HomeMy WebLinkAbout2008 02 26 CC MIN SS2008 02 26 CC MIN SSÄ—@¸— B 1 Í«MINUTES
CITY OF BALDWIN PARK
CITY COUNCIL, COMMUNITY
DEVELOPMENT COMMISSION
& HOUSING AUTHORITY
TUESDAY, FEBRUARY 26,
2008
6:00 p.m. ROOM 307
14403 E. Pacific Avenue
Baldwin Park
Manuel Lozano, Mayor
Anthony J. Bejarano, Mayor Pro Tern Marlen Garcia, Monica Garcia, Ricardo Pacheco Council
Members
Maria Contreras, City Treasurer Susan Rubio, City Clerk
The CITY COUNCIL, COMMUNITY DEVELOPMENT COMMISSION & HOUSING
AUTHORITY of the City of Baldwin Park met in SPECIAL SESSION at the above
time and place.
CALL TO ORDER
PUBLIC COMMUNICATIONS
NONE
REPORTS OF OFFICERS
1. 2007-08 MID YEAR BUDGET WORKSHOP
Chief Executive Officer Singhal presented the report. Stated that trends are
positive although there are some challenges on the horizon. Proactive efforts
will make it possible for city to get through these tough times. CEO Singhal
deferred the presentation to Consultant Bass.
Revenue Highlights:
Real Property Transfer Tax down 48%
Motor Vehicle License fees down 12%
Moving Violation Redflex down 26%
Expenditures by category
73% Personnel Polilce Department largest, Recreation second largest)
Councilmember/Member Bejarano inquired if the percentages shown include
the reductions that were made in the prior year. CEO Singhal responded yes.
He further inquired if there were proactive steps that the city could take to
reduce that cost. CEO Singhal responded that the use of technology is one
option that would improve processes. He also stated that non-sworn personnel
was reduced by 20%. If the city had a plan to stem costs not just in the short
term by reducing non-sworn but also as it relates to new hires. The work force
could be less expensive.
CEO Singhal commented that the city did things to add value because unlike
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2008 02 26 CC MIN SSÄ—@¸— B 1 Í«the private sector, the city could not increase revenues. Consultant Bass
stated that GASBY retirement cost included the total component of what the city
was presently paying.
In response to an inquiry from Mayor/Chair Lozano staff responded that when
an individual retired they will have lifetime medical benefits.
In response to an inquiry from Councilmember/Member Marten Garcia, staff
indicated that the city is drawing down on all monies that can be drawn down
upon.
Potential options were:
Evaluate and freeze non-sworn positions;
Identify and implement recommendations to increase revenues;
Prioritize and evaluate the operations and implement ways to eliminate
redundancy, waste and non-essential functions.
CEO Singhal stated that there would be changes but the outlook is hopeful.
Many accomplishments have been made in the past years with the support of
the Council.
In response to an inquiry from Councilmember/Member Pacheco staff
indicated that reorganization would be done so that work continues to be
completed. Items with the least amount of impact may not be done.
Mayor/Chair Lozano requested that a message be placed in the NOW
regarding the budget so that residents could see how they may be effected by
these economic situations.
Councilmember/Member Pacheco stated that he did not want public safety
being sacrificed. CEO Singhal stated that public safety is a priority and would
not be cut. Any changes would have to be approved by the Council.
Councilmember Pacheco wanted to ensure that more officers are hired.
PURPOSE
To discuss the Mid Year budget performance for the City for the Fiscal Year
2007/2008
BACKGROUND & DISCUSSION
For FY 2007-2008 the City adopted its budget at $43,047,000 with the
General Fund budget at $23,274,100. The General Fund budget was
balanced with revenues exceeding expenditures after transfers) by
$240,000. The budget provided funding for numerous programs including
funding for 192 positions. The current year has witnessed several issues
such as a slowdown of the economy, lower home prices and home sales,
potential for foreclosures and lower consumer spending. As a result the State
of California is expecting budget deficits of enormous proportions. Many cities
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2008 02 26 CC MIN SSÄ—@¸— B 1 Í«and counties are also expecting significant budget constraints due to
economic slowdown and lower tax revenues. While our City is also impacted
by these factors causing our revenues to be lower than budgeted, we are in a
better position then many due to our proactive strategy over the past year.
