HomeMy WebLinkAbout65A - RECIEVE AND FILE FY 2019-20 GENERAL FUND MIDYEARREQUEST FOR a
COUNCIL ACTION°1T
CITY COUNCIL MEETING DATE:
FEBRUARY 18, 2020
TITLE:
RECEIVE AND FILE FISCAL YEAR
2019-20 GENERAL FUND MID -YEAR
UPDATE; AMEND FY 2019-20 BUDGET
TO ADD TWO FULL-TIME POSITIONS;
APPROVE MID -YEAR APPROPRIATION
ADJUSTMENTS
/s/Kristine
CITY MANAGER
CLERK OF COUNCIL USE ONLY:
_••e• W
❑
As Recommended
❑
As Amended
❑
Ordinance on 111 Reading
❑
Ordinance on 2nd Reading
❑
Implementing Resolution
❑
Set Public Hearing For
CONTINUED TO
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RECOMMENDED ACTION
1. Receive and file Fiscal Year 2019-20 General Fund Mid -Year Update, including revised
revenue estimates.
2. Amend Fiscal Year 2019-20 Budget to add the full-time position of Executive Secretary in
Parks, Recreation and Community Services Agency (General Fund) and the full-time
position of Business Tax Collector -Inspector in the Finance and Management Services
Agency (Cannabis Public Benefit Fund).
3. Approve Mid -Year Appropriation Adjustments. (Exhibit 3)
DISCUSSION
This Mid -Year Report includes an analysis of revenue and expenditures recorded for the first half
of FY 2019-20. The report is focused on the General Fund, which is the primary operating fund of
the City. However, the report also includes notable information for other funds, such as the Gas
Tax Fund. The vacancy report for full-time funded employee positions and proposed workforce
changes is included. Tables and summaries include FY 2018-19 actuals, FY 2019-20 year-to-date
actuals, FY 2019-20 original budget, and FY 2019-20 revised budget. The revised budget includes
updated revenue estimates, appropriation adjustments approved by the City Council, and
appropriations continued from FY 2018-19 to FY 2019-20 approved by the City Council.
A summary of the estimated General Fund balance at June 30, 2020 follows:
65A-1
Receive and file Fiscal Year 2019-20 General Fund Mid -Year Update
February 18, 2020
Page 2
General Fund Summary in millions
FY 18-19
FY 19-20
FY 19-20
Year End
Actuals
Budget
Revised Budget
Beginning Fund Balance
$ 57.9
$ 67.0
$ 67.0
Revenues
270.4
316.7
323.2
Expenditures
(261.3)
(316.1)
(323.0)
Ending Fund Balance
$ 67.0
$ 67.6
$ 67.2
Projected Fund Balance - 06/30/20
$ 67.2
Operating Reserve based on Revised Revenues 16.67%
53.9
Economic Uncertainty 1 %
3.2
Projected Net Available
$ 10.1
General Fund Revenues for FY 2019-20
The following table summarizes the City's most significant General Fund revenue sources. A
discussion of each follows.
FY 19-20 MID -YEAR BUDGET REVIEW
KEY GENERAL FUND REVENUES
Description
FY 18-19
Actuals
Adopted FY 19-20
op et
Bud
FY 19-20
2nd Quarter
FY 19-20
Projections
Sales Tax
51,321,860
51,509,900
16,866,019
52,150,000
Sales Tax - Measure X 1.5%
13,636,350
60,000,000
21,917,861
61,100,000
Property Tax
37,309,791
37,346,100
20,242,998
38,100,000
Prop Tax -In Lieu VLF
32,897,695
34,167,600
-
34,663,784
Utility User Tax
22,655,737
22,500,000
9,894,586
22,500,000
Business Tax
13,115,518
13,000,000
2,644,633
13,000,000
Hotel Visitor's Tax
9,414,661
9,500,000
4,116,511
9,500,000
Jail Revenues
15,523,216
15,126,700
3,821,068
15,126,700
Paramedic Services Charge
5,109,445
5,175,000
4,067,377
6,792,300
Santa Ana Residual
10,231,641
8,368,700
-
10,231,650
Combined Cannabis Revenue
8,379,195
10,830,000
4,228,906
10,830,000
Permits and Plan Checks'
7,851,323
7,881,000
4,452,515
7,881,000
SUBTOTAL TOP SIX AND
KEY REVENUES:
2P7 446,433
275,405,000
92,252,474
281,875,434
OTHER REVENUES:
42,943,596
41,273,040
16,941,791
41,273,040
GRAND TOTAL:
$270,390,029
$316,678,040
$109,194,265
$323,148,474
'Permits: Building, Electrical, Heating, Plumbing Permits; Plan Checks: Building, Electrical,
Plumbing and Mechanical Plancheck
65A-2
Receive and file Fiscal Year 2019-20 General Fund Mid -Year Update
February 18, 2020
Page 3
Sales Tax (Bradley Burns 1%): The second quarter revenues of $16.8 million represents sales
tax received for the months of July through October. Sales Tax disbursements are received
monthly, two months in arrears, and may include prior period adjustments or true -ups. Based on
the sales tax consultant's current projections, staff increased the revenue estimate by $640,100.
