HomeMy WebLinkAbout021621-08.1 ADMINISTRATIVE STAFF REPORT 8.1
TO: Mayor and Town Council February 16, 2021
SUBJECT: Resolution No. 8-2021, accepting the mid-year Financial Report, approving
mid-year adjustments to the Fiscal Year 2020/21 Operating Budget
INTRODUCTION
The Operating Budget is the Town’s annual plan for service delivery. The budget focuses on
services, programs and activities that are prioritized by the Town Council to meet the Town’s
mission, which is “To provide superior municipal services that make people’s lives better.”
The Capital Improvement Program (CIP) is the Town’s capital budget. The CIP identifies high
priority current and future capital needs and identifies potential sources of funding.
On June 16, 2020, the Town Council adopted Resolution 35-2020, approving the 2020/21
Operating Budget and setting the 2020/21 Appropriation Limit; and Resolution 36-2020,
approving the 2020/21 through 2024/25 Capital Improvement Program. The purpose of the
mid-year update is to review actual mid-year revenues and expenditures in comparison to the
adopted budget and CIP, and make any necessary mid-year adjustments.
BACKGROUND
The onset of the global Coronavirus pandemic and the resultant Shelter in Place (SIP)
Orders that began in March 2020 created significant economic uncertainty for local
governments. As a result, the process leading up to adoption of the 2020/21 Operating
Budget and CIP was unique and unlike prior year efforts.
The pandemic presented both immediate and longer-term budget planning challenges that
required the Town Council to consider several different budget scenarios including the
original pre-COVID budget and three alternate scenarios developed based upon reducing
revenues, expenditures and transfers by $3 million, $5 million and $7 million.
Ultimately the Town Council determined that the final 2020/21 Operating Budget and CIP
would be based upon the mid-range alternative scenario which assumed a net total
revenue loss of $5.0 million for the fiscal year.
Fortunately, and unlike most California cities, the Town has no unfunded future liabilities
related to employee pension or medical costs to compound the fiscal impact of the
pandemic. Despite the significant pandemic-driven fiscal impacts, the Town Council
adopted a balanced budget without using reserves. Reducing operating expenditures
required some service level reductions in all operating departments. It was also necessary
Mid-year Financial Report & Adjustments
to FY2020/21 Operating Budget & CIP 2 February 16, 2021
to scale back new capital expenditures to further reduce impacts upon the General Fund
and balance the budget.
DISCUSSION
As of December 31, 2020, overall revenues are tracking ahead of the approved budget forecast,
while expenditures are on track to finish the fiscal year within budget. Overall fiscal condition
remains strong and the Town expects to finish the fiscal year on a positive note.
OPERATING BUDGET
Revenues
Total revenues for 2020/21 were forecast to total $34,354,793, including $23,963,524 from the
General Fund, $8,112,057 from Special Revenue and $2,279,212 from the Successor Agency.
General Fund
The approved 2020/21 Operating Budget forecast total General Fund revenues of $23,963,524.
At mid-year, General Fund revenues are tracking positively in comparison to budget.
Revenue highlights include:
Property Tax - Property Tax is the Town’s largest revenue source, accounting for 60.5% of the
total General Fund revenue. For 2019/20, the Town received a total of $15,485,979 in Property
Tax. The 2020/21 budget forecasts $14,505,222 in Property Tax. Mid-year receipts indicate
that actual revenues will exceed the forecast.
Sales Tax - Sales Tax is the Town’s second largest revenue source accounting for 18.1% of the
total General Fund revenue. For 2019/20 the Town received a total of $5,609,225 in Sales Tax.
The 2020/21 budget forecasts revenues of $4,339,328. Mid-year receipts indicate that actual
revenues will exceed the forecast.
Recreation Fees and Charges for Service - For 2019/20 the Town received a total of $1,725,499 in
recreation revenues. The 2020/21 budget forecasts revenues of $1,351,262. Mid-year receipts
indicate that actual revenues will fall short of the forecast.
Franchise Fees - Franchise Fees are received for solid waste and recycling services, cable TV, and
gas and electricity. For 2019/20, the Town received a total of $2,214,459 in Franchise Fees.
The 2020/21 budget forecasts revenues of $2,280,969. Mid-year information indicates that
actual revenues will exceed the forecast.
Special (Restricted) Revenues
Lighting and Landscape Assessment District (LLAD) - For 2019/20, the Town received $3,211,828
in LLAD assessments. The 2020/21 budget forecasts revenues of $3,129,750. Mid-year receipts
indicate that actual revenues will exceed the forecast.
Mid-year Financial Report & Adjustments
to FY2020/21 Operating Budget & CIP 3 February 16, 2021
Building and Planning - For 2019/20, the Town collected a total of $2,153,509 in Building and
Planning fees. The 2020/21 budget forecasts Building and Planning revenues of $1,787,458.
Mid-year receipts indicate that actual revenues will exceed the forecast.
