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Home My Public Portal AboutA 2013-05-14CC-SPThis Agenda contains a brief general description of each item to be considered. Copies of the Stafl reports or other written documentation relating to each item of business referred to on the Agenda are on file in the Office of the City Clerk and are available for public inspection. Any person who has a question concerning any of the agenda items may call the City Manager at (310) 603 -0220, ext. 200. Procedures for Addressing the Council IN ORDER TO EXPEDITE CITY COUNCIL BUSINESS, WE ASK THAT ALL PERSONS WISHING TO ADDRESS THE COUNCIL FILL OUT A FORM PROVIDED AT THE DOOR, AND TO TURN IT IN TO THE CITY CLERK PRIOR TO THE START OF THE MEETING. FAILURE TO FILL OUT SUCH A FORM WILL PROHIBIT YOU FROM ADDRESSING THE COUNCIL IN THE ABSENCE OF THE UNANIMOUS CONSENT OF THE COUNCIL. AGENDA ITEMS ON FILE FOR CONSIDERATION AT THE SPECIAL MEETING OF THE LYNWOOD CITY COUNCIL TO BE HELD ON MAY 14, 2013 COUNCIL CHAMBERS 11330 BULLIS ROAD, LYNWOOD, CA 90262 5:00 P.M. SALVADOR ALATORRE MAYOR RAMON RODRIGUEZ MAYOR PRO -TEM JIM MORTON COUNCILMEMBER CITY MANAGER ROGER L. HALEY CITY CLERK MARIA QUINONEZ OPENING CEREMONIES 1. CALL TO ORDER 2. CERTIFICATION OF AGENDA POSTING BY CITY CLERK 3. ROLL CALL OF COUNCIL MEMBERS Aide Castro Jim Morton Maria T. Santillan -Beas Ramon Rodriguez Salvador Alatorre 4. PLEDGE OF ALLEGIANCE 5. INVOCATION /� . w p i ■ . MAY 0 9 2013 CITY OF LYNWOOD P ITY CLERKS OFFICE AIDE CASTRO COUNCILMEMBER MARIA TERESA SANTILLAN -BEAS COUNCILMEMBER CITY ATTORNEY FRED GALANTE CITY TREASURER EDWIN HERNANDEZ PUBLIC ORAL COMMUNICATIONS (Regarding Agenda Items Only) NON - AGENDA PUBLIC ORAL COMMUNICATIONS THIS PORTION PROVIDES AN OPPORTUNITY FOR THE PUBLIC TO ADDRESS THE COUNCIL ON ITEMS WITHIN THE JURISDICTION OF THE COUNCIL AND NOT LISTED ON THE AGENDA. IF AN ITEM IS NOT ON THE AGENDA, THERE SHOULD BE NO SUBSTANTIAL DISCUSSION OF THE ISSUE BY THE COUNCIL, BUT COUNCIL MAY REFER THE MATTER TO THE STAFF OR SCHEDULE SUBSTANTIVE DISCUSSION FOR A FUTURE MEETING. (The Ralph M. Brown Act, Government Code Section 54954.2 (a).) NEW /OLD BUSINESS 6. FY 2013 -2014 BUDGET WORKSHOP Comments In anticipation of the FY 2013 -2014 (FY 14) Budget Hearing scheduled for June 4, 2013, staff scheduled this budget workshop to review the Proposed FY 14 Budget, which includes budget cuts and service impacts. Reductions in the expenditure budget will have an impact on level of service. The focus at the Budget Workshop is on the General Fund. The full Proposed FY 14 Budget will be presented at the June 4`" Budget Hearing at which time comments from the public and Council will be considered. While Council may, of course, provide comments on tonight's budget discussion, no decisions may be made at the workshop. Council decisions will be part of the June 4 1 " public hearing. (FIN) Recommendation Staff recommends that the City Council conduct a budget workshop to consider the following: 1) The City Manager's Proposed FY 2013 -2014 General Fund Budget Request; 2) The City Manager's Proposed FY 2013 -2014 Budget Request for all other City Funds; and 3) Reports from the departments on FY 2013 -2014 budget cuts, budget enhancements, and service impacts. CITY COUNCIL ORAL AND WRITTEN COMMUNICATION SALVADOR ALATORRE, MAYOR RAMON RODRIGUEZ, MAYOR PRO -TEM AIDE CASTRO, COUNCILMEMBER JIM MORTON, COUNCILMEMBER MARIA T. SANTILLAN -BEAS, COUNCILMEMBER ADJOURNMENT THE NEXT REGULAR MEETING WILL BE HELD ON MAY 21, 2013 AT 6:00 P.M. IN THE COUNCIL CHAMBERS OF THE CITY HALL, 11330 BULLIS ROAD, CITY OF LYNWOOD, CALIFORNIA. O gmYh W F ®O AGENDA STAFF REPORT 't IF04� DATE: May 14, 2013 TO: Honorable Mayor and Members of the City Council APPROVED BY: Roger L. Haley, City Manacrer_�� PREPARED BY: Amanda Roberson, Director of Finance at