 2011-12 Actual 2012-13 Amended 2012-13 Projected 2013-14 Proposed 2014-15 Projected 2015-16 Projected Starting Balance 536,856 289,232 314,134 314,134 440,094 254,524 168,954 Revenues 439,623 439,446 624,400 624,733 439,400 439,400 439,400 Taxes 439,623 439,446 439,400 439,400 439,400 439,400 439,400 Other 0 0 185,000 185,333 0 0 0 Expenses 687,246 414,544 477,305 498,773 624,970 524,970 499,970 Non-Personnel 13,996 14,088 15,000 11,012 15,000 15,000 15,000 Solar Lease Payment 25,456 50,912 50,912 50,912 Debt Service 363,578 365,053 362,305 362,305 359,058 359,058 359,058 Capital Projects 309,673 35,403 100,000 100,000 200,000 100,000 75,000 Annual Balance/(Shortfall) (247,623) 24,902 147,095 125,960 (185,570) (85,570) (60,570) Ending Balance/(Shortfall) 289,232 314,134 461,229 440,094 254,524 168,954 108,384 Revenue Assumptions • Nominal change from new development. • Continued setting of rates lower than the maximum rates allowed in the ordinance. Expenditure Assumptions • Portion of debt service for solar panel installation at the Swim Center (which is benefitting the Swim Center through reduced utility costs) is being paid from this Fund starting in FY 2014. • Capital projects will be undertaken as funds are available. ---PAGE BREAK--- 49 Street Improvement Fund (211) 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 City streets and pay debt service for the bond issuance that funded street improvements for which the Measure A half-cent sales tax is a pledged revenue stream. Fund Forecast 2010-11 Actual 2011-12 Actual 2012-13 Amended 2012-13 Projected 2013-14 Proposed 2014-15 Projected 2015-16 Projected Starting Balance 966,983 (77,439) 349,773 349,773 523,985 25,301 61,144 Revenue 2,279,534 1,607,920 1,425,000 1,541,195 2,517,000 1,533,000 1,533,000 Taxes 1,378,107 1,546,443 1,385,000 1,505,000 1,503,000 1,503,000 1,503,000 Grants 608,443 18,730 0 (3,553) 984,000 0 0 Transfer In (Measure C/J) 180,000 0 0 0 0 0 0 Misc Rev 112,984 42,747 40,000 39,748 30,000 30,000 30,000 Expenses 3,323,956 1,180,708 1,754,232 1,366,983 3,015,684 1,497,157 1,497,157 Personnel 80,806 9,855 0 0 54,539 54,157 54,157 Non-Personnel 424,592 54,826 2,000 5,175 3,000 3,000 3,000 Capital Projects 2,074,522 378,445 752,232 283,808 2,133,000 700,000 700,000 Transfer out (CIP) 0 0 260,000 338,000 85,145 0 0 Debt Service 744,036 737,583 740,000 740,000 740,000 740,000 740,000 Annual Balance/(Shortfall) (1,044,422) 427,212 (329,232) 174,212 (498,684) 35,843 35,843 Ending Balance/(Shortfall) (77,439) 349,773 20,541 523,985 25,301 61,144 96,987 Revenue Assumptions • Sales tax revenues are difficult to predict and are therefore projected to remain flat. • Grants will be programmed in as they become available. Expenditure Assumptions • Personnel cost increase of 3% per year. • Capital projects will be undertaken as funds are available. Significant capital projects are anticipated for FY 2014. ---PAGE BREAK--- 50 Grants (221) This Fund accounts for revenues and expenditures on grant-funded projects and programs in various departments. Fund Forecast 2010-11 Actual 2011-12 Actual 2012-13 Amended 2012-13 Projected 2013-14 Proposed 2014-15 Projected 2015-16 Projected Starting Balance 2,223,405 2,214,919 666,337 666,337 754,317 43,032 43,032 Revenues 477,765 1,483,879 2,647,914 3,459,312 203,498 112,000 112,000 Intergovernmental Revenue 477,765 937,879 2,629,329 2,860,355 203,498 112,000 112,000 Donations 0 273,000 