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Home My WebLink AboutPresentation - #1CITY COUNCI� BUDGET WORKSHOP City of Santa Ana May 11, 2023 AGENDA Budget overview Background & Best Practices Budget Direction for Discussion Next steps City of Santa Ana Budget Overview ■ ■ ■ City of Santa Ana r r SCHOOL Removed $200K increase for Crossing Guards. Staff will continue to pursue school district contributions and re -assess service level and contract funding at Midyear. One -Time Spending, • Stadium flooring and a forklift ($980 K). • Water Tower feasi bi I ity study for public visitation ($1S0K). • Security cameras ($100K). ■ Additional expansion of community intervention programs ($7SK). • Feral cat trap/release and RFP for low-income assistance to spay/neuter ($75K). 09" Recurring Spending, • Beat -making at the Library ($SK). • Community intervention programs ($200K). General Fund Summary Total Recurring Revenues Proposed FY23-24 Recurring Spending Estimated Available (Recurring) Estimated Ending Balance as June 30, 2023 Proposed Adjustments with 3rd Quarter Budget Report Less 18% Reserve Proposed FY23-24 One-Ti me Spending Estimated Available Spendable Balance (One -Time) City of Santa Ana 400, 938, 670 (40%794,280) T � � 487,710 (72y068,970) (29t429,760) 35,270 General Fund Revenue - $4004o9M Other GF Revenue, Hotel Visitor's $8.5OM, 2.1, Business Tax, $15.00M, 3.74% Cannabis, $16.06M, 4.01% Jail Revenue, $17.501 4.37% Utility Users'' $25.80M, 6.4 Sales T $88.62M, 22.10% Charges for Service, Licenses & Permits, 6.19% ranchise Fees, 10.95M, 2.73% Property Tax and In Lieu of VLF, $88.39M, 22.05% City of Santa Ana Sales Tax (Bradley Burns), $64.72M, 16.14% *Cannabis Revenue Includes: Adult -Else Retail Tax ($15.1M), Commercial Cannabis Taxes ($416K), Medical Marihuana Tax ($528K). C7 General Fund Expenditures - $41399M _ Libr Human Re $4.28M, Debt S $9.04M $44. P $49 tire & emergency ivieaicai services $56.48M,13.65% Planning & Building $20.15M, 4.87% Community development $6.19M, 1.49% Pension Liability Paydown $30.67M, 7.41% City Manager, City Clerk, City Council, City Attorney $10.94M, 2.64% Finance $11.97M, 2.89% cs, Rec. & Community Services $15.21M, 3.67% City of Santa Ana *Other includes Cannabis Set - Aside, Museum Contribution, 3rd & Broadway, Subsidies far Internal Services and Enterprise Funds, Employee Compensation Increases, & Project Transfers Ten -Year Outlook History j FY20-21 budget document showed a $74.2M j � gap in 2029 � • FY22-23 budget document showed a $21.OM I jgap in 2029, after employee pension j refinancing and FY20-21 CaIPERS 21.3% investment return • One bad year of revenue has a significant � impact on the Outlook � � • Outlook is a tool to understand trends and � I impact - actual results a Iways varies City of Santa Ana City of Santa Ana Updated Ten -Year Outlook - General Fund Includes: • Proposed budget for recurring spending only • Debt pay-offs • Measure X rate decrease (1.5% to 1.0% in 2029) • CPI increases FY24-2S and later • City's contribution to OC Streetcar ops begin FY24-2S ($1M estimate) • Planned wage increases I ON LE S510 $470 $430 $40 $390 $350 Updated Ten -Year Outlook - $400.8 $406.1 General Fund $518.2 FY23-24 FY24-25 FY25-26 FY26-27 FY27-28 FY28-29 FY29-30 FY30-31 FY31-32 FY32-33 Revenue -0-Spending City of Santa Ana * Includes recurring spending only • N ate: FY21-22 Ca I P E PS investment return was 6.1% and FY22-23 YT D is 0.1 %. CaIPEPS assumption is a 6.8% return. CaIPEPS numbers do not yet include the latest investment performance City of Santa Ana Ten -Year Outlook with Mild Recession N $550 4 2 $510 $4 70 $4 30 S448.4 $433.7 $45 $420.4 f 444.6 "07.0 S43Q.9 S400.9 $418.7 $390 $400 8 S406.1 S502.2 $518.2 $350 FY23-24 FY24-25 FY25-26 FY26-27 FY27-28 FY28-29 FY29-30 FY30-31 FY31-32 FY32-33 -a- Rev enue —Spending • one-year impact of 1.2% Sales Tax decrease illustrative only City o(Santa Ana Ten -Year Outlook with New Development N $550 s $510 $470 $452.8 $431.3 $430 5400.9 5478.7 $400.8 S406.1 $390 $519.1 $503.0 SM-7 $487.6 $487.7 $502.2 S473.5 $486.8 $472.5 0000", 5444.E $430.9 $458.0 $350 FY23-24 FY24-M FY25-26 FY26-27 FY27-28 FY28-29 FY29-30 FY30-31 FY31-32 FY32-33 Revenue —Spending • Sample developments: o $2SOM mixed -use project generating $2M annual tax revenue by 2029 o $100M hotel generating $0.8M tax revenue by 2029 o $3B mixed -use project generating more than $22M by 2028 Illustrative only Measure X Plan for the Future City °` Santa Ana • Measure X began paying for an existing $16M annual budget deficit on April 1, 2019. o FY18-19 