Title
Adoption of Resolution Approving and Adopting the Operating and Capital Budget for Fiscal Years (FYs) 2021-22 and 2022-23; [City Council] and
Adoption of Resolution Approving and Adopting the Budget for FYs 2021-22 and 2022-23; [SACIC] and
Adoption of Resolution Approving Workforce Changes and Amending the Management and Confidential Employees Association (MCEA) Salary Schedule in FYs 2021-22 and 2022-23 Effective July 1, 2021. [City Council] (Finance 2410)
Body
To: Honorable Mayor and Members of the City Council
EXECUTIVE SUMMARY
Every two years, staff presents to the City Council the Citywide biennial budget for adoption. The budget outlines the City of Alameda’s (City) fiscal plan for the two upcoming years as well as the level and types of services to be provided. The City Council held two budget workshops in May 2021, during which staff presented the City Manager Proposed Budget and the proposed Capital Improvement Program (CIP) Budget and solicited input and direction from City Council and community members on the upcoming two-year budget. The budget presented to the City Council for adoption incorporates direction provided during the May budget workshops. Staffing levels to support the City Council’s direction and priorities were also discussed at the workshops, and workforce changes are also included in this report and the attached resolution.
BACKGROUND
On May 11, 2021 and May 20, 2021, the City Council held budget workshops on the City Manager’s proposed operating budget and CIP budget for Fiscal Years (FYs) 2021-22 and 2022-23. These workshops were intended to give the City Council and community an opportunity to review the factors that make up the overall City budget. During these workshops the City Manager and staff provided information and answered questions about departmental funding requests and the City’s pension reserve payments that were in addition to the baseline budget estimates. The City Council and community provided input to staff on the allocation of funding beyond the baseline budget.
The direction from City Council on additional funding changes have been incorporated into the FY 2021-22 and 2022-23 proposed budgets.
A summary of the proposed operating budget and forecast for the City for FYs 2021-22 and 2022-23 is attached in Exhibit 2, and a summary of the proposed CIP budget for FYs 2021-22 and 2022-23 is attached in Exhibit 3.
Final versions of the operating budget, forecast document, and the CIP budget document will be available in electronic format and posted to the City’s website. The documents are expected to be completed in July 2021.
DISCUSSION
Based on the discussions held during the May budget workshops, the proposed budget intends to meet the City’s mission and the City Council’s stated goals for the upcoming two fiscal years.
Staff has prepared a revised proposed budget for FYs 2021-22 and 2022-23 covering the General Fund and all other City and Successor Agency funds, summarized in Exhibit 2. Staff has also prepared a revised CIP budget for FYs 2021-22 and 2022-23, summarized in Exhibit 3.
FY 2021-2023 General Fund Revenues
General Fund revenues, including transfers in, are estimated to increase by $3.1 million, from $108.7 million in FY 2020-21 to $111.8 million in FY 2021-22, and by an additional $2.7 million in FY 2022-23, to $114.5 million. The City’s largest source of General Fund revenue, Property Tax, has remained stable and continued to increase modestly through the COVID-19 pandemic. General Fund revenue sources impacted by the pandemic, such as Sales Tax and Transient Occupancy Tax, are projected to nearly recover to pre-pandemic levels over the next two years.
Expectations for General Fund revenues over the next two years are summarized below:
• Property Tax makes up about 43% of General Fund revenues. Property Tax is expected to increase an estimated 5% from the FY 2020-21 projection of $45.8 million to $48.4 million, and by 3% to $50.0 million in FY 2022-23.
• Property Transfer Tax is conservatively estimated at $12.0 million. Although actual Property Transfer Tax receipts have ranged from $14.1 to $17.6 million over the last three fiscal years, the fluctuation in revenues was due to the sale of large commercial properties that is difficult to predict. City Council may want to consider a policy for the use of the funds generated from the sale of large properties (value that are greater than $10 million).
• Sales Tax/Transaction and Use Tax revenue is dependent on consumer spending and on the economy overall. Sales Tax receipts decreased from $11.5 million in FY 2018-19 to $10.1 million in FY 2019-20, and are projected at $9.0 million in FY 2020-21 due to the effects of the COVID-19 pandemic on local sales transactions. In FY 2021-22, Sales Tax revenues are projected by the City’s sale tax consultant, HdL, to rebound to $11.0 million and increase by an additional 2% in FY 2022-23. Transaction and Use Tax (Measure F) revenues are projected to increase from approximately $6.0 million in FY 2020-21 to $7.0 million in FY 2021-22 and increase by an additional 2% in FY 2022-23.
