HomeMy WebLinkAbout022123-09.2 Revised ADMINISTRATIVE STAFF REPORT 9.2
TO: Mayor and Town Council February 21, 2023
SUBJECT: Resolution No. 12-2023, accepting the mid-year Financial Report, approving
mid-year adjustments to the Fiscal Year 2022/23 Operating Budget
Resolution No. 13-2023, accepting the mid-year Financial Report, approving
mid-year adjustments to the Fiscal Year 2022/23 Capital Improvement Program
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 8, 2022, the Town Council adopted Resolution 42-2022, approving the 2022/23
Operating Budget and setting the 2022/23 Appropriation Limit; and Resolution 43-2022,
approving the 2022/23 through 2026/27 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 Town is preparing to end the local State of Emergency that was declared at the outset
of the Coronavirus pandemic in March 2019. Through a series of actions and outcomes
spanning three fiscal years, the Town has successfully navigated the economic impacts of
the pandemic upon Town operations.
Economic recovery has been aided by growth in property values which have yielded
increased property tax revenue; growth in online commerce which has generated new sales
tax revenue; and federal assistance received in the form of the American Rescue Plan Act
(ARPA) of 2021. 2022/23 operating expenditures have restored and resumed service
delivery in most areas.
Ten-year forecasts covering 2022/23 through 2031/32 see the Town continuing to chart a
fiscally sustainable course, while facing minimally reduced service levels in some areas. Despite emerging from the pandemic, new fiscal challenges continue to be presented.
Rapid economic expansion occurred during the pandemic, through federal stimulus
funding that reached consumers. However, that growth has proven to be unsustainable,
Mid-year Financial Report & Adjustments
To FY 2022-23 2 February 21, 2023
leading to rising inflation. In an attempt to stabilize the economy, between Q3 of 2021 and
Q1 of 2023 the Federal Reserve raised the federal funds rate from 0.25% to 4.5%. Inflation
remains above the Federal Reserve price stability goal, further risking a recession in the
near future. For the Town, continuation of this trend into 2023/24 and beyond will continue to drive
up costs for personnel, contracted services, materials and supplies at rates that will outpace
forecast revenue growth and budgeted costs.
DISCUSSION
As of December 31, 2022, overall revenues are tracking ahead of the approved budget,
while expenditures are on track to finish the fiscal year within budget. Overall fiscal
condition remains strong, and the Town expects to finish the year on a positive note.
OPERATING BUDGET
Revenues
Total revenues of $38.5 million were forecast for 2022/23, a 7.6% increase from $35.8 million
for 2021/22.
General Fund
General Fund revenues are tracking positively compared to budget.
Property Tax – Property tax continues to be the Town’s largest revenue source, accounting for
56.5% of the General Fund. Actual 2021/22 revenues totaled $17,805,336. The budget forecast
for 2022/23 is $16,200,00. At mid-year, actual revenues are exceeding the forecast and
tracking ahead of the 2021/22 mid-year receipts. Mid-year receipts indicate that the actual
revenues are expected to exceed the budget forecast. Sales Tax – Sales tax accounts for 20.9% of the General Fund. Actual 2021/22 revenues totaled
$7,315,831. The budget forecast for 2022/23 is $6,000,000. Mid-year revenues are exceeding
the budget forecast and tracking ahead of the 2021/22 mid-year receipts. Mid-year receipts
indicate that the actual revenues are expected to exceed the budget forecast. Property Transfer Tax – Though the real estate market continues to see high values, sales
volumes have slowed due to higher interest rates. Actual 2021/22 revenues totaled $1,013,688.
The budget forecast for 2022/23 is $650,000. Mid-year receipts indicate that the actual revenues
are expected to meet the budget forecast.
Mid-year Financial Report & Adjustments
To FY 2022-23 3 February 21, 2023
Business License Tax – Business license payments were due by August 1, 2022 and mid-year
receipts represent 89.0% of the forecast for the year. Mid-year receipts indicate that the actual
revenues are expected to meet the budget forecast.
Franchise Fees – Franchise fees for Cable, Solid Waste and Gas and Electric are received at
various times throughout the year (from monthly to annually). Current year revenues are
tracking closely with prior years on a percentage basis. Mid-year receipts indicate that the
actual revenues are expected to meet the budget forecast.
