The URL can be used to link to this page

Home My WebLink AboutRes 2018-79 - Adjstmnts FY 17-18 and Xpnditures FY 18-19MEETING DATE: PREPARED BY: REQUEST: Recommendation STAFF REPORT CITY OF PALM DESERT FINANCE PARTMENT October 25, 2018 Jose Luis Espinoza, CPA, Assistant Finance Director Adopt Resolution No. 2018- 79 authorizing Fiscal Year 2017-2018 final budget adjustments to revenue and expenditures and authorize certain related expenditures for Fiscal Year 2018-2019 By Minute Motion, that the City Council: 1. Waive further reading and adopt Resolution No. 2018- 79 authorizing the Fiscal Year 2017-2018 final year-end budget adjustments to revenue and expenditures; and 2. Authorize and appropriate an expenditure of $2,000,000 for an additional payment to CaIPERS for the Fiscal Year 2018-2019, to reduce the City's unfunded liability; and 3. Authorize and appropriate an expenditure of $1,000,000 for an additional payment to the City's CaIPERS California Employers' Retiree Benefit Trust (CERBT) account to reduce the City's Other Post -Employment Benefits (OPEB); and 4. Appropriate $2,670,000 from the General Fund Unobligated Fund Balance for the purchase of land that was approved in Fiscal Year 2017-2018. Strategic 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 Analysis As part of the closing of the financial records for the fiscal year ending June 30, 2018, adjustments will be necessary to both revenue and expenditures. The General Fund total revenues are estimated to close at $60,852,232 and expenditures are estimated to close at $54,468,228. From the excess revenues, staff is recommending that we use a portion to advance payments toward the City's pension and OPEB liabilities and to pay for land on Country Club Drive, approved by the City Council in FY 2017-2018, but not finalized until FY 2018-2019. October 12, 2018 - Staff Report Resolution 2018- 79 approving FY 2017-2018 final budget adjustments Page 2 of 3 The most notable change in revenue is primarily due to an increase in Transient Occupancy Tax (TOT) collected of slightly over $3.28 million. This includes an increase due to the average rental rates, online platform revenue, and new hotel revenue. Overall TOT revenue also reflects a full year of the transient occupancy tax rate increase. Other changes in revenue include increases to property tax increment, interest income, and building permits totaling $1,395,000, and a decrease in sales tax of $170,000. The additional property tax increment received is from dissolution of redevelopment from the amount available after all debts of the former agency are paid. The adjustments to the General Fund appropriations include reallocations as well as increases for year-end adjustments and are itemized in Exhibit A, attached to the resolution. The reallocations include decreases to public safety, marketing, economic development, building and safety, and public works as well as increases to departments for legal advertising, contract increases (due to the increase in minimum wage), repair and maintenance for traffic lights, community promotions (due to higher TOT revenue) and transfers for economic development. The adjustments to other funds include bond -related expenditures to close out various assessment districts, underestimated operational fire services, and service costs to the Palm Desert Recreational Facilities Corporation (PDRFC). During FY 2016-2017, CaIPERS reduced the discount rate on their investments from 7.5% to 7.375% and adopted a discount rate reduction strategy that will reduce the rate to 7.0% by FY 2020-2021. As a result, and in anticipation of the increases in annual retirement contributions, in FY 2017-2018, the City Council approved an additional payment of $1.7 million toward pension liability. This resulted in a change in the City's liability funded status from 67.58% to 69.23%, however, with the discount rate reduction strategy established by CaIPERS, staff expects that the funded percentage will decrease for the next two years. Therefore, staff is recommending that another advance payment be made in the amount of $2 million, to help offset the effects of the rate change and keep the annual contributions as level as possible. Additionally, a new Governmental Accounting Standards Board Number 75 requires the City to report their OPEB liability in the same fashion as their pension liability. As of the City's first measurement date of June 30, 2017, the City's outstanding liability is $4,120,584. After the payments and adjustments were made during FY 2017-2018, the liability is $2,788,132. Staff is recommending that the City make an additional payment during FY 2018-2019 to reduce the City's OPEB liability by an additional $1,000,000. Finally, in FY 2017-2018 the City Council approved