07 Staff Report - Approving Redevelopment Agency FY 2009/10 Operating Budget~pW N OF
cos GA~ps COUNCIL AGENDA REPORT
DATE: MAY 2S, 2009
MEETING DATE: 61112009
ITEM NO: i
TO: MAYOR AND TOWN COUNCIL/
CHAIR AND MEMBERS OF THE REDEVELOPMENT AGENCY
FROM: GREG LARSON, TOWN MANAGER/EXECUTIVE DIRECTOR 19~r_
SUBJECT: ADOPT RESOLUTIONS APPROVING THE TOWN AND
REDEVELOPMENT AGENCY'S FISCAL YEAR 2009110 OPERATING
BUDGET, CAPITAL IMPROVEMENT PROGRAM FOR FISCAL YEARS
2009110-2013114, CARRY-FORWARD APPROPRIATIONS, AND OTHER
APPROVED ADJUSTMENTS AND MINOR CORRECTIONS
RECOMMENDATION:
1. Adopt resolution approving the FY 2009/10 Operating and Capital Summary Budget and
the FY 2009-14 Capital Improvement Program for the Town of Los Gatos, directing
staff to incorporate within the final adopted budget any changes related to Council
approved meet and confer process or management compensation plan amendments,
classification adjustments or minor corrections, carryforward appropriations, changes due
to more refined estimates and grant approvals, or additional Town Council direction
received by staff upon adoption of the budget.
2. Adopt resolution approving the FY 2009/10 Operating and Capital Summary Budget and
the 1~Y 2009-14 Capital Improvement Program for the Redevelopment Agency of Los
Gatos, directing staff to incorporate within the final adopted budget any changes related
to Council approved meet and confer process or management compensation plan
amendments, classification adjustments or minor corrections, carryforward
appropriations, changes due to more refined estimates and grant approvals, or additional
Town Council direction received by staff upon adoption of the budget.
po_~(" J6 &hz_
PREPARED BY: PAMELA JACOBS
Assistant Town Manager
NAMGR\PJaoobs109-10 Budget%Bduget adoption staff report.doo
Reviewed by: Assistant Town Manager r Town Attorney
Clerk Administrator-_P~ Finance Community Development
PAGE 2
MAYOR AND TOWN COUNCIL
SUBJECT: ADOPT RESOLUTION APPROVING THE 2008109 OPERATING/CAPITAL
BUDGET
MAY 28, 2009
BACKGROUND:
On May 18, 2009, a public hearing was held on the Town and Redevelopment Agency's
Proposed FY 2009/10 Operating and Capital Summary Budget, and Proposed FY 2009-14
Capital Improvement Program (CIP). The Town Council considered both documents and
directed staff to bring back the documents for final approval.
Prior to Council consideration of the CIP, the Planning Commission reviewed the CIP as
required by State law on April 22, 2009. The Commission determined that the CIP is consistent
with the General Plan and all specific plans.
Staff is recommending two appropriation modifications to the Proposed Operating and Capital
Budget pursuant to Council direction and no modifications to the CIP at this time. Any additional
changes or corrections directed by the Town Council upon adoption of the budget can be
incorporated into the final authorized budget as provided for in the adopted Budget Resolution.
DISCUSSION:
Recommended Modifications to the Proposed FY 2009110 Operating and Capital Budget
Staff recommends the following modifications to the Proposed Operating Budget:
Wildlife Center of Silicon Valley. As directed at the May 18, 2009_budget hearing, staff is
modifying the proposed budget to include $4,000 for the Wildlife Center of Silicon Valley. This
represents a $500 reduction to the amount received in previous years consistent with reductions
in other non-profits' allocations due to the fiscal situation. The Town will enter into an
agreement with the Wildlife Center comparable to other non-profit human service grantees,
which will require the Center to distinguish between Town residents and non-Town residents
with Los Gatos addresses who drop off animals at the Center, as well as other performance and
service reporting.
Downtown Recycling. Pursuant to Council direction and as discussed in the May 18' staff
report, staff is modifying the proposed budget to include $20,000 for the purchase and
installation of recycling cans for the Downtown. Staff is working with the waste hauler to
initiate the collection of bottles and cans from clearly marked and strategically placed recycling
cans that are smaller than the existing refuse cans. Funds for this project will come from the
Green Valley Settlement Account in the General Fund.
Donation List. Per Council direction, staff is modifying the donations list to include recycling
equipment and support. Staff will also prepare an updated brochure that includes the new
donation list. The brochure will be available on the web and public counters and provided to
interested organizations and individuals.
