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Home My WebLink About01 - Budget - PowerPointFY 2024-25 PROPOSED BUDGET CITY COUNCIL & FINANCE COMMITTEE JOINT MEETING MAY 285 2024 ------------ • Budget Priorities: • Providing high quality municipal services that residents expect • Maintaining the safety and security of our neighborhoods • Keeping Newport Beach looking great • Maintaining a prosperous, fiscally sustainable, and economically viable city • Additional Focus • Continued emphasis on elimination of the City's long-term liabilities • Ensuring proper funding for long-term capital needs • Addressing key City Council priorities identified at the February 3, 2024, City Council Planning Session Q SEW POST >� a U T ari C'q -IFORN�P Saturday, February 3, 2024 1 Special City Council Meeting I City Council Planning Session ' Thursday, February 15, 2024 Finance Committee Meeting Long -Range Financial Forecast (LRFF)u date Tuesday, March 12, 2024 I City Council Study Session I Early Look at CIP Budget Thursday, March 14, 2024 Thursday, April 11, 2024 Thursday, May 9, 2024 Tuesday, May 28, 2024 Thursday, May 30, 2024 Finance Committee Meeting Finance Committee Meeting Finance Committee Meeting Overview of FY 2024-25 Revenue Projections Proposed FY 2024-25 Expenditure Budget Review Follow-up Discussion on FY 2024-25 Proposed Budaet Joint City Council/Finance I Committee Studv Session I FY 2024-25 Operating Budget Review Finance Committee Meeting Finalize Recommendations to City Council Tuesday, June 11, 2024 I City Council Public Hearing I Adoption of FY 2024-25 Budget 3 FY 2024-25 ALL FUNDS BUDGET OVERVIEW ANNUAL BUDGET FISCAL YEAR 2024-2025 PROPOSED Operating Budget 307,536,523 309,114,306 330,919,923 351,870,115 368,155,904 4.6% Transfers Out 27,979,154 39,075,536 53,035,836 58,859,125 72,312,196 22.9% CIP New Appropriations 31,377,224 35,506,078 71,030,292 29,375,044 54,344,000 85.0% Total Budget 366,892,901 383,695,920 454,986,051 440,104,284 494,812,100 12.4% • 4.6% growth in operating budget, primarily related to: • Routine personnel costs such as cost -of -living -adjustments and merit increases • Proposed Program Enhancement Requests • 22.9% rowth in transfers out, primarily due to increases in transfers to the Tidelands, Parks Maintenance Fund, Parks & Community Centers Fund, and interfund transfers within the Water Utility for capital projects. • 85% rowth in CIP due to projects such as the Balboa Library/Fire Station No. 1 project and the Big Canyon Restoration project, along. with increases to park projects, street improvements, water and wastewater system improvements, etc. EW PO Note: Amounts for FY 25 include proposed budget revisions. Prior year amounts a have been restated to align with current accounting for Tideland expenditures. U T ari General Fund Tidelands Fund Water Enterprise Fund Wastewater Enterprise Fund 225,858,038 246,163,632 276,111,174 293,917,485 311,258,638 20,084,234 20,727,144 20,978,717 23,312,029 24,579,410 27,969,925 27,933,241 32,069,765 33,623,346 38,528,044 4,284,105 3,956,840 4,884,651 5,097,917 5,321,136 5.9% 5.4% 14.6% 4.4% Other Funds 57,319,375 49,408,985 49,911,452 54,778,463 60,780,872 11.0% 335,515,677 348,189,842 383,955,759 410,729,240 440,468,100 7.2% Note: Amounts Include Operating Expenditures, Transfers and Proposed Budget Revisions • General Fund growth of 5.9% outlined in detail on subsequent slides • Tidelands Fund growth of 5.4% primarily due to: • Updated Cost Allocation Plan P�RT Program Enhancement Requests • Water Fund increases largely due to transfer to capital fund for CIP k.'. $350 $300 $250 $200 $150 $100 $50 M W FY 2022-23 FY 2023-24 FY 2024-25 Actuals Projected Proposed Budget Property Tax ■ Sales Tax ■ TOT Transfers Q SEW POST >� a U � T C'q -IFORN�P ■ Others 2023-24 Projected $ 309.0 million 2024-25 Proposed $ 316.6 million • Projected revenues for FY 2024-25 are $7.6 million (2.5%) higher than amounts currently projected for FY 2023-24 • Primary drivers of revenue growth due to: • Property Tax + $5.7 million (4.0%) • Sales Tax + $2.3 million (5.3%) • Transient Occupancy Tax + $1.3 million (4.2%) Note: Amounts include resources from interfund loan repayments • 72% of General Fund Revenues are derived from three sources of revenue: • Property tax revenue represents 