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  Agenda Item   21.    
City Council Meeting
Meeting Date: 11/17/2020  
FROM: Bill Gallardo

Budget Adjustments to the City Operating and Capital Improvement Program Budgets for Fiscal Year 2020-21
Adopt the attached resolutions appropriating funds to adjust the Fiscal Year 2020-21 City Operating and Capital Improvement Program Budgets.
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 $21,170,918. 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-19 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  repurposed  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 inTuolumne-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 has 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.
The attached FY 2020-21 budget adjustments were reviewed by the Finance Committee on November 10, 2020, and recommended for City Council approval.
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 $99,753. 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.
William Gallardo, City Manager
Prepared by:  Faith Madrazo, Revenue & Budget Manager
Concurrence:  Cindy Russell, Administrative Services Director
Resolution - City
Resolution - CIP

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