2002-019-Amending The Position And Classification Plan Adding Finance Project Coordinator And Deleting Business License AdministratorRESOLUTION 2002 - 19
RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF'LOS GATOS
AMENDING THE POSITION AND CLASSIFICATION PLAN
ADDING FINANCE PROJECT COORDINATOR
AND DELETING BUSINESS LICENSE ADMINISTRATOR
RESOLVED, by the Town Council of the Town of Los Gatos, County of Santa
Clara, State of California, that the Town Council hereby amends the Town. of .Los Gatos
'Position and Classification Plan as follows:
T.E.A. Employee Classification
Title
Delete Business License Administrator
.Add Finance Project Coordinator
PASSED AND ADOPTED at a regular meeting of the Town Council of the
Town of Los Gatos, California, held on the 19t" day of February, 2002 by thefollowing vote.:
COUNCIL MEMBERS:
AYES: Steven Blanton, Sandy Decker, Steve Glickman, Joe Pirzynski,
Mayor Randy Attaway
NAYS: None
.ABSENT: None
ABSTAfN: None
~ ~
SIGNED.:
MAYOR O HE TO OF LOS GATOS
LOS GATOS, CALIFORNIA
Al"TE'ST:
~r~~ ~~
~~
CLERK OF "Y'HE TOWN OF L GATOS
LOS GATOS, CALIFORNIA
TOWN OF LOS GATOS
.BUDGET PERFORMANCE REPORT
FOR THE SIX MONTHS ENDED
DECEMBER 31, 2001
January 28, 2002
FINANCIAL OVERVIEW
The audit completed in October 2001 confirmed that the Town's financial status
strengthened upon the close of fiscal year ending June 30, 2001. Total fund balances, not
including Redevelopment Agency, of $39.8 million for all Town funds increased by $7.6
million or 23.6% from the prior year balance of .$32.2 million. The majority of the
increase in fund balance occurred in the Town's Capital Projects Funds ($6.1 .million)..
This was- due to the transfer of revenues to this fund for scheduled capital improvements
for which the actual expenditure of the funds had not occurred as of June 30, 2001. The
adopted FY .2001-02 budget anticipates this balance to be spent down upon .completion of
the Town's current two year phasing of some of the major capital projects in the Town.
The Town's audited General .Fund balance gained approximately $1,550,000 from the
prior year. Contributing to this financial improvement were expenditure savings and
revenue collections in excess of budget in Sales Tax, Property Tax, and Fees and Charges
revenues, all exceeding budget estimates for FY 2000-01.
Total Town Fund Balances FY Ending June 30,2001
$39.8 (In Millions)
$8.9
Internal Service Funds
2e'_.
$0,2
Fiduciary Fun
1%
$13.6
ieneral Fund
34%
$2.0
~ecial Revenue
5%
.Page 1
~,. ~ `~C~~~~NI I
$95.1
Capital'Projects
38%
~ ~
The strong financial results for he year ending .June 30, 2.001 are timely due to the
financial challenges now facing the Town as a result of a nationwide economic slowdown
and the continuing effects of the September 11, 2001 tragedy and the war on terrorism.
Revenue gains and expenditures savings at year end were sufficient to establish
$472,000 of designated future Capital Reserves, $831,545 of carryover reserves for
encumbrances and authorized carryovers from the prior year, and $875,725 available to
fund beginning fund balance. This amount is approximately $193,735 more than the
projected beginning fiord balance of $681,990 estimated in the spring of 2001 during the
development of the FY 2001-02 budget.
FINANCIAL OUTLOOK
Second quarter results ending December 31, 2001 continue to affirm that the economic
slowdown of 2001 and the after-effects of the events of September 11, 2001 have
combined to negatively impact the Town's operating revenues,. most notably Sales Tax
and Transient Occupancy Tax, Analysis of the second quarter's receipts :indicates the
revenue reductions made to sales tax at the first quarter were .appropriate. Due to a
continuing slowdown in business/holiday travel, staff recommends a further reduction in
Transient Occupancy Tax from the first quarter revised amount of $1,100,000 to
$900,000. Also, due to a slowdown in real estate sales activity in the Town, staff
recommends a :reduction in the estimated property transfer ~ tax from :$415,000 to
$25:0,000. Though these are substantial .reductions, :these revenue downturns are still
forecast to be offset by positive reductions in the Town's projected FY 2001-02 operating
expenditures, and positive revenue increases in interest income.
Staff has .analyzed the largest components of General Fund operating revenues .and total
expenditure activity through the second quarter to arrive at recommendations on budget
revisions .for FY 2001-02. In the following pages, major General Fund revenues are
described and an analysis of the current year's budgeted to .actual revenues received to
date are presented for review. The analysis section of each major revenue category
provides a basis for any staff recommendations on .revising revenue estimates for the
year.