48% of General Fund revenues and is projected to increase 4% in FY2024-25. Property Tax Revenue $155 o $135 $144 $149 $115 $123 $128 $138 $95 $116 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 Actual Actual Actual Actual Projected Projected Sales Tax Revenue • Sales tax revenue represents o 14% of General Fund revenues and is projected to increase 5.3% in FY2024-25. • Transient occupancy tax revenue represents 10% of General Fund revenues and is projected to increase 4.2% in FY2024-25. $50 $46 $42 $46 $47 �— $45 $38 0-1 $43 34 $39 $30 $36 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 Actual Actual Actual Actual Projected Projected TOT Revenue, Net of Payments to VNB $34 $30 $31 $33 (n $30 — $27 o $26 $21 $18 $17 $14 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 Actual Actual Actual Actual Projected Projected 9 $350 $300 $250 o $200 $150 $100 $50 $0 FY 23-24 FY 24-25 Adopted Budget Proposed Budget Salaries & Benefits ■ Non -Personnel ■ Transfers Q��WPO�T � D � n cq�/FORN�P 2023-24 Adopted Budget $ 293.9 million 2024-25 Proposed Budget $ 311.3 million The Proposed Budget for FY2024-25 reflects: • $17.3 million increase over FY 2023-24 Adopted Budget, or 5.9%. • $40 million allocated to paying down the City's unfunded pension liability Increases in Internal Service Charges 1,781,524 0.6% GF Program Enhancements (Gross, $730k offsetting revenues) 1,830,907 0.6% CPI increases to M&O Budgets 1,125,197 0.4% Other Routine Personnel (COLA, PERS rate changes) 7,710,503 2.6% Dove Street Property Expenses 1,650,000 0.6% Remove One-time FY24 Enhancements Police Recruitment Assistance (880,000) -0.3% New Ambulance (650,000) -0.2% Increase in base Transfers (Tidelands, 2.5% index in HBMP) 966,340 0.3% New increases to transfers General Fund Capital Projects Fund 500,000 0.2% Facilities Financing Plan (FFP) Fund 1,000,000 0.3% Harbor & Beaches Capital Plan Fund 1,000,000 0.3% Parks Maintenance Fund 1,300,000 0.4% •' , P0 � D � n cgI-/�FORNP 11 Q��WPO�T � D � n cq�/FORN�P 12 General Fund Fire Building Maintenance Budget Increases 40,000 General Fund Police FLOCK ALPR System 283,500 General Fund Police Fusus Intelligence Ecosystem Subscription 100,000 General Fund Police July 4th Outside Agency Staffing 40,000 General Fund Police Mounted Enforcement Unit 20,000 General Fund Police Uniform Expense 15,000 General Fund Public Works Increase Contract Services for Streets and Beaches 50,000 General Fund Public Works Maintenance for New City Facilities 40,000 General Fund Recreation & Senior Services Increase in Recreation Programming 232,500 General Fund Recreation & Senior Services Increase in Maintenance & Repair 6,500 General Fund Various Personnel Changes 1,003,406 Asset Forfeiture Fund Police CIC Software & Equipment 50,000 Asset Forfeiture Fund Police Use of Force Immersive Training Simulator 196,000 Environmental Liability Fund Community Development Personnel Changes 30,356 Tide & Submerged Lands Fund Harbor Increase Capital accrual for replacement patrol vessel 100,000 Tide & Submerged Lands Fund Harbor Increase Budget for Crane Maintenance 30,000 Tide & Submerged Lands Fund Harbor Personnel Changes 2,170 Water Fund Utilities Personnel Changes 19,048 2,258,480 Police Department • New Crime Information Center (CIC) • Addition of 3 Police Civilian Investigators - $359,000 • Automated License Plate Reader System $283,500 • Fusus Intelligence Ecosystem - $100,000 • CIC Software & Equipment - $50,000 (Asset Forfeiture Funds) • Use of Force Immersive Training Simulator - $196,000 (Asset Forfeiture Funds) • Addition to Outside Agency Staffing for the Fourth of July - $40,000 • Mounted Enforcement Unit - $20,000 • Increase to budget for uniform expenses - $15,000 Q SEW POST >� a U T ari C'q -IFORN�P • Other non -personnel enhancements include: • $40,000 in Fire for building maintenance • $40,000 in Public Works for maintenance for new city facilities • $50,000 in Public Works for increase in contract services for Streets and Beaches • $232,500 in Recreation & Senior Services for increased programming for youth programs as well as instructor payments at various community centers • $100,000 increase to Harbor's capital budget to cover amount needed for replacement patrol vessel • $30,000 increase in Harbor for crane maintenance Q SEW POST >� a