the purchase of a vacant 10+/- acre parcel on Country Club Drive and Desert Willow Drive. The transaction was not finalized until the current fiscal year (FY 2018-2019), so an appropriation is required in this year. Monies are available from the FY 2017-2018 excess revenue. October 12, 2018 - Staff Report Resolution 2018- 79 approving FY 2017-2018 final budget adjustments Page 3 of 3 Fiscal Analysis The adjustments detailed in the attachment to the resolution result in an overall increase in revenue to the General Fund of $4,505,000. The net effect to General Fund expenditures is a decrease of $4,632,900. The adjustments to other funds are covered by those respective fund balances. Staff is requesting an additional appropriation of $5,670,000 in the current fiscal year (2018-2019) for an additional payment to CaIPERS, OPEB liability and for the purchase of the noted property. Prepared by/ e Luis Espinoza, CPA, Assistant Finance Director LEGAL REVIEW DEPT. REVIEW N/A i, i Robert W. Hargreaves ,Ja t M. Moore City Attorney Director of Finance ATTACHMENTS: Resolution No. 2018- 79 FINANCIAL REVIEW CITY MANAGER Janet M. Moore Director of Finance Lauri Aylaian C City Manager RESOLUTION NO. 2018- 79 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, AMENDING THE FISCAL YEAR 2017-18 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 2017- 18 budget; NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Palm Desert, California, that the fiscal year 2017-18 budget is hereby revised as follows: 1. The amounts on Exhibit A, attached hereto, in the section entitled "Revenue", are hereby amended for the fiscal year 2017-18 for each fund and revenue source noted; and 2. The amounts on Exhibit A, attached hereto, in the sections entitled "Appropriations Adjustments" and "Reallocations and Transfers" are hereby amended, reallocated, transferred and/or appropriated to the departments, activities and projects identified for the fiscal year 2017-18; and 3. The amounts on Exhibit A, 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 25th day of October, 2018, by the following vote, to wit: AYES: NOES: ABSENT: ABSTAIN: SABBY JONATHAN, MAYOR ATTEST: RACHELLE D. KLASSEN, CITY CLERK CITY OF PALM DESERT, CALIFORNIA RESOLUTION NO. 2018- 79 EXHIBIT A City of Palm Desert Year -End Adjustments For Fiscal Year Ending June 30, 2018 Fund Account Number Revenue Gen Fund 1100000-3188300 1100000-3188330 1100000-3111030 1100000-3611000 1100000-3221100 1100000-3133000 Fund Department/Acct # Department Name Appropriations Adjustments Gen Fund 1104210 Public Safety 1104300 Public Works Admin 1104310 Public Works Maintenance 1104331 Public Works Auto - Fleet 1104417 Marketing 1104420 Building and Safety 1104430 Economic Development 1104470 Planning & Community 1104950 Property Acquisition Reallocations and Transfers Gen Fund 1104111-4321000 1104191-4112600 1104250-4332500 1104330-4331000 1104344-4309000 1104416-4322000 1104199-4501000 1104950-4400100 Other Funds 230 2304220-4304500 301 3014369-4309000 303 3034381-4309000 304 3044380-4309000 306 3064350-4309000 307 3074676-4309000 308 3084677-4309000 314 3144350-4309000 620 6204195-4309000 391 3914790-4364500 391 3914199-4501000 521 5214195-4803500 City Clerk Unemployement St. Lighting and Traffic Safety Corp Yard Portoal Community Center Communtiy Promotions Transfer Out Capital Fire Services Debt Service Debt Service Debt Service Debt Service Debt Service Debt Service Debt Service Debt Service Debt Service Debt Service Palm Desert Recrecation Facility Description/Reason TOT Short-term Rental TOT Property tax from RDA prop sales and residual TI Interest Income Building Permits Sales Tax Total Revenue Adjustment Description Amount $ 2,500,000 $ 780,000 $ 600,000 $ 400,000 $ 395,000 $ (170,000) $ 4,505,000 Amount Open positions $ (1,400,000) Open positions $ (100,000) Benefits, Prof Services and Street Repairs & Maint. $ (100,000) Gas and Vehicles Repairs & Maintenance $ (100,000) Media Buys and Special Co -Op Advertising $ (150,000) Open positions & Prof Services $ (100,000) Open positions $ (200,000) Open positions $ (200,000) Property Purchased in FY 18-19 $ (2,670,000) Total Appropriations to Reallocate $ (5,020,000) Legal Advertising Additional Claims Repairs and Maintenance Repairs and Maintenance Contract Cost Increase to PSDRCVB Economic Development Purchase of Capital Items Total Reallocated and Increased Appropriations Net Appropriations Adjustments Fire Cost Prof -Others Prof -Others Prof -Others Prof -Others Prof -Others Prof -Others Prof -Others Prof -Others Called Principal Transfer Out Cost of Providing Services 42,000 7,000 86,000 4,100 42,000 14,000 30,000 162,000 387,100 (4,632,900) 590,000 1,900 1,900 1,900 1,900 1,900 1,900 1,700 1,900 525,000 264,000 135,000 1,529,000