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HomeMy WebLinkAbout2004/03/31 - Agenda Packet - Spec (DR1498 & Budget) AGENDA RANCHO CUCAMONGA CITY COUNCIL SPECIAL MEETING Wednesday, March 31, 2004 + 5:30 p.m. Rancho Cucamonga City Hall ~- Council Chambers 10500 Civic Center Drive + Rancho Cucamonga, CA 91730-3801 A. CALL TO ORDER 1. Pledge of Allegiance 2. Roll Call: Alexander__, Gutierrez , Howdyshell , Kurth , Williams B. COMMUNICATIONS FROM THE PUBLIC This is the time and place for the general public to address the City Council. State law prohibits the Council from addressing any issue not previously included on the agenda. The Council may receive testimony and set the matter for a subsequent meeting. Comments are to be limited to five minutes per individual. C. CONSENT CALENDAR The following Consent Calendar item is expected to be routine and non- controversial. The item may be removed by a Councilmember or member of the audience for discussion. 1. Approval to authorize the City Engineer to execute Hazard Mitigation Grant Applications for DR 1498 and to file said applications in the Governor's Office of Emergency Services. RESOLUTION NO. 04-102 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO CUCAMONGA, CALIFORNIA, AUTHORIZING THE CITY ENGINEER TO EXECUTE HAZARD MITIGATION GRANT APPLICATIONS, PREPARED FOR DR 1498, AND TO FILE SAID APPLICATIONS IN THE GOVERNOR'S OFFICE OF EMERGENCY SERVICES AGENDA RANCHO CUCAMONGA CITY COUNCIL D. ITEM OFBUSINESS 1. STUDY SESSION - FISCAL YEAR 2004/05 PRE-BUDGET DISCUSSIONS E. ADJOURNMENT I, Debra J. Adams, City Clerk of the City of Rancho Cucamonga, hereby certify that a true, accurate copy of the foregoing agenda was posted on March 25, 2004, per Government Code 54954.2 at 10500 Civic Center Drive, Rancho Cucamonga, California. R A N C H O C U C A M O N G A ]~ NGIN 1~1~ I~ 1 N C DI~PAI~ Ti~II~N T Staff Report DATE: March 31, 2004 TO: Mayor and Members of the City Council Jack Lam, AICP, City Manager FROM: William J. O'Neil, City Engineer BY: Maria E. Perez, Associate Engineer SUBJECT: AUTHORIZE CITY ENGINEER TO EXECUTE HAZARD MITIGATION GRANT APPLICATIONS FOR DR 1498 AND TO FILE SAID APPLICATIONS IN THE GOVERNOR'S OFFICE OF EMERGENCY SERVICES RECOMMENDATION: It is recommended that the City Council authorize the City Engineer to execute nine grant applications for Federal Hazard Mitigation Grant Funding and the City Council direct the City Engineer to file the applications in the Governor's Office of Emergency Services, for the purpose of obtaining certain federal financial assistance under the Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988, P.L. 93-288. A copy of the attached resolution, certified by the City Clerk shall be attached to each application in conformance with the grant application requirements. BACKGROUND/ANALYSIS: In the wake of the Grand Prix Fire, the City began preparing for the winter rain season. Staff developed a list of sights at the base of the foothills, vulnerable to potential mudflows. As the season progressed temporary measures were put in place. Staff has continued to develop acceptable measures to sustain the comxnunity, during the next five to seven years of anticipated vulnerability. The primary focus has been successful funding through the FEMA, Public Assistance Program. Staff is aggressively working with FEMA representatives to provide long-term protection within the limitations of the Stafford Act. In the event the larger scale projects do not fit within the Public Assistance program, staff has also submitted Notices of Interest for several of the larger scale protective measures to the Governor's Office of Emergency Services, OES. The Notice of Interest provides OES with a brief description of the proposed project and cost estimate. They then make a quick determination of weather the project fits within the programs parameters. All nine of the Notice of Interests filed were determined by Authorize City Engineer To Execute Hazard Mitigation Grant Applications For Dr 1498 March 31, 2004 Page 2 OES to fit within the parameters of the Hazard Mitigation Grant Program and cleared for staff to prepare grant applications. Grant applications have been completed for the nine project, which are summarized as follows: · The East Fork of the Carnelian Drain, Bella Vista Channel and Debris Facility · The West Fork of the Carnelian Drain, La Colina Drive, Inlet and 48" Almond Culvert · The Almond Box Culvert and Alta Loma Creek Berm, West of Hermosa · Barrett Basin Overflow Inlet, East of Archibald at Huntswood Drive · King's Ranch Debris Racks, East of Gateway Drive · Demens Wash Flow-Thru, at Almond Avenue and Amethyst Street · Alta Loma Creek Rip-rap, East Fork of Alta Loma Creek at the terminus of Hermosa Avenue · Rancho Wash, Almond Trail West of Beryl Street north of Hidden Farm Road · Skyline Drive Debris Rack, North of Almond Street The deadline for the applications is April 2, 2004. All applications will be mailed out Federal Express to OES on Thursday, April 1, 2004. Respectfully submitted, Willi~mff J. O'Neil City Engineer WJO:MEP:dlw Attachments PROJECTS # .AME HMGP Authorization E-5 - SKYLINE DEBRIS RACK Hazard Uitigation Grant Program E-8 - CARNELIAN DRAIN - WEST E-10 - CARNELIAN DRAIN - EAST ./'-,~. ,~'\ E-11 - KING'S RANCH DEBRIS RACK E-12- RANCHO WASH E-13 - DEMENS WASH FLOW-THRU E-I 4 - BARRETT BAS IN OVERFLOW I "%___ I L E-16- ALMOND CULVERT & ALTALOM~ CK EAST ........... f--- I ' ..... ~, -- cr'r¥oF. -- E-17-ALTA LOMA CREEK- ROCK RIP-RAP ' i ~?~.~c:,-]o ~uc.*,~oI~6~. i E-12 E-8 N RESOLUTION NO. oq'~/0~ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO CUCAMONGA, CALIFORNIA, AUTHORIZING THE CITY ENGINEER TO EXECUTE HAZARD MITIGATION GRANT APPLICATIONS, PREPARED FOR DR 1498, AND TO FILE SAID APPLICATIONS IN THE GOVERNOR'S OFFICE OF EMERGENCY SERVICES WHEREAS, the President of the United States declared the Grand Prix Fire a National Disaster, including the subsequent Christmas Day flooding; and WHEREAS, the City of Rancho Cucamonga, in conformance with the Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988, P.L. 93-288, has prepared grant applications; and WHEREAS, said procedures and criteria established within the Hazard Mitigation Grant Program requires resolution authorizing the governing body's representative to execute the application before submission of said application to the State. NOW, THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL FO THE CITY OF RANCHO CUCAMONGA, CALIFORNIA: 1. Authorizes the City Engineer to execute the Hazard Mitigation Grant Applications requesting grant assistance. 2. Authorizes the City Engineer to file the applications in the Governor's Office of Emergency Services. 3. The City Clerk shall certify to the passage and adoption of this resolution, and certified copies of same shall be filed with each grant application. 