Title
Adoption of Resolutions Approving and Adopting the City of Alameda Operating and Capital Budget for Fiscal Years 2019-20 and 2020-21 and Approving and Adopting the Successor Agency to the Community Improvement Commission Budget for FY 2019-20 and 2020-21; [City Council AND SACIC]
Adoption of Resolution Amending the Salary Schedule and Approving Workforce Changes for Fiscal Years 2019-20 and 2020-21; [City Council] and
Adoption of Resolution Amending the International Association of Firefighters (IAFF) Salary Schedule. [City Council] (Finance 2410)
Body
To: Honorable Mayor and Members of the City Council;
Honorable President and Members of the Successor Agency Board
EXECUTIVE SUMMARY
Every two years, staff presents to the City Council the Citywide biennial budget for adoption. The Budget is the most important document that outlines the City of Alameda’s fiscal plan for the two upcoming years as well as the level and the type of services to be provided. Two Budget Study Sessions were held in May 2019. During these sessions the City Manager and Department Heads presented the City Manager Proposed Budget and solicited input and direction from City Council, staff and community members. The Budget presented to the City Council for adoption incorporates direction provided during the May Budget Study Sessions.
BACKGROUND
On May 15 and May 16, 2019, the City Council held Budget Study Sessions on the preliminary City Manager proposed Citywide Budget for Fiscal Years (FYs) 2019-20 and 2020-21. These workshops were intended to give the City Council and community an opportunity to look more closely into the factors that make up the overall City Budget. During these workshops the City Manager and Department Heads provided information and answered questions on budget projections and departmental funding requests that were in addition to the base line budget estimates. The City Council and community then provided input to staff on the allocation of funding beyond the base line budget.
The input from City Council, staff and community members have been taken into account in the proposed Budget.
A summary of the City Manager proposed Budget and forecast for the City of Alameda (City) for FYs 2019-20 and 2020-21 is attached in Exhibit 2. This report includes the budgets for both fiscal years. Staff recommends City Council adopt this operating and capital budget for FYs 2019-20 and 2020-21. Staff also recommends that the Board of the Successor Agency to the Community Improvement Commission adopt the Successor Agency’s Budget for FYs 2019-20 and 2020-21. The City Manager, Finance Director, and Department staff will be available to respond to questions.
The City Manager and staff recommend that the Budget for the Fiscal Year (FY) 2020-21 be approved as a part of the Biannual Budget, but that the Mid-Cycle review be more extensive than the typical Mid-Cycle review process.
DISCUSSION
Based on the discussions held during the Budget Workshops, the City Manager proposed Budget intends to meet the City’s mission and the City Council’s stated goals for the coming two years. In addition, the proposed budget attempts to balance the many competing priorities. The competing priorities include areas such as unfunded liabilities, new initiatives such as the Climate Action and Resiliency Plan, critical facility improvements and staffing to meet demands.
Staff has prepared a revised City Manager’s proposed Budget for FYs 2019-20 and 2020-21 covering the General Fund and all other City and Successor Agency funds as a result of the City Council and community input described above as well as refining previously presented balances. As part of the proposed budget, staff also included the proposed Capital Improvement Program (CIP) totaling approximately $53.9 million and $25.3 million for FYs 2019-20 and 2020-21, respectively.
The City’s total proposed budget for all funds including transfers out is $332.5 million for FY 2019-20 and $267.3 million for FY 2020-21, both exclusive of Alameda Municipal Power (AMP). The General Fund represents approximately $100.6 million or 30% of the total in FY 2019-20 and $103.2 million or 39% in FY 2020-21. The attached financial summaries of the budget document contain extensive financial information, and comparative data and details by fund, department, and program as well as graphic representations of revenue and expenditures by sources and uses (Exhibits 1, 2 and 3).
Revenue Performance
Overall, City annual General Fund revenues, including transfers in, are estimated to increase by $4.8 million from FY 2018-19 to FY 2019-20 and $2.4 million from FY 2019-20 to FY 2020-21. Most of the general tax revenues showed higher than expected growth in the last two years. The first year increase of $3.8 million is attributed to the annualized new Transactions and Use Tax that became effective on April 1, 2019. To get a better understanding of what may happen to City revenues in the coming five years, staff consulted with several City revenue consultants to review and estimate three of the City’s largest and most volatile revenue sources: Property Tax, Sales Tax and Property Transfer Tax. This Proposed Budget includes their combined analysis.