budget deficit before Measure X approval was $11.7M, then annual police compensation increased by $4.3M. ■ General Fund FReserve increased to 18°I0 of annual recurring revenue nr $72.2m. • Pension refinancing decreased the 2029 gap. • Additional tax from new development will help. • City Manager prioritizes one-time spending. • Services added with Measure X are in separate accounting units callE "Service Enhancements" to identify areas for future spending red ucti Restricted Funds * spending -restricted resources include grants and other federal and City of Santa Ana state a I locations, developer fees, a nd enterri pses su orte ppd bj �t�pr f�� • Examples: Measure M2 for street improvements (local fair share + comK $17.7 M Gas Tax for street improvements &right-of-way maintenance + H UTA) - $21M Water, Sewer &Refuse enterprises - $107M Housing Authority &federal housing allocations -over $70M Citywide Spending - $7644oO6M Capita $42.25 Enterprise Fund! $124.08M, 16.24 Other Restrictec $54.22M, 7.: Grant Fund! $101.53M, 13. Debt Service Fund Total, $11.76M, 1.54% $16.28M, General Fund, $413.94M, 54.18% City of Santa Ana 15 '0 Internal Service Funds City of Santa Ana Used to centrally account for internal services provided to al! departments. Cost allocations are based on logic (e.g. #'s of vehicles used). Equipment $6,443,360 $11,813,452 Ideal target balance is 100%of capitalized equipment Replacement depreciation. Since we do not have enough balance to replace assets as needed, we add one-time spending for highest -priority replacements. Building $1,784,270 $5,856,780 Target balance is 100%of annual budget due to high risk Maintenance of aged facilities. Fleet $387,560 $1,204,290 Target balance is 20°% of annual budget, Central Stores $(160,020) $402,932 With online ordering and quick delivery, we maybe able to reduce/eliminate Central Stores. Target balance is 20% of annual budget. General Liability $14,034,500 $15,248,965 Latest actuarial liability is $19,061,206. Target balance is 80%of the liability, Employee Group $(737,030) $0 No target fund balance and no shortfall is expected. This Insurance figure doesn't include the revenue component caused by employee compensation increases which will be revised once bargaining agreements are finalized, Workers $16,837,040 $26,319,899 Latest actuarial liability is $32,899,874. Target balance is Compensation 80% of the liability. City Yard $(237,270) $317,408 Target balance is 20% of annual budget. Public Works $(1,537,440) So Engineers cannot charge all their time to projects (admin, Project supervision, ett-). No target fund balance, as fund activity Management should have a net zero impact. Project billing rates have recently increased to capture more overhead and other associated costs. The work of improving the business model is ongoing. Public Works $(925,780) $0 Dept is using salary savingsdue to vacancies and holding Admin off on one-time purchases to achieve net zero impact on the bottom line. Information $323,220 $3,116,075 Fund balance has been spent down For various system Systems modernizations. Ideal target balance is 100%of capitalized systems cost + 20% of annual budget. IN Background est Practices • • City of Santa Ana 17 Budget Document H'I*ghl*lghts City of Santa Ana Overview narrative at beginning of document Fund Summary includes the • Financial policies, Strategic Plan, hot topics, revenue and labor trends, workforce changes, budget process, WN and Ten -Year Outlook 1 r ■ ■ General Fund reconciliation details all changes from prior year budget to current year budget ate • budget & estimated fund balance for all funds of the City • • • • • Each department section includes budget and labor allocations, goals, and performance indicators C,16ty's Ability to Raise Revenue City of5antaAna • State Law (Prop 13, Prop 218) limits the Cites ability to raise revenue Taxes are for general benefit and must be approved by voters ■ Simple majority for general tax or 2/3 majority for restricted uses o Fees are for individual benefit and are limited to cost recovery • The `Taxpayer Protection and Government Accountability Act," sponsored by corporate lobbyists, has qualified for the November 2024 statewide ballot to further limit local ability to raise revenue. • Raises a p p rova I threshold for general taxes to two-thirds o Expands the definition of tax (requiring voter approval) to include regulatory fees, including development fees • Retroactive application to January1, 2022 Revenue Best Practices & Sources Best practices • Use recurring revenue for recurring