Item 26 - Fiscal Year 2022-23 Mid-Year Appropriation Requests

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Fiscal Year 2022-23 Mid-Year Budget Appropriation Requests April 4, 2023 Page 3 3 3 5 9 revenue estimate was $17.2 million, based on previous League information, which supports decreasing the budget estimate by $2.5 million. To ensure the City’s right-of-way maintenance services are not impacted, staff recommends a $2.5 million General Fund appropriation to cover the shortfall. If approved, expenditures for the Fairview Bridge & Street Improvements, Traffic Signal Maintenance, Median Landscaping, and Roadway Maintenance expenditures will move to the General Fund. Increasing General Fund spending for right-of-way maintenance improves the City’s ability to comply with the Orange County Transportation Authority Maintenance of Effort for Measure M2 funding. Other Funds Cannabis Public Benefit Fund The FY 2021-22 Cannabis Public Benefit Fund budget included $1,287,990 for the Newhope Library Renovation, and the FY 2022-23 budget included $1,110,730. Due to project scope enhancements, the Library requests an additional $1,150,000 of one-time money from this fund for the Newhope Library Renovation, including replacement of existing end-of-life HVAC systems and units, critical upgrades to electrical systems and cabling, and modern technology improvements in the new Media Lab and existing large meeting room that will help bridge the digital divide. The City expects to solicit construction bids in June for a target completion date of May 2024. After absorbing the potential revenue shortfall reported to City Council on October 4, 2022 due to Cannabis tax rate changes, the estimated fund balance is approximately $2.8 million, which is sufficient to cover the recommended $1,150,000 appropriation adjustment. Restricted Fund Adjustments The City receives updated information after the beginning of the fiscal year for various restricted funding sources. Examples include the Civic Center Authority adopting the budget after June, and update to federal monies available for various programs. Staff recommends a series of adjustments to resize restricted-money appropriations to available balances and authorizations. The details of these adjustments are included in Exhibit 1. FISCAL IMPACT The General Fund fiscal impact appears at the beginning of this report. Exhibit 1 includes the line-item changes to revenue estimates and recommended appropriation adjustments. Exhibit 2 includes the estimated June 30, 2023 fund balance for all funds, including the revenue impacts and recommendations covered in this report. EXHIBIT(S) 1. Line Item Changes to Revenue Estimates and Recommended Adjustments 2. Updated FY 2022-23 Fund Balance Summary for All Funds