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Item # 20
or City of Santa Ana
20 Civic Center Plaza, Santa Ana, CA 92701
Staff Report
May 4, 2021
TOPIC: City Council Fiscal Year 2021-22 Budget Workshop Session
AGENDA TITLE:
City Council Fiscal Year 2021-22 Budget Workshop Session
RECOMMENDED ACTION
Provide additional direction to staff, as needed.
EXECUTIVE SUMMARY
This Budget Workshop Session is an opportunity for the City Council to provide staff with
further direction for the FY 2021-22 budget with the updated information provided. Staff
will present the draft budget to the City Council on May 18, 2021. The PowerPoint
presentation for this Budget Workshop Session will include a summary of the work -in -
process draft budget for the General Fund.
Staff will present the draft FY 2021-22 budget and the proposed spending plan for the
American Rescue Plan Act (ARPA) allocation of $143 million on May 18, after the public
opinion survey closes on May 16 and the U.S. Department of Treasury publishes the
spending guidelines.
DISCUSSION
The FY 2021-22 budget process kicked -off in November and the City Council approved
a budget calendar on December 15, 2020.
The City Council received early FY 2021-22 budget information on March 16, 2021 and
provided initial direction to staff.
The PowerPoint presentation for this Budget Workshop Session includes the following
information:
• Public Outreach Summary and efforts to obtain public opinion
• Preliminary ARPA Spending Plan information
• FY 2020-21 Third Quarter Budget Update for the General Fund
• Updated Ten -Year General Fund Outlook
City Council Fiscal Year 2021-22 Budget Workshop Session
May 4, 2021
Page 2
• Draft FY 2021-22 General Fund Budget Status
• Measure X Oversight Committee Recommendations
• Preliminary FY 2021-22 Measure X Spending Plan
• Preliminary FY 2021-22 Capital Improvement Plan
• Pension Debt Refinancing Status
Public Opinion Survey
An informal public opinion survey launched on April 22 and includes questions designed
to understand public priorities for the ARPA spending plan and the City's budget. The
survey is available in English, Spanish and Vietnamese on the City's main webpage and
in English and Spanish in paper format at the City Hall public counters. The survey closes
on May 16. The May 18 budget presentation will include the results of the survey.
Revive Santa Ana — the American Rescue Plan Act Spending Plan
Revive Santa Ana is a commitment to protect and revive our community as we emerge
from the impacts of the COVID-19 pandemic. The funding source includes multiple
allocations from the federal American Rescue Plan Act (ARPA). The spending plan fits
within the following five goals.
• Recovery from COVID-19
o Further Vaccination/Education Collaboration
o Public Health Equity
■ Explore Public Health Department
■ Add an Equity & Inclusion Coordinator
o Expansion of Critical City Communication Tools
■ Fixed digital boards throughout the City
■ Text Alert Notification System
o Cleaning and Sanitization of Public Spaces
• Financial Assistance and Targeted Programs
o Resident Stimulus Funding for Essential Purchases
o Reopening Assistance to Businesses
o Water Bill Waivers
o After School/Early Childhood Programs
o Youth Violence/Sexual Assault Intervention Programs
o Digital Literacy Education
o Support Food Distribution Efforts
• Public Health & Safety
o Enhanced Graffiti Removal and Trash Abatement
o Supplemental Code Enforcement Staffing
o Rapid Response Homeless Services
o Replacement of Parks Restrooms
o Enhanced Security/Monitoring for Community Space
o Addition of Green Space: Santa Anita
o Central Healthy Food Market
City Council Fiscal Year 2021-22 Budget Workshop Session
May 4, 2021
Page 3
o Santa Ana Zoo Safety Renovations
o Santiago Park Rehabilitation
o Trail Lighting
o Sports Lighting
o Playground Replacement/Shade
Critical Infrastructure
o Affordable Broadband Access
o Pedestrian and Mobility Improvements
o Community Center Renovations
o Update of Central Library
o New Library Branch/Expansion of Accessibility thru kiosks
o Addition Neighborhood Streetlights
o Security Improvements at Fire Stations
o Information Technology and Process Upgrades
City Fiscal Health
o Unemployment Fund/Employee Leave
o Santa Ana Regional Transportation Center
o City Downtown Parking Enterprise
o General Revenue Losses
The City's primary allocation is $142,974,013. The City will receive the first half of the
allocation by May 10, and the second half will be available no earlier than May 10, 2022.
Therefore, the plan includes spending broken out by first allotment and second allotment.
