Item 38 - Fiscal Year 2021-2022 General Fund - First Quarter Budget Update

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Receive and file the FY 2021-2022 General Fund - First Quarter Budget Update December 21, 2021 Page 2 2 3 6 1 In October, with the closing of the FY20-21 books, it became apparent the General Fund experienced significant positive variances, yet the audit was not yet complete. Therefore, staff postponed the first quarter budget report until more data was available to provide complete information to the City Council. The June 30, 2021 General Fund balance was $109.4 million, which is $42.3 million in excess of the 18% Reserve policy. The $42.3 million is a one-time resource derived from $19.5 million additional sales tax revenue during FY20-21 (discussed further below) and controlled spending across all departments through the pandemic. This one-time resource is a unique opportunity to address issues underfunded in previous years. As reported previously, there are significant budget challenges related to the train station enterprise, the health of internal service funds, and deferred maintenance of City facilities. The following recommended spending plan would address many of those challenges and leave $16.4 million of one-time funding for other priorities identified by City Council. 1. Maintain the 18% General Fund Reserve with $1.3 million of the additional estimated sales tax revenue. 2. Appropriate the following amounts totaling $24.7 million. Contribution to the train station enterprise to cure the June 30, 2021 negative fund balance of $1,807,208 plus further depletion of the fund with the FY21-22 budget. $1,900,000 Contribution to the risk management funds to provide for the FY21- 22 insurance rates reported to City Council on June 15, 2021. $1,500,000 Contribution to the internal service fund accounting for employee benefits to cure the June 30, 2021 negative fund balance of $1,227,916 plus the further depletion of the fund with the FY21-22 budget. $3,400,000 Contribution to the internal service fund accounting for building maintenance due to aging facilities and increased demand for upkeep. $2,500,000 Contribution to the internal service fund accounting for fleet maintenance to avoid the estimated negative fund balance at June 30, 2022, as shown on page B-21 of the budget document. $1,500,000 Rehab and repurpose the Cypress Fire Station. Based on further City Council direction, staff can propose a specific project later this fiscal year. $1,000,000 Ross Annex improvements to replace an industrial sized air conditioning unit, second-floor aged carpets and workstations, and reorganize workspace locations to improve efficiency and collaboration. The proposed appropriation will optimize efficiency $1,450,000