Sales Tax (Measure X 1.5%): The second quarter revenue of $21.9 million represents sales tax
received for the months of July through October including $1.6 million related to the prior fiscal
year, but not received until after August 31, 2019. Similar to the Bradley Burns Sales Tax,
disbursements are received monthly, two months in arrears and may include prior period
adjustments or true -ups. Based on the sales tax consultant's current projections, staff increased
the revenue estimate by $1.1 million.
It should be noted the City's sales tax consultant is currently projecting future annual increases of
approximately 2.6% for both categories of sales tax revenue. However, the consultant does have
recession scenarios that include a 4.3% reduction of revenue in the first year of a recession (roughly
$5 million), and another 1.9% reduction in the second year of recession (another $2 million). In
addition to the General Fund operating reserve of 16.67% of annual revenue, the City has a reserve
for economic uncertainty equivalent to 1 % of annual revenue or approximately $3.2 million. During
the next budget process, the City Council may want to consider using the excess General Fund
balance to increase the reserve for economic uncertainty to at least 2% of annual revenue or $6.4
million.
Property Tax and Property Tax in lieu of VLF: Total Property Tax collected for the second
quarter is $20.2 million. This does not include the first payment (50%) of Property Tax in lieu of
VLF which was received in January of $17.3 million. Based on current receipts and updated
projections from the property tax consultant, staff's estimate has increased by $1.2 million. The
updated revenue estimate represents a 3.6% increase from prior year actuals.
Utility Users' Tax: Utility Users Tax remains steady overall with an increases to both electric and
water utilities while the gas utility remains stable. Telecommunications continues to decline and is
projected to decrease this fiscal year. Overall, staff anticipates total UUT revenue will meet budget
projections.
Santa Ana Residual Property Tax Allocation: As part of the dissolution of redevelopment, the
City is one of the taxing entities receiving a residual allocation from the Redevelopment Property
Tax Trust Fund (RPTTF). Due to savings from refinancing the tax allocation bonds in 2018 and
the increase in assessed property values, this revenue source increased significantly in FY 2018-
19. For FY 2019-20, a recent payment of $6 million was received in January and the next payment
is in May. With the updated information, staff increased this revenue estimate by $1.8 million.
It should be noted the City's share of savings from the 2018 bond refinancing was structured to be
received over a three-year period (FY 2018-19, FY 2019-20, and FY 2020-21). Beginning FY 2021-
22, this revenue source will decrease by approximately $1 million.
65A-3
Receive and file Fiscal Year 2019-20 General Fund Mid -Year Update
February 18, 2020
Page 4
Hotel Visitors' Tax: Hotel Visitors' Tax collected through the second quarter is over $4.1 million,
similar to the previous fiscal year. New hotel developments are expected in the future (Hampton
Inn, Tapestry Hotel), but is unlikely to impact the current fiscal year. As such, there is no adjustment
to staffs original revenue estimate.
Business License: Business license is trending similar to last year and is projected to meet
anticipated revenue of $13 million. The current amount collected, $2.6 million represents about
20% of total revenue. Peak business license periods occur in the third (53%) and fourth quarters
(27%) of total business license revenue collected.