28. Designation of Applicant's Agent Resolution and Certification Be It Resolved By The City of Rancho Cucamonga of the City of Rancho Cucamonga that William J. O'Neil, City Engineer is hereby authorized to execute for and on behalf of the City of Rancho Cucamonga, a local government entity, state agency, special district or nonprofit organization established under the laws of the state of California, this application and to file it in the Governor's Office of Emergency Services for the purpose of obtaining certain federal financial assistance under the Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988, P.L. 93-288, as amended. That the City of Rancho Cucamonga,_hereby authorizes its agent to provide to the Governor's Office of Emergency Services for all matters pertaining to such disaster assistance the assurances and agreements required. Passed and approved this 31st day of March, 2004. (Name and Title of Approving Board or Council Member) (Name and Title of Approving Board or Council Member) Memorandum City Manager's Office To: Mayor and Members of t~ (~ity Council From: Jack Lam, City Ma~.nager~. Date: March 29, 2004 ~- Subject: State Budget Crisis Update - Projected Impacts for FY 2004/05 The City is facing a challenging budget environment in both the upcoming FY 2004/05 and future annual budgets as it deals with continued State takeaways of local tax dollars, increases in fixed operating cos{s, the additional costs of new facilities, the need to meet increased service demands of a growing community, and the uncertainty caused by the State Budget crisis. In order to deal with these challenging times and return to fiscal "normalcy," development of a recovery strategy will be all important. Without an action strategy, the City could be stuck in a deficit position for many years to come. The City must develop a plan. To develop such a -plan, direction on some key budgetary f)olicy areas is needed to guide budget development so that a budget can prese~ed to the Council in mid-May. Since the last budget communication of February 4, 2004, some of the factors that will affect the City's budget for FY 2004~05 are now more clearly identifiable. While predictability is always a challenge in these trying fiscal times, staff has generated preliminary revenue projections and analyzed these against major fixed cost increases as well as State budget impacts and known future costs. This preliminary analysis spans FY 2004/05 to 2009/10 based upon information currently available. Additionally, the March 2nd election results are known and it appears as though the State will ~ able to issue its $15 billion deficit reduction bonds. The impacts of these key budgetary factors are discussed below. After a review of City actions to date and a discussion of the factors that affect our budget for FY 2004/05, key ~oolicy issues will be identified for discussion. SIGNIFICANT ACTIONS TO DATE This past year we have seen the confluence of several factors that have ,been developing for the -past few yea~s. This is a summary review of the actions the City has S~ete Budget Crisis Updete - Projected Impacts for FY 2004/05 March 29, 2004 'Page 2 {aken in response to the uncedainty of the State budget and the increases to fixed eons. JUNE 2003 - CITY ADOPTS BUDGET (CHART I) In June 2003, the City adopted its budget ~3ased on what we knew at the time. Because the State had not yet adopted its budget, we knew we would have to revisit the City budget later. The City budget adopted in June had an effective decrease of 3% in funds available for services over the prior year. This was due to over $2 million in fixed oost increases and only $694,330 in new revenue. These fixed operational cost increases were due to dramatic increases in worker's compensation, medical insurance, liability insurance, PERS retirement rate increases, and new Sheriff labor contract costs. The City dealt with this 3% decrease by adjusting our operating budgets and enacting a selective hiring freeze to gain some personnel savings. SEPTEMBER 2003 - CITY BUDGET ADJUSTED IN RESPONSE TO STATE BUDGET (CHART II) When the State adopted its budget in August 2003, several factors reduced local funding. These factors, and the impacts upon our City as calculated at that time, included the following: · VLF Gap: $1.873 million loss to the City - This VLF gap meant that the City would not receive that portion of our VLF revenue for 3 months' time, resulting in this loss in revenue. · "Triple Flip": $85,930 loss in interest income to the City in first year - The "Triple Flip" would take half of cities' 1% local sales tax and use the money to ~oay for $10 billion deficit bonds as part of then-Governor Davis' approved ~)udget. The anticipated impact to us is the loss of interest income due to the delay of receiving property tax money. Also, full sales tax growth would be in arrears one year. This replaces a solid revenue source of $8 million in sales {ax with a promise that the State will backfill. · Redevelopment Cuts: $2.02 million loss for the RDA - This means {hat we can issue about $25 million less in bonds that we use to ~uild infrastructure. This will delay and impact the schedule of capital projects funded ~by the I~DA ~or years to come. City General Fund City General Fund Revenue and Expenditure Challenge Stere Budget Cdsis Update - Projected Impacts for 'FY 2004/05 ¢ Maroh 29, 2004 Page 5 · State Library Funds: $56,000 loss to the Library - The state has cut Che Library funds received from $208,000 two years ago to $56,000 this year and ,finally to zero. (After-budget adoption, the Legislature restored this program ~o the State ,budget and the City actually received $65,895 later in the year. 'For the proposed FY 2004/05 -budget year, the Governor has proposed funding at the same dollar amount, )out it is still at risk in the days ahead. Therefore, we can antioipato but not 43e totally sure of--$65,000 in FY 2004/05.) · COPS Funding: $53,790 loss to the City- The State cut {his program. The City's portion went from $272,320 down to $218,530. In response to these State cuts, the City took action to preserve -basic services whiie addressing the loss of revenue. These actions meant that our budget for providing services was reduced 6% from FY 2002/03. These actions were: · Moved Concrete Contract to Measure I Funds: $244,360 General Fund cut - The impact of this is to reduce other needed capital projects that were ~)udgeted from Measure I funds. · Suspended Computer Equipment Depreciation Charges: $300,930 General Fund cut - This action means the replacement of Computer Equipment will be delayed and/or eliminated. · Personnel Cuts and Adjustments: $625,O15 General Fund cut - These savings were achieved ~3y the selective hiring freeze, the delay of replacing some positions and the restructuring of some vacant positions with different classifications and job descriptions. · General Operations Cuts: $52,800 General Fund cut - These cuts mewn less material, resources and supplies for our general City operations. · Reduction of Contract Planning Services: $100,O00 General Fund cut - This action will mean longer review periods and customer service inconveniences. · Redevelopment Agency reductions: $2.02 million RDA cut - L~ss money for RDA capital projects. · Contract Assistance: $527,O00 assistance to departments - Special one-time projects in the City funded -by the Redevelopment Agency and special funds that. require general staff support. These special projects co~ract and pay for {he services provided - Planning: $75,OO0; Engineering: $85,0OO; 43uilding & Safety: $165,000; Fire Department: $12,OO0; Community Services: $140,000; Library: $5O,OOO. S~ate Budget Crisis U~da~e - Projected Impacts forl:Y 2004/05 March 29, 2004 Page · City Reserves: $549;895 in reserves transferred to General Fund - To avoid having to cut City services further than had ~een done in June 2003, reserves were used to,carry the City through the l:iscal Year. DECEMBER 2003 - FURTHER STATE ACTIONS ~CHART III) After Governor Schwa~enegger took office, he restored the reduced VLF retes but announced that he would make cities whole by .backfilling the amount of VLI: we would lose. However, the