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Home My WebLink AboutRes 2019-81 - FY18-19 Final Budget AdjstmntsSTAFF REPORT CITY OF PALM DESERT FINANCE DEPARTMENT MEETING DATE: November 14, 2019 PREPARED BY: Janet M. Moore, Director of Finance REQUEST: Adopt Resolution No. 2019- 81 authorizing Fiscal Year 2018-19 final budget adjustments to revenue and expenditures and authorize certain related expenditures for Fiscal Year 2019-20 Recommendation By Minute Motion, that the City Council: 1. Waive further reading and adopt Resolution No. 2019- 81 approving and confirming the Fiscal Year 2018-19 final year end budget adjustments to revenue and appropriations; and 2. Authorize and commit the replenishment of the Economic Development Reserve in the amount of $1,400,000; and 3. Authorize and appropriate an expenditure of $1,500,000 for an additional payment to CalPERS in the Fiscal Year 2019-20, to reduce the City's unfunded liability from the FY 2018-19 excess revenues. Strateqic Plan While not specific to a Strategic Plan Objective, it is a primary goal of the City Council to strive for accountability, financial stability, and economic consistency. Background Analvsis As part of the closing of the financial records for the fiscal year ending June 30, 2019, adjustments are necessary to the budgets for both revenue and expenditures. These adjustments are explained in more detail below and are itemized on Exhibit A to the attached resolution. The actual total for General Fund revenues for the fiscal year are anticipated to close at $65,658,917 and expenditures are anticipated to close at $62,986,395. From the excess revenues, staff is recommending that a portion be used to make an advance payment toward the City's pension liabilities and commit monies to replenish the Economic Development Reserve. November 14, 2019 - Staff Report Resolution 2019- 81 approving FY 2018-2019 final budget adjustments Page 2of3 General Fund Revenue Staff is requesting budget adjustments to the City's General Fund Revenue including increases to transient occupancy taxes (TOT), interest income, permits, fees and sales tax. The largest adjustment is an increase to the sales tax revenue budget. Actual sales tax revenue recorded for the year is approximately $2.9 million higher than was estimated. This is due, in large part, to a delay in the tax distributions from the newly created California Department of Tax and Fee Administration (CDTFA) in July 2017, as well as limited information being available as a result of the transition to the CDTFA. The delayed payments (attributable to different tax years) could be as high as $1.4 million. The balance of the sales tax revenue increase is attributable to better than expected retail sales and one-time sales events. The next largest adjustment is an increase to the TOT revenue budget. Actual TOT revenue recorded for the year (including short-term rentals) is only slightly higher than the prior year's actual revenue (1.3%), however, an adjustment is needed since the budget was based on an expectation that there would be a reduction of rooms available as well as the phase out of short-term rentals in the R1 and R2 zones. The remaining budget adjustments include increases to; interest income, permits and fees. These budgets are they are a result of external influences that are beyon number of building permits issued during a year. Appropriations residual tax increment revenue, the most difficult to estimate as d the city's control such as the Also itemized in Exhibit A are the appropriations necessary to record allowances related to the State Department of Finance's (DOF) letter to the Successor Agency to the Palm Desert Redevelopment Agency (SARDA) on May 17, 2019, wherein the DOF continues to deny one of the loans from the City to the former redevelopment agency. The City will include a note in the Comprehensive Annual Financial Report (CAFR) regarding the recording of the allowance, as staff and legal counsel maintain that the loan from the City to the former redevelopment agency is a valid and enforceable obligation. Other adjustments and reallocations to appropriations were authorized by the City Manager and are itemized in Exhibit B. Resolution No. 2018-56 provides the authority to the City Manager to reallocate departmental appropriations within the General Fund as well as transfers between funds to adjust for actual transfers and approved expenditures, provided such adjustments do not exceed the total approved adjusted budget. No adjustments were authorized that exceed the approved adjusted budget. Other actions requested In addition to the above requests, staff is recommending that the City Council authorize the replenishment of the Economic Development Reserve in the amount of $1.4 million from the General Fund unassigned reserve. The City Council authorized the use of this reserve for projects promoting economic development, with the understanding that other G \Finance\Patty Leon\Staff Reports\FINAL SR - Budget Adjustments - Year end FY18-19 rev 1 docx November 14, 2019 - Staff Report Resolution 2019- 81 approving FY 2018-2019 final budget adjustments Page 3 of 3 projects and programs would be limited until funds were