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Home My WebLink AboutA - Budget Overview - HandoutMay 24, 2016 Joint Agenda Meeting Item No. A Handout FY 2016-17 PROPOSED BUDGET City of Newport Beach Budget Discussion Joint Meeting of the City Council and Finance Committee May 24, 2016 Agenda Item A i • low tfFoilk FY 2016-17 Highlights • Budget is balanced • Revenues remain strong • Sound bonded debt position • Aggressive steps to pay down pension obligation - More work to do here • Down six full-time positions (tentative) • Adhered to Council guidance regarding the use of budget surplus • Continued focus on enhancing the community's quality of life and safety • Wastewater Operations requires use of reserves Net Change In Fund Balance Summary of the FY 2016-17 Proposed Budget General Fund (millions) Revenue Estimated Operating Revenue $199.2 Total Revenues $199.2 Expenditures Proposed Operating Expenditures $190.1 Proposed New CIP Appropriations 5.6 Total Expenditures $195.7 Plus Transfers In $8.9 Less Transfers Out (10.0) Less Planned Use of Reserves (2.5) Net Surplus $0.0 Summary of the FY 2016-17 Proposed Budget All Funds (Millions) Revenue Revenue -All Funds Total Revenues $ 292.3 $ 292.3 Operating Budget $ 270.7 New Capital Improvement Projects (CIPS) $ 27.3 New Appropriations $ 298.0 Planned use of fund balance (Capital Improvements) $ (5.8) Charter Requirements • Requires Budget submittal to Council at least 35 days prior to July 1 • Requires public notice and public hearing • Council shall adopt budget on or before June 30 5 REVENUES Fiscal Year 2016-17 FY 2016-17 General Fund Revenue Chart (millions) ■ Property Taxes $94.0 Sales Tax $36.2 4% Transient Occupancy Tax $22.0 11% Other Taxes $8.3 -All Other Sources $38.7 Total $199.2 million 20% 18% FY 2016-17 General Fund Revenue Assumptions Property Tax Sales Tax * Transient Occupancy Tax All Other Revenue Total General Fund Revenue 87, 874, 505 37, 000, 093 20, 656, 850 46, 252, 317 $1911783,765 89, 514, 555 36, 910, 863 20, 934, 950 46, 843,199 $194)203,567 93, 985, 344 36,173, 778 22, 001, 307 47, 061, 734 $199,222,163 47.2% 18.2% 11.0% 23.6% 100.0% *Note: Net of a one-time $2.0 million receipt expected in 2015-16, the budget assumes Sales Taxes are expected to grow 3.4% during 2016-17. 5.0% -2.0% 5.1% 0.5% 2.6% Assessed Valuation $50,000,000,000 .o $45,000,000,000 5.2% 5.7% a $40,000,000,000 5.9% 1.8% 0.2% 1.0% 2.9% 8.7 $35,000,000,000 12.6% $30,000,000,000 fl 11.4 $25,000,000,000 - a $20,000,000,000 8-9% $15,000,000,000 - $10,000,000,000 $5,000,000,000 $- �ati ,L03 ''i�3p` �p� � 0,6 6 0� •t �`� Ri �°� o�"S�'' 4.1�' ,1'L'�` �:"�� .3 "yR � "S� �i "1f° pN JpN Ip"- Opti pati Property Tax $100,000,000 $90,000,000 $80,000,000 $70,000,000 $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 Zpf36_0� - -.p0, � ' 7.035-03S ZgC+9 � F ��_ 1 101V 1j P113111-7--Is 3 L R �,AOS Sales Tax $40,000,000 $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $- oa' Z�6_Q� �`� Z�� .0$ �'Z��;.i]9 �'� Z�g.1� `� Z�,�,p.i� �'& Z�� Z �'� Z�,�Z_13 P`� Z�1�,1� P6Z�,��.1`� �'��,��.�0 �'�$��,�-� pc�P°$e�a Z Zp1 *Note: Net of a one-time $2.0 million receipt expected in 2015-16, the budget assumes Sales Taxes are expected to grow 3.4% during 2016-17. Transient Occupancy Tax $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 Ng ZgP`2_01B� a� ?,QP E,-()' 1,01DAN N �, 10,0"0,�V6 o Sp ,�io o xo ►N 7 moll] Biel = ■JIMNI► [a 1: Principle #1: Maintain a Prosperous, Fiscally Sustainable, and Economically Viable City • Responsible and Affordable Debt Levels • Strong Financial Profile • Strong Fiscal Management and Discipline ✓ Cash funding of big projects — CdM Library, & Mariners Fire Stations, $12.3 Million ✓ Partial Fresh Start $2.7 Million ✓ Manageable OPEB Liability —Retiree Insurance ✓ $47.5 Million Contingency Reserve Principle #2: Keep Newport Beach Looking Great Maintain a high- quality natural and physical environment by creating aesthetically pleasing places in which to live, work, recreate, and visit FY 17 Proposed CIP By Categog - $64,721,425 Wastewater Mi.