Additionally we have been monitoring our revenues and expenditures on a
regular basis.
Mid year gives us an opportunity to evaluate our actual revenue and
expenditure trends compared to the budget and recommend changes if any.
Due to the condition of the economy this Mid year review will also provide us
an opportunity to look at the next year's budget, evaluate trends, and take
necessary steps to change strategy if necessary in a timely manner.
This report consists of following components:
1. Mid Year Trends
a) General Fund and Departmental trends
b) Trends for other funds
2. Outlook for the next fiscal year including preliminary budget
projections
General Fund Mid Year Trends
The Mid-year trends suggest that our revenues are likely to be lower than
budget primarily due to lower tax revenues and lower revenues from
traffic violations including redflex cameras. However, these revenue
shortfalls will be offset by expenditure savings giving us an overall
positive performance. It is anticipated that the General Fund and its
supported funds will end another year second year) in the black. The
primary reason for lower expenditures is personnel cost savings due to
vacancies. We have approximately 15 vacancies contributing to a
potential salary and benefits savings for the year of $900,000.
Based on Mid Year trends it is expected that overall General Fund performance will be
positive as shown in the table below:
See Staff Report
General fund includes Traffic Safety Fund also
As shown in the table the General Fund is expected to end the year with
an overall saving of approximately $600,000, which is about $232,000
greater than the adopted budget. This amount is higher than the
approved budget amount especially in view of the fact that the approved
budget did not include the full impact of labor negotiations, which were
concluded after the adoption of the budget. The savings are however one
time savings because they are the result of vacancies. As these positions
are filled the savings would not be there.
General Fund Revenues:
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2008 02 26 CC MIN SSÄ—@¸— B 1 Í«For the fiscal year the total General Fund revenues are expected to be
approximately 2.5% or $635,700 lower than budget. As shown in the
following table, based on current trends at mid year several revenues are
likely to be lower than budget. The primary reasons for revenues being
lower than budget are; slower economy, lower consumer spending and
impact of housing market.
General Fund relies heavily on taxes and sources, which are not in city's
control as shown in the following chart"
See Staff Report
Due to reliance on sources beyond our control our budgets have greater
volatility. Following table shows the trends of major revenue sources:
See Staff Report
Note: Includes traffic safety fund revenue
It is important to evaluate some revenue sources:
Sales Tax: Based on data from the State the midyear trends indicates
that the Sales Tax revenue is up by only 2% compared to the prior year,
however, the budget anticipated a growth of approximately 5%.
Additionally we anticipate lower sales tax due to closure of Altman's RV
and lower sales tax from home improvement stores.
Property Tax: Similarly property taxes were budgeted to grow at
5% even though they had been growing at 10% in prior years.. As a result
of the condition of the housing market, which is impacted by
delinquencies the growth in property tax collections is not expected to be
more than 2%.
Motor Vehicle License Fees: the non-property tax portion) are down by
about 12% giving an overall shortfall of 2% compared to budget.
Real Property Transfer Tax: which is collected on sale of properties is
significantly lower than budgeted due to lower home sales almost 50%).
Construction permits are also significantly lower.
Police revenues from moving violations which includes redflex) are also
coming in lower than budget. The citations due to red light violations have
been trending downward.
These projections are based on midyear trends any further deterioration in the
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2008 02 26 CC MIN SSÄ—@¸— B 1 Í«economy could cause greater adverse impacts on our revenues.
General Fund Expenditures:
The revenue shortfall in the General Fund will be offset by lower than expected
expenditures. Based on Midyear trends it is anticipated that General Fund
expenditures will be lower than budget by approximately $953, 000. Following
tables show General Fund projections both by expenditure category as well as
by department:
See Staff Report
The primary reason for lower expenditures is salary savings due to
vacant positions. The following table shows General Fund expenditures
by department:
See Staff Report
All departments with the exception of Legal costs are significantly under
budget. The reason for legal costs being higher is unanticipated litigation.