PAGE 3
MAYOR AND TOWN COUNCIL
SUBJECT: ADOPT RESOLUTION APPROVING THE 2008109 OPERATING/CAPITAL
BUDGET
MAY 28, 2009
Additional Budget Issues
State Budget Impacts
As noted in the staff report for the May 18t" public hearing, the effects of the State budget
deliberations on the Town are not known with certainty at this time. Given the failure of the
State's initiatives on the May 19th ballot, however, the Governor is proposing drastic cuts to state
services and takes of local government revenue. As previously noted, it is expected that the
Governor will declare a "severe fiscal hardship" to suspend the local property tax protection
provisions of Proposition 1A (2004). This would enable the state to "borrow" up to 8% of the
property taxes revenues allocated to all local agencies for the prior fiscal year. Based on 2008109
estimated property tax collections, the estimated impact to the Town in loss of property tax
would be in the range of $950,000 to $1,000,000 (including the property tax swaps for VLF and
sales taxes). Proposition IA stipulates that the Legislature must pass a law that would shift these
amounts, plus interest, back to the local jurisdictions within three years.
Recent news reports indicate that the Governor is also proposing to take Gas Tax receipts from
local government. Preliminary indications from the League of California Cities are that this
would be a take rather than a loan. Based on estimated gas tax receipts for FY 2009/10, this
wouldresult in a loss of about $550,000 in revenue for the Town's street repair program.
The property tax take must be approved by the legislature before it can be implemented, and it is
unclear what actions are necessary to take the local gas tax revenue. As this remains uncertain,
the loss of property tax and/or gas tax is not included in the proposed FY 2009110 budget. If a
property tax take is sustained by the Town next fiscal year, sufficient funds are available from
the Revenue Stabilization or other reserves to temporarily replace this lost property tax until it is
repaid with interest within three years by the State as required by law. If the state takes the gas
tax revenue, there are sufficient reserves in the street repair program budget to cover about one-
half of the amount. The remainder would be covered by the Revenue Stabilization reserve or the
Town's street program could be reduced accordingly. The final determination of use of reserves
or reduced funds will be based on impacts to townwide Pavement Condition Index.
It is also not yet known what impacts the State budget will have on statewide funding for public
safety and transportation. The FY 2009110 proposed budget resolution provides flexibility to
revise the adopted budget to reflect changes in estimates of State funding of local governtnents
programs like public safety (OOP's Grant and booking fees) or transportation funding
(Proposition 42). If these resources are lost in FY 2009/10, the Town will need to Bother reduce
services or draw down its reserves.
The proposed State property tax and gas tax takes will compound all local jurisdictions' fiscal
challenges resulting from the current severe economic recession, At the May 18tH budget
PAGE 4
MAYOR AND TOWN COUNCIL
SUBJECT: ADOPT RESOLUTION APPROVING THE 2008109 OPERATING/CAPITAL
BUDGET
MAY 28, 2009
hearing, the Council adopted a resolution declaring local severe fiscal hardship should the state
take this action. The League of California Cities is coordinating a campaign through phone calls,
letters, e-mails, demonstrations and web pages to send a strong message to the Governor and
legislators about the severe impacts to local services that would result from State revenue takes.
If the final adopted State budget includes reductions to Town revenues or increases to Town
expenditures, these changes will be incorporated into the FY 2009110 adopted budget. Staff
recommends funding any negative fiscal impacts from the State budget using Revenue
Stabilization or other reserves. This action will provide temporary bridge funding for services
until the FY 2010111 budget year when services can be aligned with ongoing operating revenues.
Encumbered Items Outstanding at June 30, 2008
Town policy calls for unexpended encumbered funds to lapse at the end of the fiscal year.
However, Town policy also provides that valid encumbrances open at the end of the fiscal year
may be carried forward to the following fiscal year and re-appropriated from the encumbrance
reserve dollars set aside upon the close of the prior fiscal year.
Because of the need to reduce expenditures, the majority of encumbrances will be closed out
during the year-end process or paid in full by the time of the final fiscal year close-out and will
not be carried forward to FY 2009110. Only on an exception basis through Town Manager's
approval are outstanding encumbrances or unspent appropriated balances from the prior year
carried forward. These amounts will be reserved in their respective fiends at year end under a
designated reserve. Capital Project Fund appropriations differ in that encumbrances are carried
forward to the following fiscal year until the projects are completed.
Non-Encumbered Items
In addition to the open encumbrances outstanding at year-end, staff is proposing to bring forward
remaining current year appropriations for unexpended balances in its grant funded operating
projects. Grants provide matching revenues for expenditures and often span two or three fiscal
years in their program or project implementation.
Final Adopted Budget Changes FY 2008109
The resolution adopting the FY 2009110 recommended budget directs staff to include changes
resulting from Council approval of the meet and confer process or management compensation
plan, fiom classification adjustments or miscellaneous corrections, from changes due to more
refined estimates or grant approvals, or from further Town Council consensus direction received
on June 1, 2009 that will cause the final published budget to differ slightly from what is
presented for adoption. Any other minor adjustments as authorized by Town Council on June Ist
will be incorporated within the final published budget document thereby not requiring a second
adoption of the annual budget.