{ Nater M 51.4 M Facilities Water Quality & $3_:3 M �l�2cc 812,3 M Dollars Fn Millions reets & rainage 2.3.5 M 36% Principle #3: Maintain Newport Harbor and the Back Bay .. Balboa Island $7,000,000 Seawall American Legion $1,000,000` Bulkhead Grand Canal $3001000 Dredging Harbor Piers and $3001000 Gangway Maintenance Eelgrass Survey $75,000 Harbor Tide Gauge $50,000 Abandoned $50,000 Watercraft Abatement TOTAL $877755000 Principle #4: Provide Safety in the Community Police Department: • 1 new Community Service Officer • New police car computers Fire Department: • Increased emergency ambulance service during summer months • Basic Fire Academy — training for newly hired firefighters • Add Paramedic Assessment Unit to Fire Station 7 17 EXPENDITURES Fiscal Year 2016-17 FY 2016-17 General Fund Proposed Operating Expenditures by Function (Millions) 0.2% General Government $16.7 12% Public Safety $101.7 Community Development $12.2 19% Public Works $36.8 Community Services $22.5 6% 54% Non Departmental $0.2 Total $190.1 million General Fund Expenditure Summary by Function (Millions) General Government Public Safety Community Development Public Works Community Services General Fund Debt Service/Non Dept Exp Total General Fund Operating Budget General Fund CI Ps Total General Fund Budget 15, 535,158 95, 581, 313 10, 949, 371 35, 512, 853 20, 428,138 318,896 $178,325,729 11, 614, 095 $189,939,824 16,177, 380 97, 320, 099 11, 778, 682 36,139, 455 21, 317, 720 318,896 $183,052,232 18,404, 266 $201,456,498 16, 723, 557 101, 705, 845 12,175,693 36,817,437 22, 536, 359 168,896 $190,127,787 5,550,000 $195,677,787 8.80% 53.49% 6.40% 19.36% 11.85% 0.09% 100.00% :.. NN, Owl 3.38% 4.51% 3.37% 1.88% 5.72% -47.04% 3.87% -69.84% -2.87% Summary of Changes from the FY 16 Revised Budge +, $3,000,000 CD M $2,500,000 d N $2,000,000 co $1,500,000 E L $1,000,000 U- m c $500,000 ca s U c ca r $(500,000) L d d $(1,000,000) $(1,500,000) t / $0.47M _===��'.g6% ■ CalPERS Unfunded Acturarial Liability ■ Employee Agreements (MOUs) ■ Employee Benefits (Cafeteria Plan) ■ CalPERS Increases Overtime Employee Promotional Increases Marina Park Other Completed encumbered contracts CalPERS Employee Contributions Total Net Change Over PY 3.87% Budgeted Expenditures by Department Police Fire Municpal Operations Recreation and Sr. Svc Community Development Public Works Library Services Finance City Manager Human Resources City Attorney City Council City Clerk General Fund Operating (Millions) FY 16 Revised ■ FY 17 Proposed $0.0 $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 General Fund Expenditures by Type (Millions) Salaries & Benefits $134.0 28% Maintenance & Operation $55.3 Capital Improvement Projects and Capital Outlay $6.4 Changes in Full-time Staffing FY 17 Full-time Position Changes 1 Civilian Police Position (3) Firefighters (approved in MOU) (1) Assistant Fire Chief (3) Limited Term Groundsworkers (1) Maintenance Worker I (1) Utilities General Manager 1 Office Assistant (Recreation) 1 Recreation Coordinator (6) Net Change in Positions Salaries & Benefits Most significant changes MOU Contracts $3.2 Million Salaries Increased 4% or $3 Million 6 Net fewer employees Unfunded Pension Liability payment increased $3 Million or 14% Employee Contributions to PERS increased $1.1 Million to $9.5 Million per year Typical Employee (non -safety) Earns $79,50C in wages City pays $20,706 towards purchase of health insurance City pays $18,226 or 641/ of pension cost Employee pays $10,096 or 36% of pension cost or 12.7% of their pensionable earnings Savings for Future Needs(millions) This budget also includes nearly $30 million of forced