• Property Tax and Property Transfer Tax - combined make up about 44% of General Fund total revenues. Property Tax is expected to increase an estimated 5% from the FY 2018-19 projection and 3% from the FY 2019-20 proposed budget. Property Transfer Tax is expected to decrease by about 12% in FY 2019-20 due to exclusion of large one-time payments received in FY 2018-19. Staff estimates that it will collect $11 million in this revenue source in FYs 2019-20 and FY 2020-21.
• Sales Tax revenue - is dependent on consumer spending and on the economy overall. Staff is estimating that Sales Tax will remain flat in both years of the proposed budget.
• Transient Occupancy Tax - directly benefits from increased spending activities. Staff estimates no growth in FYs 2019-20 and FY 2020-21.
• Motor Vehicle License Fee - allocated through property taxes and as such have a similar growth pattern.
• Utility User Tax (UUT) - expected to increase in the next two years and throughout the 5-year forecast. The growth is expected as a result of updating the City’s UUT Ordinance for inclusion of modernized services and equipment and increases in the rates providers charge its customers. This tax is generated on cable television, telephone services, natural gas and electricity.
• Franchise Fees - show 6.9% increase from FY 2018-19 to FY 2019-20 and 2.8% increase from FY 2019-20 to FY 2020-21 primarily as a result of proposed fee increases on garbage rates.
• Business License Tax - projected at a small growth of 2% in each of the next two years.
• Departmental Revenues - expected to increase 2.4% in FY 2019-20 compared to FY 2018-19. The increase is attributable to a projection of $223,000 in Fire Prevention fees as this Bureau was recently reinstated and increased ambulance billing fees. In the second year, overall program revenues are expected to increase 12%. Most of the increase is projected in the Fire Department as a result of the increase in ambulance billing fees expected with one additional ambulance company. In future years, Departmental revenues are projected to increase slightly or stay flat.
Expenditures
Staff is not proposing any cost of living adjustments for contractual services or materials and supplies unless specifically provided for in existing contracts with vendors as part of the proposed two-year budget. Increases in labor costs are due to normal salary increases as well as an estimated 2% safety and 3% miscellaneous cost of living adjustment (COLA), rising costs for the retirement system, expected increases in the cost of other benefits and the addition of new positions, highlighted below. Additional funding requests from various City Departments discussed during the budget workshops that the City Manager and staff recommend for approval as part of the Proposed Budget are included in the tables below.
Ø Workforce Changes
The FY 2019-20 Budget incorporates funding for 542 allocated full-time positions. These recommendations include an overall increase in the allocation count of seven positions from the 535 full-time positions approved in the 2018-19 Mid-Year Update.
The recommendations for FY 2019-20 include 12 new positions, deletion of five positions, upgrade of eight positions, downgrade of three positions, and the retitling of four classifications.
Four additional positions are recommended to be added in FY 2020-21 for a total allocation count of 546.
Six of the 12 new positions recommended in FY 2019-20 are firefighter positions needed to staff a new ambulance. The remaining positions are needed to support program growth.
Additionally, the staffing in the FY 2019-20 budget reflects the reorganization of the Departments of Community Development and Base Reuse and Transportation. Base Reuse is now part of the Community Development Department. Planning, Building and Transportation functions are now combined together into the Planning, Building and Transportation Department.
Other workforce recommendations include:
• The extension of six limited term Firefighter positions to February 27, 2022, to support existing Staffing for Adequate Fire and Emergency Response (SAFER) Grants in the Fire Department;
• Increasing the salary for the Firefighter Recruits, who are attending the Fire Academy from $14.42 an hour to $25.75 an hour. The current salary is not competitive with other agencies. This has resulted in the City losing qualified candidates to other agencies with higher salaries; and
• The transfer of two System Analysts currently in the Information Technology Department to the Library (1), and Planning, Building & Transportation Department (1).
The City is also in the process of conducting several reclassifications and salary studies. These studies are evaluating if the current job duties and responsibilities are reflected in the current classification or if another classification would better reflect the job duties. These studies are also evaluating the competitiveness of the City’s current salary. Additionally, the City Attorney’s office is currently revising its service levels and staffing. Any recommended changes will be brought back to City Council at a future date. The recommended budget includes sufficient funding to cover the increased cost of any recommended changes.
Attachment 5 provides detail on the workforce recommendations.
