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HomeMy Public PortalAbout2019.095 (08-08-19) RESOLUTION NO. 2019.095 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LYNWOOD CALIFORNIA UNANIMOUSLY DECLARING A FISCAL EMERGENCY IN THE CITY OF LYNWOOD WHEREAS, on November 8, 2016, Lynwood voters approved Measure PS"Penny Tax", which established a one percent(1.0%)Transactions and Use Tax (TUT)within the incorporated territory ,of the city, for ten (10) years. The revenue generated from the increase in sales taxwas to provide funding for improvements in public safety, public infrastructure, and parks and recreation services. Measure PS also required that a five- member General Tax Citizen Oversight Advisory Committee be established to oversee expenditure of the proceeds of the transactions and use tax; to review, make recommendations, and report, at least once annually, upon the expenditures to the City Council; and, to perform any other functions as directed by the City Council from time to time. As part of Measure PS; and WHEREAS, Lynwood voters also approved the establishment of a budget stabilization ("rainy day")fund into which ten percent(10%)of the new general transaction • and use tax, be deposited and may only be spent in cases of City fiscal hardship declared "by 4/5ths vote of the City Council; and WHEREAS, on July 2, 2019, the City Council adopted the FY 2019-20 Citywide Budget and approved the FY 2020-21 Citywide Budget. The FY 2019-20 General Fund Budget included expenditures in the amount of$35.97 million, plus transfers out of$2.81 million, offset by $36.45 million in estimated revenues, plus transfers in of$1.91 million, for a fund balance net reduction of $418,606. Based on the estimated revenues and proposed expenditures, it was anticipated that the FY 2019-20 General Fund balance will be $6.49 million; and WHEREAS, the FY 2020-21 General Fund Budget included expenditures in the amount of $36.73 million, plus transfer out of $3.29 million, offset by $36.58 million in estimated revenues, plus transfers in of$2.53 million, for a net fund balance reduction of $905,686. Based on the estimated revenues and proposed expenditures, it is anticipated that the FY 2020-21 General Fund balance will be $5.58 million; and WHEREAS, the City's General Fund is the primary revenue source and operating fund for most of services, such as public safety, street and park maintenance, and community services, the City provides to the community. Taxes provide the majority of General Fund revenues; and WHEREAS, Measure PS has generated a substantial amount of monies that has aided in the funding of key costs. In.FY 2017-18 and FY 2018-19, Measure PS generated $4.86 million and $4.74 million, respectively. It is anticipated that Measure PS will generate $5.32 million in revenue for FY 2019-20 and $5.49 million in revenue for FY 2020-21. For many years, services have been impacted by the City's ongoing structural 1 deficits requiring reductions to the operational budget. Prior to the passing of Measure PS, the City's revenue growth remained flat; while operating costs continued to increase. Although.Measure:PS has allowed the City to generate additional revenue annually, the City will continue to face rising costs; and WHEREAS, the City is currently and will continue to face structural fiscal challenges including the following: • CaIPERS Employer Paid Contributions — CaIPERS approved new actuarial policies that are aimed at returning the System to fully-funded status within 30 • years. These changes were implemented in FY 16, and went into affect in FY 2018-19 which will ultimately be phased in over the next five years resultingin increased employer contributions (normal cost rate) for the City. + Unfunded Liability— Employer paid contributions of CaIPERS unfunded accrued (UAL) liability costs are on the rise. This costs represents the present value of future employer contributions for service that has already been earned and is in addition to future normal cost contributions for active members. For FY 2019-20, the annual contribution for the UAL is $3.15 million for the City's miscellaneous and safety plan;;for FY 2020-21.,the annual contribution for the UAL is$3.39 million for the City's miscellaneous and safety plan. At the end of five (5) years, it is anticipated that the UAL will increase by an average of$152,602 annually. • Workers' Compensation—Workers' Compensation costs are increasing. For FY 2019-20, the General Fund budgeted expenditures are $669,231 and increase to $675,706-for FY 2020-21. The increase is attributed to a rise inthe number of work-related injuries. • Public Safety— Public Safety is the City's number one priority. For FY 2019-20, • the budget for. Public Safety is