• Transient Occupancy Tax, or hotel tax, decreased from $2.3 million in FY 2018-19 to $2.0 million in FY 2019-20 and is projected at $1.4 million in FY 2020-21 due to the effects of the pandemic on travel. Transient Occupancy Tax is expected to remain flat at $1.4 million in FY 2021-22 and increase by 14%, to $1.6 million, in FY 2022-23.
• Utility Users Tax (UUT) is generated on use of cable television, telephone services, natural gas and electricity. After decreasing over the last two years, UUT is expected to increase modestly in the next two years from $8.4 million in FY 2020-21 to $8.7 million in FYs 2021-22 and 2022-23. The growth is due to projected increases in receipts for electricity and gas UUT which offset projected decreases for phone/wireless, cable, and prepaid wireless.
• Franchise Fees are projected to drop by 6% from $4.3 million in FY 2020-21 to $4.0 million in FY 2021-22 and by another 1% in FY 2022-23 to $3.9 million due to a continuing decrease in Cable TV Franchise and a reduction in the Solid Waste Franchise following re-negotiation of garbage collection rates.
• Business License Tax is projected to decrease by 5%, from $2.2 million to $2.1 million, due to the effects of the COVID-19 pandemic on small businesses.
• Departmental Fees and Charges for Services are expected to increase 16% to $6.7 million in FY 2021-22 due to the anticipated recovery of programs affected by the pandemic, such as recreation programs and fire inspections. In the second year, departmental fee revenue is expected to further increase by 4% due to a higher level of expected fire inspections and recreation program activity.
FY 2021-2023 Citywide Expenditures and General Fund Expenditures
The City’s operating budget is comprised of a number of different funding sources. The General Fund is the largest single fund and represents the resources over which the City Council has the most discretion.
The City’s total proposed expenditure budget for all funds including transfers out is $272.0 million in FY 2021-22 and $273.1 million in FY 2022-23, both exclusive of Alameda Municipal Power (AMP). The General Fund represents approximately $114.4 million or 42% of the total in FY 2021-22 budget and $118.7 million or 43% of the FY 2022-23 budget, as shown below.
Staff is not proposing any cost of living adjustments for services or supplies unless specifically provided for in existing contracts with vendors.
Increases in personnel costs are due to normal salary increases, cost of living adjustments of 1% to 2% set to take effect in January 2022 depending on bargaining unit, and rising pension costs.
Based on direction provided by City Council at the May budget workshops, the proposed operating budget incorporates the following changes. Additional changes are incorporated in the capital budget.
|
Department |
Description |
Funding Source |
FY 2021-22 Budget |
FY 2022-23 Budget |
|
City Manager |
Civic Spark Fellow |
General Fund |
$36,000 |
$36,000 |
|
Comm Dev |
Alameda Family Services - School Mental Health Support |
General Fund |
$125,000 |
$125,000 |
|
Non-Dept |
Police Auditor/Police Reform Measures |
General Fund |
$300,000 |
$900,000 |
|
Non-Dept |
Shuumi Land Tax |
General Fund |
$11,000 |
|
|
|
|
Total |
$472,000 |
$1,061,000 |
The budget also includes additional budget of $25,000 in FY 2021-22 and $30,450 in FY 2022-23 in the Workers’ Compensation Fund for Third Party Administrator (TPA) fees. The City’s new TPA was selected in May 2021 following a competitive solicitation process, and the fees are higher than anticipated when staff prepared the budget for the May budget workshops.
Capital Budget Allocations from the General Fund
The City Manager reviews the proposed capital project allocations, including 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 projects. The selection was based on the critical needs, cost-efficiency efforts, and City Council-set priorities. Projects listed below are recommended for receiving General Fund allocations over the two-year period.
|
Lead Department |
Project |
FY 2021-22 |
FY 2022-23 |
|
Public Works |
Urban Forest - Trees & Landscape Maintenance |
$150,000 |
$150,000 |
|
Public Works |
Urban Forest Master Plan Update |
$175,000 |
$175,000 |
|
Public Works |
Street, Park and Parking Lot Lighting |
$300,000 |
$300,000 |
|
Recreation & Parks |
Park Maintenance |
$450,000 |
$275,000 |
|
Recreation & Parks |
Playground Replacement |
|
$250,000 |
|
Recreation & Parks |
Park Pathway Repair & Replacement |
$50,000 |
$50,000 |
|
Recreation & Parks |
East End/Harbor Bay Dog Park |
$75,000 |
|
|
|
Total |
$1,200,000 |
$1,200,000 |
The proposed General Fund allocations to capital projects total $1,200,000 in FY 2021-22 and FY 2022-23.