After presentation of General Fund revenue and expenditure analysis, these adjustments
are incorporated into the next presentation-the Schedule of General Fund Operating
Revenues vs. Operating Expenditures. The Schedule of General Fund Operating
Revenues vs. Operating Expenditures indicates that .despite sizable reductions in
projected operating revenues, due to Town's FY 2001-02 strategic expenditure
slowdown/reduction efforts and salary and benefit savings, the Town's operating
revenues are still projected to exceed operating expenses (not including carryovers and
one-time use of reserves).
The Financial Overview .and Summary section provides a discussion of Town major
funds at a summary level. Also included is a discussion of the Town's strategies
implemented to mitigate the downturn in revenues experienced this fiscal year.
Page 2
FINANCIAL OUTLOOK FY 2001-02
Descri tp ion
5czles Tcrx Revencce
The State Board of Equalization allocates one
(1.0) cent of the eight {8.0) cents of local sales
tax collected by merchants on retail sales and
taxable services transacted within the Town of
Los Gatos. Revenues are remitted to the Town
on a monthly basis. This revenue is placed in
the General Fund for unrestricted uses.
Analysis
In developing the Town's FY 2001-02 budget
last spring, signs of a potential economic
slowdown prompted staff to reduce its Sales
Tax Revenue budget estimates from
approximately $9 .million in FY 2000-01, down
to $8 million in FY 2001-02. The decrease in
second :quarter receipts as shown in the chart
below, support this decision.
With the tragic events of September 11, 2001,
the economy suffered another setback. In 'light
of this additional :downturn, at first quarter stafF
recommended a revision of the budgeted sales
tax amount from $8 million to $7 million. Sales
Tax revenue ...analysis data is six months in
arrears, however the $7 million estimate is in
dine with projections received from MBIA, the
Town's sales tax analysis vendor.
Quarterly and Annual Revenues
5-Year History
$,a;ooo,ooo
$s;aoo;ooo
$8;000,000
$7,000,000
$6;000,000
$s,ooo,ooo
$4,000;000
$3,000;000
$2;000,000
$1.,000,000
$•
2nd Quarter
Revenues
~ Fiscal Year
Tntal RPVanuacl
FY 1998 FY 1999 FY 2000 FY 2001 FY 2002
2nd Quarter Revenues $ 2,913,382 $ 2,712,934 $ 3,245.,945 $ 4,759,276 $ 3,288,885
fiscal Year Total Revenues $ 5,652,549 $ 5,688,125 $ 7,932,104 $ 9,429,256 $ 7,000,000
"Current Fiscal Year is'budget estimate
2nd Quarter Percent of Total 51.54% 47.69% 40.92% 50:47% 46..98%
Recommended Budget Revision No Chance
Page 3
FY 1998 FY 1999 FY 2000 FY2001 FY2002
FINANCIAL OUTLOOK FY 2001-02
• Property Tax Revenue
Description
Property Tax is one of the Town's largest
revenue sources, accounting for 17.8% of the
Town's budgeted General Fund revenue for FY
2001-02.
Property Tax distributions are .largely received
in the third and fourth quarters of the fiscal year,
meaning revenue receipts are not reflected
proportionately in the chart below, by quarter.
Property Tax is levied at one percent of the
assessed value of the property, of which the
Town receives approximately thirteen cents on
each dollar paid to the County Assessors Office.
The assessed value of real property appraised by
the County Assessor is the 1975-76 assessment
role value, adjusted by a two percent inflation
factor thereafter. When property changes hands
or new construction occurs, property is
reassessed.at its current market value.
Real property values critically impact revenues.
With the passage of Proposition 13, voters in
California limited the tax rate that can be
imposed by the Town on property. With this
limitation on rates, the higher the aggregate
property value, the .higher the revenue
generated.
Analysis
The County of Santa Clara indicated to the
Town during development of the FY 2.001-02
Annual Budget, that assessed valuation was
increasing in general on the Town's parcels.
Assessed valuation is expected to grow
approximately 15% during FY 2001-02. Recent
confirmation by the County indicates that the
budgeted amount of $4,301,100 continues to be
a very realistic number; therefore staff
recommends no change to the property tax
estimate at this time.