Jail Revenue: Jail revenue to date represents only three months' receipts totaling $3.8 million.
Payments of $2.4 million for the months of October and November were received in January. The
Police Department is projecting to meet the budgeted revenue estimate of $15.1 million due to an
increase in average daily projection (ADP). An additional module will be available and is anticipated
to open in April 2020 which will likely lead to a revenue estimate increase for fiscal year 2020-2021.
Cannabis Revenues: Adult -Use Retail Cannabis revenues are projected to exceed budget by
$1.8 million. The year-to-date revenue for Adult -Use Retail is $3.8 million which represents five
months of receipts. The growth of the retail sector continues to erode revenue related to Medical
Cannabis and therefore, staff anticipates a related $1 million decrease in revenue. Commercial
Cannabis tax revenue related to distribution is projected to exceed budget by $139,000, however
the other commercial sectors are expected to underperform the original revenue estimate by nearly
$1.1 million. When considering Cannabis tax revenue in total, there is no change to the original
revenue estimate at this time.
Permits and Plan Check: Year-to-date permit and plan check revenues total over $4 million, and
are primarily driven by spikes in building plan check revenue for the months of October and
December. Staff will continue to monitor the development activity and related revenue, and
provide updates during the third quarter report. At this time, there is no change to the original
overall revenue estimate.
Paramedic Service Charge: In Fiscal Year 2018-19, the City experienced an increase in this
revenue due to the state's Ground Emergency Medical Transport (GEMT) Quality Assurance Fee
that was retroactive to July 1, 2018 and continues to June 30,2021. Combined with this fee, there
has been increase in advanced life support services provided which results in higher than
anticipated revenue. Therefore, revenue estimates will increase by $1.6 million to nearly $6.8
million for FY 2019-20.
Proposed Workforce Changes
Parks, Recreation and Community Services Agency: The proposed workforce change is to add
a position of Executive Secretary for administrative support to the Executive Director and the
Agency. The anticipated start date will be in May 2019 and the Agency will absorb the costs within
the existing General Fund budget. Going forward, the annual cost of the position is expected to be
$79,600 in FY 2020-21.
65A-4
Receive and file Fiscal Year 2019-20 General Fund Mid -Year Update
February 18, 2020
Page 5
Finance and Management Services Agency: The Agency is proposing to add a full-time
Business Tax Collector -Inspector related to oversight of Cannabis business. The position performs
pre -audit review/analysis of tax calculations, collection of tax and regulatory fee payments,
assesses penalties/interest and actively communicates with potential and current businesses. This
position will be primarily funded by the Cannabis Public Benefit fund (85%), with the remainder to
be funded by the General Fund. Currently, the City only has 2 Business Tax Collector -Inspector
positions to monitor more than 30,000 businesses in the City, which generate a total of $13 million
in annual tax revenue. Over the last 18 months, one of those positions has been primarily dedicated
to Cannabis business activity, leaving only one full-time position to monitor 30,000 businesses.
Approval of this request, to align Cannabis tax enforcement with the funding source, will restore a
second full-time position to the large portfolio of other business activity.
General Fund Expenditures FY 2019-20
Overall, year-to-date General Fund department expenditures are tracking 3% less than budget,
which is within normal parameters based upon past history. Noteworthy items follow.
• The City is currently reviewing its internal charges to departments to ensure compliance
with outside regulations and best practices. Until the study is complete, an estimate of the
charges has been used as a placeholder for actual expenditures.
• Fire Department expenditures include two payments in July (for July and August), and
monthly payments thereafter.
• The Police Department is carefully monitoring its budget, and expects the existing
expenditure appropriations to be sufficient for department operations.
Proposed Appropriation Adjustments
As part of the mid -year report, staff recommends a variety of budget adjustments (Exhibit 3) that
includes workforce changes, administrative corrections, and other budget requests. Below are key
highlights:
GENERALFUND
Public Works Agencv
The City is undergoing an energy retrofit project including energy efficient lighting, window shading
and environmental controls to reduce energy costs. The Public Works Agency (PWA) has identified
leaky windows in City Hall that are in need of repair prior to completing the window shading
installation. PWA has estimated that the costs for this project will be approximately $89,000.