Gas Tax Fund - For 2019/20, the Town received a total of $1,903,533 for Gas Tax. The 2020/21
budget forecasts revenues of $969,080. Mid-year receipts indicate that actual revenues will
exceed the forecast.
Measure J Return to Source (RTS) - Measure J revenues are received from the current Contra
Costa County half-cent transportation sales tax which runs through 2034. Eighteen percent of
the tax proceeds are returned to local jurisdictions to help fund local street and road
maintenance. For 2019/20 the Town received a total of $933,077 in Measure J RTS funds. The
2020/21 budget forecasts revenues of $576,288. Mid-year information indicates that actual
revenues will exceed the forecast.
Solid Waste Vehicle Impact Fees (VIF) - Refuse vehicle traffic accounts for 38.6% of the total
impact absorbed by Danville’s public streets. Through the solid waste franchise, the Town
collects Solid Waste Vehicle Impact Fees which are reinvested in maintaining the Town’s
streets and roads. For 2019/20, the Town collected a total of $539,772 in Solid Waste VIF. The
2020/21 budget forecasts revenues of $585,000. Mid-year receipts indicate that actual revenues
will exceed the forecast.
Successor Agency Funds
2020/21 Real Property Tax Trust Fund (RPTTF) revenues are budgeted at $2,790,212, to fund
debt service for the 2001 and 2005 Certificates of Participation, the 2001 Taxable Revenue
Bonds, and reimbursement of allowed administrative costs. Mid-year receipts indicate that
actual revenues will exceed the forecast.
Revenue Summary
Table 1 summarizes mid-year summary. Table 1
Mid-Year Revenue Summary
Adopted Prior Mid-Year
Budget Amendments Revised TOTAL $ 34,354,793 $ 34,365,498 $ 34,365,498
General Fund $ 23,963,524 $ 23,963,524 $ 23,963,524
Special Revenue $ 8,112,057 $ 8,122,762 $ 8,122,762
Successor Agency $ 2,279,212 $ 2,279,212 $ 2,279,212
At mid-year, actual receipts and information gathered point to positive variances to the
forecast for Property Tax, Sales Tax, Business License Tax, Building and Planning and Gas
Mid-year Financial Report & Adjustments
to FY2020/21 Operating Budget & CIP 4 February 16, 2021
Tax, while Recreation Fees and Charges are expected to fall short of the forecast. Overall,
General Fund and Special Revenues are performing positively in comparison to the
original budget forecast. Because ongoing pandemic is expected to continue to present
economic uncertainty for the remainder of the fiscal year, no formal mid-year revenue
adjustments are recommended.
Expenditures
Approved operating expenditures for 2020/21 total $32,911,078, including $23,785,837 from
the General Fund, $8,192,324 from Special Revenue and $1,179,212 from the Successor Agency.
Expenditure highlights include:
General Government - Expenditures of $1,864,513 are budgeted for 2020/21. All direct and
contract costs are tracking within budget and no mid-year adjustments are recommended.
Police Services - Expenditures of $10,132,889 are budgeted for 2020/21. All costs are tracking
within budget and no mid-year adjustment are recommended.
Administrative Services - Expenditures of $3,796,878 are budgeted for 2020/21. All costs are
tracking within budget and no mid-year adjustments are recommended.
Development Services - Expenditures of $3,804,345 are budgeted for 2020/21. Staffing vacancies
have required increased use of interim plan check services and temporary permit counter
staffing in Building, and temporary staffing in Transportation. All other costs are tracking
within budget. Mid-year adjustments are recommended to increase the Building budget by
$50,000 and the Transportation budget by $5,000.
Maintenance Services - Expenditures of $7,362,710 are budgeted for 2020/21. The total water
budget for Roadsides and Parks is $1,085,500. Total rainfall to date has been significantly
below average, requiring additional irrigation to sustain plant material. Continued drought
conditions are expected to cause the annual water budget to be exceeded. All other costs are
tracking within budget. Mid-year adjustments are recommended to increase the Roadside
Maintenance budget by $40,000 and the Parks Maintenance budget by $60,000.
Recreation, Arts and Community Services - Expenditures of $4,016,826 are budgeted for 2020/21.
All costs are tracking within budget and no mid-year adjustments are recommended.
Personnel - Employee costs are budgeted at $11,288,843. With 46% of the budget expended as
of mid-year, total costs will fall within budget and no mid-year adjustments are recommended.
Successor Agency
For 2020/21, Successor Agency operating expenditures total $1,179,212 to fund debt service
costs and Agency administrative costs. Capital transfers of $1,100,000 result from re-payment
Mid-year Financial Report & Adjustments
to FY2020/21 Operating Budget & CIP 5 February 16, 2021
of the outstanding balance owed under the Loan between the former CDA and the Town.
Successor Agency expenditures remain unchanged. No mid-year adjustments are
recommended.
Expenditure Summary
To date in 2020/21, the Town Council has approved the five budget adjustments, totaling
$598,705, including:
• Resolution No. 62-2020, appropriating $21,000 from the General Fund to provide traffic
control for the closure of Hartz Avenue for temporary outdoor restaurant seating due
to the pandemic.