Quarterly and Annual Revenues
S-Year History
$5,000,000
$4.,000,000
$3,000,000
$2,000.,000
$1,000,000
$-
- - ----
^2nd Quarter'Revenues
-^ Fiscal Year Total Revenues
FY FY FY fY FY
1998 1999 2000 2001 - 2002
FY 1998 FY 1999 FY 2000 FY 2-001 FY 2002
2nd Quarter Revenues $ 1,650,266 $ 1,881,857 $ 2,.110.,478 $ 2,450,173 $ 2,127,714
Fiscal Year Total Revenues $ 3,036,546 $ 3,414.,762 $ 3,724.,022 $ 4,114.,196 $ 4,301,100
*Current FiscalYear is.budget estimate
2nd Quarter Percent of Total 54.35% 55.11% 56.67% 59..55% 48.47%
Recommended Budget Revision No Change
Paee 4
FINANCIAL OUTLOOK FY .2001-02
• Interest Income Revenue
Descri tp ion
The Town earns Interest Income revenue 'by
investing cash not immediately required for
daily operations in a number of money market
instruments. These investments are made
within parameters as stated in the Investment
Policy .approved by the Town Council. The
Town's .goal is to achieve a competitive rate of
return while protecting the safety of those funds.
Interest Income revenue for the. Town is
primarily dependent upon two factors: the cash
balance in the Town's investment portfolio, and
the yield on fihose funds.
Analysis
The Town's cash 'balances have .increased
substantially in past years in accordance with
the Town's Capital Expenditure program plans,
yielding a trend of interest revenue increases.
In FY 2002 however, Interest Income
projections incorporate a planned $5 million
Capital Program expenditure which significantly
impacts cash balances. A revenue decrease is
reflected in the first quarter of the year,. with
expectations that quarterly Interest Income
revenue will further decrease.
The adopted budgeted interest revenue is lower
:than current :revenue projections however,
requiring a conservative adjustment increase of
$300,000 approved in the first quarter from $1.4
million to $ L.7 million.
Quarterly and .Annual Revenues
5-Year History
$3.,500,000
$3.,000,000
$2,500,000
$2,000,000
$1.,500.,000
$7.,0.00.,000
$500,000
$-
2nd Quarter
Revenues
^fiscal Ysar
Total Revenues
FY 1998 FY 1.999 FY 2000 FY 2001 FY 2002
2nd Quarter Revenues $ 707,276 $ 714,664 $ '882,081 $1,461,311 $1,220.,984
.Fiscal Year Total Revenues $1,616;805 $1;635,137 $.2,126,766 $3,415,358 $1,700.,:000
` Current Fiscal Year is budget estimate
2nd Quarter Revenue Percent of Total 43.7% 43:7%° 41.5% 42,8% 71.8%
Recommended Budget Revision No Change
Page 5
FY 1998 FY 1999 FY 2000 FY 2001 fY'2002
AFINANCIAL OUTLOOK FY 2001-02
Motor Vehicle In-Liecc Fees
Description
The State of California imposes an .annual
Motor Vehicle License Fee (NIVLF) on the
ownership of a registered motor vehicle, based
on the vehicle's sales price. This fee is "in-lieu"
of a personal property tax on the vehicles. For
those vehic es brought into California from out
of state, the. fee is based on the vehicle's market
value at the time of California registration.
After the Department of Motor Vehicles collects
this fee, the State remits the funds to the cities
and counties on a monthly basis. The State
allocates the MVLF revenue, less a small
allocation for administrative costs, by way of a
complex formula involving population and
property tax revenues.
The Town has pledged this revenue as collateral
for repayment of the 1992 Certificates of
Participation.
Anal.
MVLF revenue is historically stable revenue for
the Town, .representing approximately 6% of
annual General Fund revenues each year. The
five-year history shown in the chart below
illustrates a steady increase in fees, aided by the
recent strong economy and the continued
escalation in vehicle sales prices. Second
quarter receipts of $77.3,837 further supports
this trend of increasing revenues.
Revenues for the remainder of the fiscal year are
expected to match budgeted projections
however, there is concern that State deficits
may prompt cuts to this local government
revenue source. The Town' efforts working
with the League of California Cities to
oppose any proposed cuts appears to be
succesful as the Governor's 'budget for nest
fiscal year does not cut this source of
revenue.
Quarterly and Annual Revenues
5-Year History
$1,800,000
$1.,600,000
$1,400,000
$1;200,000
$1.,000,000
$800,000
$600,000
$400,000
$200,000
$-
2nd Quarter Revenues
.02nd Quarter
Revenues
^Total'Revenues
for Year
FY 1998 FY 1999 FY 2000 FY 2001 FY 2002
$ 557,387 '$ 606 728 $ 692,974 $ 757,519 $ 773,837
Total Revenues for Year $ 1,246;211 $ 1,297..,326 $ 1,478.;990 $ 1,597,247 $ 1;680;000
`Current Fiscal Year is budget estimate
2nd Quarter Revenue Percent of Total 45.8% 46.8% 46.9% 47:4% 46.1
Recommended Budget Revision No Change
Page 6
FY 1998 FY 1999 FY 2000 FY 2001 FY 2002
FINANCIAL OUTLOOK FY 2001-02
• Business License Tax Revenue
Description
The Town of Los Gatos requires businesses to
obtain a business license if a business is .located
within Town limits, or if an agent of a business
conducts operations within Town limits.