VL~' <Sap would remain but instead of a $1.873 million loss, it would be a $2.66 million loss. The state announced that they had underestimated the VLF gap for us by $787,520. The VLF Gap was not ,part of the Governor's promise to backfill and this meant an additional cut to the General Fund of $787,520. FACTORS THAT IMPACT THE FY 2004~05 BUDGET SUMMARY OF CONTINUED STATE BUDGET CRISIS IMPACTS In January 2004, the Governor's budget proposed the following additional permanent losses to the City for FY 2004/05: ' · City General Fund Loss (property tax - ERAF shift): An additional $237,359 ~)roperty tax loss, whioh will bring Rancho Cucamonga's cumulative annual ERAF loss to $1.9 million. · Library Fund Loss (propertytax-ERAF shift): $119,572 · Redevelopment Aqency (property tax increment - EI~,AF shift): An additional $2 million · Elimination of Police Bookinq Fee Reimbursements: $382,4130 loss to law enforcement revenues. · Suspension of Proposition 42 - cities would not receive local street and road rehabilitation monies again, resulting in a one-third reduction in street maintenance and repair work. · "Triple Flip" will cause the shift of one-quarter (over $3.7 million) ,of the City's sales tax revenues to the State to support the sale of the Stete's deficit bonds. There will .be a direct loss of one quarter of sales {ax grcw{h in FY 2004/05. Although the ebove items are o~ly ~3roposels at this time and will more than likely change during State .budget deliberations, for ~)urposes of budget analyses, these are State Budget Crisis Upda*,e - Projected Impacts for FY 2004/05 March 29, 2004 t~age 8 treated as a certainty at this time. (It should be noted that as of the date of this memorandum, the LCC, CSAC, Special Districts, the Governor, and the LAO have ~3egun negotiations on these issues, the outcome of which may impact the Governor's original proposals la~er on.) MARCH 27 2004 ELECTION RESULTS The voter turnout on Election Day resulted in the passage of Propositions 57 (Deficit Bond Measure) and 58 (Balanced Budget Requirement). The passage of these propositions was not a panacea for the State's budget woes. However, the passage of Proposition 57 lays a more secure foundation for the 2004/05 state budget deliberations. Budget negotiators can now put that portion of the deficit financed with the "deficit bonds" behind them, but producing a balanced 2004/05 budget will still be a challenge. There remains a $14 billion State deficit. One outcome of the passage of Proposition 57 affecting the City of Rancho Cucamonga directly is that the Triple Flip referred to eadier will now have a ¼ cent (25%) shift in our sales tax growth as compared to the previous proposal of ~ cent (50%). FUTURE GROWTH CONSIDERATIONS The City is in the process of realizing some of the Council's long-term goals as we witness the completion of several new City facilities on the horizon. These new facilities will help the City address the needs of our growing community. As these facilities come on line (i.e. Fire Station #176 in April 2004, Central Park (Community and Senior Centers) in late fall 2004, and the Library/Cultural Center in Spring 2006), the City will begin to incur the related operational costs. The Victoria Gardens Mall, while bringing in additional sales and property tax revenues, will also require additional public safety and other support services. These costs will also need to be incorporated into future year budgets as these various facilities come on line, and then become a permanent part of the City's budget. Although the City is currently experiencing challenging financial times, the development of these facilities is in mid-stream and are going forward due to funding from a variety of non-General Fund sources including monies we have received from Grants and Park Bond funds as well as capital funding from the Redevelopment Agency. No General Fund monies have been utilized for these construction activities. SUMMARY OF INCREASES IN MAJOR FIXED AND FUTURE OPERATIONAl COSTS. The following are ~orojected major fixed cost and future operational increases that must be factored into the FY 2004/05 budget for the CityGeneral Fund, Library F~nd and Fire District Funds, all of which impact the City General Fund. Again, only .those factors State Budget Cdsis Update - Projected Impacts for FY 2004/05 March 29, 2004 Page9 known today are used for making these projections, and for simplicity ~3f preliminary analyses, major cost increases are those currently identified to be $50,000 or more in value: · Retirement cost increases (PERS): $2,106,958. The PERS system, like other private and public pension funds, lost a bulk of assets during the downturn in the stock market. Furthermore, additional program enhancement costs exacer~bate this situation. As a result of both these factors, CalPEI~S has increased its rates to its member agencies beginning this fiscal year and for the ~ext two years at least. For FY 2004/05, these increases are: $809,608 for City miscellaneous employees (including Library), $1,242,470 for Fire Safety employees, and $54,880 for Fire miscellaneous employees. (Cost increases for special fund employees total $425,198). · Police contract (second year of three year contract): $1,550,000. FY 2004/05 will be the second year of a three year County labor contract that will translate into a $1,550,000 increase to police contract costs for tx)th safety and miscellaneous. The third year contract cost increases are projected to be well over $2 million for FY 2005/06. · Merit Increases: $184,084. This cost reflects labor increases within salary ranges. · Increased medical insurance premiums: $559,376. Medical insurance premiums continue to increase dramatically each year and are part of the national trend. These increases are estimated to be 20% for FY 2004/05, with a projected 15% increase the following fiscal year. · Increased workers comp costs: $238,888. Worker's comp costs for public organizations in California continue to escalate similarly with those in the private sector. Worker's comp costs increased 20% for the City and 5% for the Fire District this fiscal year, with a projected 2.72% increase the following fiscal year. · Increased Property Insurance costs: $56,984. This increase refleots a general increase in all insurance costs. · Bookin.q fees: $56,300. Estimated increases in cost to ~)ook suspects. These fees are paid to the County. · Supplemental funding for staffing of Fire Station 176: $547,010. In FY 2003/04, the Fire District hired staffing for Fire Station 176, funded through CFD 88-1. The annual cost for this staffing and station operations is $1,380,280. The initial hiring of {his staffing will use up the remaining ~eserves in CFD 88-1 ~3y {he end S~a{e Budget Crisis Update - Pro~ Impacts for FY 2004/05 March 29, 2004 'Page of this year. Because CFD 88-1 has insufficient funds to support the to{al annual staffing costs for this station, supplemental funding will -be necessary in FY 2004/05. · Central Park operating, costs (partial)/ear): $810,000. Central Park'Phase I is slated to open in November 2004, part way into FY 2004/05. This amount represents approximately~o0% funding for the start up year. · Staffin,q and operation of Victoria Gardens substation: $1,125,000. Just as Fire staffing has been necessary for the opening of Station 176 in the east end, police staffing is necessary for the opening and operation of the substation at Victoria Gardens in October 2004. This represents the minimum staffing and operations