PAGE S
MAYOR AND TOWN COUNCIL
SUBJECT: ADOPT RESOLUTION APPROVING THE 2008109 OPERATING/CAPITAL
BUDGET
MAY 28, 2009
FISCAL IMPACT:
The fiscal impact of the Town and Redevelopment Agency's FY 2009110 Operating and Capital
Budgets is provided in the Financial Summaries section of the budget document including
estimates of Fund Reserves at June 30, 2009.
As stated by staff at the public hearing on May 18, 2009, the Town will continue to monitor local
economic trends and associated impacts to the Town and RDA's adopted FY 2009110 budgets.
It is currently anticipated that staff will bring forward any further adjustments necessary in the
Town's mid-year budget review. These adjustments may include some fiu-ther actions necessary
to align operating revenues with expenditures; however, staff cannot determine at this time
whether or not these will be required. Staff will also provide an update on further
reorganizations, service reductions and cost controls necessary to balance future year budgets.
Attachments:
1. Resolution of the Town Council Approving FY 2009/109 Operating Budget and FY 2009.14
Capital Improvement Plan
2. Resolution of the Redevelopment Agency Approving FY 2009110 Operating Budget and FY
2009-14 Capital Improvement Plan
RESOLUTION 2009-
RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS
APPROVING FY 2009/10 OPERATING BUDGET & FY's 2009/10 - 2013/14 CAPITAL
BUDGET AND CARRY-FORWARD APPROPRIATIONS AND OTHER APPROVED
ADJUSTMENTS RELATING TO MEET AND CONFER PROCESS, MANAGEMENT
COMPENSATION PLAN, CLASSIFICATION ADJUSTMENTS, MINOR
CORRECTIONS, AND REFINED ESTIMATES
WHEREAS, Section 2.30.295(b) of the Los Gatos Town Code requires the Town
Manager to annually prepare and submit a budget to the Town Council and be responsible for its
administration; and
WHEREAS, the Town Manager did submit a proposed budget for the 2009110 to
the Town Council; and
WHEREAS, the Town Manager did submit a proposed five-year capital
improvement plan for FY"s 2009110 2013/14; and
WHEREAS, the Town Council has considered and reviewed said proposed budget
and capital improvement plan during public hearings.
RESOLVED, that the Town Council hereby adopts as the budget for the Town of
Los Gatos for the 2009110 fiscal year the schedule entitled "Total Town Revenues By Fund and
Total Town Expenditures By Fund" (Exhibit A) including the first year (FY 2009/10) of the
Town's Capital Improvement Program budget as contained in the Town's FY's 2009110 -
2013/14 Capital Improvement Plan.
BE IT FURTHER RESOLVED, that the final adopted budget includes approved
carry-forward appropriations for unspent operating grants and pass-throughs from FY 2008109,
and that there be carried forward from prior years Reserve for Encumbrances within each fund
an amount sufficient to cover approved outstanding encumbrances as of June 30, 2009;
BE IT FURTHER RESOLVED, that the Town Council hereby directs staff that
any changes or impacts resulting from: Council approval of the meet and confer process or
management compensation plan; from classification adjustments or miscellaneous corrections;
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ATTACHMENT 1
from changes due to more refined estimates or grant approvals; or from further Town Council
consensus direction received on June 1, 2009, be incorporated within the final FY 2009/10
Operating and Capital Budget.