The Business License 'Tax is based on the type
of business activity. Activities such as retail
sales, who wale, and manufacturing are based
on estimated gross receipts, on a sliding scale.
Other Business License Tax revenues are based
on flat fees asset forth in the Town Code.
Annual business license renewals are due and
payable in advance on January 2nd of each year.
New business license applications for flat-fee
based businesses are pro-rated by quarter, .from
the date of application to the end of the year.
The Town has instituted unproved collection
techniques over the last several years, as is
reflected by the increase in Business License.
Tax revenues from prior years.
Analysis
The second quarter o'f FY 2002 reflects an
:increase from the prior year. A positive trend
for the fiscal year.
The Business License Tax revenue received in
the first quarter is primarily comprised of new
Business License fees. The majority of
Business License revenue is received in the
second and third quarters of the fiscal year for
the annual Business License renewal fees.
During preparation of the FY .2001-02 budget,
staff anticipated the softening economy would
affect Business Tax fees based on revenues,
Fees based on gross receipts comprise
approximately 40% of the Business License
fees, with flat fees making up the other 60% of
revenue. Budgeted revenues were therefore
decreased from the prior year. At this time,
staff .does not expect that further budget
decreases are needed.
Quarterly and Annual Revenues
5-Year History
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
.$200,000
$-
^2nd Quarter
Revenues
^Total Revenues
for Year
FY 1998 FY 1999 FY 2000 FY 2001 FY 2002
2nd Quarter Revenues $ 359;559 $ 287,882 $ 400,413 $ 428.,772 $ 4.99.,395
Total Revenues for Year $ 942,087 $ 956,710 $ 1,000,281 $ 995,699 $ 900,000
Current Fiscal Year is estimated
2nd Quarter Revenue Percent of Total 38..17% 30.09% 40.03% 43.06% 55.49%
Recommended Budget Revision No Chanae
Page 7
FY 1998 FY 1999 FY 2000 FY 2001 FY 2002
FINANCIAL OUTLOOK FY 2001-02
Transient Occupancy Tax Revencce
Description
The Town of Los Gatos levies a 10 per cent
Transient Occupancy Tax on all hotel/motel
rooms within Town limits to help fund Town
services provided to transient lodgers.
expects the occupancy rates to improve with the
re-establishment of air travel and normal
business .activity. The occupancy rates are also
impacted by the economic slowdown which has
been experienced throughout the nation and
especially in the Silicon Valley region.
Analysis
The Transient Occupancy Revenues received in
the first quarter of the fiscal year reflects the
drop in occupancy rates for nearly all Town
hotels and motels. This decrease is due in large
measure to the dsniption in travel caused by the
tragic events of September 11, 2001. The Town
The second quarter of FY 2002 reflects a
decrease from the prior year. As a result, we
recommend a further reduction in this revenue.
source by .$200,000 from $1.1 million to
$900,000 for the fiscal year. Town hoteliers
report that reservations were beginning to pick
up in January 2002, a hopeful sign for the
future.
