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Budget Presentation 2012 - GREG (2)Small Town Service ~ Community Stewardship ~ Future Focus Small Town Service ~ Community Stewardship ~ Future Focus Budget Presentation 2012-13 Operating Budget 2012-17 Capital Improvement Program May 21, 2012 Small Town Service ~ Community Stewardship ~ Future Focus Presentation Outline Introduction Town Manager Budget Overview Finance Director Departmental Highlights Assistant Finance Director Additional Policy Items Town Manager CIP Highlights Parks & Public Works Director Public Comment Council Discussion & Direction Small Town Service ~ Community Stewardship ~ Future Focus Budgetary Roller Coaster •Continuing “Great Recession” •Declining revenue from largest tax payer •Redevelopment “takes” by State & County •Rising pension, medical, police and environmental costs Small Town Service ~ Community Stewardship ~ Future Focus Budget Development Process •May, 2011 –Projected $7 m future shortfall Council directed review of budget priorities •Nov., 2011 –Projected $4 m gap in 2012/13 Subsequent retention of Netflix sales tax •Jan., 2012 –Projected $2 m gap in 2012/13 Council rank orders budget proposals •May, 2012 –Balanced proposed budget Manageable future with better economy Small Town Service ~ Community Stewardship ~ Future Focus Balanced Budget Overview GENERAL FUND SOURCES General Fund Operating Revenues Sales & Use Tax $7.9 Property Taxes 8.0 Licenses & Permits 2.1 Charge for Services 2.2 All Others 12.7 Fund Balance (for designated uses)2.4 TOTAL SOURCE $35.3 GENERAL FUND USES General Fund Operating Expenditures $33.3 Transfers (for designated uses)2.0 Contingent Transfers -$ TOTAL USE $35.3 FY 2012/13 PROPOSED BUDGET Small Town Service ~ Community Stewardship ~ Future Focus $1.8 m Budget Gap Solution Tier 1 Reductions & Adjustments $1.1 m Updated Revenue Projections $ .5 m Increased Operating Costs ($ .3 m) Use of 2011-12 Fund Balance $ .5 m (or new revenue alternatives) Small Town Service ~ Community Stewardship ~ Future Focus Updated 5-Year Forecast Assumptions -Netflix sales tax revenues continue to drop -Other revenues trending up slowly -Rising pension and health costs Future Challenges -Up to $2.4 m in future adjustments needed -Will require stronger economy and more cuts -Some use of reserves likely to bridge the gaps Small Town Service ~ Community Stewardship ~ Future Focus Reserves Remain Strong Restricted General Fund Reserves Reserved for RDA Loan $1.5 Total Restricted General Fund Reserves $1.5 Designated Reserves Budget Stabilization Reserve $7.4 Catastrophic Reserve 3.7 Capital/ Special Projects 5.1 Unallocated Reserves 0.2 Open Space Reserve 0.6 Actuarial 0.4 Vasona Land Sale 1.3 Sustainability Reserve 0.1 Special Studies 0.3 Productivity 0.1 Total Designated Reserves $19.2 Total Restricted and Designated Fund Balances $20.7 Estimated June 30, 2013 ( $ Millions) Small Town Service ~ Community Stewardship ~ Future Focus Departmental Highlights Administrative Services -Elimination of vacant Staff Technician -Reduction in training, travel and other expenses Community Development -Reclassification of temporary planner to Senior Planner -Reclaim previously shared Building Inspector -Reduction in temporary staff hours Police -Elimination of vacant officer position -Mid-year consolidation of Community/Personnel and Traffic sergeant positions upon retirement Small Town Service ~ Community Stewardship ~ Future Focus Departmental Highlights Parks & Public Works (PPW) -Elimination of PPW Manager; CIP funded thru Nov. -Transfer some engineering/inspection expenses to CIP Library Add hourly staff for essential customer service Seek funding for teen services and collections Town-Wide -Continue non-sworn unpaid furloughs for 5 days (2% pay reduction) Small Town Service ~ Community Stewardship ~ Future Focus Additional Policy Items Other Budget Considerations -Library Weekend Hours -Live Oak Day Services & Case Management -Arts Funding Allocation Final Budget Balancing -Use of anticipated 2011/12 Fund Balance -Redevelopment dissolution distributions -Residual income from Villa Vasona transfer Small Town Service ~ Community Stewardship ~ Future Focus Future Budget Issues Capital Projects Funding & Priorities Direction Incomplete Redevelopment Projects Technology investments FY 12/13 Mid-Year Budget Review -Environmental services funding -Police staffing, overtime and training Labor Negotiations with all bargaining groups Small Town Service ~ Community Stewardship ~ Future Focus Dissolution of Redevelopment •Extraordinary Town administrative burdens •County/State minimizing Town resources: –Legislated reimbursements cut in half –High County overhead costs taken off the top –Tax increment allocation penalizes Town –Narrow definition of “incomplete” projects •Almond Grove, Pageant & Library cut •Affordable Housing status unknown Small Town Service ~ Community Stewardship ~ Future Focus Proposed Fee Adjustments Council Tier 1 Budget Priorities Development related costs rise to full cost recovery Evaluate Impact Fees (traffic, parks, environmental) Annual CPI increases approved in April Proposing Building/Planning Fee changes Based on 2010 Cost Recovery Fee Study Some increases, decreases and restructuring Proposed Budget includes $50 k revenue Public Hearing scheduled for June 4, 2012 Small Town Service ~ Community Stewardship ~ Future Focus Building Fees No rate or fee changes proposed Instead, update basis for construction valuation -Currently use 2002 ICBO Building Standards -Move to 2010 ICC Standards -Projects national average construction costs -Includes regional adjustments for local variances -New standard used by most local agencies -Most agencies use ICC instead of ICBO Likely increases most fees 10 –12% Small Town Service ~ Community Stewardship ~ Future Focus Planning Fees Maximum 10% Increase -Impacts most planning fees 30% Increase -Non-residential and multiple dwelling A&S applications -New second tier –Major Restaurants Category Greater than 30% Increase -CDAC & Administrative Land Use Permits (Wireless Telecom) Other Modified Fees -PD & Rezoning applications charged on actual Time & Materials -Major projects: No change or slightly higher -Minor projects: Lower fees -Modest decreases for A&S and subdivision applications part of a PD Small Town Service ~ Community Stewardship ~ Future Focus Proposed FY 2012 –2017 CIP CIP Development Process -Review current and scheduled projects -Match priorities to available resources -Planning Commission review Proposed 5 Year CIP totals $27m -Proposed FY 12/13 CIP totals $18.6m -$14m in carry-forward projects -$4.6m in new or expanded projects Small Town Service ~ Community Stewardship ~ Future Focus Specific Capital Projects Streets Projects -Blossom Hill Road street improvements -Almond Grove Street Rehabilitation -University Avenue Resurfacing Parks -Completion of Pageant Grounds -Completion of Los Gatos Creekside Sports Park Public Facilities -Completion of LEED certification for new Library -Planned Re-Use of former Library Space Small Town Service ~ Community Stewardship ~ Future Focus Recommended Actions Public Comment Council Discussion Council Direction and Action -Consider the FY 2012/13 Proposed Operating Budget -Consider the FY 2012-17 Proposed CIP -Provide direction on the following: -Funding for increased Library weekend hours -Arts and Senior services funding requests -Use of increased revenues in lieu of fund balance -Planning and Building Fee changes -Other Council priorities and interests Small Town Service ~ Community Stewardship ~ Future Focus Thank You