Belvedere City Manager’s Blog

Entries categorized as ‘Finance’

Budget.

March 2, 2010 · Leave a Comment

“Budget.  For most of us, that single word can strike fear into our hearts – especially when it’s paired with the word ‘government.’”  City Budget

We in California think we are alone with a State in budget crisis and local governments on the brink of that very crisis, but we’re not.  The preceding quote came from a blog of a Mayor in the midwest.

Whether you are working on your household budget, the budget for a small or large business, or the budget for a governmental entity, the process is likely complicated, challenging, and full of decision-making priorities.  Priorities mean that some things get funded and others, do not.  Worse, at the end of the day, some budgets are well-funded and others face a deficit.

DollarBut no panicking here, the City of Belvedere is not facing a deficit.  In fact, we can’t.  The City is not legally permitted to run on a deficit – unlike the State.  The State Constitution prohibits local governments from operating in terms of operational deficit financing.  We can issue bonds for large capital projects, but we cannot operate in debt for general operating expenses.  We can maintain a reserve.  In an agency that is primarily dependent on local revenue sources, a reserve is extremely important.

Each year, the City collects funds through various mechanisms to cover operational expenses as well as capital expenses.  Typically, our total revenue amounts to approximately $5.0 to $6.0 million, depending on specific grants or special revenues.   Our local revenue sources include:

  • Property Taxes
  • Sales Taxes
  • Franchise Fees (PG&E, Comcast, Mill Valley Refuse)
  • Business Licenses
  • Permit Fees (Planning, Building, Public Works)
  • Fines (Vehicle, Planning/Building Penalties)
  • Service Charges
  • Fire Tax
  • Rental Income
  • Project Grants

The City tries not to be dependent upon any outside agency (i.e. State or Federal) as a regular funding source.  But we do have a few:

  • Supplemental Law Enforcement Fund ($100,000 per year)
  • Gas Tax Fund ($45,000-$50,000 per year)
  • Marin County Transportation Sales Tax ($26,000 per year)

The only debt the City holds is for a brief period of time as Underground Utility Districts are formed and operated.  Once established, bonds are sold and that debt is transferred to the Assessment District and the member property owners.  We have a balanced budget that is adopted every year – with little fanfare.   That budget covers the City’s operational expenses and capital expenses.  It’s not a complicated document and not that long – in fact, it’s available for download on the City website.  Check it out – it includes a Budget Guidelines section discussing the City’s various funds and fund types.

On Monday, March 8 at 6 pm staff will present the Council with a mid-year budget presentation.  That’s sort of a “what’s over and what’s under” presentation as well as a “what did we do” slide show.  Once complete, the City’s 2010/2011 Budget Cycle begins.

The City operates a pretty bare-boned operation.  We have a base team of expertise that know the details and run the different departmental areas, but we tend to use a lot of consultants that bring further expertise and result in a more scaleable operational structure.  A small agency, such as Belvedere, cannot afford to hire permanent extra staff – particularly when operational demands go up and down each year.  We do more with less on a regular basis.  Staff wear many hats both in and outside of their primary areas of responsibility.  The ability to multi-task, prioritize, facilitate, and educate while still meeting jurisdictional, legal, and governmental timelines across a plethora of projects is a must.

From a future budget perspective, the expectation is that property taxes will decline slightly over the next couple of years and then level off.  That’s the City’s primary revenue source.  When such a significant and primary revenue source declines, even slightly, the City faces tougher choices when programming out maintenance and capital projects in order to maintain a healthy reserve.

Through the budget process, we assess needs and set priorities.  You have opportunities to give input as the adoption of the budget is a public process for the City Council.  As you look at the budget, note that projected out over the next 5-7 years, the balance of the general fund at year-end (i.e. the amount in reserve) declines and other funds, such as the Capital Improvement Fund, increase.  This is due to the slow, but steady increase in general operating expenses, scheduled capital project priorities, single-year special project expenditures, and the addition of major unanticipated capital projects without alternative funding sources.  To meet future needs, funds are transferred from the general fund to these special purpose funds.  As budget years come into focus, projects without funding sources are either eliminated or funds are allocated from particular sources (General Fund, Grants, etc.).

The good news is that basic revenues generally outpace budget projections at year-end.  From current year to current year, the amount in the general fund at the end of the year is typically higher than projected.  This is due to the City’s conservative budget process.  For expenses, we nail down costs as concrete as possible for the budget.  For revenues, we nail down those as well, but project them conservatively.

The City Council reviews and prioritizes the City’s Annual Operating Budget.  Like a household budget, the City budget is always tight.  Our goal is to spend money wisely to meet the needs of the community, whether those needs are roads, sidewalks, tree trimming, public education and information, safety inspections, design review, long-term planning, park maintenance, pathway improvement, code enforcement, engineering, land-use, infrastructure projects, building permits, building inspection, public safety, deer, flood zones, noise, street sweeping, traffic, storm preparation, committee support, or more.