0 0 0 0 0 Transfer in (General Fund) 0 0 0 598,957 0 0 0 Transfer in (Eq Repl) 0 273,000 0 0 0 0 0 Transfer in (LLAD) 0 0 18,585 0 0 0 0 Expenses 486,251 3,032,462 3,129,402 3,371,333 914,783 112,000 112,000 City Manager Personnel 0 0 0 0 69,715 0 0 Environmental Services Non-Personnel 181,247 172,794 211,314 128,240 0 0 0 Police Personnel 82,512 73,194 70,000 70,150 70,000 70,000 70,000 Non-Personnel 187 27,518 12,000 2,000 12,000 12,000 12,000 Capital Outlay 44,895 0 385,000 354,971 30,000 30,000 30,000 Fire Capital Outlay 147,765 306,956 0 6,502 0 0 0 Grants 0 2,433,596 2,027,997 2,636,396 0 0 0 Public Works Personnel 2,393 5,227 0 128 0 0 0 Non-Personnel 27,251 13,178 327,091 76,946 0 0 0 Capital Outlay 0 0 81,000 81,000 0 0 0 Community Development Personnel 0 0 0 0 357,945 0 0 Non-Personnel 0 0 0 0 375,123 0 0 Recreation Capital Outlay 0 0 15,000 15,000 0 0 0 Annual Balance/(Shortfall) (8,486) (1,548,582) (481,488) 87,980 (711,285) 0 0 Ending Balance/(Shortfall) 2,214,919 666,337 184,849 754,317 43,032 43,032 43,032 Revenue Assumptions • Unspent grant funds from the Municipal Services Corporation are being transferred into this Fund for use on eligible expenses in the City Manager and Community Development Departments. Staff is pursuing future funding sources for economic development and environmental sustainability programs. Expenditure Assumptions • Of the projected ending balance for FY 2012-13, $185,000 is prior years’ police grants, which is budgeted to be spent down in this and following years. ---PAGE BREAK--- 51 Low & Moderate Income Housing Asset Fund (232) Pursuant to the Dissolution Act, the City elected to serve as the Successor Housing Agency 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. LMIHF had been borrowed to pay into the Educational Revenue Augmentation Fund (ERAF) and Supplemental ERAF. Loan repayments are obligations of the El Cerrito Redevelopment Agency Successor Agency (see Section 10) and the only anticipated near-term revenues. Fund Forecast 2010-11 Actual 2011-12 Actual 2012-13 Amended 2012-13 Projected 2013-14 Proposed 2014-15 Projected 2015-16 Projected Starting Balance 25,000 239,558 239,558 118,308 (22,530) 90,220 Revenue Totals 416,079 781,152 0 0 235,283 355,045 Expenses 201,521 1,013,134 121,250 140,838 122,533 125,309 Personnel 43,294 137,562 89,250 89,838 92,533 95,309 Non-Personnel 8,577 94,420 32,000 51,000 30,000 30,000 Loans & Grants 0 781,152 0 0 0 0 Overhead Transfer 149,650 0 0 0 0 0 Annual Balance/(Shortfall) 214,558 (231,982) (121,250) (140,838) 112,750 229,736 Ending Balance/(Shortfall) 239,558 7,576 118,308 (22,530) 90,220 319,956 * Fund Created in FY 2012 Revenue Assumptions • The FY 2012 Fund Starting Balance consists of a refundable developer deposit transferred as an asset to the Fund upon Agency dissolution. • SERAF/ERAF payments estimated as one third of residual Redevelopment Property Tax (RPT). Payments of up to one half of residual RPT start in FY 2014. Current loan balance is $1,247,318. Staff is pursuing revenue to cover shortfall in FY 2014. Expenditure Assumptions • Personnel cost increase of 3% per year. • Non-personnel expenses include carrying costs for housing real estate assets and project costs, including use of the developer deposit subject to an agreement, and development of affordable housing programs. ---PAGE BREAK--- 52 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. 