Based on direction provided by City Council at the May 2021 budget workshops, the proposed capital budget incorporates the following changes:
|
Project |
Change |
Funding Source |
FY 2021-22 |
FY 2022-23 |
|
Traffic Signal - Pedestrian Safety |
Provide matching funds for an intersection safety grant |
Measure BB LSR |
$24,024 |
|
|
Urban Forest - Trees & Landscape Maintenance |
Increase species-specific tree trimming |
General Fund |
$150,000 |
$150,000 |
|
Urban Forest Master Plan Update |
Increase funding for the master plan |
General Fund |
$50,000 ($175,000 total allocation |
$50,000 ($175,000 total allocation |
|
Parks Maintenance |
Increase funding for park improvements to enhance recreational activities. |
General Fund |
$200,000 ($450,000 total allocation) |
$200,000 ($275,000 total allocation) |
|
Parking |
Eliminate WETA contribution of capital funds for ferry terminal parking, per updated agreement with WETA |
WETA |
($400,000) |
($400,000) |
|
West End Bicycle and Pedestrian Crossing |
Update allocation to reflect grant amount |
ACTC |
$1,355,000 |
$200,000 |
Staff recommends allocating matching funds in the amount of $24,024 from Measure BB Local Streets and Roads funding (Fund 231) for the Traffic Signals - Pedestrian Safety project. The grant funding is $249,076 from the Highway Safety Improvement Program, administered by Caltrans, and the total project cost is $273,100.
City Council provided direction to increase General Fund contributions for Urban Forest - Trees and Landscape. This project has required General Fund contribution in the past to maintain existing service levels. To reduce General Fund exposure during this budget cycle, the Urban Forest - Trees and Landscape Maintenance Funding is supported with $1,178,000 in one-time surplus funds from the Construction Improvement Tax (Fund 302) and $600,000 of Gas Tax (Fund 211). This supports current service levels (trim one of five zones/year and 200 tree plantings) with some species specific trimming. The contribution of the General Fund will increase species specific trimming to approximately $261,000 per year.
The budget for Urban Forest - Trees and Landscape does not support an increase in tree plantings, per the Climate Action and Resiliency Plan. Staff is looking to first complete the Urban Forest Master Plan and then seek funding per the recommendations in that plan. City Council provided direction to increase General Fund contributions for the Urban Forest Master Plan to $350,000 over the two-year period. General Fund support for the Urban Forest - Trees and Landscape Maintenance will need to be revisited in the next two year budget.
In addition, there are two updates to the capital budget that reflect changes discussed at other City Council meetings. The change for the Parking project is related to the updated agreement between the City and WETA that was discussed at the May 4, 2021 Council meeting (File 2021-863). The change for the West End Bicycle and Pedestrian Bridge project is scheduled for the June 15, 2021 meeting (File 2021-961).
Capital Budget Allocations from other Fund Sources
The full list of the projects proposed in the current budget are included in the Capital Improvement Program Budget Summary (Exhibit 3). Capital investments are shown by project type and fund source for each year. Highlights include the following:
• Pavement Management: Resurface and repair local streets and roads; incorporate new signage and traffic striping to improve safety for all users.
• Sidewalks: Remove trip hazards and replace sidewalks damaged by City-owned trees.
• Traffic Signals and Systems: Replace obsolete equipment and improve safety and multimodal operations at key intersections.
• Urban Forest - Trees and Landscape Maintenance: Trim, maintain and replace existing city-owned trees and maintain landscaped areas in medians, bioswales and along pathways.
• Sanitary Sewer Rehabilitation: Replace sewer lines and laterals according to the City’s Sewer Master Plan.
• Stormwater Management: Provide improved performance at City-owned pump stations; replace critical storm water infrastructure; prevent trash and pollutants from entering the Bay.
• Buildings and Facilities: Maintain and improve city-owned buildings, replace methane piping and flare at the Doolittle Landfill.
• Transportation: Construct the Clement Avenue and Central Avenue Safety Improvement projects; design and install infrastructure for active transportation, traffic calming and safe routes to school; continue planning for West End Bicycle/Pedestrian Crossing.
• Sea Level Rise Adaptation: Advance projects that prevent flooding and address sea level rise at Veteran’s Court on Bay Farm Island and along the northern waterfront area adjacent to the Webster and Posey Tubes.