Increase General Fund budget: $89,000 (one-time)
Homelessness Efforts
Public Works Agency (PWA)
PWA continues to provide clean-up services in response to homelessness seven days a week by
patrolling the City. As needed, major cleanup efforts are provided in the Santiago Creek area and
along the railroads. To ensure continuity, PWA is requesting a budget increase of $80,000, as the
current allocation for existing contracts will be exhausted prior to the end of the year.
Increase General Fund Budget: $80,000 (one-time)
65A-5
Receive and file Fiscal Year 2019-20 General Fund Mid -Year Update
February 18, 2020
Page 6
Police Department
In response to homelessness efforts, PD is requesting to invest in technology, including the one-
time purchase of mobile phones to enter data in to the City's homeless portal, and the purchase
and installation of covert cameras to investigate unlawful activates related to homelessness issues.
Investment in these resource will provide more efficient responses to homelessness activities
citywide.
Increase General Fund Budget: $10,000 (one-time)
The Police Department continues to actively recruit Police Officers and met the hiring goal of 50
Officers for 2019. To continue those efforts, staff plans to request funding for the remaining 18
authorized Police Officer positions as part of the fiscal year 2020-2021 budget process. The
primary source of funding would be the General Fund. The FY 2019-20 budget includes $6.9
million of one-time General Fund expenditures that will not be automatically included in the
proposed FY20-21 budget, which can make room for the annual cost of $2.7 million for 18 additional
Officers. In addition, the Police Department is looking at temporary outside restricted funding for a
portion of the new officers. More information will be provided during the FY 2020-21 budget
process.
City Manager's Office
On February 10, 2020, the City of Santa Ana was awarded a Census Outreach Grant for $50,000
by the County of Orange. The grant will be used to promote the upcoming census through a place -
based strategy in collaboration with neighborhood associations in the hardest -to -count areas of the
city. An adjustment is requested to recognize the revenue and approporite it for spending.
Increase General Fund Budget: $50,000 (one-time)
OTHER FUNDS
Library Services Grant
In December, the Library Services was awarded an American Library Association (ALA) Census
Grant for $2,000. The grant will be used to promote the upcoming census and Library staff is in
the process of purchasing promotional supplies. An adjustment is requested to recognize the
revenue and appropriate it for spending.
Increase to grant fund: $2,000
Public Works Agency
On January 10, 2020, the California Department of Finance provided new revenue estimates with
the Governor's Proposed 2020-2021 State Budget. Based on these estimates, there will be an
update to the City's estimated Gas Tax allocation for fiscal year 2019-2020 as well as a slight
increase in projections for next fiscal year 2020-2021.
Increase Gas Tax fund to reflect updated estimates resulting in a net increase: $356,003
At the September 17th, 2019 City Council Meeting, Council approved a variety of continuing
appropriations for projects in the Select Street Construction Fund. The funding source for these
projects is accumulated Gas Tax revenue. The requested adjustment will re -appropriate the
accumulated Gas Tax fund balance for the projects, as a funding transfer to the Select Street
Construction Fund.
65A-6
Receive and file Fiscal Year 2019-20 General Fund Mid -Year Update
February 18, 2020
Page 7
Increase budget for at Interfund Transfer from Gas Tax Fund to Select Street Construction
Capital Fund: $6,564,027
The Santa Ana Regional Transportation Center (SARTC) enterprise fund continues to operate with
a deficit. Without any additional revenues to support SARTC, the spendable fund balance will
continue to decrease resulting in a larger negative balance. This fund will be discussed during the
fiscal year 2020-2021 Budget Process.
At this time, no adjustments are proposed pending a full policy discussion.
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Funding in the amount of $78,866 for a Business Tax -Collector Inspector will be transferred from
the City Manager's budget in the Cannabis Fund to the Finance & Management Services budget
within the same fund.
No net increase to the Cannabis Public Benefit Fund budget.
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On December 17th, 2019, the City Council approved an appropriation adjustment to provide
General Fund relief for the Parking Enterprise fund related to overtime and unfunded liability
expenses. In addition, parking meter rates have been increased and it is projected that the Parking
Enterprise will be balanced by the end of the fiscal year.