Challenging choices with challenging priorities in a changing environment.  But in Belvedere, we know we can make things happen to meet the needs of this community – it’s all a matter of finding the right solution.

Imagination Stirs Innovation to Realization.

Categories: City Budget · Finance · General City Government

Sacramento “Borrows” Local Funds

October 19, 2009 · Leave a Comment

Fall is here and in the 2009 City Newsletter you will find articles on projects underway, some highlights of upcoming community events, and a synopsis of the City’s finances.  As  you know, the City prides itself on a history of self-reliance and believes this to be fundamental to good financial stewardship.  The City does not rely heavily on any Federal, State, or other non-local revenue source in the provision of services to the community.

Unfortunately, the State does not share the same sentiment and has balanced its budget with revenues dedicated to local government services.  The State’s recent budget adoption has resulted in the taking of huge amounts of money belonging to the CIty of Belvedere and hundreds of other cities, counties, special districts, and schools across California.  This “borrowing” of local funds will have a significant negative impact on the ability of local government to deliver its services.

Belvedere will lose roughly 8% or $300,000 of its general fund revenues from local property taxes.  Property taxes are used to provide a wide variety of local services including public safety, parks and facilities maintenance, capital projects, and the annual subsidy for fire services.  For more details, read the Fall 2009 City Newsletter coming to mailboxes this week…or the digital version online at:

http://www.cityofbelvedere.org/pdf/Fall_2009_Newsletter.pdf

Categories: City Budget · Finance

City Adopts 2009-2010 Budget

June 16, 2009 · Leave a Comment

The City continues its history of self-reliance. We do not rely heavily on any Federal, State, or other non-local revenue sources in the provision of services to the community. Historically, we have not faced budget deficits forcing the consideration of tax increases or reductions in services. We consistently budget revenues and expenditures conservatively.

In FY 2009-10, we will receive General Fund revenues totaling more than $4.64 million. General Fund expenditures are projected at $4.5 million leaving a projected year-end positive balance of $3.56 million (before transfers to other funds).

In terms of total revenue projected for all Funds, we estimate $7.18 million. Total expenditures for all funds are projected at $8.43 million. Expenditures are projected over revenues in FY 2009-10 in several areas. FY 2009-10 includes several large capital projects that will use “saved” revenues of Road Impact Fees and Capital Improvement Funds. In addition, revenues in the Fire Fund total only 59% of the projected expenditures. The balance is made up through a subsidy from the General Fund.

At this time, the budget does not include the impact of the potential borrowing by the State under Proposition 1A. It is estimated that this could impact revenues negatively by $250,000 – $300,000. The impact of the State take-away would show in revenues to the City at mid-year. It is my recommendation that the City evaluate its revenues at mid-year and make budget adjustments as necessary at that time. The FY 2009-2010 Budget includes a $460,200 transfer to the Capital Improvement Fund for current and future projects. The balance of the Capital Improvement Project at June 30, 2010 is projected at $699,202. The amount transferred to the Capital Improvement Fund could be reduced with the associated impact being that out-year projects are pushed further out.

Following is a fund-by-fund revenue and expenditure summary of the proposed budget.
GENERAL FUND

REVENUES – It is anticipated that the General Fund will generate an estimated $4.64 million in current year revenues. This amount is $179,768 less than the estimated actual revenues that will be received by the end of FY 2008-09 and $162,989 more than the FY 2008-09 approved budget.

The decrease in General Fund revenue projections against actual revenues is directly related to the conservative estimating of revenues due to the City including property taxes, construction related licenses and permits, planning and building penalties, and service charges. These reductions are offset by the inclusion of traditionally “unanticipated revenues” related to the Educational Reimbursement Augmentation Fund (ERAF) shifts at the State level. Staff does not traditionally budget for unpredictable ERAF revenues. In the past, these have been an unpredictable revenue source that could be dependent on State budget action. However, in the case of ERAF funds, the City received $270,000 in 2004-05, $240,000 in 2005-06, $265,000 in 2006-07, $429,370 in 2007-08, and $315,805 in 2008-09. It is anticipated that the City will continue to receive this allocation and therefore we have budgeted conservatively at $200,000 in 2009-2010.

EXPENDITURES – Expenditures for the operating departments in the General Fund will decrease $554 over the 2008-09 Budget. Overall, each budget has minor increases and decreases on numerous line items. There are no notable increases within any departmental budget.