The U.S. Department of Treasury expects to issue spending guidelines in advance of the
first allotment on May 10. The spending plan work -in -process includes City Council input
from March 16, staff input, and public input.
In addition to the primary allocation, the City expects to receive the following housing
allocations from ARPA.
HOME program for homeless assistance — $6,183,914 allocation from the total $5
billion program.
Emergency Rental Assistance Program — unknown allocation from the total $21.55
billion program.
Housing Vouchers — unknown allocation from the total $5 billion program.
Public Works will also apply for competitive awards from the ARPA $10 billion capital
project fund "to carry out critical capital projects directly enabling work, education, and
health monitoring, including remote options, in response to the public health emergency."
Finally, the City will appeal to the state and county officials for pass-thru allocations from
their federal ARPA allotments.
Updated General Fund Ten -Year Outlook
City Council Fiscal Year 2021-22 Budget Workshop Session
May 4, 2021
Page 4
The updated Ten -Year Outlook includes the FY20-21 budget structure at March 31 (the
third quarter update) and the draft FY21-22 budget, along with the following assumptions.
• Revenues and expenditures increase annually by the CPI as forecasted by the
California Department of Finance.
• Savings from Pension Debt Refinancing has not yet been included in the Outlook.
• City revenue makes a full recovery from the pandemic during FY22-23.
• The final jail module begins producing revenue during FY22-23.
• The Measure X tax rate decrease from 1.5% to 1.0% in FY28-29.
• The City pays off the debt for the Police facility in 2024.
Measure X Oversight Committee Recommendations
Voter approved Ordinance NS-2952 requires a "...citizen oversight committee to act in
an advisory role to the City Council in reviewing the annual revenue and expenditures of
funds from the tax..." Committee establishing Resolution 2019-008 requires "During its
March meeting, the Committee shall prepare an annual report to City Council, including
recommendations, in time for City Council consideration during the budget process for
the upcoming fiscal year."
The Committee met on March 10, 2021 and prepared the following recommendations for
the FY 2021-22 budget, in accordance with establishing Resolution No. 2019-008.
1. Favor one-time spending from Measure X revenue.
a. Remember, Measure X is temporary.
b. Focusing in on one time spending will reduce reliance upon Measure X
revenue for future minimum/expected service levels.
2. Consider the following pilot programs:
a. Community based professionals/specialists vs. sworn Police for non-
violent response such as substance abuse, mental health crisis and small
neighborhood disputes in order to control costs and improve results;
and/or
b. Seed economic development such as community cooperatives to provide
future revenue growth and stimulate the local economy.
3. Prepare a long-term plan to prepare for the Measure X rate reduction.
a. Focus on the temporary nature of Measure X and prepare for the phase-
out of such revenue on service levels.
b. The plan should identify areas where Measure X is supporting recurring
spending instead of one-time use of revenue.
4. Shift Measure X revenue to fixing streets.
a. This is one of the most visual items for the public.
b. This is one of the areas that has not been funded historically with Measure
X.
c. This is one time use of funds.
5. Use Measure X revenue increase to reduce the reliance on the General Fund
Reserve to preserve service levels.
City Council Fiscal Year 2021-22 Budget Workshop Session
May 4, 2021
Page 5
a. Avoid using the increase of Measure X for incremental increases of
recurring services.
b. If the Measure X increase is used, limit the use to one-time spending.
6. Use the pandemic as an opportunity to identify lessons learned and shifting
priorities.
7. The Committee supports dedicated Measure X spending accounts within the
General Fund.
a. Each year, accounting for Measure X spending will become more and
more difficult because of the inherent General Fund nature. Adding
dedicated accounts will improve tracking, reporting and auditing of
Measure X revenue.
Measure X Spending Plan
To improve and enhance the reporting and auditing process for Measure X spending,
staff has created Measure X accounts within the General Fund for the FY 2021-22 budget.
A summary of the work -in -process spending plan is included in the PowerPoint
presentation for the Workshop Session.
ENVIRONMENTAL IMPACT
There is no environmental impact associated with this action.
FISCAL IMPACT
There is no fiscal impact directly associated with providing additional direction to staff for
preparation of the draft FY 2021-22 budget. The City Council schedule includes receiving
the draft budget on May 18 and conducting a public hearing for the proposed budget on
June 1.
Submitted By: Kathryn Downs, Executive Director Finance and Management Services
Approved By: Kristine Ridge, City Manager
Fiscal Year
2020m2021
Budget Workshop
Session
City Council Meeting
May 4, 2021
>.aNse cauus►i*
fOUN09D 160
•
• Public Outreach Efforts
• American Rescue Plan Act -Update
• 3rd Quarter FY 2020-21 General Fund Update
• FY 2020-21 Budget Discussion and Capital Improvement Program (CIP)
• FY 2021-22 Budget Discussion, 10-year General Fund Outlook,
Measure X Committee Recommendations and Spending.