Departmental Trends
Information on revenues and expenditures for each department is attached as
Attachment- I". With the exception of some revenues tied to housing and
economy such as construction permits, planning fees, engineering fees and
police fines departments are ok on revenues. With respect to expenditures,
departments are within budget.
1(b) Trends for Other City Funds:
Other city funds can be categorized into two categories: those
supported/subsidized by the General Fund. While any shortfall in these funds
must be paid for by the General Fund any savings are retained in these funds
for future expenditures. These funds include funds such as Gas Tax, Prop A,
Park Maintenance Assessment District and Street Lighting and Landscape
Maintenance Fund. Based on midyear projections these funds are also within
budget. Another set of funds represents restricted funds, where the funds are
subject to restrictions for example; Asset seizure, grant funds and funds which
have legal or other restrictions. No adverse trends are noted in these funds
either. Attachment-II' includes a summary of all city funds except CDC and
their projections. No major adverse trends are noted in these restricted funds.
2. Outlook for the next fiscal year
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2008 02 26 CC MIN SSÄ—@¸— B 1 Í«While the current Fiscal Year looks good the next year poses some
challenges. In order to have a good perspective of our fiscal future it is
important to consider the past.
The City has experienced good revenue growth over the past five years, which
was attributable to good economic growth fueled by a housing boom and
redevelopment projects such as Walmart, Smart and Final that increased both
sales tax and property tax revenues. However, this revenue growth was not
enough to keep pace with the growing expenditures.
In order to maintain essential services and to stay competitive the city invested
the revenue increases in providing services to the community. It must be noted
that the City of Baldwin Park has a rather smaller tax base compared to many
other cities. Our per capita revenues for the General Fund are significantly
lower than many cities in the region. Further a significant portion of our
General Fund is committed for essential services such as public safety. Our
personnel costs also account for a very large portion of the total General Fund
budget. This structure makes it very hard for the city to manage big downward
swings in revenues without creating service impacts. In the past the city had to
use reserves to maintain essential services in times of lower revenue growth.
In 2005/2006 General Fund Revenues grew by less than 5% and the city had
to take several proactive steps to balance expenditures with revenues.
Measures implemented by the city included a restructuring plan,
implementation of new revenues as well as measures to keep our spending
low. City also had to reduce staffing and budgets for most departments.
Compared to actual spending of 2005/2006 the 2007/2008 budget reduced
staffing and budgets for many departments. Departments such as
Administration, Community Development and Public Works saw staffing
reductions of about 20% or more. Despite staffing reductions the budgets for
essential services such as public safety programs were preserved or were
higher. Staff was also able to identify and implement several creative ideas to
improve efficiency of operations and maintain and improve service levels
despite staffing and budget reductions. As a result of these measures we are
in a better shape than many.
Even though our fiscal performance has improved and is better than budget,
there are numerous challenges on the horizon created by worsening economic
environment. This economic downturn, which has impacted states, cities and
private enterprises alike is likely to impact us as well. Following are some of
the challenges that we will face in the next year:
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2008 02 26 CC MIN SSÄ—@¸— B 1 Í«Potential Impact of State's budget problems
The State is anticipating a $14 billion budget deficit, Governor's proposed
budget proposes 10% across the board cuts including cuts in essential
services. The budget also includes a provision to delay payment of Gas Tax to
Cities. Impact on Baldwin Park of this proposal would be delay in receipt of
approximately $600,000. It is not known when this money will be repaid and if
there will be any additional impacts.
Proposition IA approved by California Voters prevents the State from taking
money from cities to balance its budget as it has done in the past, however it
allows the State to borrow money, which it is supposed to pay back within a
certain period of time. It is possible that the State may do so and if so it is not
known what the impacts would be.
If this were to happen the city must have sufficient reserves to cover this
payment. *Based on midyear estimates the 2007/2008 yearend
unreservedlunrestricted fund balance reserves) for General Fund and
funds supported and subsidized by the General Fund including risk
management fund is expected to be only $2,000,000 including $1,000,000 for
the lock box reserve). This is not a significant amount for a city our size.