savings that fund long-term liabilities and capital replacement plans. Facilities Financial Plan - Transfers $8.5 $8.5 $ - Facilities Maintenance Plan - Transfers 1.5 1.0 (.5) Vehicle Replacement Plans — Department Cost 3.3 2.7 (.6) Emergency Communication System - Transfers 1.0 .5 (.5) Other Equipment (Safety, IT, Parking & Rec) 1.6 1.8 (.2) Workers Compensation — Department Cost 2.8 2.8 - General Liability — Department Cost 4.1 4.1 - Compensated Absences — Department Cost 2.5 2.5 - Retiree Insurance (OPEB) — Department Cost 2.8 4.0 1.2 Total $28.1 $27.9 (.2) Unfunded Pension Liability $1,000 Projected $900 $800 $700 $600 $500 _ $400 $300 _ $200 $100 $(100) 2007 2008 2009 2010 2011 2012 2013 2014 Accrued Pension Liability $501 $553 $617 $652 $693 $727 $755 $820 $845 $880 w Market Value of Assets $499 $472 $354 $395 $467 $452 $497 $567 '$581 $ 581 —~Unfunded Liability at Market Value $2 $82 $263 $257 $226 $275 $258 $253 $264 $299 CaIPERS Rate of Investment Return 18.8% -2.9% -23.6% 11.1% 20.7% 1.0% 12.5% 18.4% 2.4% 0.096 Accelerated PIERS Payment Schedule Normal Cost 14,899,906 15,760,618 860,712 5.78% Amortized Cost of Unfunded Liablility* 21,524,369 24,599,873 3,075,504 14.29% Total Annual PERS Cost 36,424,275 40,360,491 3,936,216 10.81% Employee Contributions 8,401,598 9,464,924 1,063,326 12.66% Net Employer Cost 28,022,677 30,895,567 2,872,890 10.25% Total Annual PERS Cost 36.424.275 40.360.491 3.936.216 10.81% Capital Improvement Program Newly Proposed Projects Re -budgeted Projects (Estimated) Encumbered Funds (Estimated) Total Community Reinvestment (Estimated) $27 million $37 million $23 million $87 million k1. k i`${. $27 million $37 million $23 million $87 million 29 A BALANCED APPROACH Fiscal Year 2016-17 Balanced Approach to Surplus Use Neighborhood Enhancements Meet/Reduce Obligations Proposed Use of Surplus Funds 2015-16 ❑ Contingency Reserve Growth ❑ Replenish General Liability Fund ❑ Newport Blvd Widening ❑ Dover/Westcliffe Pavement Quantities ❑ Corona del Mar Entry ❑ FIIN - Lido House Hotel Mitigation FY 2015-16 Budget Amendments 2016-17 ❑ Irvine Avenue Pavement/Landscaping ❑ City Parcels in Assessment Districts ❑ Median Landscaping ❑ Mariners Mile Study FY 2016-17 Neighborhood Ehancement ❑ City Manager Assignment (Uncommitted) GRAND TOTAL SOURCE ❑ 2014-15 Surplus ❑ 2015-16 Surplus Neighborhood Enhancement 880,000 78,000 175,000 975,000 $2,108,000 500,000 679,500 500,000 60,000 $1,739,500 3,500,000 $7,347,500 Meet/Reduce Obligations 4,000,000 3,000,000 $7,000,000 $0 Tota I 4,000,000 3,000,000 880,000 78,000 175,000 975,000 $9,108,000 500,000 679,500 500,000 60,000 $1,739,500 $7,000,000 $14,347,50 14,200,000 147,500 14, 347, 500 32 CONCLUSION Fiscal Year 2016-17 Finance Committee Budget Review • 9/16/15 Discussion of Proposed Budget Preparation Framework. • 10/15/15 Implementation of Budget Preparation Framework -Review of FY 16 Operating Budget, Session 1 (Recreational and Senior Services Department). • 11/12/15 Implementation of Budget Preparation Framework -Review of Operating FY 16 Budget, Session 2 (Police Department) Finance Committee Budget review, cont. • 12/10/15 Implementation of Budget Preparation Framework -Review of FY 16 Operating Budget, Session 3 (Fire Department). • 1/14/16 Implementation of Budget Preparation Framework -Review of FY 16 Operating Budget, Session 4 (Public Works Department). • 2/11/16 Implementation of Budget Preparation Framework -Review of FY 16 Operating Budget, Session 5 (Municipal Operations Department) Finance Committee Budget Review, cont. • 3/10/16 Review of FY 17 Budget Assumptions. • 4/28/16 First review of FY 17 Operating Budget • 5/4/16 Second review of FY 17 Operating Budget • 5/12/26 Third review of FY 17 Operating Budget Questions & Comments City's budget documents can be accessed at: www.newportbeachca.gov/budget I OI ft. �11 = OT R ��-:O