• FY 2021-22 Draft Capital Improvement Program (CIP)
• FY 21-22 Budget Discussion
• Pension Refinancing Status
• Next Steps
2
Public Outreach Efforts
• March 25 CommLink Budget Meeting in compliance with Sunshine
Ordinance
• April 23 Public Opinion Survey Go -Live
• Online
• QRC codes for Survey Link and Paper Surveys at City Hall public counters
• Survey closes on May 16
• Planned May 11 Community Meeting for federal stimulus spending
plan
3
Revive Santa Ana
()Recovery from COVID-19
Santa Ana is resilient —and we will recover together.
We're ready to combat the remaining health and safety
impacts of COVID-19.
......................................................................................
Financial Assistance and Targeted
Programs
In addition to financial assistance to help pay for Essential
goods and services, we're designing programs that meet
the needs of our residents and businesses.
0 Public Health and Safety
We're ready to reinvest in our community to improve the
future health and well-being of all.
......................................................................................
Critical Infrastructure
Whether it's information technology, streets, or
community facilities, the pandemic has elevated the need
REfor significant investment in our municipal assets.
........1..��...............................................................................
^� City Fiscal Health
As the economy rebounds, the City of Santa Ana will be a
• Draft Spending Plan divided
into two allocations
• $71.5 million to be received by
May 10
• $71.5 million no earlier than May
10, 2022
• Spending guidelines expected
prior to May 10
• Based on City Council input,
staff input and Public Opinion
FY20-21 General Fund
3rd Quarter — Maior Revenues
Revenue Source
0 1
Sales Tax
3rd Quarter Actuals
$ 30,755,266
Revised Budget
$ 49,198,300
ReceN�
62.5%
Sales Tax (Measure X)
41,325,363
61,432,700
67.3%
Property Tax/
Property Tax In -Lieu of VLF
43,783,256
76,624,612
57.1%
Hotel Visitor's Tax
2,536,181
4,250,000
59.7%
Business License
10,015,245
9,300,000
107.7%
Utility User's Tax
15,585,274
22,650,000
68.8%
Jail Revenue
10,482,232
16,113,896
65.1%
Permits
2,788,912
3,109,000
89.7%
Cannabis Tax*
13,167,323
19,250,000
68.4%
Subtotal Top GF Revenues
$ 170,439,053
$ 261,928,508
65.1%
Other General Fund Revenues
39,356,488
61,664,635
63.8%
Total Revenues
$ 209,795,541
$ 323,593,143
64.8%
5
FY2O-21 General Fund Expenditures - 3rd Quarter
City Manager
..
1,278,100
1,887,880
�.
.- .-.
67.7%
City Council
326,572
489,780
66.7%
Non -Departmental
33,105,148
44,087,316
75.1%
Clerk of the Council
853,666
1,457,539
58.6%
City Attorney's Office
2,202,597
3,034,052
72.6%
Human Resources
1,570,662
3,059,931
51.3%
Finance & Management Services
6,390,976
9,573,666
66.8%
Library
3,409,920
5,568,789
612%
Bowers Museum
1,230,206
1,473,430
83.5%
Parks and Recreation Services Agency
15,752,375
23,257,922
67.7%
Police Department
99,941,583
135,096,727
74.0%
Fire Department*
37,390,340
46,730,217
80.0%
Planning& Building Agency
10,244,681
16,712,402
61.3%
Public Works Agency
9,636,532
16,563,498
582%
Community Development
2,280,127
4,232,874
53.9%
SUBTOTAL GENERAL FUND
$ 225,613,487
$ 313,226,023
72A%
NET TRANSFERS
14,604,124
21,290,260
68.6%
TOTAL GENERAL FUND
$ 240,217,611
$ 334,516,283
71.8%
*Includes one month advanced payment
0
Vacancy Report as of March 31, 2021
1
•
0
a
0
•
2
City Manager's Office
10
2
City Attorney's Office
15
3
0
2
1
Clerk of the Council
6
0
0
0
0
Community Development
48
1
3
0
4
Finance & Management Services
62
7
0
4
3
Information Technology
24
0
9
0
9
Human Resources
27
2
0
1
1
Planning & Building
75
19
2
9
12
Police Department
629
37
3
9
31
Parks & Rec Services Agency
79
17
5
6
16
Library
26
5
0
3
2
Public Works Agency
234
8
47
3
52
Total
1235
101
69
37
133
7
Fiscal Year 2020-2021
Budget Discussion
GENERAL FUND