Quarterly .and Annual Revenues
S-Year History
$1, 400, 000
$1, 200, 000
$1; 000,000
$800,000
$600,000
$400,000
$200,000
$-
02nd Quarter
Revenues
^ Fiscal Year Total
Revenues
FY 1998 FY 1999 FY 2000 FY 2001 fY 2002
2nd Quarter Revenues $ 378.,680 $ 396,149 $ 415,824 $ 572,874 $ 334,858
Fiscal Year Total Revenues $ 1.;012,640 $ 1.,:025,042 $ 1,215,702 $ 1.,286,276 $ 900,000
"Current Fiscal Year is budget estimate
2nd Quarter Percent of Total 37..40% 38.65% 34.20% 44.54% 37.21
Recommended Budget Revisions Decrease to: $ 900,000
Page 8
FY 1998 FY 1999 FY 2000 FY 2001 FY 2002
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FINANCIAL OVERVIEW SUMMARY .AND RECOMMENDATIONS
GENERAL FUND
Analysis of revenue and expenditure activity though the second quarter of FY 2001-02
provides staff with sufficient trend information to recommend the following revisions to
revenue sources discussed in the Financial Outlook section of this report:
GENERAL FUND REVENUES
Sales Tax
Transient Occupancy Tax
Interest Income
Real Property Transfer Tax
Beginning Fund Balances
FY 2001-02
Adopted BudEet
$ 8,000,000
$ 1,400,000
$ 1,400,000
$ 415,000
$ 681,990
FY 2001-02 FY 2001-02
Revisions Revised Budget
$ (l,ooo,ooo) $ 7,000,000
$ (500,000) $ 900,000
$ 300,000 $ 1,700,000
$ (165,000) $ 250,000
$ 19.3,735 $ 875,725
After revising General Fund .revenues as recommended, the Town's Schedule of General
Fund Operating Revenues versus Operating Expenditures project the following:
GENERAL FUND FUNDING SOURCE RECAP
FY 2001-02 ADOPTED AND PROJECTED/ACTUAL BUDGET
Add:
Operating Revenues
Less:
Operating Expenditures
Net Operating Revenues Available for Capital
Capital Financing
Add:
Net Operating Revenues Dedicated
Beginning Fund Balance
Authorized Use of Designated Reserves
Amount Available for Capital
Capital Transfers from General Fund Per Budget
Fund Balance Beginning
Add: Net Operating Revenues
FY 2001-A2 FY 2001-02
Adopted Actual/Pro,jected
.24,099,410 22,954.,55:5
(23,,574,000). (22,385,643)
525,410 568;912
525,410 33 l ,67.5
681,990 , 875,725
591,900 591,900
1,799,300 1,799,300
1,799,300 1,799,300
10,560,703 13,608,96.8
S25,410 568,9.12
Less;
Budgeted Use of Designated Reserves 591,900 690,500
Use of Beginning Fund Balance for Capital Projects 681,990 875,725
Use of Net Oper. Rev. for Remaining Capital Projects 525,410 331,67:5
Fund Encumbrances and FY 00-01 Carryovers ~ - 732,945
Fund Balance-Ending June 30, 2002 $ 9,286,813 $ 11,547,035
As shown above, the FY 2001-02 budget planned on a net operating surplus at the end of
FY 2001-02 of $525,410 which was budgeted to partially fund the FY 2001-02 capital
Page 10
program General Fund contribution of$1.8 million. After implementing the revisions to
Town revenues and factoring in the effect of strategic expenditure reductions and salary
and benefit savings, 'the Town now expects. an operating surplus of $568,912.
Combining the small increase in expected operating surplus with the additional amount of
budgeted available beginning fund balance .projects the Town to maintain a General Fund
total ending fund balance including reserves of .$'11.5 million versus the $9.3 million
projected in the adopted FY 2001-02 budget.. This favorable projection results largely
from the increase to fund balance from the prior year's results, but also from the budget
reduction strategies utilized by the Town. Beginning with closely monitoring operating
expenditures for potential reductions, Town staff is implementing the following:
Expenditure Slowdowns/Reductions and Projected Salary & Benefit Savings-FY 2001-02
In addressing the funding needs, Town staff began reviewing operations for possible
strategic expenditure slowdowns/reductions. Departments will be :reviewing ' tlxese
expenditure reductions with the priority to limit the impact to Town services.
Additionally, the Town conservatively budgets its personnel costs assuming top pay step
and zero position vacancies during the year. At the time of this report, actual salary and
benefit reports indicate that all employees are not at their top step, and 17 vacant
authorized positions remain to be filled. Savings through strategic expenditure reductions
:and salary and benefit savings are currently projected to be nearly $1.4 million for the
fiscal year.
Surplus Beginning Fund Balance
After establishing all reserves to their planned levels, the available budgeted beginning
fiord balance after audit is estab fished at .$875,725 versus the estimated balance available
of $681,990 planned in the adopted budget.
It is believed that through the combination of expenditure reductions, salary and benefit
savings,. and the use of surplus fund balances., the :revenue reductions experienced by the
Town in sales tax, transient occupancy tax, property tax and other miscellaneous
revenues can be mitigated. The steps taken by the Town this fiscal year appear to be
sufficient. to maintain the Town's General Fund operating budget and .capital project
commitments and funding allocations for FY 2001-02.
Future plans and policies to in deal with potential recessionary revenue reductions in
future years will include staff considering the following:
Internal Service Fund Balance and User Charges
As part of the FY 2002-03 budget development, staff will be conducting a detailed
review of the approximately $8.9 million of Fund Balances in the Town's Internal
Service Funds. These funds provide resources for MIS services, equipment replacement,
building :and vehicle maintenance, and Town-wide supplies by charging a rate to the
General Fund to pay for these services. Staff believes there may be some excess balances
that have accumulated in these funds, and that the rates charged for these services to the
General Fund may have opportunities for reduction.