Recreation Fees and Charges - Recreation fees and charges have been most significantly
impacted by the pandemic. Current revenues were forecast to increase by 35.6% from the
prior year, continuing a gradual recovery. Classes and programs offered continue to increase
as the pandemic has eased up. Actual revenues for 2021/22 totaled $1,667,350. The budget
forecast for 2022/23 is $2,034,067. Mid-year receipts indicate that the actual revenues are
expected to meet the budget forecast. Donations – No donation revenue was budgeted for 2022/23. Subsequently the Town has
received a $10,000 donation to purchase security camera equipment. A mid-year adjustment
of $10,000 is recommended to recognize the receipt of the $10,000 in donations.
Special Purpose Revenue
Special Purpose revenues are tracking ahead of the budget forecast.
Building and Planning – The budget forecast for 2022/23 is $2,153,200. Actual 2021/22
revenues totaled $2,932,342. At mid-year, revenues collected represent 81.4% of the budget
forecast. Mid-year receipts indicate that actual revenues are expected to exceed the budget
forecast.
Gas Tax - The budget forecast for 2022/23 is $1,800,000. Actual 2021/22 revenues totaled
$1,954,911. At mid-year, revenues collected represent 54.0% of the budget forecast. Mid-
year receipts indicate that actual revenues are expected to exceed the budget forecast. Measure J Return to Source (RTS) – RTS revenues come from the countywide half cent sales
tax for transportation and are received as a single year end payment. The budget forecast for
2022/23 is $771,781. Actual 2021/22 revenues totaled $1,111,730. Mid-year receipts indicate
that the actual revenues are expected to meet the budget forecast. Solid Waste Diversion Incentive Fees – Solid Waste DIF are collected from the Town’s solid
waste and recycling haulers to offset wear and tear on Town streets. The budget forecast for
2022/23 is $872,257. Actual 2021/22 revenues totaled $854,168. Mid-year receipts indicate
that the actual revenues are expected to meet the budget forecast.
Mid-year Financial Report & Adjustments
To FY 2022-23 4 February 21, 2023
Lighting and Landscape Assessment District – LLAD revenues are based upon set assessment
rates collected to help offset costs to maintain Town parks, roadside landscaping and street
lighting. The budget forecast for 2022/23 is $3,129,750. Actual 2021/22 revenue totaled
$3,195,658. Mid-year revenues received through mid-year is comparable to that received in
each of the three prior years. Mid-year receipts indicate that the actual revenues are expected
to meet the budget forecast.
Successor Agency Real Property Tax Trust Fund (RPTTF) revenues are budgeted at $2,272,250, inclusive of
Town re-payment under the Re-stated Cooperation Loan Agreement with the former CDA.
RPTTF revenues fund debt service payments for the 2001 and 2005 Certificates of
Participation, the 2001 Taxable Revenue Bonds, and reimbursement of allowed
administrative costs. Mid-year receipts indicate that the actual revenues are expected to
meet the budget forecast.
Revenue Summary
Thus far in 2022/23, the Town Council has approved one budget adjustment:
• Resolution No. 63-2022, increased revenues in the General Fund by $62,906 to accept
SB 1383 Local Assistance Grant program funding received from CalRecycle.
At mid-year, one mid-year adjustment is recommended:
• Increase “Donations” by $10,000 in order to allow the donation received for the
Police Department to be expended. At mid-year, there are significant positive variances to the budget forecast for Property
Tax, Sales Tax, Building and Planning Fees and Gas Tax. Barring any significant
unforeseen expense, total revenues for 2022/23 will exceed the budget forecast. Due to
the anticipated positive variance, no further mid-year revenue adjustments are necessary.
Table 1 summarizes the adopted budget forecast, prior amendments and recommended
mid-year adjustments.
Mid-year Financial Report & Adjustments
To FY 2022-23 5 February 21, 2023
Table 1
Mid-Year Revenue Summary
Adopted Prior Mid-Year
Budget Amendments Revised
TOTAL $ 46,089,360 $ 46,152,266 $ 46,152,266
General Fund $ 28,665,329 $ 28,728,235 $ 28,728,235
Special Revenue $ 9,827,912 $ 9,827,912 $ 9,837,912
ARPA $ 5,323,869 $ 5,323,869 $ 5,323,869
Successor Agency $ 2,272,250 $ 2,272,250 $ 2,272,250
Expenditures
The 2022/23 operating budget includes total operating expenditures of $35.77 million, a
7.6% increase from the 2021/22 budget of $33.25 million.