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 adopted by a separate board of directors, 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 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 of the Redevelopment Agency in 2012. Its expenditures are for economic development programs, and property management and disposition. Capital Improvements Fund (301) This Fund is utilized to account for all capital activities within the City regardless of funding source and typically with multiple funding sources. Within the Fund, each project is accounted for separately on a life-to-date basis for internal and external reporting purposes. 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. 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. ---PAGE BREAK--- 53 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. 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 Trust Fund (780) The purpose of this 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. TEN-YEAR PLANS Due to the size, complexity and large percentage of programs supported by the General Fund and Integrated Waste Management Fund, the City prepares 10-year plans for these two funds. The 10-year plans provide the City with a tool to look at the long term resources required for City operations and the revenue needed to maintain and or enhance these services and activities. Long range financial planning allows the City to plan ahead for things such as the purchase of new equipment or begin the process of addressing future cost increases or revenue loss rather than making drastic program or service changes within a short period of time. The 10-year plans for the two major City funds are discussed below. General Fund Revenue assumptions for Property Tax include conservative growth of 2-3% for all ten years, and sales and other taxes are expected to increase by an inflation rate of 3% after the projected 1-time decrease in FY 2013-14. As the economy recovers, staff hopes to adjust these assumptions as development opportunities occur and sales and property taxes improve. Expenditures in general are projected to increase in accordance with the current labor agreements and economic indicators at a rate of approximately 2% - The assumptions presented in the Ten-Year Plan achieve the goal of a reserve of at least 15% and maintain that percentage for the remainder of the Plan. In order to achieve these results, expenses related to employee benefits will need to be stabilized over time as employees pay a greater percentage of their pension costs. ---PAGE BREAK--- 54 Integrated Waste Management Fund This enterprise fund is used to account for the activities related to the recycling and waste diversion management programs. Integrated waste management services, including design and implementation of programs aimed at diverting waste from the landfill, compliance with State regulations, and participation in regional planning and waste reduction efforts. Services include recycling collection and waste management services in the community; weekly residential and commercial curbside recycling collection; and collection at private schools, public offices, parks, and businesses and BART stations. The City also runs a state-of-the-art LEED Platinum Recycling + Environmental Resource Center, which is a regional hub for collection of hard-to-recycle materials. Revenue & Expenditure Assumptions for the 10-year plan include the following: • IWM Fee increases