necessary to provide support for the Victoria Gar<~ens area substation seven days a week beginning partway into FY 2004/05 (67%) and phasing into FY 2005/06. · Cultural Center start-up marketin.q costs: $150,000. This minimum funding is needed to begin start-up marketing for the Cultural Center, which is sla~ed to open later in the following year. Total projected major fixed and future cost increases for FY 2004/05 were estima*,ed to be $7,384,599. As the budgetary process continues, there will be a number of smaller cost increases as these are identified (i.e. elections costs, utility costs, etc.). PROJECTED REVENUES FY 2004105 In estimating revenue for FY 2004/05, factors of the State take away of revenues have been integrated into the following estimates. As mentioned above, although the State take away is only proposed at this time, for the purposes of projecting revenues as of the current date, these should be treated as a certainty. Additionally, preliminary revenue estimates incor~3orate the ¼ cent Triple Flip included in the State's FY 2003/04 budget and would -basically shift one quarter of our sales tax revenue growth each year {o the State with a "promise" to ~3ackfill the amount with ERAF property tax money. However, due to delays in reconciliation of sales {ax advances to actual sales tax receipts, the City will continually be in arrears in receiving one-quarler of its sales tax growth each year. A summary of the key assumptions used in projecting FY 2004/05 revenue.growth is as follows: · $1.3 billion Statewide ERAF shift proposed-byC~overnor will occur · I/, cent Triple Flip will occur State Budget Crisis Update -Projected Impacts for'FY 2004/05 March 29, 2004 Page 11 · Transient Occupancy Tax growth estimated at average CPI for past riva years · Franchise Fees estimated to grow by projected population increase, allowing for decreased natural gas usage by the Reliant Energy Plant · Business Licenses growth estimated at average CPI for past five years · Motor vehicle in lieu fees growth estimated at projected population increase, adjusted for assumed continuation of shift in realignment percentage by State · Initial year projected net income from municipal utility of $75,000 · Developer fees, interest revenue and all other revenue not specif"mally listed above were kept flat for projection purposes. Based on the above assumptions, revenues projections for FY 2004/05 indicated growth of $4,088,115. See Chart IV below: Chart IV City of Rancho Cucarnonga Preliminary Revenue Projections FY 2004/05 General Library Fire Oescription Fund .Fund Oistrict To{at Property tax $ (123,520) $ 134,931 $ 1,391,480 $ 1,402,891 Property transfer tax 31,850 31,850 Sales and use tax 2,623,405 2,623,405 Transient occupancy tax 45,850 45,850 Franchise fees 290,780 290,780 Business licenses 30,600 Motor vehicle in lieu fees (69,670) (69,670) Municipal utility, net revenue 75,000 75,000 Other revenue sources (335,5607 150,651) 43,t~20 ~342,591) $ 2,568,735 $ 84,280 $ 1,435,100 $ 4,088,115 RESULTS OF PRELIMINARY EXPENDITURE AND REVENUE ANALYSIS · Revenue Growth vs. Ma~or Fixed Cost Increases FY 2004/05. Comparing projected revenue .growth of $4,088,115 to projected major fixed cost increases of $7,384,599 results in a projected net def'~cit for FY 2004/05 of $3,296,484. S~ale Budget Crisis Update -Projected Impacts for ~Y 2004/05 March 29, 2004 Pa<ge 12 This represents at least a 5.3% deficit from the Adopted FY 2003/04 ,Budgets for the CityzT~eneral Fund, Fire District Funds and Library Funds oombined. · Five-Year Revenue Growth vs. Ma~or Fixed Cost Increases. In order to understand the significance of the FY 2004/05 deficit, one must examine the long-term implications as well as the short-term. Again, to simplify understanding of future implications to determine a possible "break even" year, no growth expenditures other than those associated with the known phase-in of {acilities currently being implemented are used. This does not mean other cost or expenditures may not occur, merely, if ex~3enditures remained static, and only currently known cost increases are factored in, it simply indicates at what point could revenues grow to catch up with such basic ex~penditures if no action were to be Caken to address the current deficit. The revenue assumptions for this preliminary five-year analysis are contained in Exhibit A. Chart V illustrates the results of this revenue/expenditure analysis. The identified deficit for FY 2004/05 is projected to be at least 5.3%. Without addressing this deficit, it could be at least FY 2009/10 before the General Fund falls into the black if all of the five-year assumptions become true and all other ~orograms remain static. Such a view should be tempered by knowledge that the State may continue to take other revenue in out years. Furthermore, continued growth in the community means a growing service need in the future that cannot be addressed. However, this basic analysis can give a good general understanding of the time affect of the deficit. ADDRESSING THE ISSUES Acting to secure fiscal recovery at the earliest date is the most fiscally responsible and prudent approach irrespective of State needs raids on local revenue. It avoids the development of any long-term structural deficit, prevents the compounding of problems, and minimizes any disruptions to services over a shorter ~eriod of time. To the ex*~ent an organization remains in a deficit mode, it cannot look ahead and at best, stand still, constantly trying to plug .budget holes instead of looking at the future needs of a growing community. Furthermore, continued deficits can affect a jurisdiction's bond rating, affecting the future ability to cost effectively fund capital. Witness the example of the State. While the Sta~e has, in essence, shifted part of its deficit on ~ local government through its Cake away of revenues, it is still local governments' responsibility to .,balance local budgets, regardless of any Stale actions. It will necessarily mean finding ways 1o cut back, explore o~tions for new revenue sources, minimize disruption ~ basic services, ac~d developing a recovery 131an to return to fiscal normalcy. Chart V City of Rancho Cucamonga Fiscal Yearn 2005/06 through 2009/10 City General Fund. Library Fund and Fire District Funds Projected Revenue Growth Compared to Projected Maior* Cost Increases As of March 23. 2004 Proposed Projected Projected Projected Projected Projected FY 2004/05 FY 2005/06 FY 2006/07 FY 2007/08 FY 2008/09 FY 2009/10 Projected revenue growth by fund: IRecu~n~?nly City General Fund 2,568,735 3,292,108 1,799,310 1,782,789 1,812,093 1,488,832 Receipt of VLF backfill gap from State ~One-time revenue** I I~' 2,056,579 Library Fund 84,280 60,642 60,608 60,557 60,508 60,657 Fire District: Fire Fund 948,940 345,421 345,226 344,938 344,657 322,122 CFD 85-1 419,380 245,996 253,604 261,366 269,336 278,097 CFD 88-1 66,780 34,284 35,345 36,427 37,537 38,758 Total rave nue growth 4,088,115 3,978,452 4,550,671 2,486,076 2,524,131 2,188,467 Projected major cost increases: PERS cost increases (excludes RDA and Special Funds) 2,106,958 862,490 Police contract cost increase - safety 1,500,000 2,167,000 unknown unknown unknown unknown Police contract cost increase - miscellaneous 50,000 71,950 unknown unknown unknown unknown OTS grant ralloff 500,000 Police for Victoria Gardens substation 1,125,000 375,000 Central Park operating costs 810,000 610,000 Cultural Center operating costs 150,000 480,000 1,120,000 Property insurance premium increase (10% first year, avg CPI thereafter) 56,984 4,809 4,940 5,075 5,213 5,355 Medical premium increases (20% first year, 15% through 07/08, then CPI) 559,375 503,437 578,953 120,731 124,015 127,388 Workers comp increase-City (20% first year, avg CPI thereafter) 31,551 5,149 5.289 5,433 5,581 5,733 Workers comp increase-Fira (5% first year, avg CPI thereafter) 207,337 11,279 11,586 11,901 12,225 12,557 Salary costs - merits (estimated for FY 2005/06 and thereafter) 184,084 193,288 154,630 115,973 77,315 38,658 CPI operating cost increases (excluding Police contract) 363,111 370,011 377,041 384,205 Booking fees 56,300 Fire Distdct Station 176 additional funding 547,010 Total cast increases 7,384,599 5,784,403 2,238,510 629,123 601,389 573,895 Cumulative revenue surplus (deficit) by year $ (3.296,484) $ (5,102,435) $ (2,790,273) $ (2,989,900) ~ $ 547,414 JAdjusts for non- -- J recurring VLF backfill J Jgap revenue received * Those cost increases $50,000 or greater in FY 2004/05. JFY 2006/07. J ** One-time revenue return from State for VLF gap repayment. h~inancetbudget2OOS~rev vs exp increases 0~06 to 09-10 cumulative qtr major CPL xI$ 3/25/2004 8:36 AM State.Budget Crisis Update - ~rojec~ed Impacts for FY 2004/05 March 29, 2004 Page 14 A RATIONAL APPROACH To develop a recovery plan under the current fiscal circumstances, a systematic approach is needed to ensure the most rational thought process and avoid knee-jerk reactions. A systematic approach incorporates the following steps: · Preliminary identification of the fiscal issues · Guidance on major policy issues · Preparation of a preliminary budget and identification of alternatives · Budget consideration and adoption This memorandum contains the preliminary identification of the fiscal issues. Guidance is now needed on the following general policy issues so that the Staff can better develop a preliminary budget and accompanying alternatives. POLICY ISSUES The following are some major policy issues where policy guidance can assist the Staff in developing a preliminary t)udget (not listed in any rank order): 1. Re-examine PERS rate structure and payment schedules? While we have now been informed of the new rate schedules for P~RS, Staff can investigate whether a new "Fresh-Start" analysis can identify ways to reduce annual ~)ayments through longer amortization schedules. This may require an actuarial study to be performed for our City. Furthermore, such study may identify whether restructuring payment schedules can result in any annual cost savings. Some cities are opting to do this analysis because the increased rates so heavily impact the annual ,budget expenditure. 2. Continue suspension of annual depreciation charqes in the General Fund? The City has a system of depreciating equipment and vehicles in such a way that balances expense of repair and maximizes resultant asset value for each piece of equipment or vehicle. Depreciation charges are paid annually into a replacement fund to ensure the systematic replacement of equipment and vehicles. This system mirr<)rs the approach taken ,by private businesses to avoid large .outlays of capital expenditure in any given year. The City's equipment and vehicle replacement funds have been fully funded annually and the system has served ~he City well over the years. However, given the extreme pressures upon the General Fund under the fiscal circumstances described in this memorandum, continued suspension of these depreciation char~jes would help. It must ,be understcx)d that during this suspension time, only those vehicles that absel~ely need replacement are replaced, regardless S4.ate ~udget Crisis Update -'Projected Impacts for FY 2004/05 March 29, 2004 Page 15 of resultant asset value. Furthermore, it should ~3e understood that the replacement funds must be brought back to full asset value once budget recovery is attained if the integrity of the system is to be maintained. 3. Update various fees for service? Certain fees for service such as development processing fees, inspection service fees, and other service fees have not been updated in many years. Given these fiscal circumstances, it may be timely to update these fees to ensure service fees are consistent with the current cost of services being provided. 4. Fire District budqet, General Fund dependence, Redevelopment A.qency fundin,q shift? The Fire District operating budget has required supplemental funding from the City General Fund since FY 1995/96. Supplemental funding for FY 2003/04 is $925,380. While the District will not suffer any State shifts in revenue, the need to fund Fire Station 176 staffing ($1,296,430) and increased fixed costs will require an additional $859,890 supplement, resulting in a total supplement need of $1,785,270. The Fire District budget will have a large deficit for which belt-tightening alone will not `be sufficient to address. The existing supplement comes from the City General Fund, which is also experiencing increases in fixed operating costs and raids on its revenue by the State. The City General Fund is also the sole funding source for law enforcement services. To the extent the District `budget continues to rely upon th~ General Fund budget to make up its deficit, continued pressure will be placed upon the General Fund. Because of such fiscal circumstances, a way to help alleviate this situation may be to develop a method to use a portion of the Redevelopment Agency Fire ~'und to channel funds to help the District operating budget. Under current redevelopment law, agency funds of any kind cannot be used for normal operating costs. However, if we utilize language in the existing ~ass-through agreement, which predates the current law, a defensible approach may be to assign a rational value to services that may be attributable to the Redevelopment Area `by the various stations and applying this formula to the District deficit. In this way, some ~oortion of the Redevelopment Fire Fund normally used for capital improvements and equipment might `be channeled to help the operating fund of the District. To accomplish this, it is important that a rational, defensible, and ~prudent approach be developed, irrespective of when the pass through agreement was adopted since current law would prohibit such use of revenues. ~urthermore, it must ,be recognized, that to the extent any defined f)ortion of the ~edevelopment Fire Fund is transferred to subsidize ~'ire operations, the District may have to e~ther give up certain capital improvements or have these ~oost~3oned indefinitely. Such a ~olicy direction, once given, will unlikely be reversed `because fire service costs will State ~:~:jet Crisis Update - Projeoted Impacts for FY 2004/O5 March 29, 2004 'Page 16 continue to be dependent upon supplements. Yet, this would help ~elieve some pressure on the General Fund. It should also be noted that, .because of the size of the District's deficit, this shift alone, will not solve the District's entire defioit. Belt- tightening will still be needed. 5. Preserve Basic Levels of Service--Recommend temporary suspension of value- added services if necessary? The City's goals maintain public safety services as a priority. Even within this priority, ~belt-tightening will still .be necessary within these services, given the fact the deficit is so great. It has been the focus of Staff to preserve basic levels of services and belt-tightening would take into consideration those "value added" components first. In other words, those components that are nice to have but can be temporarily suspended without sacrificing basic levels of service would be considered first for any necessary belt-tightening. This ensures the least disruption to services from any belt-tightening actions. 