the largest General Fund expenditure at over 54.31%of the General Fund budget,excluding transfers(up from 32.21% in 2015). For FY 2020-21, the budget for Public Safety remains the largest General Fund expenditure at over 54.47% of the General. Fund budget, excluding transfers (up from 35.37% in 2015). The cost for providing Sheriff and Fire services continues to climb annually. Public-Safety continues to be a real fiscal challenge and has increased by anaverage of$1.25 million (FY 2019-20)and $1.71 million (FY 2020- 21) per year, offsetting City budget operational savings. - WHEREAS, placing a ballot measure before the voters for removal of the Measure PS sunset clause, is two-fold. Removing the 2026 sunset expiration on the measure will 1) allow the City to continue providing necessary services to its residents, and 2) allow the City to maintain control of revenue generate_ d from the measure. Ultimately if the ballot measure is not passed, the revenue will be distributed to the County of Los Angeles.- Lynwood residents will not see a decrease in their taxes. The tax will continue to be collected but redirected to.the County; and - 2 deficits requiring reductions to the operational budget. Prior to the passing of Measure PS, the City's revenue growth remained flat, while operating costs continued to increase. Although Measure PS has allowed the City to generate additional revenue annually, the City will continue to face rising costs; and WHEREAS, the City is currently and will continue to face structural fiscal challenges including the following: • CaIPERS Employer Paid Contributions — CaIPERS approved new actuarial policies that are aimed at returning the System to fully-funded status within 30 years. These changes were implemented in FY 16, and went into affect in FY 2018-19 which will ultimately be phased in over the next five years resulting in increased employer contributions (normal cost rate) for the City. Unfunded Liability— Employer paid contributions of CaIPERS unfunded accrued (UAL) liability costs are on the rise. This costs represents the present value of future employer contributions for service that has already been earned and is in addition to future normal cost contributions for active members. For FY 2019-20, the annual contribution for the UAL is $3.15 million for the City's miscellaneous and safety plan;for FY 2020-21,the annual contribution for the UAL is$3.39 million for the City's miscellaneous and safety plan. At the end of five (5) years, it is anticipated that the UAL will increase by an average of$152,602 annually. Workers' Compensation Workers' Compensation costs are increasing. For FY 2019-20, the General Fund budgeted expenditures are $669,231 and increase to $675,706 for FY 2020-21. The increase is attributed to a rise in the number of work-related injuries. Public Safety — Public Safety is the City's number one priority. For FY 2019-20, • the budget for Public Safety is the largest General Fund expenditure at over 54.31%of the General Fund budget,excluding transfers(up from 32.21% in 2015). For FY 2020-21, the budget for Public Safety remains the largest General Fund expenditure at over 54.47% of the General Fund budget, excluding transfers (up from 35.37% in 2015). The cost for providing Sheriff and Fire services continues to climb annually. Public Safety continues to be a real fiscal challenge and has increased by an average of$1.25 million (FY 2019-20)and $1.71 million (FY 2020- 21) per year, offsetting City budget operational savings. • WHEREAS, placing a ballot measure before the voters for removal of the Measure PS sunset clause, is two-fold. Removing the 2026 sunset expiration on the measure will 1) allow the City to continue providing necessary services to its residents, and 2) allow the City to maintain control of revenue generated from the measure. Ultimately if the ballot measure is not passed, the revenue will be distributed to the County of Los Angeles. Lynwood residents will not see a decrease in their taxes. The tax will continue to be collected but redirected to the County; and 2 RESOLUTION NO. 2019.095 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LYNWOOD CALIFORNIA UNANIMOUSLY DECLARING A FISCAL EMERGENCY IN THE CITY OF LYNWOOD WHEREAS, on November 8, 2016, Lynwood voters approved Measure PS"Penny Tax", which established a one percent(1.0%)Transactions and Use Tax(TUT)within the incorporated territory of the city, for ten (10) years. The revenue generated from the increase in sales tax was to provide funding for improvements in public safety, public infrastructure, and parks and recreation services. Measure PS also required that a five- member General Tax Citizen Oversight Advisory Committee be established to oversee expenditure