HomeMy Public PortalAbout03) Budget In BriefMay 29, 2012
Dear Temple City Community Members:
I am pleased to present you with the annual Budget-in-Brief for
the Fiscal Year (FY) 2012-13 City Budget. This report provides the
City Council and general public with a concise overview of the
City’s financial planning efforts, as well as a summary of where
revenues will come from and how they will be spent between
July 1, 2012 and June 30, 2013.
BACKGROUND & FINANCIAL STANDING
Like many local governments nationwide, in the midst of
the recent economic downturn, the City of Temple City also
experienced considerable financial stress. But unlike some that
have been forced into unfortunate situations of austerity and
mass layoffs, an established tradition of prudent fiscal planning
enabled the City to not only sustain, but elevate its level of
service to the community.
Under “New Normal” economic conditions—wherein periodic
episodes of revenue decline1 can destabilize funding—the City
has recognized the urgency to adopt strategic fiscal policies
toward protecting core programs and services, as well as
optimizing and developing available assets. As such, in FY 2010-
11, the City Council made a deliberate effort toward economic
recovery by shifting “From Status Quo to High-Performance.”
Since then, City initiatives and a general improvement in the
economic climate have moved the City along toward a successful
transition:
• In FY 2010-11, the City’s adoption of zero-based
budgeting reduced operating costs by approximately
$800,000. Continuing this practice ensures efficient
spending and maximization of resources. (See Creating
Value on following page.)
• Last year, the City also updated its cost-allocation
plan and user-fee schedule for the first time since
1991. Verifying that user fees reflect the true costs of 1 Recent episodes of revenue decline included a $2 million dip in the General Fund in 2007-09, followed by a $300,000 State raid on the City’s Community Redevelopment Agency in 2010.
FY 12-13 OVERVIEW
EFFECTIVE
JULY 1, 2012 - JUNE 30, 2013
CITY BUDGET
$28,090,140
NOTABLE TRENDS
• LOCAL REVENUES CONTINUE TO RISE
• ECONOMIC ENVIRONMENT STABILIZING
KEY INITIATIVES
• CONTINUE ENHANCING CITY SERVICES,
INCREASING OPERATIONAL EFFICIENCY
• CONTINUE PROGRESS ON EXISTING
PROJECTS, PROGRAMS
• CONTINUE BEST PRACTICES IN
FISCAL PLANNING (i.e., zero-based
budgeting, proactive collection measures,
amending General Fund Reserve policy)
operating City programs and services reduces the need
for General Fund subsidy.
• In conjunction with the aforementioned financial
measures, the City refocused attention on strategic
investment. Enabled by a healthy General Fund
Reserve, the City made a one-time draw of $867,000
for capital improvement projects, anticipated to support
community and economic development efforts.
• Proactive collection measures, including code
enforcement implementation as a part of the Community
Preservation Program, enabled the City to recover funds
previously foregone due to unavailable resources.
• Significant growth in sales, property and motor vehicle
in-lieu taxes boosted the General Fund in FY 2011-12.
In addition, the year closed with additional revenue
savings in operational costs that increased the General
Fund Reserve by $709,000 as of June 30, 2011.
• Whereas previous years saw State raids on local funds,
a more stable financial environment has also facilitated
the City’s resilient recovery.
Entering FY 2012-13, projections of sustained growth, along with
the continued practice of new budgeting strategies, will further
enhance the City’s financial stability and economic prosperity.
CONTINUED PERFORMANCE IN FY 2012-13
Last year, the State of California abolished community
redevelopment agencies2. For the City, dissolution of the
local redevelopment authority will mean the disappearance
of $880,000 in gross tax increment—tough news, as the City
progresses on the Rosemead Boulevard Project, which was anticipated to be funded by $1.8 million
through redevelopment bond proceeds.
But despite the loss of redevelopment revenues, based on projections for FY 2012-13 the City is expected
to operate with a General Fund operating surplus of $14,770. Of the total draft City Budget of $28,090,140,
the General Fund comprises $12,121,015 (43%).
Brief breakdowns of the City Budget and General Fund are provided in the tables below. More detailed
illustrations are shown in Attachments A, B and C.
2 Pursuant to ABx126, the State of California eliminated redevelopment agencies as a measure to ease budget shortfalls. After Agency obligations, there was approximately $200,000 for redevelopment and economic development activities—which is no longer available. Personnel costs previously associated with the Community Redevelopment Agency have been absorbed primarily by the General Fund.