General Government – The budget for 2022/23 is $2,197,461. Direct and contract costs are
largely tracking within budget. Outside legal costs resulting from Town initiated litigation
are exceeding what was budgeted in the City Attorney’s budget. One mid-year adjustment
is recommended to increase the City Attorney budget by $100,000.
Police Services – The budget for 2022/23 is $11,378,646. Contract and direct costs are
tracking within budget. One private party donation received will be used to purchase
security camera equipment. One mid-year adjustment is recommended to increase the
Police Services Management budget by $10,000.
Administrative Services – The budget for 2022/23 is $4,238,464. Costs are tracking within
budget and no mid-year adjustments are recommended.
Development Services – The budget for 2022/23 is $5,179,933. Significant efforts such as the
2023-30 Housing Element and the Downtown Master Plan have been completed and high
development-driven demand continues to occur in Building Services. Special noticing
costs associated with the Housing Element exceeded budgeted costs. One mid-year
adjustment is recommended to increase the Planning budget by $35,000 to cover Housing
Element Outreach.
Maintenance Services – The budget for 2022/23 is $8,516,458. Maintenance costs are
currently tracking within the budget and no mid-year adjustments are recommended.
Recreation, Arts and Community Services – The budget for 2022/23 is $4,256,628. RACS
costs are currently tracking within the budget and no mid-year adjustments are
recommended.
Mid-year Financial Report & Adjustments
To FY 2022-23 6 February 21, 2023
Personnel – The 2022/23 budget for regular and part-time temporary employees is $14.6
million, a 9.8% increase from the prior year. At mid-year, 41.5% of the budget has been
expended. No mid-year adjustments are recommended.
Extraordinary Storm Recovery Costs - Severe storms struck the state during the first two
weeks of 2023. The Town experienced widespread flooding, requiring significant clean up
and recovery efforts which continue to be ongoing. This has resulted in significant,
unanticipated recovery and repair costs, which are currently expected to total $500,000 to
$1 million absent additional weather-related damage. The recent nature of the damage and
related recovery efforts is such that additional time will be required to more fully and
accurately account for the Town’s storm related costs. Though no mid-year adjustment is
recommended, a significant year end adjustment will be required to budget for all storm
related costs. Successor Agency
For 2022/23, Successor Agency operating expenditures total $1,172,250 for debt service and
administrative costs. Re-payment of the outstanding balance owed under the former
CDA/Town loan funds capital transfers of $1,100,000. Successor Agency expenditures
remain unchanged. No mid-year adjustments are recommended. Expenditure Summary
Thus far in 2022/23 the Town Council has approved two budget adjustments totaling
$88,006, including:
• Resolution No. 63-2022, appropriating $62,906 from the General Fund to support SB
1383 compliance activities, this expense is funded from a grant received from
CalRecycle.
• Resolution No. 97-2022, appropriating $25,100 from the Asset Replacement Fund to
purchase the replacement of one scanner/plotter device for Development Services.
Recommended Mid-Year Adjustments
As described above, total mid-year adjustments of $145,000 are recommended, including: General Fund $100,000
Special Revenue
Donations $ 10,000
Advance Planning Fees $ 35,000
Table 2 illustrates 2022/23 expenditures, including the adopted budget forecast, prior
amendments and recommended mid-year adjustments.
Mid-year Financial Report & Adjustments
To FY 2022-23 7 February 21, 2023
Table 2
Mid-Year Expenditure Summary
Adopted Prior Mid-Year
Budget Amendments Revised
TOTAL $ 36,939,840 $ 37,027,846 $ 37,172,846
General Fund $ 25,336,288 $ 25,399,194 $ 25,499,194
Special Revenue $ 10,431,302 $ 10,456,402 $ 10,501,402
Successor Agency $ 1,172,250 $ 1,172,250 $ 1,172,250
Following are two additional changes that are necessary to include in the mid-year update
in order to address an error or omission:
• Employee Salary Ranges will be updated to include a “Program Specialist” position
for Transportation with a monthly salary range of $5,643-$7,731.