Planning & Building Agency (PBAI
In Fiscal Year 2018-2019, PBA was allocated $850,000 to update the City's General Plan. At the
close of the fiscal year, there is a remaining project balance of $283,177 that is available to carry
forward into the current fiscal year 2019-2020. This information was not available when Council
considered continuing appropriations in September 2019. Therefore, an adjustment is requested
at this time.
Increase AMES budget for the General Plan: $283,177
Community Development Agency (CDA)
CDA has experienced a reduction in grant awards such as the Workforce Innovation and
Opportunity Act (WIOA) and prior year funding for Rapid Response Formula and Layoff Aversion
funds. Therefore, CDA will adjust their budget to be in alignment with current available funding.
Decrease grant funding for WIOA and other grant programs: $448,792
STRATEGIC PLAN ALIGNMENT
Approval of this item supports the City's effort to meet Goal #4 - City Financial Stability, Objective
#1 (maintain a stable, efficient and transparent financial environment).
FISCAL IMPACT
The fiscal impacts for General Fund and Other funds are summarized in the tables in Exhibits 1
and 3.
65A-7
Receive and file Fiscal Year 2019-20 General Fund Mid -Year Update
February 18, 2020
Page 8
Kathryn Downs, CPA
Executive Director
Finance and Management Services Agency
Exhibits: 1. General Fund Mid -Year Update Presentation and Revenue Estimates
2. Budget Resolution to add two positions of Executive Secretary and Business
Tax Collector -Inspector
3. Appropriation Adjustment Table for General Fund and Non -General Fund
65A-8
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EXHIBIT 2
RESOLUTION NO. 2020-XXX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
SANTA ANA TO AMEND THE CURRENT ANNUAL BUDGET
FOR FISCAL YEAR 2019-2020.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SANTA ANA AS
FOLLOWS:
Section 1: The City Council hereby finds, determines and declares as follows:
A. Section 1004, Article X of the City Charter of the City of Santa Ana
requires the City Manager to prepare, install and maintain a position
classification and pay plan subject to civil service rules and regulations
and the approval of the City Council.
B. On July 2, 2019, the City Council passed and adopted Ordinance No. NS-
2969, establishing the City's Budget for Fiscal Years 2019-2020,
authorizing position allocations for Fiscal Years 2019-2020, and requiring
that alterations in the allocation of authorized positions be reviewed and
approved by the City Council.
C. The Human Resources Department has completed a mid -year review of
the various departmental requests to make changes to the City's
organizational structure, classification titles, and staffing. The Parks,
Recreation and Community Services Agency is requesting the addition of
one Executive Secretary (UC) and the Finance and Management Services
Agency is requesting the addition of one Business Tax Collector -Inspector
to the FY 2019-2020 City Budget.
D. It is now desired to amend the Annual Budget for Fiscal Years 2019-2020,
as amended, in order to effect these changes, as shown below:
Section 2: That the City Budget for Fiscal Years 2019-2020, as amended, is
hereby further amended by:
A. Adding one (1) full time position in the Parks, Recreation and Community
Services Agency, at the monthly six -step rate range as indicated:
Resolution 2020-XXX
Page 1 of 3 65A-1 5
6-Step Salary Rate Range Effective 10/01/19
Number of Monthly Salary
Classification Title Positions Added SSR Minimum -Maximum
Executive Secretary (UC) 1
615 $4709 - $6015
B. Adding one (1) full time position in Finance and Management Services
Agency at the monthly seven -step rate range as indicated:
7-Step Salary Rate Range Effective 07/01/19
Monthly Salary
Classification Title SSR Minimum -Maximum
Business Tax Collector -Inspector
631 $4533 - $6080
Section 3: That except as amended by this Resolution, all other provisions of the
Annual Budget for Fiscal Years 2019-2020, as amended, shall remain in full force and
effect.
Section 4: This Resolution is operative upon adoption.
ADOPTED this 18th day of February, 2020.