Delania Whitaker, Administrative Analyst I� Steven Avalos, Administrative Analyst II SUBJECT: FY 2013 -2014 BUDGET WORKSHOP Recommendation: Staff recommends that the City Council conduct a budget workshop to consider the following: 1) The City Manager's Proposed FY 2013 -2014 General Fund Budget Request; 2) The City Manager's Proposed FY 2013 -2014 Budget Request for all other City Funds;and 3) Reports from the departments on FY 2013 -2014 budget cuts, budget enhancements, and service impacts. Background: In anticipation of the FY 2013 -2014 (FY 14) Budget Hearing scheduled for June 4, 2013, staff scheduled this budget workshop to review the Proposed FY 14 Budget, which includes budget cuts and service impacts. Reductions in the expenditure budget will have an impact on level of service. The focus at the Budget Workshop is on the General Fund. The full Proposed FY 14 Budget will be presented at the June 4th Budget Hearing at which time comments from the public and Council will be considered. While Council may, of course, provide comments on tonight's budget discussion, no decisions may be made at the workshop. Council decisions will be part of the June 4 public hearing. Discussion & Analysis: FY 14 Proposed Budget Overview The FY 14 Proposed Budget was developed in the context of a sluggish economic recovery with an expectation that the City's major revenues: property tax, sales to AGENDP utility user's tax revenues will remain flat based on FY 13 revenue performance. The ITEM proposed budget also focuses on meeting the Council's reserve policies for the General Fund, Garage Fund, and Water Enterprise Fund, as well as the Contingency Set Aside policy. (0 The Citywide expenditure budget, including transfers between funds, and excluding the Successor Agency, totals $103.8 million and is funded by $95.0 million in revenues and the use of $8.8 of available reserves, including bond proceeds for capital projects. The Citywide budget includes all funds and programs, such as the Water Enterprise Fund, HUD Funds, Street Lighting and Landscape Maintenance Assessment Districts, and the General Fund. FY 14 PROPOSED BUDGET — ALL CITY FUNDS FY 13 Adopted Budget FY 14 City Manager Proposed Budget % Change Revenues General Fund $28,879,633 $28,836,298 0.2% Capital Improvement Projects 18,958,494 22,146,055 16.8% Other Funds 40,606 43 987 080 8.3% Total Revenues' $88,444,201 $94,969,433 7.4% Expenditures General Fund $29,616,217 $28,755,043 2.9% Capital Im rovementProjects 18,604,171 22,160,314 19.1% Other Funds 53 353 265 52 859 525 0.9% Total Expenditures $101,573,653 $103,774,882 2.2% Use of Reserves $13,129,452 $8,805,449 32.9% The FY 14 General Fund Proposed Budget contains recommended actions that reduce overall expenditures by 2.9% (or $861K) from the FY 13 Adopted Budget. It is imoortant to note that the FY 14 Proposed General Fund Budaet is a balanced budaet. where revenues are sliahtiv hiaher than expenditures. with no use of reserves. FY 14 Proposed General Fund expenditures in the amount of $28.8 million are offset by $28.8 million in projected revenues. For FY 14, staff proposes that General Fund expenditures stay below General Fund projected revenues to avoid depleting the General Fund reserves. To achieve this, staff recommends reductions in operations and workforce. The budget includes transfers out for debt service payments and to pay down deficit funds. Based on the projected revenues and proposed expenditures, it is anticipated that the General Fund will end FY 14 with $4.8 million in reserves. Please note that the City's auditor may adjust the General Fund reserves by categorizing certain portions of the reserve as non - spendable or restricted based on obligations, payables, and receivables. ' Excludes Successor Agency Funds 2 FY 14 PROPOSED GENERAL FUND BUDGET " Based