spending • Use most restricted sources first City of Santa Ana Taxes (property, sales, hotel, utility, business) fund public services such as safety and recreation. Fees (permits, water utility) cover individual service costs. Grants and other federal/state allocations used for restricted purposes (street improvements, housing). Capital Asset Best Practices Maintain existing assets before developing more Utilize professionally developed master plans to prioritize projects Consider future maintenance & replacement costs City of Santa Ana City of Santa Ana Budget Direction By the end of 2023, RFP to be released for new business license system (delayed due to priority for Measure W tax equity and tax holiday implementation) RFP in development for new financial and payrol I system, with implementation expected to kick-off during 2024 FmL L 0 On May 2, Council approved a credit card payment processing agreement for modifications to accommodate new payment systems • Rent Stabilization's Rental Registry (estimated go -live Summer 2023), • Zoo (estimated go -live Fall 2023) • City-wide cashiering software and hardware upgrade (estimated to go -live Winter 2023) r6 New land management system (Clariti) for Planning and Public Works Counters is in process of implementation (expected go - live summer 2024) On April 4, Council recently approved new dog licensing system with expected go -live summer 2023 Rent Stabilization City °` Santa Ana • Forthcoming staff report on regular May 16 agenda • Proposed budget includes $100 fee per unit to fund $3.2 million program • Proposed program implements the City Council's Rent Stabilization Ordinance wil AAIICp C • Patrol staffing, 3 separate patrol shifts • Supplemented by QOLT, Directed Patrol and Traffic Officers » 4 officers assigned full-time as permanent assignment to the Downtown Business Liaison Unit » Coverage 7 days a week from 10:00 a.m. - 8:30 p.m. » 2- 8 officers assigned on an overtime as -needed basis every weekend • Officers have been assigned to the Mayor and each Council Wa rd • Contact information provided to the Mayor and Councilmembers Environmental Justice (EJ) Commitments City of Santa Ana • Established an Environmental Services division in Planning & Building with a dedicated full-time employee • Climate Action Plan Funding- $750K • Collaborated with oC Health Care Agency and other organizations to identify partnership opportunities and raise awareness for increased healthcare services ■ Delhi Groundwater Cleanup Program is the first interagency initiative addressing environmental hazard issues "_i reel -Tel �•� 0 'W q 9" FI :10 Proposals for anew concession contract are due June 19 • Posted to Planet Bids • Pre -proposal meeting on May 24 • Parks & Recreation are working to promote the RFP for local bidders • Alcohol service is a mandatory requirement of the RFP Splash Pads • Identified park sites include Portola, El Salvador, Madison, Memorial, Thornton, Zoo • Plans & specs for all 6 sites are nearly complete • The budget includes funding for the first two sites (Madison &Thornton) City of Santa Ana Park Restroorns Pre -Fab: ■ Completed Memorial, Cesar Chavez Campesino and Madison ■ Funded & in -process for Angels, Windsor, Heritage, Riverview ■ Current cost is approximately $72SK each City of Santa Ana Renovations: • To be completed Julyl for Santiago West and Santiago Gas House (for rentals only) ■ In -process for Lawn Bowling, Nature Center • Funding needed for El Salvador and Santiago baseball field (considering pre -fa b) In -process of creating a master plan for Park Restrooms wo Cannabis Public Benefit Fund Estimated Fund BalanceJulyl, 2023 $1,501,690 Add FY23-24 Transfer from General Fund $10,354,720 Less Spending: City of Santa Ana • The FY23-24 Cannabis Public Benefit Fund is currently balanced after removing one- time spending due to tax rate reductions. • City Attorney°s office $553,080 If there is a loss of revenue • Finance Collections &Audit $362,990 beyond the estimates, the fund balance is expected to be • Li bra ry Youth Services $975,000 enough to cover the shortfa I I • before re -balancing the budget Parks &Recreation Youth Services $3,207,410 for FY24-25. • Code Enforcement $1,190,520 • Police Enforcement $3,520,900 Estimated Fund Balance June 30, 2024 $2,046,510 Next Steps •■rr•■•■•■• 1 • ■ ■ ■•rr••••••••rrr••••••••■••.>■ r • ■ • +1 ■■■■■■■...........••••••> V 1 • • • • • • • Public Hearing June 6 Adoption June 20 City of Santa Ana During FY23-24 • Update recurring revenue estimates ■ Consider funding for additional police officers