Ongoing Capital Improvements with No New Funding
Public Works and other City departments are currently managing a portfolio of ongoing capital projects, funded through previous City Council appropriations. Following are major ongoing projects with no new funding proposed for the proposed capital budget for FYs 2021-22 and 2022-23.
• Alameda Point Adaptive Reuse Backbone Infrastructure: City Council appropriated $28,427,000 in Base Reuse (Alameda Point) Funds in the FY 2019-20 budget. This project is completing the design phase and is expected begin construction in the fall of 2021.
• Clement Avenue and Tilden Way Complete Street: City Council appropriated $5,216,000 in previous budgets for planning, design and property acquisition for this project from various sources, including $4,039,000 in grants. The remaining $7,226,000 for constructing the project, including $6,400,000 in grants, is expected to be appropriated in future budgets.
• Appezzato Parkway Bus Lanes: City Council appropriated $1,350,000 in previous budgets for planning and design for this project from Measure BB funding. The remaining $7,650,000 in Measure BB funding for constructing the project is expected to be appropriated in future budgets.
Workforce Changes
The City Manager recommends increasing the authorized position count (excluding AMP) from the 459.75 full-time positions approved in the FY 2020-21 Mid-Cycle Budget Update to a total of 469.75 positions in FYs 2021-23. Funding for the authorized and proposed positions is incorporated in the FYs 2021-23 proposed budget.
|
Department |
FY 2019-20 Authorized |
FY 2020-21 Authorized |
FY 2021-22 Proposed |
FY 2021-22 Change |
FY 2022-23 Proposed |
FY 2022-23 Change |
|
City Attorney |
11.50 |
11.50 |
11.50 |
- |
11.50 |
- |
|
City Clerk |
3.00 |
3.00 |
3.00 |
- |
3.00 |
- |
|
City Council |
0.50 |
0.50 |
0.50 |
- |
0.50 |
- |
|
City Manager |
6.50 |
6.50 |
6.50 |
- |
6.50 |
- |
|
Community Dev |
11.50 |
11.50 |
11.50 |
- |
11.50 |
- |
|
Finance |
17.00 |
17.00 |
17.00 |
- |
16.00 |
|
|
Fire |
117.00 |
117.00 |
117.00 |
- |
117.00 |
- |
|
Human Resources |
8.00 |
8.00 |
8.00 |
- |
8.00 |
- |
|
Information Technology* |
5.75 |
5.75 |
6.75 |
+1.00 |
7.75 |
+1.00 |
|
Library |
20.00 |
21.00 |
21.00 |
- |
21.00 |
- |
|
Planning, Building & Transp. |
29.00 |
29.00 |
31.00 |
+2.00 |
31.00 |
- |
|
Police |
124.00 |
125.00 |
126.00 |
+1.00 |
126.00 |
- |
|
Public Works |
75.00 |
75.00 |
80.00 |
+5.00 |
80.00 |
- |
|
Recreation & Parks |
27.00 |
29.00 |
30.00 |
+1.00 |
30.00 |
- |
|
Total |
455.75 |
459.75 |
469.75 |
+10.00 |
469.75 |
1.00 |
* 25% of the personnel cost of the Information Technology Director position is charged to AMP.
Departments requested a total of eleven (11) new FTE positions and upgrade of six existing positions, detailed in Exhibit 3. The City Manager recommends adding ten (10) new FTE positions in FY 2021-22 and the remaining one (1) new FTE position in FY 2022-23, pending available resources. Additionally, one (1) limited-term Accountant II position is set to expire in FY 2022-23. It is recommended pending available resources that this position become permanent in 2022-2023. There are four (4) positions, one each in the departments of Community Development, Finance, Planning, Building & Transportation and Recreation & Parks recommended to be upgraded. Recommendations for two (2) other position upgrades in Community Development Department and Finance Department are pending the results of classification studies. If either or both of the two positions are recommended for an upgrade, staff will return to City Council for approval of an additional workforce change resolution.