of the proceeds of the transactions and use tax; to review, make recommendations, and report, at least once annually, upon the expenditures to the City Council; and, to perform any other functions as directed by the City Council from time to time. As part of Measure PS; and WHEREAS, Lynwood voters also approved the establishment of a budget stabilization ("rainy day")fund into which ten percent(10%)of the new general transaction and use tax, be deposited and may only be spent in cases of City fiscal hardship declared by 4/5ths vote of the City Council; and WHEREAS, on July 2, 2019, the City Council adopted the FY 2019-20 Citywide Budget and approved the FY 2020-21 Citywide Budget. The FY 2019-20 General Fund Budget included expenditures in the amount of$35.97 million, plus transfers out of$2.81 million, offset by $36.45 million in estimated revenues, plus transfers in of$1.91 million, for a fund balance net reduction of $418,606. Based on the estimated revenues and proposed expenditures, it was anticipated that the FY 2019-20 General Fund balance will be $6.49 million; and WHEREAS, the FY 2020-21 General Fund Budget included expenditures in the amount of $36.73 million, plus transfer out of $3.29 million, offset by $36.58 million in estimated revenues, plus transfers in of$2.53 million, for a net fund balance reduction of $905,686. Based on the estimated revenues and proposed expenditures, it is anticipated that the FY 2020-21 General Fund balance will be $5.58 million; and WHEREAS, the City's General Fund is the primary revenue source and operating fund for most of services, such as public safety, street and park maintenance, and community services, the City provides to the community. Taxes provide the majority of General Fund revenues; and WHEREAS, Measure PS has generated a substantial amount of monies that has aided in the funding of key costs. In FY 2017-18 and FY 2018-19, Measure PS generated $4.86 million and $4.74 million, respectively. It is anticipated that Measure PS will generate $5.32 million in revenue for FY 2019-20 and $5.49 million in revenue for FY 2020-21. For many years, services have been impacted by the City's ongoing structural 1 WHEREAS, based on foregoing information, the Council finds that a fiscal emergency exists in the City. As the City continues to experience current and anticipated future funding crisis, which remain out of the City's control, including rapid increases in the cost of employee retirement and health insurance benefits, overall flat revenue from existing taxes and fees, Los Angeles County Public Safety contract increases, expenditures will continue to exceed revenues. Absent the continued source of Measure PS revenue, the City's ability to maintain staff and service level would be jeopardized. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF LYNWOOD DOES HEREBY FIND, ORDER, AND RESOLVE AS FOLLOWS: SECTION 1. The City is continuing to experience an existing and immediate funding crisis, which is the result of factors largely outside of its control, including rapid increases in the cost of employee retirement and health insurance benefits, flat revenue from existing taxes and fees, and, L.A. County Public Safety contract increases. SECTION 2. The City has worked effectively to increase financial stability, transparency, and accountability, but can potentially lose revenue source and essential City services if the measure is not passed. Without the needed additional revenue, the City may be forced to consider Public Safety and staffing cuts. Further reductions in service levels would mean continuing to allow the City's parks, roads, facilities, landscaping, and trees to deteriorate, jeopardizing the public health, safety, and welfare, and increasing the costs of maintaining basic infrastructure. The additional revenue generated from Measure PS is strongly needed for near and long term financial stability of the city. SECTION 3. Because of changes in State law, particularly the approval, of Propositions 62 and 218, the City has very few means available for increasing General Fund revenue. SECTION 4. Because of that threat to the public health, safety, and welfare, an emergency exists in the City, as the term "emergency" is used in Article XIIIC, section 2(b) of the California Constitution. The City must immediately address that emergency by ensuring that the City has the resources and continuing revenue sources necessary to preserve the public health, safety, and welfare. SECTION 5. The identified emergency necessitates that the City Council submit a tax measure to the voters of Lynwood at the November 5, 2019 election, even though such an election would not be consolidated with a general election for a member of the Council. SECTION 