Number of Allocated Positions by Department
And Citywide Vacancy Rates
|
DEPARTMENT |
Approved 2018-2019 |
Allocation Changes in 2018-2019 |
Adjusted 2018-2019 |
Recommended 2019-2020 |
Recommended 2020-2021 |
|
Alameda Municipal Power |
98.25 |
-1 |
97.25 |
94.25 |
94.25 |
|
City Attorney |
9 |
0 |
9 |
9 |
9 |
|
City Clerk |
3 |
0 |
3 |
3 |
3 |
|
City Manager/Council |
6 |
0 |
6 |
6 |
6 |
|
Community Development (Will include Base Reuse starting 2019-2020) |
33 |
1 |
34 |
10 |
11 |
|
Planning Building and Transportation (Effective 2019-2020) |
|
|
|
29** |
29 |
|
Base Reuse |
5 |
0 |
5 |
0 |
0 |
|
Finance |
14 |
1 |
15 |
17* |
18* |
|
Fire |
111 |
1 |
112 |
117 |
117 |
|
Human Resources |
8 |
0 |
8 |
8 |
8 |
|
Information Technology |
6.75 |
0 |
6.75 |
5.75 |
5.75 |
|
Library |
18 |
0 |
18 |
20*** |
21 |
|
Police |
122 |
0 |
122 |
122 |
122 |
|
Public Works |
74 |
0 |
74 |
75 |
75 |
|
Recreation & Park |
25 |
0 |
25 |
26 |
27 |
|
TOTAL |
533 |
2 |
535 |
542 |
546 |
* Includes 2 Limited Term Accountant II’s
** With Position transferred from IT to Planning Building and Transportation
*** With Position transferred from IT to Library
The chart below shows the position vacancy rate since 2017. This chart includes the position of Police Officers, which historically has had a higher vacancy rate than other departments due to the difficulty recruiting qualified candidates.
Ø Vehicle Acquisition
The City Finance and Public Work Departments staff spent significant time evaluating the Citywide vehicle replacement program in preparation for the biennial budget. As a result, a comprehensive list was established of all vehicles and equipment in the City included in the program. In addition, a comprehensive list of vehicles that are due and past due replacement were identified and are proposed to be replaced in the next two years. This accounts for 129 vehicles out of 288 vehicles included in the replacement program. The funding for the program was reengineered and is incorporated in the City Manager’s proposed budget. The only vehicles excluded from the replacement program are large apparatus items for the Fire Department. The current proposal for the funding of these vehicles is “pay as you go” and/or lease financing.
Subsequent to the May Budget Study Session and in order to accommodate community and City Council’s input, the General Fund contributions to the Fleet Replacement Fund have been reduced by 10% or approximately $134,000. The staff will review the Fleet Replacement program in greater detail to further evaluate the makeup of the City fleet, size of the fleet and the type of vehicles (such as gas, hybrids, or electric). This may change the contributions from all the City funds including the General Fund.
The replacement vehicles that meet the current City’s replacement vehicle schedule included in the proposed budget are detailed in Exhibit 4. All replacement vehicles are older than the replacement policy allows because they exceed either the age or the maximum mileage of the policy. Most of the vehicles proposed for replacement far exceed these criteria as a result of deferred acquisition due to funding availability in previous years.
|
Department |
Vehicle Count |
Funding Source |
Total Vehicle Costs for FY2019-20 & FY2020-21 |
|
Police |
45 |
Vehicle Replacement Fund |
$2,377,500 |
|
Fire |
12 |
Vehicle Replacement Fund |
$779,019 |
|
Public Works |
43 |
Sewer and Vehicle Replacement Fund |
$3,978,062 |
|
Recreation & Parks |
20 |
Vehicle Replacement Fund |
$810,668 |
|
Library |
1 |
Vehicle Replacement Fund |
$37,050 |
|
Planning/Building/ Comm. Development |
8 |
Vehicle Replacement Fund |
$292,320 |
|
Total |
129 |
|
$8,274,619 |
Ø Capital Program Funding
Staff identified a number of citywide capital projects. The City Manager reviewed the proposed list with Staff, including those projects that require allocations from the General Fund. Due to limited General Fund resources, the City Manager’s proposed budget either fully or partially funds certain selected projects. The selection was based on the critical needs, cost-efficiency efforts, and City Council priorities. In addition to the projects presented during the Budget Study Sessions in May, the following projects listed below were revised or added to the two-year period.
|
Department |
Project |
Funding Source |
Total One-Time Capital Costs (Proposed) |
Total One-Time Capital Costs (Revised) |
|
Public Works |
Urban Forest |
General Fund |
$400,000 |
$500,000 |
|
Parks and Recreation |
Park Maintenance Improvements |
General Fund |
$500,000 |
$425,000 |
|
Parks and Recreation |
Park Playground Replacement |
General Fund |
$0 |
$325,000 |
|
Public Works |
Master Tree Plan |
General Fund |
$0 |
$150,000 |
A full list of the projects proposed in the current budget are included in the Capital Improvement Program Budget (Exhibit 3).