6. Deficit reduction and use of reserves? Reserves act as an emergency fund to .be used to address unexpected fiscal circumstances. For FY 2003/04, over $500,000 of reserves were authorized in September 2003 in an effort to assess what further actions the State would .be taking. The purpose of reserves is to temporarily ensure the least amount of disruption to services while the organization determines an appropriate course of action to eliminate a deficit. As the basic projections in Chart V illustrates, taking no action to cut the deficit means the City would be in a structural deficit until at least FY 2009/10, assuming no further cost increases and no further State shift of local revenue. It would also mean depletion of heady 64% of the City's standing reserves. Chart VI shows a "what if" scenario for FY 2004/05 with a balanced .budget and deficit elimination. This illustrates the need for only one year's use of reserves in FY 2005/06 with a "payback" from one-time repayment of VLF gap monies by the State in FY 2006/07. Chad VII shows a "what if" scenario that illustrates the impact of utilizing reserves to address 50% of the deficit for FY 2004/05. Readily apparent, is the very small impact on the time span of the deficit. One can vary the amount of reserves vs. budget cuts to see what their impact would .be on any time line for recover~. While it is always recommended that the use of reserves .be confined to the shortest possible time as budgets are adjusted, its use and length of use is a matter of Council policy. However, one needs to be aware of the long-term consequences of any such decisions such as the inability to move ahead in mee{ing future service needs. State Budget Crisis Update -~rojec~ed Impaots for FY 2004/05 March 29, 2004 Page t9 7. Should the City research and analyze the potential for local revenue augmentation measures to support .qrowing future ~ublic safety service needs? Pu.blic safety costs are the most significant .budgetary services l~rovided by a city, and the need continues to ~jr, ow annually. Each year, as funds are shifted away .by the State and as the cost to fund existing and expanded public safety services in the future continues to increase, should some revenue augmentation measure ~3e ,exglored whereby the f)ublic <;an self-determine the levels of services they are willing to fund in the midst of resolving the cumulative effects of State ~'evenue raids over the past decade and a half? Rancho Cucamonga is a growing community with increasing service needs. In spite of the City's ~est efforts to manage its fiscal resources res:,ponsibly, the State's handling of its fiscal matters continues to intrude upon our local ability ~o not only sustain our existing services but plan for the future. Focusing on a deficit alone, does not address the service needs of the future. A need for increasing subsidies for the Fire Oistrict will continue to place additional pressure on a General Fund that is also the sole source of funding for police services which also has growth needs. The result is not only having competing services within the General Fund Budget, but also competing services between two separate budgets. Focusing~on a deficit without at least thinking about the future growth needs of these essential services means we look at only one side of the fiscal equation with the legacy of the State fiscal raids determining the future of local services. Should there ever be a time when the City must consider potentially eliminating ~opular community/cultural programs also supported.by the General Fund in order to sustain these basic services without first having a healthy dialog about future service needs and the City's ability to fund these? 8. Explore all means to obtain cost containment for medical and worker compensation insurance costs? The cost of medical and worker compensation insurance has increased dramatically and is ~projected to continue its double-digit climb. Options should be examined to help contain these costs and still provide quality coverage. 9. Continue selective hirinq freeze and attrition mana~lement? During this 9ast year and a half, a selective hiring freeze has .been in effect and attrition management has ~een one strategy to help address the fiscal situation. As a result, over $500,000 in savings has been realized. Given the tremendous workload the City has ~)een ex~periencing, the cost to this attrition is inconvenience and delay in outgut as the organization struggles to mai~ain its various services for the Public. The Staff is doing an outstanding job of shouldering this workload under these difficult circumstances. While attrition management can provide a component of budget Sta{e Budget Cdsis Update - l~rojeoted Impacts for FY 2004/05 March 29, 2004 Page 20 relief, it.cannot be the .only answer since attrition can only go so far before services decline to unaoceptable levels. 10.Temporarily shift the Redevelopment Aqency lease payment from Capital Facilities Repair into the General Fund? The Redevelopment Agency lease payment for use of City facilities has been invested in the Capital Facilities Repair Fund to help pay for repairs of public facilities. This lease payment, if shifted into the General Fund, should be considered temporary because once the Agency completes its mission and/or the State further restricts Agency funding, these funds would no longer be available on an ongoing basis. That is why these annual payments have been historically placed in the Capital Facilities Repair Fund rather than being depended upon for operations use. CONCLUSION Upon receiving Council direction regarding the above budgetary policy issues, the Staff will move to complete a preliminary budget for presentation to Council in May 2004. Exhibit A City of Rancho Cucamonga Fiscal Year 2004/05 Budget Summary of Assumptions for 5-Year Revenue Projections Property Tax: FY 2004/05 · Allows for proposed ERAF reduction of $356,931 (General Fund=S237,360 and Library Fund=S119,571 ) · Estimated growth of 5% of FY 2003K)4 estimated actual revenues per direction from Hinderliter de Llamas (HdL) · Increased CFD 85-1 and CFO 88-1 assessments by2%. FY 2005/06 through FY 2009/10 · Increased by projected population growth each year. Property Transfer Tax: FY 2004/05 · Used FY 2003/04 estimated actual revenues plus 4.36% projected population growth FY 2005/06 throuqh FY 2009/10 · Increased by projected ~population growth each year. Sales and use tax: FY 2004/05 · Per HalL, applied estimated population growth of 4.36% to all sales tax groups except Business and Industry. These groups were.estimated to~3e 79% of total sales tax revenues. Estimated growth for Business and Industry of $544,215. · Estimated growth for mall's first year of $1,318,330.based on average projected sates tax revenue data provided by HdL. · Estimated new revenues of $70;000 for new Wickes Furniture store 43ased on average projected sales tax revenue data ~orovided ~)y HalL. · Allowed for ¼ cent Triple ¢'lip that reduced growth ~3y one-fourth, or $483,140. FY 2005/06 · Estimated growth for sates tax base at 2.72% {average CPI ,growth over last five years). Page t · Estimated new mall revenue of $659,1743 (remainder ofgartial year~f revenues included in prior year, plus incremental increase,projected to get to $3,400,010 total Pew