Page 11
~.
Economic Vitality Efforts
An important component in the steps the Town can take on apro-active basis to address
its long-term funding needs, is an active economic vitality effort. Though the Town has
strong reserves, these are one-time sources of funding designated for one-time needs..
The Town is .not particularly strong in reliable, stable, on-.going revenues that can support
the Town's annual operating costs. The Town's sales tax base needs to be retained and
enhanced for the future. Key to this effort will be the development of a business
retention strategy; and a sales tax diversification effort.
Though the Town presently has a strong sales tax base, it is reliant on some Ivey sectors
such as auto and retail sales which can be viewed as vulnerable sectors that shift with the
fortunes of the overall economy. Staff is addressing the issue of the Town's economic
vitality by developing some key action steps that included the recruitment and hiring of a
Redevelopment Manager and the imp ementation of a viable economic vitality program
for the Town. This program will seek to strengthen and :diversify the economic 'base of
the Town and enhance its ability to provide services to the community. The program will
have Council policy considerations that will be brought forward at a firture date. This
program is even more important now because of the uncertainty of the economy after
September 11. Consequently, staff would like to begin laying the foundation for these
efforts at a future council work session.
ALL OTHER FUNDS (Vehicle Maintenance, Building Maintenance, Management
Information Systems, Equipment Replacement, Self Insurance, Workers'
Compensation, Stores Fund)
Internal Service Funds
Internal Service Funds are tracking in .accordance with the .adopted FY 2001-02' budget.
No revision to .adopted revenues or expenditures is required at this time. Ending fund
balances for Internal Service Funds for June 30, 2D02 is projected to be $8,91.2,020.
INTERNAL-SERVICE FUNDS
Equipment Liab & Vehicle Building Mgmt.
:Replacement worker Comp Stores Maintenance Maintenance Info Systems
.Beg Pund Balance BUDGET $ 2;980,500 $ 2,604;890 $ 85;610 $ d 1;025 $ 431,760 $ '1,609;980
Beg Fund Balance ACTUAL $ 3,025,062 $ 3,525,778 $ '190;497 $ 12,735 $ 458,380 $ 1,691,458
FY 02 Revenues .BUDGET $ 795,700 $ 1,263;000 $ 83;200 $ 564,100 $ 955,910 $ 841,900
2nd Qtr Revenues ACTUAL $ 396,600 $ 6L1,164 $ 32,430 $ .264,350 $ 530,986 $ 335,918
FY 02 Expenditures BUDGET $ 491,900 $ .1,107,200 $ 113,500 $ 564;000 $ 1,018,500 $ 1,210;600
2nd Qtr Expenditures ACTUAL $ 71,565 $ 494,240 $ 59,350 $ 258,573 $ 473,186 $ 192;899
Ending Balance BUDGET $ 3,284,300 $ 2,760,690 $ 55,310 $ 11,125 $ 3b9,170 $ 1,241,280
Ending Balance PROJECTED $ 3;328,862 $ 3,681,578 $ .160,197 $ 12,835 $ 405,790 $ '1,322,758
TOTAL ENDING'BALANCE: $ 8,912,020
Page 12
~ i,
Special Revenue Funds (Solid Waste, CDBG, Non-Point Source, .Sewer Maintenance,
Land and Lighting Fund)
.Special Revenue Funds are tracking in accordance with the adopted FY 2001-02 budget.
No revision to adopted revenues or expenditures is required at this time. Ending fund
balances for Special Revenue Funds for June 30, 2002 is projected to be $1.,990.,122.
SPECIAL REVENUE FUNDS
Solid waste CDBG Non Point LLD's Scorer
Beg Fund Balance BUDGET $ 357.;000 $ 1,310;424 $ 213;280 $ l 14,700 $ -
Beg Fund Balance ACTUAL $ 368,080 $ [,335,838 $ 20.1,279 $ (17,774 $ 97,361
FY 02 Revenues BUDGET $ 166;000 $ 445,900 $ 194,500 $ 45,30.0 $ 484,900
2nd Qtr Revenues ACTUAL $ 62,057 $ 22;223 $ 194,500 $ 48,.175 $ 484.900
I'Y 02 Expenditures BUDGET $ (42;900 $ 642,700 $ 1b0;710 $ 35,600 $ 48-1.900
2nd Qtr Expenditures ACTUAL $ 58;776 $ 34,764 $ 100,534 $ 18,877 $ 223.21;4
Ending Balance BUDGET $ 380,100 $ 1,.113,624 $ 247;070 $ 124,400 $ -
Ending Balance PROJECTED $ 391,180 $ 1,.139;038 $ 235;069 $ 127,474 $ 97,36.1
TOTAL ENDING BALANCE: $ 1,990,122
Capital Projects Funds
Capital Project Funds are tracking in accordance with the adopted FY 2001-02 budget.