on FY 12 actual results. FY 14 Fiscal Issues & Challenges Staff has identified the following critical fiscal issues: • Stable Revenues - General Fund revenues remain flat. The City should consider additional sources of revenues to continue to meet expectations for community services. • Public Safety - Public Safety is the City's number one priority. The budget for Public Safety is the largest General Fund expenditure at almost 50% of the total General Fund budget. The cost for providing Sheriff and Fire services continues to increase annually. For FY 14, the cost will increase by 2.4% (or $190K) and 1.04% (or $56K), respectively. 3 FY 13 Adopted Budget FY 13 Year -End Estimate FY14 City Manager Proposed Budget REVENUES Property Tax & VLF Swap $8,588,792 $8,602,716 $8,739,735 Sales Tax 3,651,947 3,684,271 3,935,442 Utility User's Tax 5,534,311 5,068,989 5,165,519 Franchise Fee 1,194,000 1,204,993 1,196,000 Business License and Other Tax 871,200 920,595 874,750 Charges for Current Services 3,301,453 3,224,758 3,228,950 Fines, Forfeits, and Penalties 1,604,000 1,526,000 1,582,000 Other Revenues 2,036,820 2,765,350 2,155,052 Transfers In 2.097,109 2,076,571 1.958.850 TOTAL REVENUES $28,879,633 $29,074,243 $28,836,298 EXPENDITURES Operational Expenditures $27,882,233 $27,567,396 $27,120,190 Transfers Out Debt Service 717,003 717,003 721,394 Transfers Out (OPEB/ Self Insurance Fund 389,200 389,200 289,200 Transfers Out Park Replacement Fund 276,656 276,656 276,656 Transfers Out (Landscape Maintenance Fund 197,889 197,889 177,889 Transfers Out Street Lighting Fund) 58,315 58,315 58,315 Transfers Out Traffic Safety Fund 52,425 52,425 52,425 Transfers Out (Finance Authority Fund) 12,023 12,023 12,023 Transfers Out (Contingency) 0 10,000 16,478 Transfers Out (Prior Years' Deficits) 0 0 0 Transfers Out (Other Funds) 30,473 30,473 30,473 TOTAL EXPENDITURES $29,616,217 $29,311,380 $28,755,043 USE OF RESERVES /SURPLUS $736,584 $237,137 $81,255 BEGINNING FUND BALANCE 5,083,849" 5,021,009 4,783,872 ENDING FUND BALANCE $4,347,265 $4,783,872 $4,865,127 " Based on FY 12 actual results. FY 14 Fiscal Issues & Challenges Staff has identified the following critical fiscal issues: • Stable Revenues - General Fund revenues remain flat. The City should consider additional sources of revenues to continue to meet expectations for community services. • Public Safety - Public Safety is the City's number one priority. The budget for Public Safety is the largest General Fund expenditure at almost 50% of the total General Fund budget. The cost for providing Sheriff and Fire services continues to increase annually. For FY 14, the cost will increase by 2.4% (or $190K) and 1.04% (or $56K), respectively. 3 Health Insurance Premiums — Although the City has 'capped" the amount of health insurance paid by the City (at the Kaiser Family Rate), health benefits remain the fourth largest expense for the City behind Public Safety, salaries, and CalPERS employer contributions. In FY 13, it is estimated that the City will pay approximately $2.2 million for medical, dental, vision, and life insurance benefits for active employees. In January 2013, health insurance premiums increased by 8% and are expected to increase at a similar rate in January 2014. • Other Post - Employment Benefits Liability — The City must increase its $500,000 annual contribution (paid from the Self- Insurance Fund) to address a projected cumulative liability of $18.5 million to fully fund lifetime medical, dental, vision, and life insurance benefits for the City's retirees by 2021. • Deficit Funds — The City must continue to reduce the cumulative deficits in the Traffic Safety, Street Lighting, TEA Grant, Park Replacement, and Self- Insurance Funds estimated at $4.0 million at the end of FY 13. It is anticipated that the accumulated deficit in the