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    8.    
Finance Committee
Meeting Date: 11/10/2020  
FROM: Bill Gallardo

Subject:
Budget Adjustments to the City Operating and Capital Improvement Program Budgets for Fiscal Year 2020-21
 
RECOMMENDATION
Adopt the resolutions appropriating funds to adjust the Fiscal Year 2020-21 City Operating and Capital Improvement Program Budgets.
BACKGROUND/DISCUSSION
Budget adjustments are presented to the City Council periodically for review. These adjustments represent the appropriation of items previously approved by the City Council during the fiscal year, or staff recommended adjustments for City Council consideration. The recommended adjustments to the City Operating Budget are listed in City - Exhibit A. These adjustments are separated by funding source and the accounts are identified as either revenue or expenditure accounts.

Sales Tax is the  City's largest revenue source.  The adopted FY 2020-21 budget for Sales Tax is $21,170,914.  Since budget adoption, staff have received revised sales tax projections.   Unfortunately, these revised projections are lower by $844,618 due to the overall decline in sales as a result of the COVID pandemic.  Likewise, overall travel has declined due to the pandemic resulting in an estimated $473,136 decline in transient occupancy tax.  Additional revenue reductions will be addressed further in this report.

Realizing early that there would be a decline in City revenues, staff reviewed their budgets and proposed a number of budget reductions.   Many of these reductions were a direct impact as a result of the ongoing pandemic and have a limited impact to overall core City services.   For instance, due to travel restrictions many conferences have been canceled or training has been offered online which has often been at a reduced priced. Mandatory trainings were not affected by these reductions.  Overall, travel and meeting reductions total $120,988.  In addition, staff have programmed significant vacancies that will be naturally realized due to attrition, the recruitment process, as well as other variables.  Overall salary savings are $1,626,233.   These savings reflect not only vacancies but part-time hours not being used due to canceled programs and repurposed Community Services Employees mentioned below.

It should be noted that recreation type services have been severely affected by this pandemic such as facility rentals, youth and adult sports, special events, fitness/wellness, and theatre.  For the Community Services Department, there is an anticipated loss of $660,258 in program revenues.  Likewise, they have programmed a decrease in program expenditures of  $801,589.   As noted above, much of the savings realized are part-time salaries due to programs and activities that are currently prohibited.  Also, much of the full-time salaries savings have been re-purposed to cover COVID related duties that staff anticipate will be reimbursed by the CARES Act. Repurposed employees have been programmed through December 31, 2020 and funding for these positions has been transferred from the General Fund (110) to the Disaster Recovery Fund (911).

The Fire Department continues to respond to mutual aid throughout California.  Fire Administration continues to be diligent in seeking reimbursement for costs incurred.  Mutual aid responses included the Apple Fire in Riverside County and the Salt and MOC Fires in Tuolumne-Calaveras counties.

Furthermore, there is a reduction in revenue for Fire Inspections, Delinquent Fees and Permits totaling $174,255.  Inspections have not been performed since the beginning of the pandemic and have been placed on hold until January 2021.  This reduction does not include mandatory, life-safety inspections.

In addition, the Community Development Department was approved for the Local Early Action Planning (LEAP) grant in the amount of $150,000.  This money will: fund the Housing Element Update and Community Engagement/Outreach; aid in the
improvement of the Development Review Process Tools such as improving and customizing the City’s GIS application platform; and update the Affordable Housing Ordinance.

Lastly, revenue reductions have also been realized for building and planning inspections.   Development assumptions have been revised to reflect the current workload along with staff vacancies. Development related revenue reductions total $75,203.  Engineering related inspections are projected to be $92,704 less, as well, however, Public Works inspection revenues are anticipated to increase by $124,000.

The Capital Improvement Program Budget Adjustments in CIP - Exhibit A consists of an increase in expenditures of $115,000 and a corresponding adjustment to revenues and transfers-in as follows:
 
Golf Course Fund (465)    $  115,000
TOTAL $   115,000

Within these adjustments, there is a shift of funding for water projects.  Since budget adoption, staff have further prioritized outstanding projects.  Current Water Utility (420) funding has moved from the  Walnut-Orange Avenue Waterline Improvements (CIP #7454) and  the South Brea Neighborhood Water Main Replacement (CIP #7466) to the Moorpark Drive Waterline Improvement (CIP #7430), the County Hills Pavement & Water Rehabilitation (CIP #7322), and Napoli Tract Water Improvements (CIP #7458).   Total funding remains unchanged from the Water Utility (420) Fund.
SUMMARY/FISCAL IMPACT
The City Operating Budget adjustments for the General Fund (110) in Exhibit A resulted in a decrease in revenues  of $1,968,204 and a decrease in expenditures of $2,067,957, for a net General Fund decrease in expenditures of $99,573. The City Operating Budget adjustments, for all funds including the General Fund, resulted in a decrease in revenues of $1,372,736 and a decrease in expenditures and transfers-out of $1,670,268 for a net decrease in  expenditures and transfers-out of $297,532.  The Capital Improvement Program Budget adjustments resulted in an increase in expenditures of $115,000 and corresponding adjustments to revenues and transfers-in.
RESPECTFULLY SUBMITTED
William Gallardo, City Manager
Prepared by:  Faith Madrazo, Revenue & Budget Manager
Concurrence:  Cindy Russell, Administrative Services Director
Attachments
Resolution - City
Exhibit A - City
Resolution - CIP
Exhibit A - CIP

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