Even though this fund balance is available for spending as it represents net
assets after setting money aside for all obligations) it should not be spent. The
city uses the fund balance for its working capital needs to maintain operations
during the months of July to January when it does not receive enough tax
payments. This reserve is also supposed to protect the city in case of
emergencies and allow time to react to fiscal emergencies such as loss of
revenues to state of for other reasons. Any payment to the State is likely to
cause some hardships and is not factored into midyear projections.
*Revised 2.26.08
Desire and ability to maintain competitiveness in the market
The City also has to deal with the challenge of staying competitive in the
market for its recruitment and retention needs. Absent significant revenue
growth or in times of declining revenues as is the situation currently our
expenditure growth must not exceed the revenue growth. Therefore we must
find innovative ways to provide service and reevaluate our business
processes. Additionally use of technology and process simplification must be
embraced. Furthermore importance of increasing revenues cannot be
overemphasized. While these mean change these are essential in order to
generate resources to stay competitive.
During the past years most departments have been successful in increasing
revenues and reducing costs. We plan to continue our quest to identify
creative ways to reduce spending with out impacts and increase revenues to
generate resources to hire and retain good staff and stay competitive.
Impact of fiscal outlook on 200812009 budget
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2008 02 26 CC MIN SSÄ—@¸— B 1 Í«Given the current economic scenario we expect a growth of no more than 1-
2%. could be lower if the economic outlook worsens).
Based on these projections a preliminary look at 2008/2009 suggests that if we were to
budget for all authorized positions, the city would need to either generate new revenues
or reduce expenditures to balance the budget. The following table shows the potential
impact of slower economy on city's budget.
See Staff Report
The above table shows that if all vacancies were to be kept vacant we would
have a balanced budget. However, there still would not be any amounts for
cost of living increases or to restore programs and positions. The city cannot
keep all vacant positions vacant because some of the vacancies are in
process of being filled and some such as sworn positions are important and
need to be filled.
Staff therefore needs to identify additional options to not only balance the
budget but to generate resources to allow the city to stay competitive for its
staffing needs.
Additionally efforts to balance the budget must also balance the need to
maintain services. Since significant staffing and budget reductions have
already been made in many departments in the prior years accomplishing
further reductions without generating impacts is a very challenging task.
While this is a very tough challenge we are very hopeful that we will be able to
generate innovative ideas, revamp business processes, identify new revenue
sources and implement technology supported programs to generate
efficiencies and balance the budget while maintaining the quality and level of
service.
Staff is already working on exploring following options:
Evaluate and freeze non-sworn vacancies
Identify and implement recommendations to increase revenues
Prioritize and evaluate the operations and implement ways to
eliminate redundancy, waste and non essential functions
We expect to bring a balanced budget for Council review in April 2008.
FISCAL IMPACT
No fiscal Impact at this time
RECOMMENDATION
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2008 02 26 CC MIN SSÄ—@¸— B 1 Í«It is recommended that the City Council review the information and provide
directions as deemed appropriate.
ADJOURN TO CLOSED SESSION OF THE CITY COUNCIL & COMMUNITY
DEVELOPMENT COMMISSION
7:10 p.m.
2. PUBLIC EMPLOYEE PERFORMANCE EVALUATIONS GC 54957)
Title: Chief Executive Officer
Title: Recreation & Community Services Director
Title: Public Works Director
Title: Human Resources Manager
3. CONFERENCE WITH LABOR NEGOTIATORS GC 54957.6)
A) Agency Negotiator: Manuel Lozano, Mayor
Unrepresented Employee: Vijay Singhal, Chief Executive Officer
B) Agency Negotiator: Vijay Singhal, Chief Executive Officer
Unrepresented Employees: Recreation & Community Services
Director
Public Works Director
Human Resources Manager
4. PUBLIC EMPLOYEE APPOINTMENT GC 54957)
A) Interim Chief of Police
B) Chief of Police
RECONVENE IN OPEN SESSION
REPORT FROM CLOSED SESSION
No reportable action taken.
ADJOURNMENT
There being no other matters for discussion the meeting was adjourned at 7:30
p.m.
Approved as presented by the Council, Commission and Authority at their
meetings held April 16, 2008.
Laura M. Nieto
Deputy City Clerk
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