PASSED AND ADOPTED at a regular meeting of the Town Council of the Town
of Los Gatos, California, held on the 15t day of June, 2009 by the following vote:
COUNCIL MEMBERS:
AYES :
NAYS :
ABSENT:
ABSTAIN:
SIGNED:
MAYOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
ATTEST:
CLERK ADMINISTRATOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
N:1 MAdminWorkFileslAnnual Budge66-1-09 Reso Approving FY 09-10 Operating Budget, CIP.doc
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TOTAL TOWN REVENUES BY FUND & TOTAL TOWN EXPENDITURES BY FUND
2009110
2009110
Proposed
Budget
Recommended
Budget
Revision
Budget
TOWN REVENUES & OTHER FUNDING SOURCES
General Fund
$ 32,523,905
$ 23,005
$ 32,546,910
Special Revenue Funds
314,835
5,344
320,179
Internal Service Funds
4,427,300
4,427,300
Trust & Agency Funds
154,380
154,380
Capital Project Funds
18,136,257
5,344
18,141,601
Redevelopment Agency Funds
9,150,920
9,150,920
TOTAL TOWN REVENUES & OTHER FUNDING SOURCES
$ 64,707,597
S 33,693
S 64,741,290
TOTAL TOWN EXPENDITURES, TRANSFERS OUT & CARRYFORWARD APPROPRIATION
General Fund
$ 32,522,586 $
38,280
$ 32,560,866
Special Revenue Funds
529,600
5,344
534,944
Internal Service Funds
4,701,848
4,701,848
Trust & Agency Funds
463,561
463,561
Capital Project Funds
26,776,475
5,344
26381,819
Redevelopment Agency Funds
7,782,330
7,782,330
TOTAL TOWN EXPENDITURE & OTHER FUNDING USES
$ 72,776,400 $
48,968
S 72,825,368
EXHIBIT A
RESOLUTION 2009-
RESOLUTION OF THE REDEVELOPMENT AGENCY
CONSENTING TO THE PROVISION OF PUBLIC IMPROVEMENTS BY THE LOS GATOS
REDEVELOPMENT AGENCY AND MAKING MANDATORY FINDINGS IN REGARDS TO
CAPITAL PROJECTS PROVIDED FOR IN THE LOS GATOS REDEVELOPMENT AGENCY
FY 2009110 OPERATING AND FY's 2009110 2013114 CAPITAL IMPROVEMENT PLAN
WHEREAS, Section 33445 of the Health and Safety Code requires the local legislative body to
consent to the provision of public improvements by its Redevelopment Agency and make findings: 1) that
the public improvements are of benefit to the project area or the immediate neighborhood of the project
area; 2) that no other reasonable means of financing such public improvements are available to the
community, and; 3) that the Agency's contribution to the cost of the public improvement or facility will
assist in eliminating one or more blighting conditions in the project area, and is consistent with the
Agency's implementation plan adopted pursuant to Section 33490 of the Health and Safety Code, the
(Implementation Plan), and
WHEREAS, the Redevelopment Agency's FY 2009110 - 2013114 Capital Budget provides
funding for the following projects (the Projects): 1) Police Facility; 2) Almond Grove Concrete
Rehabilitation; 3) S. Santa Cruz/Wood Gateway
WHEREAS, the Projects will be of substantial benefit to the downtown business district and
surrounding areas of the Central Los Gatos Redevelopment Project Area (the Project Area) established
pursuant to the 1991 Redevelopment Plan (the Redevelopment Plan);
WHEREAS, the Town has limited financial resources for capital improvements and these funds
are committed to other critical infrastructure needs of the Town such as repairing aging streets outside of
the Project Area;
WHEREAS, the Projects have been specifically called for in the Town's Redevelopment Plan and
lmplementation Plan; and
WHEREAS, the Downtown infrastructure was initially in a deteriorated condition with broken
pavement, deteriorated streets and alleys, deteriorated sidewalks, and functionally obsolescent, and the
capital projects have helped, and continue to help, eliminate these blighting conditions;
Page 1 of 2
ATTACHMENT 2
THEREFORE BE IT RESOLVED, that the Town Council of the Town of Los Gatos does
hereby consent to the provision of funding for the Capital Projects by the Los Gatos Redevelopment
Agency in accordance with the Agency's FY 2009/10 Operating and FY 2009/10 - 2013/14 Capital
Improvement Program budgets totaling adopted revenues of $9,150,920 and expenditures of $7,782,180
(prior to carry-forward appropriations); and
BE IT FURTHER RESOLVED, that the Agency Board hereby finds that the Projects are of
benefit to the Project Area and the immediate neighborhood of the Project Area; and
BE IT FURTHER RESOLVED, that the Agency Board hereby finds that no other reasonable
means of financing such public improvements are available to the community; and
BE IT FURTHER RESOLVED, that the Agency Board hereby finds that the Los Gatos
Redevelopment Agency's contribution to the cost of the public improvements will assist in eliminating
blighting conditions in the Project Area, and is consistent with the Implementation Plan.
BE IT FURTHER RESOLVED, that the Agency Board hereby directs staff that any changes or
impacts resulting from: Council approval of the meet and confer process or management compensation
plan; from classification adjustments or miscellaneous corrections; fiom changes due to more refined
estimates or grant approvals; or from further Agency Board consensus direction received June 1, 2009, be
incorporated within the final FY 2009/10 Operating and Capital Budget.
PASSED AND ADOPTED at a regular meeting of the Redevelopment Agency of the Town of
Los Gatos held the 1st day of June, 2009, by the following vote:
AYES:
NAYS:
ABSENT:
ABSTAIN:
SIGNED:
CHAIR OF THE REDEVELOPMENT AGENCY
TOWN OF LOS GATOS
TOWN OF LOS GATOS, CALIFORNIA
ATTEST:
SECRETARY OF THE REDEVELOPMENT AGENCY
TOWN OF LOS GATOS, CALIFORNIA
N:IMGRIAdminWor1cFi1esUnnua1 Budget16-1-09 Reso Approving FY 09-10 RDA Operating Budget.duc
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