FIRE FUND

REVENUES – In March 2008, Measure C was passed by the residents authorizing the adjustment of the City’s appropriations limit for the next four fiscal years in order to allow taxes already approved to be spent on fire protection and emergency medical services. For FY 2009-10, revenue from Measure C will generate $654,106, up 2.7% over the estimated revenues for the prior fiscal year. Without this revenue, the City would be required to expend this amount in addition to the current subsidy from the General Fund Reserve depleting the Reserve fund’s current balance in its entirety within 4 years.

EXPENDITURES – Even with this increase, the revenues continue to fall significantly short of what is required to fully fund the cost of services provided by the Tiburon Fire Protection District. The total required budget is $1,104,654. A General Fund transfer of $475,548 is included in the budget to augment the fund for the year.

CAPITAL IMPROVEMENT FUND

REVENUES –The Capital Improvement Fund will generate new revenue of $1,844,423 in FY 2009-10. This includes a conservative estimate of Road Impact Fee revenue – $125,000 and $1,625,000 for Utility Undergrounding Districts. Funding for the Districts come through assessment district bond sales.

EXPENDITURES – Capital Improvement expenditures in FY 2009-10 total $2.77 million. As mentioned above, $1,625,000 will be spent on undergrounding districts. Approximately $674,400 will be spent on various street and road projects to include spot repairs, slurry projects, and other projects as recommended by the Traffic Safety Committee. The majority of the funding and expenditures here comes from Proposition 1B and is allocated to the Peninsula Road Overlay & Drainage Improvement Project. Drainage projects for the coming year total $109,000 and include storm drain repairs at Bella Vista, Belvedere Ave @ Belvedere Way, and Beach Road. Park and Open Space projects total $153,700 and include improvements to the San Rafael Avenue Pathway, Beach Road Circle Landscaping, and miscellaneous other improvements. Lane improvements include work at the Harry B. Allen Stairs and Upper Woodland stairs at $52,000. Community Building improvements, $33,500, include repairs/replacement of portions of the City Hall patio and waterproofing. Lastly, 2009-10 expenditures include miscellaneous projects totaling $112,000, such as concrete/retaining wall repairs, study and surveys, sidewalk repairs and a disaster preparedness and recovery project allocation to be used on an as needed basis ($50,000).

OTHER RESTRICTED FUNDS

LEGAL DAMAGES AND SETTLEMENTS – Expenditures for legal expenses from the legal damages and settlements fund in FY 2009-10 are projected at $25,000. Anticipated expenditures in 2008-2009 were $1,000. At year-end, the anticipated balance of the Legal Damages and Settlements Fund will be $420,000.

EQUIPMENT REPLACEMENT FUND – The FY 2009-10 Equipment Replacement Fund includes the purchase/replacement of miscellaneous furniture and computer equipment. All purchases and replacement of major equipment and vehicles has postponed to mid-year after a mid-year budget review. The FY 2009-10 budget includes a fund of $25,000 for any necessary replacement of computer equipment and/or furniture.

CONCLUSION

In summary, recommended expenditures total $8.43 million and combined available revenue and fund carryovers total $13.25 million. As the budget is currently proposed, it is anticipated that the General Fund balance at the end of FY 2009-10 will total $2.58 million. The Finance Committee met on May 21, 2009 to review the proposed budget for FY 2009-10 along with the five-year projections.

Stated Reserve Policy: As adopted in 2007, the City’s General Fund Operational Reserve Policy requires that the City maintain 6-months General Fund operating expenses within the General Fund Reserve. General Fund operational expenses for 2009-10 are $4.98 million, inclusive of a transfer to the Fire Fund. The projected General Fund balance at year-end, exclusive of reserve fund transfers, is $3.08 million well maintaining a General Fund Operational Reserve of $2.49 million, consistent with the proposed policy. The remainder can be allocated to the City’s various outside funds for designation as infrastructure, equipment, or legal reserves as needed.

At the conclusion of FY 2009-10, the Capital Improvement Fund balance will be stable at $2.58 million and the Road Impact Fee balance will be $916,210, with allocations within the 5-Year Capital Improvement Plan.

I would like to commend staff’s hard work developing this document. Each year, City staff develops a budget that balances community priorities, identified revenue sources, and fiscal conservativeness to ensure that the City’s fiscal independence continues. This budget year is particularly challenging given the economic downturn of the economy. Key staff members consistently provide the input necessary to develop a successful budget. These staff members include: ACM/Building Official Lee Braun, Planning Manager Pierce Macdonald, Public Works Manager Scott Derdenger, Former Police Chief Mark Campbell, New Police Chief Steve Fracolli, and Deputy City Clerk Leslie Carpentiers. Special recognition is always due to Finance Office Becky Eastman who coordinates a very successful budget process. Belvedere is fortunate to have such professional and dedicated staff all of whom recognize the uniqueness of the community and feel as strong about preserving Belvedere as someone who has lived here all their life.

Categories: City Budget · Finance · General City Government
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