U T ari C'q -IFORN�P General Fund City Attorney Increase Part -Time Paralegal FTE 0.25 Community Development Add FT Code Enforcement Officer II 1.00 - Community Development Convert PT Code Enforcement Officer I to FT 1.00 (1.00) Community Development Add Full Time Building Inspector II (Reduce Contract Services) 1.00 - CMO/IT Reclassify Dept Assistant to Admin Assistant (Transfer from City Clerk) - - CMO/IT Reclassify Management Analyst to Sr. Management Analyst - - Finance Reclassify Revenue Auditor to Management Analyst - - Finance Convert PT Fiscal Specialist to FT 1.00 (0.70) Fire Firefighter to Firefighter Paramedic Position Adjustments - - Fire Title Changes for Life Safety Specialists - - Library Increase Part -Time Department Assistant (Grant Funded) - 0.48 Police Add 3 Police Civilian Investigators 3.00 - Public Works Add Engineering Technician 1.00 - Public Works Reclassify Senior Civil Engineer to Principal Engineer - - Public Works Reclassify City Traffic Engineer to Transportation Manager/City Traffic Engineer - - Recreation & Senior Serv. Reduce Preschool Program Staff Expenditures - (1.45) Total General Fund 8.00 (2.42) Tidelands Harbor Reclassify Department Assistant to Administrative Assistant - - Total Tidelands Fund - - Environmental Liability Fund Community Development Convert PT Code Enforcement Officer I to FT 1.00 (0.50) Water Enterprise Fund Utilities Reclassify Maintenance Aides to Utilities Specialists - - Total Other Funds 1.00 (0.50) 1000 900 800 700 600 500 400 300 200 100 0 967 946 925 886 878 867 877 886 888 895 902 915 921 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Q��WPO�T � D � n cgI-/FORN�P ■ Full -Time Employees Part -Time Employees 17 GENERAL FUND RESERVES & SURPLUS Beginning Unrestricted Fund Balance Operating Revenues & Transfers In Operating Expenditures & Transfers Out Repayment of Advances Prior Year Resources Carried Forward Non -Operating Transfers Out Preliminary Ending Unrestricted Fund Balance Increase in Contingency Reserve (estimated) Additional CalPERS UAL Payment Final Ending Unrestricted Fund Balance Q��WPO�T � D � n cq�/FORN�P 15,254,999 308,836,480 (304,763,798) 1,250,000 5,465,426 (18,293,751) 7,749,356 (3,128,408) 4,620,948 315,298,822 (311,258,638) 1,250,000 5,290,184 (5,000,000) 290,184 Q��WPO�T � D � n cq�/FORN�P 20 • In November 2023, CaIPERS announced a 6.1 % investment gain for Fiscal Year 2022-23. • The Actuarial Valuation at June 30, 2023 will not be available until August 2024. However, the CaIPERS Pension Outlook tool has been utilized to estimate the City 's projected funded status as of June 30, 2023, which reflects the impact associated with the 6.1 % investment gain. Unfunded Liability Funded Percentage Investment Return Q �EvuPpR T � D � n cq�/FORN�P $ 326,289,861 $ 333,046,257 $ 223,438,444 $347,832,174 68.7 % 69.2 % 80.5 % 70.9% 6.7% 4.7% 21.3% -7.5% $332,814,000 72.2% 6.1 % 100% 25% 95% 92.3% 20% Stack Market Crash of2008-2009 90% 15% 85.3% 85% 10% Cr `n 80% 5% C � m m E LL 75% — 0% 72.2% _ .91 70% 69.2% 68.7% 69.2% -5% 61.4% 67.5% 65.8% 66.0 % 65% 63.8% -10% 62.2% 60.6% 60% -15% 7.4 55% -20% 50% -25% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Funded Status—CaIPERS Investment Returns —Discount Rate (Expected Return) 22 Tier 1 (Classic) 2.5% @ 55 formula 3.0% @ 50 formula Tier 2 (Classic) 2.0% @ 60 formula 3.0% @ 55 formula Tier 3 (PEPRA) 2.0% @ 62 formula 2.7% @ 57 formula ann 800 700 600 N G1 Q 5oo S W 400 V a 300 200 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 FY 21 FY 22 FY 23 FY24 ■ Tier 1 Legacy L Tier 2 Classic PEPRA 23 • The Finance Committee and City Council revisit the UAL paydown strategy as part of each year's budget process • In the FY 2023-24 Adopted Budget staff recommended a $40 million per year payment from the baseline budget plus an additional $5 million added as a supplemental appropriation at the time of budget adoption • Staff recommends maintaining the current paydown strategy for FY 2024-25 • Results in anticipated paydown in FY 2032-33 assuming CalPERS earns 6.8% on investments over the next 10 years. 24 • Proposed General Fund budget is balanced • Updated and comprehensive savings plans for long-term needs • Maintained pension UAL payment of $45 million resulting in paydown of the liability in FY 2032-33 QUESTIONS?