of 7.5% on January 1, 2014 and 5% on January 1 annually thereafter • All other revenues relatively stable with fixed contracts, state payments and on-site sales and fees • Personnel cost increase of 3% per year ---PAGE BREAK--- 55 Table 2-9 General Fund Ten-Year Plan 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021 2021-2022 2022-2023 Beginning Fund Balance $2,909,552 $2,935,039 $3,344,907 $3,947,560 $4,530,625 $5,229,117 $4,522,563 $3,840,342 $3,409,058 $3,504,690 Estimated Revenue: Property Taxes 6,322,213 6,448,657 6,642,117 6,841,380 7,046,622 7,258,021 7,475,761 7,700,034 7,931,035 8,168,966 Sales Taxes 2,997,750 3,754,093 3,866,715 3,982,717 4,102,198 4,225,264 4,352,022 4,482,583 4,617,060 4,755,572 Utility Users Taxes 3,605,000 3,713,150 3,824,545 3,939,281 4,057,459 4,179,183 4,304,559 4,433,695 4,566,706 4,703,707 Other Taxes 2,121,900 2,185,557 2,251,124 2,318,657 2,388,217 2,459,864 2,533,660 2,609,669 2,687,959 2,768,598 Interim sales tax 1,596,000 1,643,880 1,693,196 1,743,992 1,307,994 Total Taxes 16,642,863 17,745,337 18,277,697 18,826,028 18,902,491 18,122,331 18,666,001 19,225,981 19,802,761 20,396,844 Fees for Services 10,513,990 10,829,410 11,154,292 11,488,921 11,833,588 12,188,596 12,554,254 12,930,882 13,318,808 13,718,372 Interest, Transfers & Other Revenue 1,322,226 1,361,893 1,402,750 1,444,832 1,488,177 1,532,822 1,578,807 1,626,171 1,674,956 1,725,205 Total Other Revenues 11,836,216 12,191,302 12,557,042 12,933,753 13,321,765 13,721,418 14,133,061 14,557,053 14,993,764 15,443,577 Total Estimated Revenues 28,479,079 29,936,639 30,834,738 31,759,781 32,224,256 31,843,750 32,799,062 33,783,034 34,796,525 35,840,421 Expenditures: Salaries & Wages 13,713,123 14,415,951 14,660,111 15,126,614 15,277,880 15,659,827 15,816,425 16,211,836 16,373,954 16,783,303 Retirement Contributions 4,759,053 $4,830,539 $4,982,913 $5,222,859 $5,191,482 $5,600,406 $6,151,440 $6,245,586 $6,341,303 $6,438,619 Insurance & Benefits 2,837,718 2,979,604 3,128,584 3,191,156 3,254,979 3,320,078 3,386,480 3,454,209 3,523,294 3,593,760 FICA/Medicare Taxes 446,088 455,010 464,110 473,392 480,493 487,701 495,016 502,441 509,978 517,628 Workers Compensation 426,395 434,923 443,621 452,494 461,543 470,774 480,190 489,794 499,589 509,581 Other Expenditures 5,522,834 5,660,905 5,802,428 5,947,488 6,096,176 6,248,580 6,404,795 6,564,914 6,729,037 6,897,263 Capital Outlay Transfer 22,600 22,600 22,600 35,000 35,000 35,000 20,000 20,000 - - Debt Service Transfer-City Hall 595,308 596,767 597,246 597,240 597,740 597,465 596,465 595,065 593,265 595,178 Debt Service Transfer-Solar 130,473 130,473 130,473 130,473 130,473 130,473 130,473 130,473 130,473 130,473 Additional Actions Total Expenditures * 28,453,592 29,526,771 30,232,085 31,176,715 31,525,765 32,550,304 33,481,283 34,214,318 34,700,893 35,465,804 Annual Balance/Shortfall (Revenues-Expenditures 25,487 409,868 602,653 583,065 698,491 (706,554) (682,221) (431,284) 95,632 374,617 Ending Fund Balance 2,935,039 3,344,907 3,947,560 4,530,625 5,229,117 4,522,563 3,840,342 3,409,058 3,504,690 3,879,307 10% Contingency Reserve (2,845,359) (2,952,677) (3,023,209) (3,117,672) (3,152,576) (3,255,030) (3,348,128) (3,421,432) (3,470,089) (3,546,580) Fund Balance above/(below ) 10% $89,680 $392,230 $924,352 $1,412,954 $2,076,540 $1,267,532 $492,214 ($12,374) $34,601 $332,727 FB as a % of Expenditures 10.3% 11.3% 13.1% 14.5% 16.6% 13.9% 11.5% 10.0% 10.1% 