revenues from {he mall by FY 2008/09). FY 2006/07 · Estimated growth for sales tax base at 2.72% (average CPI growth over last five years). · Estimated new mall revenue of $474,170 (incremental increase projeoted to get to $3,400,010 total new revenues from the mall by FY 2008/09). .FY 2007/08 · Estimated growth for sales tax base at 2.72% (average CPI growth over last five years). · Estimated new mall revenue of $474,170 (incremental increase projected to get to $3,400,010 total new revenues from the mall ~y FY 2008/09). .FY 2008/09 · Estimated growth for sales tax~ase at 2.72% (average CPI growth over last five years). · Estimated new mall revenue of $474,170 (incremental increase ~)rojected to get to $3,400,010 total new revenues from the mall ~3y FY 2008/09). FY 2009/10 · Estimated growth for sales tax base at 2.72% (average CPI growth over last five years). Transient Occupancy Tax: FY 2004/05 · Used FY 2003/04 estimated actual revenues ~plus 1.8% CPI (January 2004). FY 2005/06 · Estima{ed growth at 2.72% (average CPI growth over last five years). · Added $1,187,940 for 5 new hotels opening just grior{o FY 2005/06. Estimate based on a total of 547 rooms at an average room rate of $85 with a 70% occupancy rate. FY 2006/07 · Estimated growth at 2.72% (average CPI growth over last five years). FY 2007/08 · Estimated growth at 2.72% (average CPI growth over last five years). FY 2008/09 · Estimated growth at 2.72% (average CPI growth over last five yea. rs). Page 2 .FY 2~309/1'0 · ~stimated<jrowth at 2.72% (average CPI growth over last five years). Franchise Fees: .FY 2004/05 · For Electric and Refuse, used FY 2003/04 estimated actual revenues plus 4.36% population growth. · For Gas, used FY 2003/04 estimated actual revenues plus 4.36% population growth less estimated loss of revenue from Reliant Energy Plant of $92,500. · For Cable, used FY 2003/04 estimated actual and kept fiat for FY 2004/05 based on limited growth estimate and no known rate increases. FY 2005/06 throuqh FY 2009/10 · Increased by projected population growth each year. Motor Vehicle-in-Lieu Fees: FY 2004/05 · Used FY 2003/04 adopted budget plus 4.36% estimated population growth less 4.9557% anticipated continued loss due to realignment from backfill gap. · Anticipate receiving full year's VLF with backfill and continuation of realignment percentages. FY 2005/06 · Increased by projected population growth. FY 2006~07 · Increased by projected population growth. · Assumed receipt of one-time reimbursement revenue from the State in the amount of $2,056,579 for VLF backfill gap (August 2006). FY 2007/08 throu.qh FY 2009/10 · Increased by projected population growth each year. All Other Revenue Sources: Developer fees, interest revenue and all other revenue not specifically listed above were kept fiat for projection purposes. Page 3 City Council Pre-Budget Study Session Presented by Jack Lam, CityManager March 31, 2004 Areas to be Covered - - I ntroduclion Significant Actions to Date Factors that Impact the FY 2004/05 Budget Addressing the Issues Conclusion/Wrap-U p IntroduCtion Challenging budget environment in FY 2004/05 and beyond - State takeaways of local tax dollars -Increases in fixed operating costs - Additional costs of new facilities - Need to meet increased service demands of a growing community -Uncertainty caused by State Budget crisis duction (c ti d) m Intro on nue City must develop a plan to deal with challenges ,- - Direction needed on key budgetary policy areas : Factors affecting FY 2004/05 budget are now more clearly identifiable - Preliminary revenue and expenditure projections -March 2® election results Significant Actions to Date June 2003- City Adopts Budget (Chart I) - Effective decrease of 3% in funds available for services over the prior year · $2 million in fixed cost increases · Only $694,330 in new revenue -Adjus!ed operating budgets and enacted a selecbve hiring freeze (CHART I) City General Fund Revenue and Expenditure Challenge Budget Adoption June 2003 New Fixed $47,000,000 Cost Resultant Increases Program Cuts Needed Within $46,000,000 the Budget $1,391,340 3.01% $45,000,000 $44,000,000 $43,000,000 $42,000,000 $41,000,000 $40,000,000 $39,000,000 $38,000,000 $ -0- Significant Actions to Date (continued) September 2003 - City budget adjusted in response to State budget (Chart lO -VLF Gap: $~.873 million loss to City -"Triple Flip": $85,930 loss in interest income to the City; receipt of full sales tax growth in arrears for one year - Redevelopment Cuts: $2 02 million loss -State Library Funds: $56,000 loss to Library -COPS Funding: $53,790 loss to City Significant Actions to Date (continued) " Response to State.cuts: - Moved concrete.,contract to Measure ! Funds: $244,360 General Fund cut -Suspended computer depreciation charges: $300,930 General Fund cut -Personnel cuts and adjustments: $625,015 General, ...Fund cut -Additional operations cuts: $52,800 General Fund cut Significant Actions to Date (continued) - Reduction of contract,planning services: $100,000 General,Fund cut $2 o2 Redevelopment Agency reductions: million cut -Contract assistance from RDA to departments: $527,000 - City reserves: $549,895 usage of reserves transferred to General Fund (CHART II) City General Fund Revenue and Expenditure Challenge Budget Revision September 2003 t $2,714,445 or 6%Total $47,000,000 ~--- --"" "' ~ '---'" ' ................ ~"- Effective Program Cuts ' Nready Reserves $45,000,000 Applied $$49,895 $44,000,000 $43.490,345 $43,000,000 $42,000,000 $41,ooo,ooo $40,000,000 $39,000,000 $38,000,000 $ -0- Significant Actions to Date (continued) December 2003 - Further State actions (Chart III) - Backfill of VLF approved by Governor - VLF gap underestimated by State · VLF gap ~ncreased from $1.873 million loss to $2 66 million loss for City -Additional cut to the General Fund of $787,520 (cHART III) City General Fund Revenue and Expenditure Challenge Budget Impacts November - December 2003 $47,0O0,000 $46,000,000 Governor's Executive Order I [ State Revises Governor's Restores VLF HUnderstetement $45,000,000 Backfill H of VLF Gap Backfill 12/03 ][ 12/03 11103 $44.000,000 $43,000,000 $42,000,000 $41,000,000 $40,000,000 $39,000,000 $38,000,000 Factors Impacting FY 2004/05 Budget Summary of continued State budget crisis impacts in Governor's January 2004 budget proposal -Continued ERAF shift · General Fund loss: $237,359 · Library Fund loss: $119,572 · RDA loss: $2 million - Elimination of poliCe,booking fee reimbursement: $382,400 loss to law enforcement revenues Factors Impacting FY 2004/05 Budget (continued) -- - Suspension of Proposition 42:$400,000 approximate loss i.n. local street and road rehabilitation monies ~ -"Triple Flip"' Shift-of one-quarter (over $3.7 million ) of the'City's sales tax revenues to the State to support the sale of the State's deficit bonds · Direct loss of one quarter of sales tax groWth in FY 2OO4/O5 Factors Impacting FY 2004/05 Budget (continued) March 2, 2004 Election Results - Passage of Propositions 57 (Deficit Bond Measure) and 58 '(Balanced Budget Requirement) - Reduced "Triple Flip" from one-half cent to one-quarter cent - Does not prevent the Governor's proposed FY 2004/05 budget cuts to local government Factors Impacting FY 2004/05 Budget (continued) Future growth considerations - Midstream projects - new facilities · Fire Station #176 · Central Park (Community and Senior Centers) · Library/Cultural Center -Related operational costs -Victoria Gardens Substation · Public safety and other support services Factors