The URL can be used to link to this page

Home My WebLink AboutItem 22 - Early Direction for Fiscal Year 2023-24 Budget Cycle Finance and Management Services www.santa-ana.org/finance Item # 22 City of Santa Ana 20 Civic Center Plaza, Santa Ana, CA 92701 Staff Report April 18, 2023 TOPIC: Early Direction for Fiscal Year 2023-24 Budget Cycle AGENDA TITLE: Early Direction for Fiscal Year 2023-24 Budget Cycle RECOMMENDED ACTION Provide early budget direction to staff for the upcoming fiscal year. DISCUSSION The discussion for this agenda item is the City Council’s opportunity to provide early budget direction for FY 2023-24. The staff presentation will include, at a minimum, the following topics: •An early look at General Fund revenue, which is not expected to significantly increase from FY 2022-23 •An early look at the “Baseline” General Fund budget, defined as the recurring status-quo with no service level enhancements •Efforts to gather public input •Measure X Oversight Committee recommendations •Cannabis Tax and Public Benefit Fund analysis •Updated 10-year outlook for the General Fund •The next steps in the budget process Staff is currently in the midst of preparing the draft budget for FY 2023-24. The Budget Calendar includes City Council budget workshops on the regular agendas of May 2 and May 16. If the City Council wishes to have a dedicated budget workshop outside of the regular meeting schedule, staff has identified May 11 as the potential date. FISCAL IMPACT There is no fiscal impact associated with the recommendation. Submitted By: Kathryn Downs, Executive Director Finance and Management Services Approved By: Kristine Ridge, City Manager Early Direction for Fiscal Year 2022-23 Budget Cycle April 18, 2023 Page 2 3 3 8 9 Exhibit: 1. Early Direction for FY 2023-24 City Budget Presentation EARLY BUDGET DIRECTION FY 2023-24 City Council Meeting April 18, 2023 Exhibit 1 Revised 4-12-23 Page 1 of 18 BUDGET CYCLE Page 2 of 18 •Early budget information to Council •Council direction only - no action ⚬Provides staff with insight to build the budget ⚬Answer specific budget policy questions PURPOSE OF EARLY DIRECTION Page 3 of 18 ENGAGEMENTTOOLS •13 Question Community Budget Priorities Survey ⚬Simulate: Respondents can adjust current General Fund spending ⚬Prioritize: Respondents can select and rank defined projects and initiatives within a budget •Budget Engagement Simulation Tool (Best) Community Budget Forums in all Council Wards ENGAGEMENTOPPORTUNITIES Three Community-wide events Virtual forums with Youth Planning Commission and KidWorks PUBLIC INPUT SOLICITATION Page 4 of 18 MEASURE X COMMITTEE RECOMMENDATIONS (Ranked) •Inform homeless community members about available services •Address homelessness-related issues •Coordination with surrounding cities and County governments to address homelessness •More affordable housing •Clean-up homeless encampments MEASURE X COMMITTEE RECOMMENDATIONS (Ranked) MEASURE X COMMITTEE RECOMMENDATIONS (Ranked) MEASURE X COMMITTEE RECOMMENDATIONS (Ranked) MEASURE X COMMITTEE RECOMMENDATIONS (Ranked) INITIAL PUBLIC INPUT To date we have received 796 responses from survey and simulation tools. Trending responses shown here. Invest in homeless- reduction programs Improve City parks •City should acquire vacant lots, properties to expand existing parks or create new parks and dog parks •Improvements to existing parks (cameras, playground/recreation equipment) •Regular playground maintenance •Cameras and better lighting at parks to enhance safety Invest in crime-reduction programs •More gang prevention programs •PAAL program expansion •Fund afterschool and educational programs for youth Street Maintenance / Traffic Improvements •More frequent street maintenance •Fill potholes •Alternatives to traffic calming •Repave alleys and city-owned parking lots •Sidewalks and pavement maintenance Library Investments •Additional libraries •After school programs for youth Page 5 of 18 FAVOR ONE-TIME SPENDING FROM MEASURE X REVENUE 1 CONSIDER PROGRAMS TO USE COMMUNITY-BASED PROFESSIONALS VS. SWORN OFFICERS TO RESPOND TO NON-VIOLENT POLICE CALLS 2 EXPLORE ESTABLISHING A MEASURE X SUNSET STABILIZATION FUND3 PREPARE A LONG-TERM PLAN TO PREPARE FOR MEASURE X RATE REDUCTION4 SHIFT MEASURE X REVENUE TO FIXING STREETS5 MEASURE X COMMITTEE RECOMMENDATIONS 6 INCREASE SALES TAX COMPLIANCE FOR MOBILE FOOD VENDORS THROUGH REGISTRATION AND EDUCATION EFFORTS Page 6 of 18 GENERAL FUND REVENUE EXPECTATIONS Business License Tax Sales Tax (40% of budget) Assume flat for now until more info available in May •Used consultant’s “Most Likely” Scenario •Higher interest rates have slowed car sales •Continued global supply chain challenges •Concerns about futurerecession Proposed fee increase of 4.1% Based on the