%TOTALS
DRAFT CITYWIDE BUDGET 100 $28,090,140
General Fund 43 $12,121,015
Special Fund 11 $3,149,005
Capital Improvement and Outlay 46 $12,820,120
GENERAL FUND (GF)$12,121,015
GF Budgeted Expenditures $11,441,840
GF Revenues, transfers $11,456,610
General Fund Reserve Outlay $679,175
Creating Value through
Zero-Based Budgeting
When budgeting in a business-as-
usual environment, appropriations
generally “rollover” from previous
years, with minor modifications
made as needed. While this method
of fiscal planning certainly comes
with less hassle, the City recognizes
that the current economic situation
is not business as usual. Having
experienced significant periodic
revenue declines in recent years, the
City understands the need to extract
as much value as possible from every
available dollar.
In an effort to optimize spending, the
City adopted zero-based budgeting
in FY 2010-11 as a best practice for
future financial planning. Since then,
staff has made annual line-by-line
analyses of proposed expenditures
to ensure the creation of value with
available resources. Yearly evaluation
of expenditures also has the added
benefit of helping staff prioritize
allocation of resources toward the
most high-yielding programs and
projects.
City Council
5/30/12
Page 2
Continuing from last year’s budget, the City
is moving forward with modernizing City Hall
operations and strategically investing in capital
improvement projects. The shown one-time
General Fund Reserve Outlay of $679,175 is for
equipment purchases (i.e., $182,925) and capital
improvement projects (i.e., $496,250). At the
moment, the Council is considering adoption of an
Ordinance designating budgeted reserves. By June
30, 2013, the General Fund Reserve balance will
be $23,340,861. If Council adopts the allocations
as proposed (see Securing Our Future), an
undesignated balance of $1,640,861 remains. Staff
recommends the one-time outlays be appropriated
from this source.
FY 2012-13 BUDGET IN ACTION:
HIGHLIGHTS AHEAD
Toward continuing the City’s “high-performance”
trajectory—implementing best practices in fiscal
planning to maximize resources and focus attention
on strategic investment opportunities—the FY
2012-13 Budget targets the following initiatives:
• Communications and Transparency
▶Ramping up outreach efforts to improve
citizen engagement and publicize Parks
and Recreation programs and events.
▶Technology upgrades in the City
Clerk’s Office to provide more efficient
document storage and enhance
transparency.
• Economic Development
▶Continue allocating resources to grow
the City’s assets (e.g., leveraging
General Fund dollars enabled the City
to capture millions of dollars in grants
for the Rosemead Boulevard Project).
• Transportation and Mobility
▶The Public Transportation Budget (Prop
A Fund) includes $90,000 to add fixed-
route shuttle services.
▶More aggressive street maintenance
is planned for the coming year in a
preventative effort to avoid heavier
costs from extensive wear in the future.
▶Increased efforts for re-striping, re-
painting of city streets and parking lots.
Securing Our Future:
Reserving the General Fund Reserve
In the midst of an unfavorable economic
downturn, the City’s healthy General Fund
Reserve (GFR) enabled us to cope—even elevate
level of service by making strategic investments.
One-time GFR outlays in FY 2011-12 and 2012-13
have been critical in the City’s efforts to modernize
operations and upgrade infrastructure.
While the GFR was previously unrestricted—
meaning money can be taken out and approved
for practically any purpose, from covering
equipment costs to emergencies—toward
ensuring that resources will be available in the
future for emergencies, contingencies, liabilities
and planned major capital projects, the City
Council and staff are developing a comprehensive
budget reserve policy.
In so doing, the City Council has introduced an
Ordinance that recommends dollar amounts
for General Fund Budgeted Reserves. Various
budgeted reserve fund accounts will be
established, with each designated for specific
purposes. The goal of this initiative was to
maintain adequate financial reserves such that, in
the event of economic downturns, variable annual
revenue fluctuations, or unforeseen hardships—
such as the 2011 windstorm—the City may still
continue to meet expenditure obligations and
provide essential city services.
If the City Council adopts the Ordinance during
the second reading scheduled for June 5, 2012,
the Ordinance will take effect July 5, 2012.
These reserve levels will be reviewed on an
annual basis (or more often if necessary) as part
of the City Budget process. Recommendations for
changes in these reserves would come from the
City Manager to the Council.
PROPOSED ALLOCATIONS
Emergency/Disasters $1,000,000
Liquidity $2,000,000
Local Economic Uncertainty $500,000
Other Post-Employment Benefits (OPEB)$1,000,000
Fleet Management $400,000
Facilities Management $4,000,000
Technology Replacement $200,000
Economic Development $8,000,000
Opportunities for One-Time Expenditures $4,600,000
GFR TOTAL $21,700,000
City Council
5/30/12
Page 3
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