Beginning Fund Balance
Revenue
Expenditures
Transfers Out
Net Activity
Estimated Ending Fund Balance
Reserves (18% of recurring revenue)
Estimated Available Balance
FY20-21
Current Adjusted Budget
$ 81,868,704
323,593,143
(313,226,023)
(21,290,260)
$ (10,923,140)
$ 70,945,564
58,155,866
$ 12,789,698
Estimated Available Balance
comes from:
• $3 million of positive budget
variances from FY19-20
• $2.7 million of unspent money
from closing FY14-15 AMES Fund
• $12.5 million increased sales tax
estimate, less $5.9 million
increase to Reserve
• When revenue estimates increase,
so does the required reserve
vie
Capital
Budget
$256.6
million
Ej
it-IW
• l Iff.l•L:
11FAVA
ant Prog
Spend to
date (paid +
committed)
$49.5 million
or 19%
Significant
Carryovers to
FY21-22
Expected
Fiscal Year 2021-2022
General Fund Budget Discussion
• Structural deficit of $14+ million
• Estimated available General Fund balance at June 301, 2021 is $12.8 million (in excess of Policy
Reserve requirement)
• Proposed hiring freeze will close the gap (roughly half the scope of FY20-21 freeze)
• Mandated cost increases are included
• Contract increases (e.g. OCFA, Ambulance, previously bargained wage increases, etc.)
• Redistricting cost
• Spending restored for pandemic related reductions during FY20-21, but only partial revenue
recovery is included
• Train Station recurring subsidy included
• NEW Park Facility Attendants and NEW Citywide Text Communication Platform
• Scheduled increase of Pension Debt payment included, but refinancing savings not yet included
• Draft budget does not include anything for future labor negotiations
10
Ten -Year General Fund Outlook
N $500
0
2
$460
$420
` $386.9
$374.7 $376.5
$380 $ 364.1
$386.8
$353.2 $375.9
$365.3
$340 $334.5 $355.0
$340.9
$397.5
$398.0
$409.6
$4:�$432.
3
$406.7
$323.6
$300
FY20-21 FY21-22 FY22-23 FY23-24 FY24-25 FY25-26 FY26-27 FY27-28 FY 28-29 FY 29-30
-*-Revenue Expenditures & Transfers Out
Measure X Oversight Committee
Recommendations
1. Favor one-time spending from Measure X revenue.
2. Consider pilot programs to reduce reliance on sworn Police for some types
of response, and community cooperatives for economic development.
3. Prepare a long-term plan to prepare for the Measure X rate reduction.
4. Shift Measure X revenue to fixing streets.
5. Use Measure X revenue increase to reduce the reliance on the General
Fund Reserve to preserve service levels.
6. Use the pandemic as an opportunity to identify lessons learned and
shifting priorities.
7. The Committee supports dedicated Measure X spending accounts within
the General Fund.
Measure X
Proposed Spending By Ballot Category
Category Total
Maintain Effective 9-1-1 Response
$ 5,655,163
Retaining Firefighters
5,674,555
Retaining Police Officers
28,669,088
Addressing Homelessness
1,270,760
Fixing Streets
500,000
Maintaining Parks
3,014,292
Youth Services
11240,415
Unrestricted General Revenue
Purpose
321346,911
Revenue
Estimate is
$65 million
FY 21 /22 DRAFT
CAPITAL IMPROVEMENT
PROGRAM (CIP)
$78,021,769
I I I
12
0t0
Street Traffic Utility/ Drainage Municipal
Improvements Improvements 1 Lighting Improvements
$19,446,667 $6,367,800 $41,087,000 $11,120,302
53%
■ Street Improvements
Traffic Improvements
Utility / Drainage /
Lighting Improvements
Municipal Facilities
14
Pension Debt Refinancing Status
• March 11 Competitive Proposals for Underwriters Received
• March 26 Filed for Judicial Validation
• April 19 Interviewed Underwriters
• May 18 Propose Underwriters for Council Consideration
• July — September
• Bond Documents for Council Consideration, including Preliminary Official
Statement
• Obtain Credit Rating
• Issue Debt
Savings not included in draft budget yet
is
May 18
Draft Budget
Workshop &
Draft ARPA
Spending Plan
Next Steps
June 1 June 15
Budget Public
Hearing
Adopt Budget
Ordinance
July 1
Beginning of
New Fiscal Year
I i,
*iolv
Questions?
17