While the COVID-19 pandemic has presented some significant and unforeseen financial challenges this past year, the City has successfully navigated these unprecedented times with strong leadership and a responsive organization that has worked diligently in adapting and aligning resources with the evolving changes of the pandemic while continuing to serve the needs of the community, including but not limited to the following:
- Maintaining public safety operations including front line and support services;
- Continuing Senior Center services related to home delivered meals and lunch distribution as well as Senior transportation services for approved medical and essential needs appointments;
- Maintaining wellness calls to Brea Older Adults/Senior Center participants and registrants;
- Continuing case management services, counseling services and crisis inquires as well as providing information and resources to the public;
- Continuing Veteran services and resources to the public;
- Continuing to provide plan reviews, inspections, permitting, parking permits and code enforcement duties through the use of digital workflow;
- Maintaining traffic signal operations, street sweeping and other road maintenance services, and
- Maintaining park and landscape services.
The gradual re-opening of the economy these past few months has shown positive momentum in the City’s sales tax base, which represents over 40 percent of the City’s General Fund budget and is bouncing back quicker than initially assumed a year ago. Entering this new recovery phase, we remain cautiously optimistic upon presentation of the proposed FY 2021-22 budget.
This budget workbook provides a preview of the FY 2021-22 budget (Attachment A) and an opportunity for comments, input and direction from City Council, including discussion of measures to respond to the revenue loss experienced from the pandemic, primarily related to sales tax, transient occupancy tax and Community Services related revenues. This also includes an overview of the recent Federal stimulus assistance the City anticipates receiving as part of the American Rescue Plan Act (ARPA). Based upon initial funding allocation estimates, the City is anticipated to receive a total of $8.14 million in two installments. This Federal funding is not more restrictive than the CARES Act funding, as it does allow the City to use the funding for revenue loss experienced due the pandemic. Funds are expected to be used prior to December 31, 2024 and staff is awaiting further guidance from State.
Staff is recommending to use these Federal stimulus dollars instead of using the City’s excess General Fund reserves to cover the costs for the current fiscal year and future years as needed through December 31, 2024. This funding combined with the funding previously received from the CARES Act, has allowed the organization to respond effectively to the pandemic and will now provide a means for the organization to recover quicker, and address priorities of the City Council, City operations and emerging community needs, while also maintaining a reasonable and responsible reserve for unforeseen circumstances.
The information presented tonight is based upon staff’s objective assumptions for both revenues and expenditures on information that is known as of May 18, 2021. The following are key points to consider while reviewing the FY 2021-22 Budget Workbook:
- City Mission Statements and City Council’s Top Priorities and Projects – The City’s mission statements and City Council’s top priorities and projects are provided as a reference and is the foundation for the City’s budget.
- Fiscal Policies Statement – The City’s fiscal policies statement is provided as a reference and sets the financial framework for the City’s budget.
- General Fund Five Year Projections – The Five Year Projections represent staff’s estimate as of May 18, 2021 of where the General Fund will be for each of the next five fiscal years. The projection serves as a tool to identify financial trends, shortfalls, and issues so that the City can proactively address them. The goal of the Five-Year Projections is to assess the City's ability over the next five years to:
- Continue current service levels based upon the City's operational goals;
- Preserve the City's long-term fiscal health by aligning operating revenues and costs; and
- Maintain the City's General Fund reserves based upon the City's fiscal policies.
It is important to stress that projections beyond Fiscal Year 2021-22 are not a budget and are used to highlight the need to prioritize the allocation of City resources.The purpose of the projection is to provide an overview of the City's fiscal health based on various assumptions over the next five years and to provide the City Council, departments and residents of Brea a "snapshot" of the City's financial outlook beyond this budget cycle.The five-year projection is intended to serve as a planning tool to bring a long-term perspective to the budget process.The assumptions used in the preparation of Five-Year Projections are detailed in this section of the workbook and are categorized by fiscal year.
As a reminder, the Fire Deployment Plan that was approved by the City Council on June 18, 2019 is included in the Five Year Projection through Fiscal Year 2021-22. Future years beyond Fiscal Year 2021-22 are pending further evaluation. The Fire Department continues to evaluate this new deployment model and staff will return prior to the start of Fiscal Year 2022-23 to provide a more comprehensive review of staffing levels and service delivery options to the community.
In addition, the proposed FY 2021-22 budget and future projections include staffing redistribution and a shift in operating costs to better align program services with the appropriate funding source. This includes shifting part-time police cadet positions and associated operating costs from the Public Safety Augmentation Fund to the City’s General Fund. This will allow the Public Safety Augmentation Fund to be solely dedicated to replace public safety capital replacement items. Staff also evaluated non-direct administrative and support staff costs distributed to the City’s enterprise funds and shifted to the City’s General Fund.
Lastly, it is important to note that any projected gains/losses to our future CalPERS employer rate as a result of the current COVID-19 pandemic, are amortized over a 20-year horizon with no changes for the first two years; a ramp up over the next five years and then levels off the remaining 15 years. CalPERS rate of return is currently positioned at a favorable 12.4% as of the end of 2020 calendar year, well above the 7% benchmark, however this is no guarantee where its value will land at fiscal year-end.
Decision Packages – Decision packages are department requests for new programs, personnel, and/or equipment. The decision packages are organized by fund and are not presented in any priority order. There is a total of twelve (12) decision packages recommended to be reviewed. The decision packages presented are for City Council review and feedback, as well as provide a preview of the needs of the upcoming fiscal year.
- Fund Summaries – This section of the workbook includes the fund summaries of those funds impacted by the proposed decision packages. The fund summaries identify funding availability, however do not include any associated costs of the proposed decision packages.
- Fees – Staff has carefully reviewed fees for service, and recommends adding two new user fees in the Community Development Department. These user fees were evaluated independently by the department and would allow the City to charge development hourly rates associated to Planning Division Preliminary Plan Review (PPR) and a flat fee for preparing a Zoning Verification Letter.
- Successor Agency – The Successor Agency to the Brea Redevelopment Agency’s expenditure summary is presented in this section of the workbook.
Tonight's presentation will also provide an opportunity to review the City's proposed Seven Year Capital Improvement Program Budget which is provided as Attachment B.
|