10.9% Debt Service as a % of Expenditures 2.6% 2.5% 2.4% 2.3% 2.3% 2.2% 2.2% 2.1% 2.1% 2.0% *Total Expenditures before additional actions in Salaries and Wages and other activites ---PAGE BREAK--- 56 Table 2-10 Integrated Waste Management Fund Ten-Year Plan 2010-2011 Actual 2011-2012 Actual 2012-2013 Projected 2013-2014 Proposed 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021 2021-2022 2022-202 35 Gallon IWM Fee effective mid-year $ 8.37 $ 8.54 $ 8.97 $ 9.64 $ 10.12 $ 10.63 $ 11.16 $ 11.72 $ 12.19 $ 12.67 $ 13.08 $ 13.48 $ 13 IWM Fee Revenue Increase effective mid-year 8.5% 5.0% 5.0% 7.5% 5.0% 5.0% 5.0% 5.0% 4.0% 4.0% 3.3% 3.0% 3 Beginning Fund Balance 588,679 743,668 715,166 595,758 463,827 536,280 623,892 696,167 812,705 231,809 370,805 128,035 297, Beginning Equipment Reserve Balance - - - - 150,000 300,000 375,000 450,000 550,000 - 200,000 - 100, Operating Revenue: Interest 1,030 529 500 250 250 250 250 250 250 250 250 250 Grants (State Funding) 6,110 29,849 16,000 16,000 16,000 16,000 16,000 16,000 16,000 16,000 16,000 16,000 16, Misc. Revenue (Sales and Fundraising) 13,842 7,607 34,000 10,822 11,147 11,481 11,825 12,180 12,546 12,922 13,310 13,709 14, Total IWM Fees 1,473,041 1,554,293 1,647,023 1,742,292 1,850,398 1,942,917 2,040,063 2,142,066 2,238,198 2,327,726 2,411,935 2,487,260 2,561, Recyclables and Contracts 272,224 276,442 195,000 273,000 281,190 289,626 298,314 307,264 316,482 325,976 335,756 345,828 356, Total Estimated Revenue 1,766,247 1,868,721 1,892,523 2,042,364 2,158,984 2,260,274 2,366,453 2,477,761 2,583,476 2,682,874 2,777,250 2,863,047 2,948, Operating Expenses: Salaries and Wages 902,467 895,357 1,037,320 1,201,413 1,151,426 1,219,129 1,291,303 1,368,270 1,450,375 1,537,989 1,631,510 1,731,368 1,838, Professional Services 49,084 159,409 109,875 65,900 36,018 36,138 66,261 36,386 36,514 66,644 36,777 36,913 67, Property Services 45,817 40,844 111,000 40,500 23,160 23,923 24,714 25,532 26,381 27,259 28,169 29,112 30, Other Services 31,585 44,427 47,508 28,000 25,860 26,377 26,905 27,443 27,992 28,552 29,123 29,705 30, Supplies and Equipment 92,873 100,832 101,496 84,700 83,094 86,646 90,363 94,254 98,327 102,591 107,055 111,729 116, Facility Debt Payments - 319,163 233,538 306,524 306,619 306,477 306,497 306,472 306,599 306,671 306,588 306,548 306, Equipment Debt Payments 182,930 184,956 59,944 119,887 119,887 119,887 119,887 119,887 119,887 59,944 - - Transfer-out 293,383 302,184 311,250 327,371 340,466 354,084 368,248 382,978 398,297 414,229 430,798 448,030 465, Total Operating Expenses 1,598,139 2,047,172 2,011,930 2,174,295 2,086,531 2,172,662 2,294,178 2,361,223 2,464,372 2,543,879 2,570,020 2,693,406 2,854, Net Income (Loss) 168,108 (178,452) (119,408) (131,931) 72,453 87,612 72,275 116,538 119,104 138,996 207,230 169,642 93, Available Fund Balance 756,786 565,216 595,758 313,827 236,280 248,892 246,167 262,705 231,809 170,805 128,035 197,676 191, Available Fund Balance as a % of Expenditures 47.4% 27.6% 29.6% 14.4% 11.3% 11.5% 10.7% 11.1% 9.4% 6.7% 5.0% 7.3% 6 Equipment Reserve Designation - - - 150,000 150,000 75,000 75,000 100,000 150,000 200,000 250,000 100,000 100, Equipment Reserve Spending - - - - - - - - 700,000 - 450,000 - Equipment Reserve Total - - - 150,000 300,000 375,000 450,000 550,000 - 200,000 - 100,000 200, Capital Activity: Vehicles >10K - - - - - - - - 700,000 - 450,000 - Other Equipment >10K - 23,366 - - - - - - - - - -