• Resolution No. 71-2020, appropriating $10,705 from the SPCP Fund for plan check fees
for the revised Stormwater Management Plan and Drainage Study.
• Resolution No. 74-2020, appropriating $250,000 from the General Fund to establish a
Forward Focus COVID-19 Business Grant Program.
• Resolution No. 82-2020, appropriating $293,000 from the General Fund for $275,000 to
establish Phase 2 of the Forward Focus COVID-19 Business Grant Program, and $18,000
to administer the Business Assistance Program.
• Resolution No. 3-2021, appropriating $24,000 from the General Fund for grant
coordination and application services.
Mid-year adjustments are recommended to:
• Maintenance Services – increase Parks Maintenance budget by $60,000, including:
$30,000 (General Fund) and $30,000 (Special Revenue - LLAD Zone D);
• Maintenance Services – increase Roadside Maintenance budget by $40,000, including:
$18,000 (Special Revenue - LLAD Zone A) and $22,000 (Special Revenue - LLAD Zone B);
• Development Services – increase Building budget by $50,000 (Special Revenue – Building
and Planning); and
• Development Services – increase Transportation budget by $5,000 (Special Revenue –
Measure J - RTS)
Table 2 illustrates 2020/21 recommended mid-year adjustments.
Table 2
Mid-Year Expenditure Summary
Adopted Prior Mid-Year
Budget Amendments Revised
TOTAL $ 32,157,373 $ 32,756,078 $ 32,911,078
General Fund $ 22,785,837 $ 23,373,837 $ 23,403,837
Special Revenue $ 8,192,324 $ 8,203,029 $ 8,328,029
Successor Agency $ 1,179,212 $ 1,179,212 $ 1,179,212
Mid-year Financial Report & Adjustments
to FY2020/21 Operating Budget & CIP 6 February 16, 2021
Transfers and Designations
The 2020/21 budget includes General Fund transfers of $2,575,240: $900,000 for LLAD
operations and $1,675,240 for CIP – Project B-626.
On November 17, 2020, the Town Council adopted Resolution No. 78-2020, approving the
2019/20 CAFR and designating $3,392,641 from the General Fund as a “COVID Reserve” fund.
This increased the total 2019/20 transfers and designations to $5,967,881.
Operating Budget Summary
Through mid-year, the Town’s overall financial condition remains positive with overall
revenues exceeding the budget forecast and expenditures tracking closely with the approved
2020/21 Operating Budget. Mid-year adjustments are recommended to increase expenditures
by 0.47%.
CAPITAL IMPROVEMENT PROGRAM
The 2020/21 CIP includes appropriation of $2,452,740 to fund 16 separate projects. The Town
Council has not approved any additional funding appropriation for capital improvement for
2020/21. At mid-year, no budget adjustments are recommended for CIP.
RECOMMENDATION
Adopt Resolution No. 8-2021, accepting the mid-year Financial Report, approving mid-year
adjustments to the Fiscal Year 2020/21 Operating Budget.
Prepared by:
Joseph Calabrigo
Town Manager
Lani Ha
Finance Manager/Treasurer
Attachments: Resolution No. 8-2021
RESOLUTION NO. 8-2021
ACCEPTING THE MID-YEAR FINANCIAL REPORT, APPROVING MID-YEAR
ADJUSTMENTS TO THE FISCAL YEAR 2020/21 OPERATING BUDGET
WHEREAS, all revenue and expenditure projections, which were made in preparing the
Fiscal Year 2020/21 Operating Budget, have been reviewed; and
WHEREAS, the following mid-year adjustments to the Fiscal Year 2020/21 Operating
Budget are recommended to reflect increased expenditure needs:
General Fund – Expenditures
• Increase General Fund expenditures - Maintenance Services - Parks by $30,000;
increasing total General Fund expenditures from $23,373,837 to $23,403,837.
Special (Restricted) Revenue - Expenditures
• Increase Building/Planning expenditures – Development Services – Building by
$50,000;
• Increase Measure J expenditures – Development Services – Transportation by $5,000;
• Increase LLAD Zone D expenditures – Maintenance Services – Parks by $30,000;
• Increase LLAD Zone A expenditures – Maintenance Services – Roadsides by $18,000;
• Increase LLAD Zone B expenditures – Maintenance Services – Roadsides by $22,000;
increasing total Special Revenue expenditures from $8,203,029 to $8,328,029.
WHEREAS, sufficient funding is available in the Town’s funds; now, therefore, be it
RESOLVED, that the Danville Town Council hereby approves the mid-year adjustments
to the Fiscal Year 2020/21 Operating Budget.
APPROVED, by the Danville Town Council at a regular meeting held on February 16,
2021, by the following vote:
AYES:
NOES:
ABSTAINED:
ABSENT:
_________________________________
MAYOR
APPROVED AS TO FORM: ATTEST:
________________________________ _________________________________
CITY ATTORNEY CITY CLERK
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