replenished. Staff therefore recommends replenishing the reserve by the same amount that was used from the reserve using the remaining excess revenue from FY 2018-19 and the balance from unassigned General Fund reserve. Lastly, staff is once again requesting an advance payment to CalPERS in the amount of $1.5 million, to help offset the effects of the discount rate change and to keep the City's future annual required contributions as level as possible. As background, during FY 2016- 17, CalPERS adopted a discount rate reduction strategy that reduces the discount rate from 7.5% to 7.0% by FY 2019-20. In anticipation of the increases in required annual contributions/payments, in both FY 2017-18 and FY 2018-19, the City Council approved additional payments of approximately $3.7 million to assist in stabilizing the City's pension liability going forward. This has resulted in the City's percent funded ratio increasing from 66.2% in 2016 to 70.7% in 2017 and 71 % in 2018, although the actual dollar value of the funded ratio fluctuates and may be less than a prior year. Next year, it is possible that the City's funded ratio percentage may decrease as the final reduction in the discount rate is realized. Fiscal Analysis The approval of the adjustments requested in Exhibit A will finalize the FY 2018-19 budget and allow for the final entries to be made for the year-end closing. The anticipated actual General Fund revenue over expenditures for the year is approximately $2,700,000. From that balance, staff is requesting an appropriation of $1,500,000 in the FY 2019-20 (current year) for an additional advance payment to CalPERS as well as a commitment of $1,400,000 to the Economic Development Reserve from the unassigned General Fund reserve. LEGAL REVIEW DEPT. REVIEW FINANCIAL ASSISTANT REVIEW CITY MANAGER N/A N/A Robert W. Hargreaves J t M. et M. Moore Ja eMoo�re Andy Firestine City Attorney Director of Finance Director of Finance Assistant City Manager City Manager Lauri Aylaian: ATTACHMENTS: Resolution No. 2019- 81 G.\Finance\Patty Leon\Staff Reports\FINAL SR -Budget Adjustments -Year end FY18-19 rev 1 docx RESOLUTION NO. 2019- 81 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, AMENDING THE FISCAL YEAR 2018-19 BUDGET AS A RESULT OF YEAR-END ADJUSTMENTS WHEREAS, as a result of the closing of the books and year-end review of the revenue, expenditures, and appropriations, it is desirable to revise the fiscal year 2018- 19 budget; and WHEREAS, Resolution No. 2018-56 provides the City Manager with the authority to reallocate departmental appropriations within the General Fund as well as transfers between funds to adjust for actual transfers and approved expenditures, provided such adjustments do not exceed the total approved adjusted budget; NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Palm Desert, California, does hereby confirm the adjustments as follows: 1. The amounts on Exhibit A, attached hereto, in the section entitled "Revenue", are hereby amended for the fiscal year 2018-19 for each fund and revenue source noted; and 2. The amounts on Exhibit A, attached hereto, in the sections entitled "Appropriations Adjustments" are hereby amended and/or appropriated to the funds, departments, activities and projects identified for the fiscal year 2018- 19; and 3. The amounts in Exhibit B attached hereto, in the sections entitled "Appropriations Adjustments" and "Reallocations and Transfers" are hereby amended, reallocated, transferred and/or appropriated to the funds, departments, activities and projects identified for the fiscal year 2018-19; and 4. The amounts on Exhibit B, attached hereto, in the section entitled "Other Funds" are hereby amended, transferred and/or appropriated for each fund noted. PASSED, APPROVED AND ADOPTED at the regular meeting of the Palm Desert City Council held on this 14t" day of November, 2019, by the following vote, to wit: AYES: NOES: ABSENT: ABSTAIN: ATTEST: RACHELLE KLASSEN, CITY CLERK CITY OF PALM DESERT, CALIFORNIA SUSAN MARIE WEBER, MAYOR City of Palm Desert Resolution 2019- 81 Year -End Adjustments For Fiscal Year Ending June 30, 2019 Fund Account Number Revenue Gen Fund Description/Reason Exhibit A Beginning Budgeted General Fund Revenues 1100000-3188300 TOT 1100000-3188330 Short-term Rental TOT 1100000-3111030 Property tax from RDA prop sales and residual TI 1100000-3611000 Interest Income 1100000-3221100 Building Permits 1100000-3411400 Plan Check 1100000-3411200 Sub Division 1100000-3412300 Vehicle Impact 1100000-3910000 Transfers In 1100000-3511300 Court Fees 1100000-3133000 Sales Tax Total Revenue Adjustment Fund Department/Acct # Appropriations Adjustments Gen Fund 1104159-4369701 Appropriations Adjustments Other Funds Fund Departn New ConstrTax 2314159-4369701 Parks Facilities 4304159-4369702 Liability Self Ins 5754159-4369703 Housing 8734159-4369704 Total Ending Budgeted General Fund Revenues Amount $ 58,012,396 $ 1,790,000 $ 540,000 $ 270,000 $ 1,100,000 $ 680,000 $ 340,000 $ 200,000 $ 137,000 $ (790,000) $ 132,000 f non nnn yi l,F JJ,V UV $ 65,311,396 Description Amount Beginning Budgeted General Fund Expenditures $ 58,009,613 Appropriations made during year $ 6,527,801 Loan/Advance Write off $ 160,000 