APPROVED AS TO FORM:
Sonia R. Carvalho
City Attorney
By: 0.U�
Laura A. Rossini
Senior Assistant City Attorney
Miguel A. Pulido
Mayor
65A-16
Resolution 2019-XXX
Page 2 of 3
AYES:
NOES:
ABSTAIN:
NOT PRESENT:
Councilmembers
Councilmembers
Councilmembers
Councilmembers
CERTIFICATE OF ATTESTATION AND ORIGINALITY
I, Daisy Gomez, Clerk of the Council, do hereby attest to and certify the attached
Resolution No. 2020- _ to be the original Resolution adopted by the City Council of the
City of Santa Ana on February 18, 2020.
Date:
Resolution 2020-XXX
Page 3 of 3
65A-17
Clerk of the Council
City of Santa Ana
EXHIBIT 3
Budget adjustments
Fiscal Year 2019-2020
Revenue
Expenditure
Increase/
Increase/
Department
Accounting Unit
Account
Acct. Description
Description of adjustment
(Decrease)
(Decrease)
Library Services
City Manager- Non Departmental
Public Works Agency - Capital and Grant Funds
Public Works Agency- Sanitation Enterprise Fund
D
1
Public Works Agency - General Fund
00
City Manager Office - Cannabis Public Benefit Fund
Finance - Cannabis Public Benefit Fund
15211002
52040
Grant Revenue
15211XXX
63001
Misc. Operating Expenses
01102002
57000
Expense Reimbursement
01105015
62300
Contract Services
05917002
59000-029
Transferin
02917019
68000-059
Transfer Out
06817641
68000-059
Transfer Out
01117650
62300
Contract Services
01203010 62300 Contract Services
01210010 61000s (Various) Salary & Benefits
City received a grant from the ALA
to promote the census. $ 2,000
$ 2,000
Recognition of Census Outreach
Grant $
50,000
$
50,000
I me rfund Transfer from Gas Tax
$
6,564,027
Fund to Select Street Construction
Capital Fund
$
6,564,027
Reduce Transfer to fund 59. PWA
staff does not anticipate this
transfer
$
(195,500)
To repair leaky windows in City
$
89,000
Hall
Transfer Budget for Business Tax
$
(78,866)
Collector -Inspector for preaudit,
tax and fee collection and other
business license revenue
$
78,866
Budget adjustments
Fiscal Year 2019-2020
Revenue
Expenditure
Increase/
Increase/
Department
Accounting Unit
Account
Acct. Description
Description of adjustment
(Decrease)
(Decrease)
Community Development - Grant Funds
12318XXX
61000s (Various)
Salary & Benefits
5
(354,424)
62120
Training, Transportation, Meeting
$
788
12318XXX
62140
Membership, Subscription &
12318XXX
Dues
$
(SO)
12318XXX
62300
Contract Services -Professional
$
(15,000)
62302
Contracted Vendor Personnel
12318XXX
Services
$
(3,800)
12318XXX
62400
Auditor Fee
$
(10,000)
Adjust grant budgets to current
12318XXX
62500
Rent Payments
allocations.
$
(46,851)
63001
Miscellaneous Operating
$
12318XXX
Expenses
(3,000)
12318XXX
65400
Indirect Costs
$
(20,901)
12318XXX
69135
Payment to Subagent
$
14,136
12318XXX
69138
Payment -Training Portion
$
(6,090)
12318XXX
69144
Client Support Services
$
S00
12318XXX
69145
Client Assessment
$
7,000
12418737
65040
IT Maintenance Charge
$
(6,000)
12418737
65100
Insurance Charges
$
(5,100)
Reduction to reflect actual
12318002
52001
Federal Grant - Indirect
allocation received
$ (106,076)
Funding for General Plan from
Planning& Building Agency -AMES Fund
05017018
62300
Contract Services
prior year
$
283,177
Homelessness Efforts
Funding to continue to support
cleanups services in response to
Public Works Agency - General Fund
01117643
62300
Contract Services
homelessness 7 days a week.
$
80,000
To provide technological
equipment such as cell phones
and covert cameras to assist in
enforcement of quality of life
Police Department -General Fund
01114420
63001
Misc. Operating Expenses
concerns.
$
10,000
Total General Fund
$ 50,000
$
229,000
Total Non -General Fund
$ 6,420,951
$
6,254,912
Total Adjustment:
$ 6,470,951
$
6,483,912