It is also recommended to amend the Management and Confidential Salary Schedule to add a new Crime Analyst Classification and to add a Crime Analyst position. This new position is included in the number of new positions listed above. The Crime Analyst classification will support the City’s ongoing need for analysis of crime data to allow policing to be responsive and data driven and to improve communication to the public on crime trends in the City. It is recommended to align the salary of the position with the City’s Management Analyst classification. The salary range is listed below:
|
|
Annual Salary |
|
Weekly Hours |
Classification FLSA Exempt |
Step 1 |
Step 2 |
Step 3 |
Step 4 |
Step 5 |
|
36 |
Crime Analyst |
$83,763 |
$87,951 |
$92,349 |
$96,966 |
$101,814 |
The workforce recommendations include transition of twelve (12) firefighter positions from Staffing for Adequate Fire and Emergency Response (SAFER) grant funding to the General Fund. The City received SAFER grant awards from the Federal Emergency Management Agency (FEMA) in 2017 and 2018 that are set to expire in February 2022 and March 2023, respectively. Each grant supports six (6) firefighter positions, for a total of twelve (12) grant-funded positions. When the SAFER grants expire in February 2022 and March 2023, the City Manager recommends transitioning the grant-funded positions to the General Fund. In FY 2021-22, the cost to the General Fund of the six positions for the last five months of the fiscal year would be approximately $532,000. In FY 2022-23, the General Fund cost of the twelve (12) positions (six for the FY 2021-22 and six for the last four months of FY 2022-23) would be approximately $1,792,000.
Changes in Financial Organization
The proposed budget for FYs 2021-22 and 2022-23 has been prepared according to the financial structure that is being developed as part of the of the City’s still developing Enterprise Resources Planning (ERP) system. The new financial structure includes consolidation of some special revenue funds according to their fund grouping in the Comprehensive Annual Financial Report.
The most significant change to the financial structure relating to the City’s operating budget is the incorporation of the Recreation Fund in the General Fund. The Recreation Fund previously served as a special revenue fund for collecting Recreation & Parks program revenues and supporting department operations. In recent years, recreation fees have not been sufficient to support department operations so the Recreation Fund has been receiving General Fund transfers ranging from $1.8 million to $2.5 million annually. This General Fund transfer to the Recreation Fund will no longer be required under the new financial structure and the portion of the Recreation & Parks operations not covered by program revenues will be covered by other General Fund revenue sources.
It should be noted that the historic budget and actuals data presented as part of this proposed budget has been converted to the new financial structure for comparison purposes. As a result, General Fund revenues and expenditures appear higher than previously presented due to the incorporation of the Recreation Fund in the General Fund.
ALTERNATIVES
• Alternative 1 - Approve and adopt the operating and CIP budgets and workforce changes as proposed in the staff report.
• Alternative 2 - Approve and adopt the proposed operating and CIP budget and workforce changes with any amendments made during the City Council meeting.
FINANCIAL IMPACT
Staff recommends adoption of the City’s FYs 2021-22 and 2022-23 biennial budget totaling $272,047,695 and $273,163,009, respectively, including all City funds and transfers (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 $30.3 million or 26% of General Fund total expenditures and transfers out at the end of the FY 2021-22. The projected available fund balance at the end of FY 2022-23 is $25.2 million or 21% of expenditures and transfers out. 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.
Included in the City’s FYs 2021-22 and 2022-23 biennial budget is the Successor Agency FYs 2021-22 and 2022-23 biennial budget totaling $11,039,830 and $11,393,339, 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, which do 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 associated with this action. However, both the Operating Budget and the Capital Improvement Program Budget include appropriations for implementation of the Climate Action and Resiliency Plan.
RECOMMENDATION
Adopt Resolutions (1) Approving and Adopting the City of Alameda Operating and Capital Budget for Fiscal Years 2021-22 and 2022-23 and (2) Approving and Adopting the Successor Agency to the Community Improvement Commission Budget for Fiscal Years 2021-22 and 2022-23; and
Adopt a Resolution Approving Workforce Changes and Amending the Management and Confidential Employees Association (MCEA) Salary Schedule in Fiscal Years 2021-22 and 2022-23, Effective July 1, 2021.
CITY MANAGER RECOMMENDATION
The City Manager recommends approval of the Budget as presented with amendments from the City Council’s two Budget workshops included in the presented Budget. I want to thank the City Council for all of your time and focus over the month of May on this item.
In addition, I want to thank the staff from each Department who worked on the budget and a special thanks to Annie To, Jennifer Tell, Gerry Beaudin, Nancy Bronstein, Erin Smith and Robert Vance for their work on the Budget and Capital Budget.
I am proud that we have collectively been able to maintain critical services, support the residents and businesses during this unique time.
Finally, the American Rescue Plan Act or ARPA funds are not included in the proposed budget, but will be placed in an amended budget as the City Council allocates the funds.
Respectfully submitted,
Annie To, Finance Director
Erin Smith, Public Works Director
By,
Jennifer Tell, Budget Manager
Robert Vance, Supervising Civil Engineer
Exhibits:
1. Draft Transmittal Letter
2. Proposed Budget Summary
3. Capital Improvement Program Budget Summary
4. Recommended Workforce Changes
cc: Eric Levitt, City Manager