REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Fred A. Wilson, City Manager
PREPARED BY: Gilbert Garcia, Chief Financial Officer
Subject:
title
Public Hearing to consider adopting Resolution No. 2018-34 to Adopt a Budget for the City for Fiscal Year 2018/2019 - Continued from May 21, 2018 with Public Hearing Open
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Statement of Issue:
The City Charter of the City of Huntington Beach requires a Public Hearing prior to the adoption of the City’s annual budget. On December 18, 2017, the City Council approved Ordinance Number 4143 amending Huntington Beach Municipal Code (HBMC) Chapter 1.13 changing the fiscal year for the City to a July 1 to June 30 period. Thus, the City Charter requires adoption of the annual budget by June 30, 2018, for FY 2018/19.
Financial Impact:
The FY 2018/19 Proposed Budget is a structurally balanced budget. The All Funds Proposed Budget equals $373.1 million, including a General Fund Proposed Budget of $228.4 million. Individual department and fund level appropriations are contained in the attachments herein.
Recommended Action:
recommendation
A) Conduct the Public Hearing on the Proposed FY 2018/19 City budget appropriation of $373,127,959 as outlined in the Proposed Budget document;
B) Adopt Resolution Number 2018-34, “A Resolution of the City Council of the City of Huntington Beach Adopting a Budget for the City for Fiscal Year 2018/19;”
C) Authorize the Professional Services included in the FY 2018/19 budget to be representative of the services projected to be utilized by the departments in FY 2018/19;
D) Approve adjustments to the FY 2018/19 Proposed Budget in the Funds and by the amounts contained in Attachment 2, Exhibit A-1;
E) Approve the FY 2018/19 Proposed Budget Table of Organization as shown on Attachment 2 Exhibit D; and,
F) Approve an amendment to the City’s Financial Policies to adjust reserve policies for the Water and Sewer Service Funds as shown on Attachment 4.
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Alternative Action(s):.
Continue the Public Hearing until June 18, 2018, and/or instruct City staff regarding changes to be incorporated in the budget prior to July 1, 2018.
Analysis:
The City Charter requires that the City Manager submit the Proposed Budget to the City Council at least 30 days prior to the beginning of the next fiscal year. The City Manager submitted the FY 2018/19 Proposed Budget to the City Council on April 26, 2018, for the fiscal year starting July 1, 2018. The general framework for the FY 2018/19 Proposed Budget was first presented to the City Council at the February 13, 2018 Strategic Planning Retreat.
The Proposed Budget was discussed at a Study Session held on April 16, 2018. The Five-Year Capital Improvement Program (CIP) was discussed at a Study Session held on May 21, 2018. The purpose of these discussions is to publicly address the issues being faced by the City in the
development of next year's budget. This provides the City Council and the public with
the opportunity to request additional information and analysis, and to provide input to staff’s
recommendations before the Public Hearing held on May 21, 2018, which was continued to June 4, 2018. The Proposed Budget was also presented to the Finance Commission on April 28, 2018.
Overview
The theme of next year’s budget, “The Challenge of Change,” reflects the City Council’s adoption of shifting the fiscal year period, from a September year-end to a June year-end. This aligns the City’s financial period with that of the State, Orange County, over 487 California municipalities, and with CalPERS. It also provides the City with the opportunity to significantly reduce its long-term pension
costs by implementing the CalPERS prepayment option in July of each year.
The FY 2018/19 Proposed Budget is structurally balanced and totals $373.1 million in All Funds, reflecting a 3.3 percent increase from the FY 2017/18 Adopted All Funds Budget of $361.2 million. The FY 2018/19 Proposed Budget reflects flat staffing levels. The total FTE count in All Funds for FY 2018/19 is 986.25, which is unchanged from the FY 2017/18 Adopted Budget. The FY 2018/19 General Fund Proposed Budget is $228.4 million, a $4.3 million or 1.9 percent increase from the current year’s Adopted Budget of $224.0 million. General Fund revenue consists of numerous sources, such as taxes and fees. Major sources of revenue include Property Tax, Sales Tax, Utility Users Tax, and Transient Occupancy Tax, among others. Although many economic indicators predict another year of stable economic growth, the City is experiencing a flattening or slowing of revenue growth in some categories requiring continued vigilance. A total of 55 percent of the General Fund is allocated to public safety, totaling $124.8 million.
Professional Services
As established by Administrative Regulation Number 228, each department has submitted a list of professional services, which are generally contained in their Proposed Budgets (Attachment #3). Professional services contracts are subject to compliance with Administrative Regulation Number 228 and the City Ordinance Chapter 3.03.
Update Financial Policies
Also included for review and adoption is an update of the City’s Reserve Policies, reflecting the Water Master Plan Update, which was approved in November, 2016. The minimum operating reserve of the Water Fund has been reduced from 33% to 25%, consistent with the capital improvement component of Water Master Plan Update.
Public Hearing
The City Charter requires that a public hearing be conducted on the City budget prior to adoption. Public Hearing notices have been published per City Charter requirements (Attachment #1). At the close of this hearing, all legal requirements for budget adoption will have been met.
Environmental Status:
Not Applicable.
Strategic Plan Goal:
Improve quality of life
Enhance and Maintain Infrastructure
Strengthen Economic and Financial Sustainability
Enhance and Maintain Public Safety
Enhance and Maintain City Services Delivery
Attachment(s):
1. Public Hearing Notice
2. Resolution Number 2018-34, “A Resolution of the City Council of the City of Huntington Beach Adopting a Budget for the City for Fiscal Year 2018/2019”.
3. Professional Services included in the Fiscal Year 2018/19 Budget.
4. City of Huntington Beach Financial Policies - Enterprise Funds