Impacting FY 2004/05 Budget (continued) Summary of increases in major fixed and future operational costs ($50,000 or more in value) -Public Employees Retirement System (PERS) cost increases: $2,106,958 - Police contract: $1.,550,000 - Merit increases: $184,084 Factors Impacting FY 2004/05 Budget (continued) -Increased medical.insurance premiums: $559,375 - Increased workers comp costs: $238,888 -Increased property insurance costs: $56,984 - Booking fees: $56,300 -Supplemental funding for staffing Fire Station 176:$547,010 Factors Impacting FY 2004/05 Budget (continued) -Central Park operating costs (partial year): $8~o,ooo -Staffing and operation of Victoria Gardens substation: $1,125,000 -Cultural Center start-up marketing costs: $150,000 -Total projected cost increases: $7,384,599 Factors Impacting FY 2004/05 Budget (continued) Projected revenues FY 2004/05 - Treats already proposed State take away of revenues as a certainty -Incorporates one-quarter cent "Triple Flip" -Total projected revenue growth: $4,088,115 Chart IV City of Rancho Cucamonga Revenue Projections FY 2004/05 General Library Fire Description Fund Fund District Total Property tax $ (123,520 $ 134,931 $ 1,391,480 $ 1,402,891 Property transfer tax 31,850 31,850 Sales and use tax 2,623,40'5 2,623,405 Transient occupancy tax 45,850 45,850 Franchise fees 290,780 -' ~ 290,780 Business licenses 30,600 30,600 Motor vehicle in lieu fees (VLF) (69,670) (69,670) Municipal utility, net revenue 75,000 75,000 Other revenue sources (335,560) (50,651) 43,620 (342,591) $ 2,568,735 -$ 84,280 $ 1,435,100 $ 4,088,115 Factors Impacting FY 2004/05 Budget (continued) Results-ef preliminary expenditure and revenue analysis for FY 2004/05 - Projected revenue growth: $4,088,115 -Projected major fixed cost increases: $7,384,599 - Projected net deficit for FY 2004105: $3,296,484 ~,~ Chart V City of Rancho Cucsmonga Fiscal Years 2005/05 through 2008/10 Projected Revenue Growth Compared to Projected Major* Coat Incresses As of Marck 23. 2004 Proposed Projected Projected Projected Projected Projected FY 2004/05 FY 2005/06. FY 2006/137 FY 2007/08 FY 2008/09 FY 2009/10 Projected reaenue oroavth by fund: City General Fund 2,568.735 3.292,108 1.799,310 1,782,789 1.81 2,093 1,488,832 Receipt of VLF backfill gap from State I ~,x~f~.e/~.~u~- ~ 2,058,579 Library Fund 84,280' 60,642 60,608 60,557 60,508 60,657 Fire District: Fire Fund g48,940 345,421 345,228 344,g38 344.857 322,122 CFD 85-1 419,380 245.996 253,604 261,366 269,336 278,097 CFD 88-1 66,780 34,284 35,345 36,427 37,537 38,758 Total revenue growth 4,088,115 3,978,452 4,550,671 ;2,486,076 2,524,131 2,188,467 Projected major cost increases: ' ' · PERS cost increases (excludes RDA end Special Funds) 2,106,958 882,490 Police contract cost increase - safety 1,5n0,000 2,167,0n0 unknown unknown u~known unknown Police contract cost increase - miscellaneous 50~00 71,850 unknown unknown unknown unknown OTS grant roJIoff 500,n80 Police for Victoria Gardens substation 1,1 25,000 375,000 Central Park operating costs 810,OOO 610,000 Cultural Center operating costs 150 ,goo 480,000 1,120,000 Property insurance premium increase 58,984 4,809 4,940 5,075 5,213 5,355 Medical premium increases 559,375 503,437 578,953 120,731 124,015 127,388 Workers comp increase-City 31,551 5,149 5,20g 5,433 5.581 5,733 Workers comp increase-Fire 207,337 11,27g 11,586 11 ,gO1 12.225 12.557 Salary costs - merits 184,084 193,288 154,630 115,973 77,315 38,658 CPI operating cost increases (excluding Police contract) 363,111 370,011 377,041 384,205 Booking fees 56,300 Fire District Station 176 additional funding 547,010 Total cost increases 7,384,599 5,784,403 2,238,510 629~123 601,389 573,895 Cumulative revenue surplus (deficit) by year $(3.296,484) $(5,102,435) $(2,790,273~ $ (2,989.900) ~.~.~.~ (1,067,1 57~ =~ 547,414 Adjusts for non-recu~ring1 VLF backfill gap revenue · Those cost increases $50,000 or greeter in FY 2004/05. received in FY 2006107. "One-time revenue return from State for VLF gap repayment. Addressing the Issues A rational approach for City actions - Preliminary identification of the fiscal issues -Guidance on major policy issues - Preparation of a preliminary budget and identification of alternatives -Budget consideration and adoption Addressing the Issues (continued) Policy issues to consider -Re-examine PERS rate structure and payment schedules?. .~ -Continue suspension of annual depreciation charges in the General Fund? - Update various fees for service? - Fire District budget, General Fund dependence, Redevelopment Agency funding shift? Addressing the Issues (continued) - - Preserve basic levels of service - recommend temporary suspension of value-added services,, if necessary? ~ - Deficit reduction and use of reserves? · "What if" scenario for FY 2004/05 with a balanced budget and deficit elimination (Chart VI) · '"What if" scenario for FY 2004/05 utilizing reserves to address 50% of deficit (Chart VII) Chart VI City of Rancho CusemoflOa Fiscal Years 2095/06 thraugh 2009/1 0 C~'bJ General l=u~d, Libras3/F~ud a~d Fire District Projected Rever~e Growth Compared to Projected Major' Cost Increases As of March 2.3, 2004 TAKJNG ACT/ON TO EL~MINA TE FY 2004/05 DEFVCIT Proposed Projected ~ Projected Projected Projected Projected FY 2004/05 FY 2005/06~ FY 2006/0~7 FY 2007/08 FY 2008/09 FY 2009/10 Total reuenue gro~th $ 4,088,115 $ 3,978,452 $ ~,,550,671 $ 2,486,076 $ 2,524,131 $ 2,18B,467 Total coot insres~e~ 7,384,599 5,704,403 2,238,510 629,123 601.389 573,895 Eotimsted reuenue surplus (deficit) by.ar (3,296,484) $(1.805.951..~__~) $ 2,312.162 $1,856,953 $1,922,742 $1,614,571 Cost csttina measures ('100%) FV 2004~5 and usage of resefue~ I:¥ 2005/06 3,296,484 Cumulstiuereuenuesurplus(dsticit)byyem $ (0.~.) $(1.805,951) $ 506.210 $ 300,584 ~ $3,843,098 AdjuSL$ For non- * Those cost increases $50,000 or greater in FY 2004/05. recurring VLF bacl~i]l gap revenue received *' Includes one-time revenue of $2,056,579 from State for VLF gap repawneht, in FY Z005/'07, Chart VII Cit~- of Rancho Cucamonga Fiscal Years 2005/06 through 2009~10 C;'ty Geaerel F#ad, &i~re~-/ Fe~d aad Fire ~'~rict Fae~ Proje~ed Revenue Gro~h Compared to Proje~ed Maior' Co~ Increases As of M;~h 23, 2004 U~IZ~ ~$ERVE~ TO F~ 50% OF ~R~T Proposed Proje~ed ~ Prqe~ed Proje~ed Prqe~ed Proje~ed FY 2004~5 FY 2005~6~ FY 2008~7 FY 2007~8 FY 2008~9 FY 200~ 0 T~al re~enuegro~h $ 4,0~,115 $ 3,978,452 $ 4,550,E71 $ 2,488,076 $ 2,524,131 $ 2,188,467 T~el co~ increases 7,384,59S 5,784,403 2,238,510 629,123 801,389 573,895 E~im~e4 revenue surplus (d~c~) ~ ~ar (3,296,484) $(1,805,951] $ 2,312,182 $1,856,953 $1 ,S22,742 $1,814,571 Co~ c~ine measures (58%) end usage ~ reserves (5~%) 1 ~848,242 Cumul~i~erevenuesurplus(d~cH)~ar [F~..~..e~ ~ $(1,848,242~ $(3,454,193~ $(1,142,032) $[1,341,858~ $ 2,1~5,856 /~Adiusts2006107'~or non- ThOSe CO~ increases $50,000 or 9re,er In FY 2004~5, lre¢urrin~ VLF bacilli lgap revenue received "I~ludes one-6me revenue of $2,058,579 from ~e for VLF 9~ repeyme~. /iR FY AddresSing the Issues (continued) -Should the City research and analyze the potential for local revenue augmentation measures to support growing future public safety service needs? - Explore all means to obtain cost containment for medical and workers compensation insurance costs? Addressing the Issues (continued) -Continue selective hiring freeze and attrition management? - Temporarily shift the Redevelopment Agency lease payment from Capital Facilities Repair into the General Fund? ConcluSion/Wrap-Up Questions?? ,. Comments??