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101-Staff Report.pdf ADMINISTRATIVE SERVICES DEPARTMENT CITY HALL 1010300TORRE AVENUE • CUPERTINO, CA 95014-3255 TELEPHONE: (408)777-3227www.cupertino.org CITYCOUNCILSTAFFREPORT Meeting:January 18, 2011 Subject Mid-Year budgetadjustment RecommendedAction Approvemid-year budgetadjustment Description AdjustGeneralFund budgetedrevenuesandexpendituresby $321,875asfollows: RevenueIncreases Sales Tax$81,875 BudgetSavingsfromPriorYear$240,000 TOTALREVENUES$321,875 ExpenditureIncreases ERAF-TEApropertytaxlegislationandgrantsconsultant$21,875 Revenuetaxmeasurerate studyand polling$60,000 Zoningchangefor slopedR-1lots$25,000 ABAGRegionalHousingNeedsAllocation(RHNA) sub-$50,000 regionalreport preparation Permittrackingsystem$165,000 TOTAL EXPENDITURES$321,875 Discussion BudgetaryConditions Staff projectsa smallGeneralFund surplusfor 2010-11 because of strongerthananticipated salestaxgrowth so farthisyear.However,fiscal2009-10endedwithrevenuesthatwere $2.3 millionlowerthanexpected duetotherecession.The stronggrowth of 2010-11 hasmade up most ofthat shortfallleavingafund balance of $14.4millionattheend of 2010-11, or $0.5 millionaboveminimumreservelevels. Therevisedfive-yearforecast showsanimproved 2011- 12 but becauseoflowerpropertytaxrevenuesandincreasedPERScosts, beginningin 2012, GeneralFundreservesare projectedtofall belowpolicylevels.Statelegislationto provide equityin propertytaxallocationsis one solution being pursued. Cupertino has keptcosts downwithacontract policeforce, selective hiringfreeze, smallwage increases,caps onemployer healthcarecostcontributions,andlimits on newcapital projects. Other possiblerevenuemeasures beingconsideredatthistimeareatransient occupancytax (TOT)rateincreaseanda storm drain/cleancreeks parceltaxincrease. Revenue and Expenditure Budget Adjustments Usingthe surplusand budget savings, staff proposesadjusting budgeted 2010-11GeneralFund revenuesandexpendituresby $321,875 asfollows: RevenueIncreases- $321,875 Year-end savings of $240,000and stronger salestax of $81,875 should bereflected on the revenue side. ExpenditureIncreases-$321,875 PropertyTaxLegislation and GrantsConsultant- $21,875 TheCity has beenworkingwithalegislativeconsultant,inconjunctionwithSaratoga,LosAltos Hillsand MonteSereno,ongetting statelegislationtocorrectthe disproportionateamount of propertytaxes shiftedfromthesecitiestothe state undercurrent EducationalRevenue AugmentationFund(ERAF)Tax EquityAllocation(TEA)formulas. Theconsultantisalsowell regardedinfindinggrantsthatcould helptheCity’sfinancial picture. The$21,875includesthe City’s sharedcost of $4,375throughtheend ofthismonthforthe ERAFissueand $17,500 for theCity’s solecostfromFebruarythruJune 2011 for pursuinglegislativegrantawards. RevenueTaxMeasureRate Study and Polling- StormDrain/CleanCreeks- $60,000 Storm drain/cleancreeksmaintenanceandimprovement parceltaxes havenotchanged since 1992and nowrequireaGeneralFundannual subsidy.Staffrecommendsa storm drain/clean creeksrate studyforapproximately $30,000 thatwouldidentifythetotalcost ofthis programand anappropriaterate structure. Thatinformationcould be usedina pollcostingapproximately $24,000thatwould determinethe viabilityofa storm drain/cleancreekstaxincreaseineitherthe upcomingNovember 2011generalelection orasaseparatemail-in ballottoindividual parcel ownersateitherAugust30, 2011 or March 6, 2012.Sixthousand dollarswould be neededfor part-time helpincommunity outreach. TheNovember ballotwouldrequire 2/3majority passage ofthe generalelectorateandcostapproximately$30,000inCountyelectioncoststo hold. The separatemail-in ballotsrequirea simplemajoritybutcostsapproximately$130,000to hold since theCounty does notconductelections directedto parcel ownersandthereforetheCitymust bear allcosts.Budgetsforthe $30,000 or $130,000 electioncostswould be decidedas part ofthe 2011-12 budgetand onlyifthe pollingindicatesprobable passage ofthetaxmeasure.Rate study ($30,000), polling($24,000),and outreachcosts($6,000)totaling $60,000should be budgeted nowifthisrevenuemeasureis pursued. RevenueTaxMeasureRate Study and Polling Alternative-TransientOccupancyTax- $30,000 Alternatively,increasingthetransient occupancytax on hotelsfrom 10%to 11%wouldincrease generalfundrevenuesby $210,000 to $250,000 annually based on recentrevenuetrends.Sucha measurecouldappear ontheNovembergeneralelection,requiringamajority vote. Election, polling,and outreachcostswould be $30,000, $24,000, and $6,000 respectively.LosAltosisat 11%;CampbellandPaloAltoareat 12%. The pollingand outreachcoststotaling $30,000 should be budgeted nowifthisrevenuemeasureis pursued. ExpenditureIncreasesfor Additional ProgramNeeds Usingin-housesavings,staff proposestofundcertain program needs.CommunityDevelopment generated savings of $240,000fromcompleting planning studieswith staffinstead of using consultants. These savingsmakeit possibletoaddressthefollowing needs: Zoningchangefor slopedR-1lots$25,000 ABAGRegionalHousingNeedsAllocation(RHNA) sub-$50,000 regionalreport preparation Permittrackingsystem$165,000 In summer 2010, theCitywas notifiedbyitscurrent softwareprovider,Pentamation,thatit would begin phasing-out support oftheCity’sexisting permittrackingsystem, usedby planning and building.Inadditiontothis notice ofintent,the developmentreview streamlining study identifiedthe needto domorein providing on-line supportforapplicants.Atthat point, staff begantoallocatefunding via ourannualinformationtechnology budgetforthiscriticale- servicesapplicationandperformedageneralinquiryastowhatsystemswereavailabletomeet theCity’s needs.Originalestimatesrangedfrom $350,000 to $500,000 asaresult ofthisinquiry. ThecurrentI.T. budgethas $224,000 already set-aside.Another $165,000 could beaddedfrom CommunityDevelopmentcost savings. FiscalImpact Approvingallrevenueandexpenditureincreaserecommendationsmaintainsa balancedGeneral Fund budgetfor 2010-11. _____________________________________ Preparedby:DavidWoo,FinanceDirector Reviewedby:CarolA.Atwood,DirectorofAdministrativeServices ApprovedforSubmissionby:DavidW.Knapp,CityManager