The beginning fiord balance of $11.8 million is available for use in the Street
Improvement Projects now being implemented with a current fiscal year total budget of
approximately $7.7 million over atwo-year implementation schedule. Given the
recommendations presented earlier that advise no change at this time to the General Fund
FY 01-02 capital finding commitment, no revision to adopted revenues or expenditures
is required at this time.- Ending fund balances for Capital Projects Funds for June 30,
2002 is projected to be $7,796;350..
CAPITAL PROJECT FUNDS
Traflic Mit. Utility
GFAR & Grants Gas Tax Underground Storm Drains
Beg Fund Balance BUDGET $ 11,672,937 $ 153,500 $ 523,000 $ 1,465,500 $ 547,600
Beg Fund Balance ACTUAL $ l 1,819,352 $ 200,907 $ 985,225 $ 1,573,139 $ 52.1,357
FY 02 Revenues BUDGET $ 2,686,000 $ 7.04;450 $ 620,800 $ 144,200 $ 129,400
2nd Qtr Revenues ACTUAL $ 1,883,169 $ 54,585 $ 312,248 $ 57,748 $ 78,481
FY 02 Expenditures BUDGET $ 10,013,630 $ 636,65.0 $ 938,200 $ - $ -
2nd Qtr Expenditures ACTUAL $ 2,115,995 $ 16,393 $ 446,585 $ - $ -
Ending Balance BUDGET $ 4;345,307 $ 221,300 $ 205,600 $ 1,609;700 $ 677,000
Ending Balance PROJECTED $ 4,491,722 $ 268;707 $ 667,825 $ 1,777,339 $ 650,757
TOTAL ENDING' BALANCE: $ 7,796,350
Page 13
Trust and Agency Fccnds
Town Trust and Agency Funds have fiord balances as of June 30, 2001 of $271,877 for
Parking District #88 and $185.,930 in the Library Trust Funds. No budget revisions are.
contemplated at this time for these funds.
Redevelopment Agency
At the close of the fiscal year ending .June 30, 2001 the Town's Redevelopment Agency's
Capital Projects fund reported $1,481,966 of fund balance available for capital projects.
The Agency's :adopted budget for FY 2001-02 and adopted FY 2001-06 adopted Capital
Improvement Plan and proposed current unbudgeted potential RDA funding
commitments are presented as follows:
Town of Los Gatos Redevelopment Agency
Cash Balance .June 30,2001
Cash Loaned to Agency From Town
Less:
Accounts Payable & Pass Throughs Dine at b/30./01
Total Cash Available-Beginning
Additional Cash- FY 2001-02 Increment Net of Pass
Throughs, Adorn Costs,. & 20% Housing Set-Aside
Total Cash Available and Current Year Net Increment
Capital Costs:
Budgeted and Authorized:
Town Piaza
Street/Sidewalk/Santa Cruz & Bachman
Street Improvements
Parking Structure
P armed in FY 2001-06 Capital Improvement Plan:
Additional Streetscape Improvments
Total Capital Costs
3.,.860,110
1:,968,500
(2,,712,b08)
3,116,002
1,122,010
4,238,012
1,509,267
1,560,000
1,110,000
475;000
1,800,-000
6;454,267
Gash Required Based on Cash Available $ (2,216,255)
As demonstrated above, the capital appropriations approved in the RDA FY 2001-02
budget and its amendments combined with the planned or anticipated but not yet
budgeted capital improvements approved in the RDA's FY 2001-06 Capital Improvement
Plan total approximately $6.5 million. Current cash. on hand available to fiord this
program totals approximately. $4.2 million, including the approximately $2, million
loaned to the Agency by the Town. Present authorized and planned projects exceed the
projected available cash on hand on.June 30, 2002 by approximately $2.2 million . The
current projections lead to a question about how to best fund the cash flow needed to
accomplish the capital projects currently authorized and future Agency projects that are
.contemplated by the Agency board.