Ø Other Changes
As a result of community input and City Councils’ direction, the City Manager proposed the following changes to the previously presented FY 2019-20 and FY 2020-21 Budget:
• General Fund expenditures were increased by $100,000 to assist with funding of Alameda Unified School District’s Mental Health program;
• General Fund expenditures were increased by $140,000 in the first year for the Climate Action and Resiliency Plan for a total allocation of $305,000. Expenditures in the second year were increased $360,000 to provide additional allocation for this undertaking;
• Appropriation for the feasibility study for Fire Station 5 was initially allocated to the General Fund. Upon City Council’s inquiry, staff re-evaluated the funding source and changed it to the Base Reuse Fund and moved it to the first year of the budget. In addition, appropriations were increased by $20,000 to expand the scope of the study to include options for re-location;
• Vehicle Replacement contributions from the General Fund were reduced by ten percent for a total of approximately $134,000; and
• Library Fund expenditures budget was increased by $50,000 in each year to provide for expansion of Library books and periodicals collections.
Sources of Risk
Every budget contains the risk that estimates will not accurately predict future performance for revenue and expenditures and that conditions will deviate from the assumptions used to make estimates.
The proposed budget for FYs 2019-20 and 2020-21 and the 5-year projection include assumptions about cost increases that depend on collective bargaining results. Benefit costs will also depend on CalPERS performance, amortization and smoothing policies, and revisions of actuarial assumptions. Other Post-Employment Benefits (OPEB) cost increases are incorporated in the 5-year projection based on the City’s practice of pay-as-you-go method. All of these risks described above must be taken into account in making decisions about ongoing expenditure and reserve levels.
ALTERNATIVES
• Alternative 1 --- Approve the Budget with the amendments added during the May study sessions.
• Alternative 2 --- Approve the Budget with any amendments made during tonight’s City Council meeting.
FINANCIAL IMPACT
With this report, staff recommends adoption of the City’s FYs 2019-20 and 2020-21 biennial Budget totaling $332,539,884 and $267,265,912, respectively, including all City funds (except for AMP). With the proposed budget, it is projected that the City will maintain an available fund balance in its General Fund of approximately $26.7 million or 27% of General Fund total expenditures and transfers out at the end of the FY 2019-20. The projected available fund balance at the end of FY 2020-21 is $26.3 million or 25% of expenditures and transfers out. The City Council policy is to maintain a 25% General Fund reserve (also known as the available fund balance). The above percentages take into account amounts set aside for the funding of unfunded pension and OPEB liabilities as set by the City Council funding policy. The attached summary includes the financial budgets for the General Fund for FY 2019-20 and 2020-21 and forecasts through FY 2022-23.
Included in the City’s FYs 2019-20 and 2020-21 biennial Budget is the Successor Agency FYs 2019-20 and 2020-21 biennial Budget totaling $22,912,856-- and $23,030,202, respectively. The Successor Agency will fund its expenditures with Redevelopment Property Tax Trust Fund (RPTTF) revenues received in June and January of each year. Any other revenues received by the Successor Agency will be used to pay debt service and enforceable obligations.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This action is in conformance with the Alameda Municipal Code and all policy documents.
ENVIRONMENTAL REVIEW
This activity is not a project and is exempt from the California Environmental Quality Act (CEQA) pursuant to section 15378 (b)(4) of the CEQA Guidelines, because it involves governmental fiscal activities (approving and adopting the operating and capital budget for FYs 2019-20 and 2020-21), which does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment.
CLIMATE IMPACT
There are no climate impacts from the adoption of this biennial Budget. However, this Budget does include appropriations that will assist in dealing with climate issues.
RECOMMENDATION
Adopt Resolutions (1) Approving and Adopting the City of Alameda Operating and Capital Budget for Fiscal Years 2019-20 and 2020-21 and (2) Approving and Adopting the Successor Agency to the Community Improvement Commission Budget for Fiscal Years 2019-20 and 2020-21;
Adopt a Resolution Approving Workforce Changes; and
Adopt a Resolution Amending the International Association of Firefighters Salary Schedule
CITY MANAGER RECOMMENDATION
The City Manager recommends adopting the City of Alameda operating and capital Budget for FYs 2019-20 and 2020-21 and adopting the resolution approving the workforce changes and amending the salary schedule.
Respectfully submitted,
Elena Adair, Finance Director
Exhibits:
1. Draft Budget Transmittal Letter
2. Budget Summary
3. Capital Improvement Program
4. Vehicle Replacement Schedule
5. Recommended Workforce Changes