• Resolution No. 98-2022, accepting the 2021/22 Audited ACFR, was approved by the
Town Council on November 15, 2022. The Resolution contained an error which
indicated that $6,100,000 was to be transferred into the CIP Fund at year end. This
number was inadvertently carried over from the prior year resolution. The correct
transfer amount is $3,250,000, which coincides with what was shown in the
Administrative Staff Report. Transfers and Designations The 2022/23 budget includes General Fund transfers of $4,726,594: $1,300,000 for LLAD
operations, $900,000 for CIP - Pavement Management Project, $75,000 for Asset
Replacement, and $2,451,594 for CIP – General Purpose. On November 15, 2021, the Town
Council adopted Resolution No. 98-2022, approving the 2021/22 ACFR and transferring a
total of $4,769,893 from the General Fund to: CIP - General Purpose Fund - $3,250,000; Asset
Replacement Fund - $1,500,000; Compensated Absences/Personnel - $269,893; and Rental
Proceeds - $250,000. This increased the total 2022/23 transfers and designations to
$9,496,487. Amended ARPA/General Fund Transfers
A mid-year action is required to revise the allocation of Coronavirus Local Fiscal Recovery
Funds received under the American Rescue Plan Act of 2021 (“ARPA funds”). This action
will reduce the number of ARPA-funded capital projects and programs to ensure that the
strict federal timeline requirements attached to the expenditure of ARPA funds can be met.
The following amended ARPA transfers are included as part of mid-year budget
adjustments:
Mid-year Financial Report & Adjustments
To FY 2022-23 8 February 21, 2023
• Senior Services: Reduce ARPA funding by $500,000, increase General Fund funding
by $500,000.
• Mental Health: Reduce ARPA funding by $350,000, increase General Fund funding
by $350,000.
Mid-Year Budget Summary The Town’s overall financial condition remains positive with overall revenues exceeding
the budget forecast and expenditures tracking closely with the approved 2022/23
Operating Budget. Mid-year adjustments are recommended to increase expenditures by
.3%.
CAPITAL IMPROVEMENT PROGRAM The 2022/23 CIP included appropriations of $18,047,209 to fund 38 separate projects.
Following adoption of the CIP, the Town Council approved one additional funding
appropriation:
• Resolution No. 73-2022, appropriating $325,000 from the Park Dedication Impact Fund
for the Oak Hill Park Playground Replacement Project, CIP No. B-544. This action increased total capital appropriations for 2022/23 to $18,372,209.
Recommended Mid-Year Adjustments
A mid-year action is required to revise the allocation of Coronavirus Local Fiscal Recovery
Funds received under the American Rescue Plan Act of 2021 (“ARPA funds”). This action
will reduce the number of ARPA-funded capital projects and programs to ensure that the
strict federal timeline requirements attached to the expenditure of ARPA funds can be met.
The following amendments will be included with mid-year adjustments to the CIP:
• A-330 – Town-wide Storm Drain System Management: Transfer $750,000 to Project A-
362; reduce ARPA funding by $250,000; increase CIP General Purpose funding by
$250,000; Total project funding is reduced to $250,000.
• A-362 – Downtown Improvement Project: Increase funding from $2,500,000 to
$3,250,000; increase ARPA funding from $1,500,000 to $3,250,000; Total project funding is
increased to $3,250,000.
• A-492 – Central Irrigation System Capital Management: Reduce ARPA funding by
$350,000; increase CIP General Purpose funding by $350,000.
• A-620 – Fiberoptic Cable Interconnect: Reduce ARPA funding by $500,000; increase
CIP General Purpose funding by $500,000.
Mid-year Financial Report & Adjustments
To FY 2022-23 9 February 21, 2023
• B-616 – Multi-Sport Skatepark: Reduce CIP General Purpose Funding by $1,500,000
and increase ARPA funding by $1,500,000.
• B-626 – Town Office Relocation: Reduce CIP General Purpose funding by $1,883,012
and increase ARPA funding by $1,883,012.