Landscape Maintenance Fund will be eliminated by the end of FY 13. The General Fund subsidized $1.0 million in FY 13 to pay down the deficit funds. The accumulated deficit has decreased 40% since 2009. This is significant given the fact that the three major bond credit rating agencies have indicated they will downgrade the City's credit rating if the City does not continue to eliminate these prior years' deficits. • Reserves — The City should maintain compliance with the General Fund Reserve Policy to meet unexpected emergencies and to stabilize operations. CalPERS recently approved new actuarial policies that are aimed at returning the System to fully- funded status within 30 years. Although the changes will not be implemented until FY 16, and even though they will be phased in over five years, they will result in increased employer contributions for the City. Additional increases in employer contributions are expected due to changes in actuarial assumptions (i.e. mortality rates) and the discount rate. The total increase for the period between FY 16 and FY 20 is estimated at 10% to 11 %. Please note that this does not impact the FY 14 budget, but will significantly impact the General Fund and other key funds beginning in FY 16. FY 14 Proposed Budget Highlights The FY 14 Proposed Budget is the third year of a multi -year approach addressing the fiscal issues and challenges listed above. The FY 14 Proposed Budget recommends the following actions: 1) To eliminate 2 filled full -time positions. 2) To eliminate 4 vacant positions. 3) To reduce operational expenditures by $762K. S 4) To increase rates charged to departments to cover the annual cost of programs included in the Self- Insurance Fund to prevent subsidies from the General Fund. 5) Allocate costs from the General Fund to other funds to reduce General Fund expenditures (i.e. insurance premiums, security). 6) Continue to transfer revenues in the next seven years from the General Fund to the deficit funds to eliminate prior years' deficits in the Traffic Safety, Lighting Maintenance, TEA Grant, Park Replacement, and Self- Insurance Funds. 7) Maintain General Fund reserves at the end of FY 14 at $4.9 million. These recommendations will be incorporated in the FY 14 Proposed Budget to be presented to the Council on June 4, 2013. If projections of revenues and expenditures for FY 13 and FY 14 are reached, this will result in balancing revenues and expenditures in the General Fund, with no use of reserves The City must continue to be conservative and manage its fiscal affairs in an appropriate manner. The road to long -term financial and operational stability requires leadership, commitment, planning, and effective execution as well as a thriving national and local economy. As stewards of public funds and provider of services to the Lynwood community, the most favorable financial outcome for the City is financial resiliency to ensure that the City can continue to provide services to the community and meet its mandates. Revenue Enhancement Since FY 10, property and sales tax revenues have increased by a combined 6.7% (or $770K). During that time, UUT revenues have decreased by 13.8% (or $810K). Revenue increases in property and sales taxes have been offset by declining UUT revenues, which have resulted in flat revenues. The lack of general growth in revenues has deepened the use of the City's reserves to stabilize the City's operations. Rather than only focusing on cuts, staff recommends that Council consider increasing revenues as well. Incorporated in the FY 14 Proposed Budget Workshop Presentation is a section on Potential Revenue Enhancements. Fiscal Impact: No fiscal impact identified with holding the workshop. Council decisions should be made at the hearing scheduled for June 4, 2013. Coordinated With: All Departments 5