65B - DRAFT BUDGET - Laserfiche WebLink

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Consider the FY 2020-21 Draft Budget and the Seven -Year CIP June 2, 2020 Page 2 mandate to adopt its budget by June 15. If the state adopts its budget with the Governor's proposed allocation, the City of Santa Ana will receive $28,790,000. CARES Act guidelines published by the Department of Treasury indicate the funding is restricted to COVID-19 related expenditures. It cannot be used to backfill lost revenue. Once the state adopts its budget with a CARES Act funding allocation for the City, staff will return to City Council with a spending plan. Orange County took action to set aside $26 million of CARES Act funding for cities. The City may receive a $2.5 million allocation of that set -aside, to help offset COVID-19 related costs. General Fund Overview The General Fund is the primary operating fund of the City and accounts for unrestricted revenue. A summary of the draft General Fund budget and a calculation of the City Council's reserve policy follows. General Fund Draft Budget Beginning Balance $ 67,784,132 Revenue 307,392,970 Expenditures (310,065,470) Transfers Out for: Debt Service (9,336,460) Cannabis Public Benefit Fund (6,766,700) SARTC Subsidy (1,100,000) Civic Center Authority (1,179,400) Ending Fund Balance $ 46,729,072 Operating Reserve (16.67%of Revenue) 51,242,408 Economic Uncertainty Reserve (minimum 1%) - General Fund Balance Excess/(Shortfall) (4,513,336) Staff does not recommend adopting the draft General Fund budget in its current form, as it would necessitate using $4.5 million of the Operating Reserve. The City receives new information nearly every day, and the draft budget is a moving target. The following scenarios may help the City avoid using the Operating Reserve in FY20-21. 1. Obtain labor concessions. If the labor groups were to forego the wage increase scheduled for July 1, General Fund savings may range from $5.5 million to $6.0 million. 2. CARES Act funding for FY19-20 and FY20-21. As noted above, the City may receive CARES Act funding allocations. Federal guidelines indicate CARES Act funding can pay for staff time, if staff is performing work substantially different from what was budgeted. In other words, if an employee is working in direct response to COVID-19 instead of their originally budgeted purpose, the City may be able to use CARES Act funding to pay for employee compensation. This revenue could offset as much as $3.6 million of employee compensation costs ($1.6 million in FY19-20 and $2.0 million in FY20-21). The City may 65B-2