• B-628 – Town Green and Arts District: Reduce ARPA funding by $2,033,012 and
increase CIP General Purpose funding by $2,033,012.
• B-629 – 282 Front Street – Arts District Maker Space: Reduce CIP General Purpose
funding by $600,000 and increase ARPA funding by $600,000.
• C-621 – Town-Wide Bicycle Facilities Improvements: Reduce ARPA funding by
$1,000,000 and increase CIP General Purpose funding by $1,000,000. Additional mid-year fund adjustments are recommended for the following projects:
• A-613 – Loch Lomond Trash Rack: The 2022/23 CIP incorrectly shows a FEMA grant
totaling $169,200. The correct award amount is $403,990. Project funding should be
increased by $234,790 to reflect the total FEMA grant awarded.
• C-601 – Camino Ramon Improvements: The Town has $111,885 remaining from
SAFETEA-LU earmark funds that has been programmed for the Camino Ramon
Improvements project. Project funding should be increased by $111,885. Attachment C includes revised CIP pages - Tables A, B, C and E, and project pages including
the adjustments for each of these projects.
PUBLIC CONTACT
Posting of the meeting agenda serves as notice to the general public.
RECOMMENDATION
Adopt Resolution No. 12-2023, accepting the mid-year Financial Report, approving mid-year
adjustments to the Fiscal Year 2022/23 Operating Budget; and adopt Resolution No. 13-2023,
accepting the mid-year Financial Report, approving mid-year adjustments to the Fiscal Year
2022/23 Capital Improvement Program.
Prepared by:
Joseph Calabrigo
Town Manager
Mid-year Financial Report & Adjustments
To FY 2022-23 10 February 21, 2023
Lani Ha
Finance Director/Treasurer
Attachments: Attachment A: Resolution No. 12-2023
Attachment B: Resolution No. 13-2023
Attachment C: CIP pages - Tables A, B, C and E, and individual project pages
RESOLUTION NO. 12-2023
ACCEPTING THE MID-YEAR FINANCIAL REPORT, APPROVING MID-YEAR
ADJUSTMENTS TO THE FISCAL YEAR 2022/23 OPERATING BUDGET
WHEREAS, all revenue and expenditure projections, which were made in preparing the
Fiscal Year 2022/23 Operating Budget, have been reviewed; and
WHEREAS, the following mid-year adjustments to the Fiscal Year 2022/23 Operating
Budget are recommended to reflect increased expenditure needs:
General Fund – Expenditures
Increase General Fund expenditures – General Government – City Attorney by
$100,000; increasing total General Fund expenditures from $25,399,194 to $25,499,194.
Special (Restricted) Revenue - Expenditures
Increase Donations expenditures – Police Services - Management by $10,000; Increase
Advance Planning Fee expenditures by $35,000, increasing total Special Revenue
expenditures from $10,456,402 to $10,501,402.
WHEREAS, the following mid-year update are recommended to address error and
omission:
Update Employee Salary Ranges to include a “Program Specialist” position for
Transportation with a monthly salary of $5,643-$7,731.
Update Reso 98-2022, to show Fiscal Year 2021/22 year end transfer amount to CIP
Fund from $6,100,000 to $3,250,000 per Administrative Staff Report on November 15,
2022.
WHEREAS, the following mid-year adjustments to the Fiscal Year 2022/23 Operating
Budget are recommended to amend American Rescue Plan Act (ARPA) and transfers
from General Fund to ensure strict federal timeline requirements are met:
Senior Services: Reduce ARPA funding by $500,000, increase General Fund
funding by $500,000.
Mental Health: Reduce ARPA funding by $350,000, increase General Fund
funding by $350,000.
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 2022/23 Operating Budget.
APPROVED, by the Danville Town Council at a regular meeting held on February 21,
2023, by the following vote:
DocuSign Envelope ID: C8D2A35A-3979-465D-A13B-EA8D1068AF9D
PAGE 2 OF RESOLUTION NO. 12-2023
AYES:
NOES:
ABSTAINED:
ABSENT:
_________________________________
MAYOR
APPROVED AS TO FORM: ATTEST:
________________________________ _________________________________
CITY ATTORNEY CITY CLERK
DocuSign Envelope ID: C8D2A35A-3979-465D-A13B-EA8D1068AF9D