Page 14
The funding question can be addressed in a number of ways. It is important to note that
redevelopment agency's are limited by law in their use of tax increment only to repay
debt incurred by the Agency. Keeping this restriction in mind, one way to address the
Agency's funding requirements is to continue making Town loans. to the Agency for its
project needs. The borrowed funds are then spent on eligible Agency projects. The loans
from the Town would then be repaid by the Agency from its .annual tax increment stream
on a "pay-as-you -go" .basis. Another approach is for the Agency to issue bonds on its
future tax increment streams. This approach .allows the. Agency to receive the bond
proceeds "up front" and use them for current and future plamzed eligible projects. 'The
bond debt service would then be repaid from the annual tax increment revenues received
by the Agency. The amount of bonding capacity is determined by the estimated amount
of future tax increment dollars to be received by the Agency for the life of the Agency
project plan. Staff has initiated work to update the tax increment projections to arrive at
the Agency's firture borrowing capacity. Additional work is underway to identify
potential projects to receive RDA funding and or reimbursement should a bond issue be
brought forward to the Agency board in the future. As a point of information, the
Agency's future tax increment were conservatively estimated to total $18 million as of
June of 2000, the date of the last projection.
Other Budget Adjustments;
Community Development Department
Staff recommends an adjustment to the budgeted revenues and appropriated expenditures
totaling .$49,7.50 to reflect revenues received through .mid-year by the Town's
Community Development Department for environmental impact fees, Geo Tech reviews,
Arborists.
Parks and Public Works
Staff recommends an adjustment to the budgeted revenues and appropriated expenditures
totaling $21;790 to reflect revenues received through mid-year by the Town's Parks and
Public Works Department for traffic studies and donations for trees and benches.
Police
Staff recommends an adjustment to the budgeted revenues and appropriated expenditures
totaling $80;853 to reflect revenues received through mid-year by the Town's Police
Department for federal .and state grants received for technology and local law
enforcement.
Finance Program Reorganization
The Town Manager's Department proposes a re=allocation of three authorized positions
in the Finance program to provide better internal and external service to Town customers.
Two positions are being reallocated. One position is the Business License Administrator.
Staff has surveyed other local governments of similar size and complexity and believes
that this function can be successfully staffed at an Account Technician level, versus the
current level of service of one Senior Account Clerk and one Business License
Page 15
Administrator. 'The Business License Administrator would be reassigned to the Finance
program as a Finance Project Coordinator, providing support in Town budget preparation
and tracking,. developing Capital Improvement Plans, financial reporting, at the same
level of pay and :benefits currently paid to the Administrator position. In addition, staff
proposes the reclassification of the vacant Account Technician position to a Project
Accountant position, to better support the Town's contract and expenditure monitoring
strengthening the internal controls and project management efforts between the Parks and
Public -Works Department, Redevelopment Agency, and Finance, The proposed re-
allocation adds no net new positions to the program. Costs. associated with this
adjustment are estimated at approximately 18I~ per year as detailed below:
Finance Program(Program2050)
FY 2001-02 F'Y 2001-02
Authorized Salaries & Benefits
Net Nct
Positions Adopted Budget
Fl' 2001-02 F'1' 2001-02
Proposed Salaries $c Benefits
Reallocation After Revision
Change Ch<uige
Positions $'s
Business License Administrator 1 $ ~ 96,963 0 -1 $ {96,963)
Fina~ice Project Coordinator 1 $ 96,963 1 $ 96;963
Senior Account Clerk 1 $ 68,408 0 -1 $ (68,408)
Account Technician-Business License 1 $ 72;869 1 $ 72,869
Account Tecluiician-GeneralAccounting 1 $ 72,869 0 -1 $ (72,869)
Project Accountant. 1 $ :86,277 1 $ 86,277
Totals After Budget Adjustment 3 $ 238,240 3 $ 256,109 0 $ 17,869
It should be noted that reclassified Project Accountant position is eligible for partial RDA
funding at an appropriate level based upon the amount ofadministrative support received
by the Agency from the Project Accountant and ability of the Agency to fiord the work.
.Additionally, the Project Accountant would also be potentially eligible to be charged out
to grants. based upon the hours of support provided to Town capital projects which
receive outside grant .funding sources.
CONCLUSION
As demonstrated in the Second Quarter Budget Performance Report, the Town is in a
sound overall financial position despite the economic uncertainties the economy is facing
this year. It is this overall financial strength that .enables the Town to effectively manage
the current economic downturn and its associated revenue reductions through the series
of recommended .adjustments contained in this report without. causing an immediate
disruption to Town services or the current year's capital improvement program.
Though fiscal year 2001-02 has been extremely challenging on a fiscal level, economists
are still forecasting economic growth this year, with the 'Bay Area forecast at 4%
economic growth. `Staff believes the Valley may not see that level, more likely a 1 to 2%
economic growth rate in calendar year 2002. Staff will continue to closely monitor all
current year revenue and expenditure .activity, mindful of the necessity to balance
operating revenues with operating expenditures.
Page 16
The proposed FY 2002-03 budget development currently underway is taking a
conservative, hold the line stance; but will strive to ensure progress will continue to be
made on key initiatives.
Page 17