6. Accordingly, the City Council of the City of Lynwood unanimously finds and declares the existence of a fiscal emergency within the City of Lynwood; and 3 SECTION 7. This Resolution shalltake effect immediately upon adoption. SECTION 8. The City Clerk shall certify to the passage and adoption of this City Council Resolution and enter it into the book of original Resolutions. PASSED, APPROVED AND ADOPTED THIS 8th DAY OF AUGUST, 2019 ,e / Jo 1 Luis Solache, payor ATTEST: . Maria Quinonez, City Clerk. APPROVED AS TO FORM: APPROVED ;S TO CONTENT: 1 Noel Tapia, Jose O.'eteotl, City.Attorney : . . City anager 4 • • SECTION 7. This Resolution shalltake effect immediately upon adoption. SECTION 8. The City Clerk shall certify to the passage and adoption of this City Council Resolution and enter it into the book of original Resolutions. PASSED, APPROVED AND ADOPTED THIS,8th DAY OF:AUGUST,3019. Jo Luis:Solache, ayor ATTEST: : . ; 1i(.A.v/ ,141, �1,A/Lr/1 A Maria Quinonez;. = =. • City:Clerk. . .. . APPROVED AS TO FORM: • APPROVED S TO CONTENT: • • • Noel Tapia, - Jose 0 _.,eteotl, City.Attorney. . 'City. anager 4 • WHEREAS, based on foregoing information, the Council finds that a fiscal emergency exists in the City. As the City continues to experience current and anticipated future funding crisis, which remain out of the City's control, including rapid increases in the cost of employee retirement and health insurance benefits, overall flat revenue from existing taxes and fees, Los Angeles County Public Safety contract increases, expenditures will continue to exceed revenues. Absent the continued source of Measure PS revenue, the City's ability to maintain staff and service level would be jeopardized. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF LYNWOOD DOES HEREBY FIND, ORDER, AND RESOLVE AS FOLLOWS: SECTION 1. The City is continuing to experience an existing and immediate funding crisis, which is the result of factors largely outside of its control, including rapid increases in the cost of employee retirement and health insurance benefits, flat revenue from existing taxes and fees, and, L.A. County Public Safety contract increases. SECTION 2. The City has worked effectively to increase financial stability, transparency, and accountability, but can potentially lose revenue source and essential City services if the measure is not passed. Without the needed additional revenue, the City may be forced to consider Public Safety and staffing cuts. Further reductions in service levels would mean continuing to allow the City's parks, roads, facilities, landscaping, and trees to deteriorate, jeopardizing the public health, safety, and welfare, and increasing the costs of maintaining basic infrastructure. The additional revenue generated from Measure PS is strongly needed for near and long term financial stability of the city. SECTION 3. Because of changes in State law, particularly the approval of Propositions 62 and 218, the City has very few means available for increasing General Fund revenue. SECTION 4. Because of that threat to the public health, safety, and welfare, an emergency exists in the City, as the term "emergency" is used in Article XIIIC, section 2(b) of the California Constitution. The City must immediately address that emergency by ensuring that the City has the resources and continuing revenue sources necessary to preserve the public health, safety, and welfare. SECTION 5. The identified emergency necessitates that the City Council submit a tax measure to the voters of Lynwood at the November 5, 2019 election, even though such an election would not be consolidated with a general election for a member of the Council. SECTION 6. Accordingly, the City Council of the City of Lynwood unanimously finds and declares the existence of a fiscal emergency within the City of Lynwood; and 3 STATE OF CALIFORNIA ) ) SS. COUNTYOFLOS ANGELES ) I, Maria Quinonez, the undersigned, City,Clerk of the City of Lynwood, do hereby certify that the foregoing.Resolution was passed and adopted by the City Council,of the City of Lynwood at a special meeting held on the 8th day.of August,. 2019. AYES: COUNCIL MEMBERS CASANOVA, SANTANA, ALATORRE, MAYOR . . PRO TEM CASTRO, AND MAYOR SOLACHE NOES: NONE ABSENT:_ NONE ABSTAIN: NONE . Ai if difkl ;Alt 41° Maria.Quinonez; City Clerk . STATE OF CALIFORNIA ) • ) SS. . COUNTY OF LOS ANGELES ) I, Maria Quinonez, the undersigned, City Clerk of the City of Lynwood, and the Clerk of the City Council of said City, do hereby certify that the above foregoing is a full, true and correct copy of Resolution No. 2019. 095 on file in my office and that said Resolution was adoptedon the date and by the vote therein stated. Dated this 8th day of August, 2019.. aria Quinonez; City Clerk 5 .