Total YE Appropriations General Funds $ 160,000 Total Ending Budgeted General Fund Expenditures $ 64,697,414 Ending Budgeted GF Revenues vs Expenditures $ 613,982 ent/Acct # Description Amount Loan/Advance Write off $ 523,200 Loan/Advance Write off $ 3,812,000 Loan/Advance Write off $ 304,800 Loan/Advance Write off $ 1,200,000 Total YE Appropriations Other Funds $ 5,840,000 OVERALL GENERAL FUND SUMMARY [including YE/SR requests) General Fund Actual Revenues $ 65,658,917 General Fund Actual Expenditures $ (62,986,395) FY 2019-2020 Request for PERS Advance Payment $ (1,500,000) Surplus after FY 2019-20 requests: $ 1,172,522 City of Palm Desert Resolution 2019- 81 Year -End City Manager Approved Appropriation Adjustments For Fiscal Year Ending June 30, 2019 Exhibit 8 Fund Department/Acct # Department Name Description Amount Appropriations Adjustments Gen Fund 1104210-4304000 Public Safety Reduction to budget based on actuals $ (1,500,000) 1104300-4100100 Public Works Admin Reduction to budget based on actuals 5 (271,000) 1104300-4111500 Public Works Admin Reduction to budget based on actuals $ (32,000) 1104300-4112000 Public Works Admin Reduction to budget based on actuals $ (11,ODO) 1104300-4112100 Public Works Admin Reduction to budget based on actuals $ (47,DDO) 1104300.4112200 Public Works Admin Reduction to budget based on actuals $ (101D00) 1104300-4301000 Public Works Admin Reduction to budget based on actuals $ (29,000) 1104159-4111500 General Services Reduction to budget based on actuals $ (208,OOD) 1104159-4963000 General Services Reduction to budget based on actuals S (87,100) 11041.42-4100100 Special Programs Reduction to budget based on actuals $ (213,000) 1104132-4100200 Special Programs Reduction to budget based on actuals $ (2,0DO) 1104132-4111500 Special Programs Reduction to budget based on actuals $ (23,000) 1104132-4111600 Special Programs Reduction to budget based an actuals $ (3,DDO) 1104132-4112000 Special Programs Reduction to budget based on actuals $ (2,000) 1104132.4112100 Special Programs Reduction to budget based on actuals $ (50,(X0) 1104132-4112200 Special Programs Reduction to budget based on actuals $ (51500) 1104132-4309000 Special Programs Reduction to budget based on actuals $ (56,000) 1104132-4312000 Special Programs Reduction to budget based on actuals $ (2,000) 1104132-4312500 Special Programs Reduction to budget based on actuals $ (1,500) 1104132-4361000 Special Programs Reduction to budget based on actuals $ (11000) 1104132-4366000 Special Programs Reduction to budget based on actuals $ (1,0D0) Total Appropriations to Reallocate $ (2,555,100� Reallocations and Transfers Gen Fund 1104114-4309000 Elections Increase in budget based on actual expenditures 7,100 1104120.4301500 City Attorney Increase in budget based on actual expenditures 3,300 1104121-4301500 Legal Special Services Increase in budget based on actual expenditures 19,200 1104150-4100100 Finance Increase in budget based on actual expenditures 16,400 1104199-4501000 Transfer Out Increase in budget based on actual expenditures 2,179,000 1104330-43310DO Carp Yard Increase in budget based on actual expenditures 24,300 1104344-43090DO Portola Comm Center Increase in budget based on actual expenditures 58,000 1104416-4369100 Community Promotions Increase in budget based on actual expenditures 4,700 1104419-4100100 Visitor Center Increase In budget based on actual expenditures 9,100 1104420.4301D00 Building and Safety increase in budget based on actual expenditures 54,000 1104470-4100100 Planning & Community Increase in budget based on actual expenditures 40,000 1104470-4309000 Planning & Community Increase in budget based an actual expenditures 140,000 Total Reallocated and Increased Appropriations 2,555,100 Other Funds 230 2304220.4304500 Fire Services Fire Cost 800,000 237 2374511.4364600 Energy Program Called Principal 403,WO 242 2424549-4331100 Aquatic Center Replacement of Equipment 40,000 243 2434199.4501000 Cannabis Transfer Out 450,000 311 3114676-4309000 Debt Service Prof -Others 68,000 314 3144350.4364600 Debt Service Called Principal 14,000 315 3154350-4309000 Dent Service Prof -Others 8,200 353 3534994-4309000 Debt Service Prof -Others 27,000 430 4304674-4400100 Capital Park Park Improvements 7,300 468 4684199-4501OW Debt Service Transfer but 27,000 577 5774195.4102000 Compensation Absences Change is Liability 23,000 1,867,500 229 2294210-4391400 Police Reduction to budget based on actuals (100,D00) 873 9734492-4400100 Housing Reduction to budget based on actuals (225,000) 873 9734699-4400100 Housing Reduction to budget based on actuals (54,000) 870 9704195-4100100 Admin Housing Reduction to budget based on actuals (41,OOD) 520 5204195.4909200 Desert Wilow Reduction to budget based on actuals (104,100) 520 5204195.4908100 Desert Wilow Reduction to budget based on actuals (84,400) 576 5764192.4119000 Retiree Health Reduction to budget based on actuals (49,700) 576 5764192-4309000 Retiree Health Reduction to budget based on actuals (9,300) 441 4414199-4501000 Golf Course Reduction to budget based on actuals (1,200,000) NOTE: Adjustments authorized by the City Mana er ursuant to Resolution 7018-56 (1,867,500) Approved: 'tauri AyIaIan, City Manager