compensation increase for staff providing the services All Other revenues may increase by 3.8% Some examples include charges for services & franchise fees Property Tax (24% of budget) •Prop 13 growth of 2% max •Re-assessed values forproperties sold contributes to the growth above 2% •Sales activity has decreased •City receives an average of 18.45% of the 1% assessment Cannabis Tax Assume reduction of $8M for now, until more info available in May TOTAL ESTIMATED REVENUES OF $399.8 MILLION FOR FY 2023-24 -SUBJECT TO CHANGE Page 7 of 18 FY 2023-24 BASELINE BUDGET FY 2022-23 Adjusted Budget - Removed One-time Items +Full-time funding for items added in FY 2022-23 with partial funding +Employee compensation increases (Step Increases & Labor Agreements) - Adjustments for Debt Payments +Transfer to Pension Stabilization +Adjustments for Overhead Allocations +Fire & Ambulance contract increases =Baseline Budget for FY2023-24 Estimated Recurring of $397.3 million Page 8 of 18 UPDATED10-YEAROUTLOOK Includes: •Baseline Budget, before adjustments •Debt pay-offs •Measure X rate decrease ⚬1.5% to 1.0% in 2029 •CPI increases FY24-25 and later •OC Streetcar ops begin FY24-25 Does not include: •Impact of potential future recession •New services •Potential revenue increases from new development Page 9 of 18 Summary of the General Fund Balance General Fund Estimated Ending Balance at June 30, 2023, adjusted for non-cash activities $101,495,809 Less 18% Reserve $(71,967,831) Estimated Spendable Balance $29,527,978 Planned Additions to FY23-24 Budget: Third & Broadway Development Contractual Obligation $(13,000,000) Right-of-way maintenance to cover Gas Tax revenue reduction to preserve current service levels $(700,000) Potential Special Elections $(1,000,000) Climate Action Plan $(750,000) Downtown Santa Ana Parking Subsidy $(1,862,320) Estimated Available for One-Time Spending $12,215,658 Page 10 of 18 Event Spending Should event funding be adjusted? Most Recent Actual Estimated Attendance Cost Per Fourth of July $80,256 7,500 $10.70 Juneteenth $91,107 800 $113.88 Fiestas Patrias $297,620 60,000 $4.96 Egg Hunt $37,335 5,000 $7.47 Movies In the Park (13)$116,684 9,750 $11.97 Summer Concert Series (4)$42,336 2,400 $17.64 Birch Series (summer & fall movies, Shakespeare in the Park)$31,835 2,700 $11.79 Indigenous Peoples Day $66,266 250 $265.06 Chicano Heritage $65,609 6,000 $10.93 Winter Village $896,147 35,000 $25.60 Autumn Festival $42,967 3,500 $12.28 5K $59,958 821 $73.03 Page 11 of 18 UNFUNDED EMPLOYEE PENSION LIABILITY COST- REDUCTION POLICY “It shall be the City’s policy to consider an additional discretionary payment to reduce the unfunded pension liability during each annual budget process” Shall we add any discretionary payments from one-time money? Page 12 of 18 UNFUNDED EMPLOYEE PENSION LIABILITY COST-REDUCTION POLICY Page 13 of 18 Cannabis Public Benefit Fund - Summary Staff is in process of fine-tuning this budget, but we need more data from tax remittances after the rate reductions became effective January 1, 2023 Page 14 of 18 FY 2023-24 BUDGET UPDATES New Rent Stabilization Program/Fee/Fund - FY 2023-24 budget will include a new fund for Rent Stabilization. To be funded with a new fee to cover staff costs of operating the program, including legal, housing and administration. Community Development will bring an item to Council by June. Civic Center Modernization – City will receive $9 million from the state for Modernization of the Civic Center. This grant will be used for acquisition of the state building and related costs. Receipt of the funding enables us to fulfill Senator Umberg’s request to provide $1.5 million of direct assistance to downtown businesses. Page 15 of 18 OPIOID SETTLEMENTS PAYMENTS Santa Ana may receive a total of $11.4 million, with a large share being received over a period of 7 years and the reaming over 18 Years Total Funding To date, we have received $1,128,302 Total Received •Purchase Naloxone or similar •Medication-assisted and other opioid related treatment •Treatment for pregnant & postpartum women •Treatment for neonatal abstinence syndrome •Warm hand-off and recovery programs •Treatment for those incarcerated •Prevention programs The money is restricted to treatment and prevention programs, with priority given to: •Prevention programs •Syringe service programs •Data collection and analysis of effectiveness of abatement strategies Would City Council like to provide direction for spending preferences? Page 16 of 18 Next Steps •Council work sessions during regular meetings on May 2 and May 16 •Optional dedicated workshop on May 11 •Draft budget and CIP presentations •Continue gathering public input •Complete internal process and develop recommendations Page 17 of 18 QUESTIONS? Page 18 of 18