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Home My WebLink AboutAgenda Packet - CC - 2014.03.05 The City of Burlingame 2013-14 Mid-Year Budget Status Report and Five Year Forecast Wednesday, March 5, 2014, 6:30 p.m. Burlingame Library Lane Room 480 Primrose Road Burlingame AGENDA I. Call to Order and Roll Call – Mayor Michael Brownrigg II. Introductory Remarks – Lisa Goldman, City Manager III. General Fund Mid-Year 2013-14 Budget Status Report - Carol Augustine, Finance Director IV. Five Year Forecast and Budget Policy Issues for Fiscal Year 2014-15 – Lisa Goldman, City Manager and Carol Augustine, Finance Director V. 2014-15 General Fund CIP– Lisa Goldman, City Manager and Syed Murtuza, Public Works Director VI. Public Comments VII. Council Direction on Budget Policy Issues – Lisa Goldman, City Manager VIII. Adjournment Fiscal Year 2013-14 General Fund Mid-Year Budget Status Report City of Burlingame, CA Budget Study Session March 5, 2014 1 Overview Projected Revenues Property Tax, Sales Tax & Transient Occupancy Tax All General Fund Revenues Projected Operating Expenditures Projected Fund Balance 5-Year Forecast and Next Steps 2 Projected Revenues: Property Tax, Sales Tax & TOT 3 Property tax actuals expected to be $834K or 5.8% better than budget Higher net assessed values ERAF Refund – Actuals are $525K better than budgeted 6% higher than in prior year (adjusted) Sales & use tax actuals expected to be $185K or 2.0% better than budget Continued demand for new and used autos Transient occupancy tax (TOT) expected to be $1.5 million or 8.2% better than budget 20% growth in Average Daily Room Rates (ADR) - $194 in San Francisco-San Mateo area Continued high local occupancy rates of 85% Projected Revenues: All General Fund Sources 4 FY12-13 Actuals FY13-14 Budget FY13-14 Projected Budget Up (Down) $ Budget Up (Down) % Property Tax $15,384,141 $14,441,000 $15,275,203 $834,203 5.8% Sales and Use Tax 9,198,871 9,445,000 9,630,000 185,000 2.0% Transient Occupancy Tax 18,244,310 18,570,000 20,100,000 1,530,000 8.2% Other Taxes Franchise Tax 1,572,005 1,420,000 1,547,000 127,000 8.9% Business Licenses 952,804 991,000 991,000 0 0.0% State HOPTR 65,337 64,000 64,000 0 0.0% Real Property Transfer Tax 379,542 406,000 375,000 (31,000) -7.6% Licenses & Permits 101,753 110,000 110,000 0 0.0% Fines, Forfeitures and Penalties 860,476 815,000 692,000 (123,000) -15.1% Use of Money & Property 199,186 226,000 191,000 (35,000) -15.5% Charges for Services 3,680,054 3,686,600 3,991,991 353,311 9.7% Miscellaneous Revenue 110,196 38,500 38,500 0 0.0% State Subventions 404,875 132,000 89,012 (42,988) 32.6% Interest Income 133,386 200,000 200,000 0 0.0% Total, General Fund Revenue $51,286,936 $50,497,100 $53,294,626 $2,797,526 5.5% Projected General Fund Operating Expenditures 5 Recommend net increase of departmental budgets by $208K Departments continue to monitor operating expenditures well to stay within budget Includes $75K to jump-start an update of the Circulation Element of the General Plan, now required for grant programs Includes $50K matching funds for GF Update grant Adjustments made to re-allocate Utility budgets across departments Transfers out (to other funds) reduced by $290K Projected Fund Balance 6 Other Funds 7 Allocation of Interest Earnings Separation of Certain Activities Solid Waste and Landfill Operations General Liability and Workers’ Compensation Establishment of OPEB Internal Services Fund to allow contributions to Retiree Medical Trust Fund Adjustments in Other Funds 8 Questions & Comments? Fiscal Year 2012-13 General Fund Five-Year Financial Forecast City of Burlingame, CA Budget Study Session March 5, 2014 9 Overview General Fund Revenue Forecast Property Tax Assumptions Sales Tax Assumptions Transient Occupancy Tax (TOT) Assumptions General Fund Revenue Summary Expenditure Assumptions Increasing CalPERS Employer Rates Impact of Retiree Medical Costs Next Steps 10 Summary of Economic Indicators 11 Economic Indicator Projected 2013-14 Forecast 2014-15 U.S. Real GDP Growth 3.0% 4.1% Consumer Price Index – San Francisco 2.6% 2.86% California Non-Farm Employment Growth 1.6% 2.6% California Unemployment Rate 8.5% 7.7% California Median Existing Home Prices $379,500 $416,275 California Residential Building Permits 88,700 123,000 Major General Fund Sources 12 Property Tax Assumptions 13 Growth in net assessed values (NAV) contingent upon: Higher residential property values Local 2013-14 property roll reflects 6.89% growth since prior year 9.7% growth in residential values expected statewide San Mateo median home price = +22.2% since PY However, City inventories of properties for sale relatively low In calendar year 2013 closed sales declined 5.5% and new listings down 14.2% since prior year Assume that significant real estate developments in pipeline will not be completed in 5 years Property Tax Assumptions Phase out of Excess ERAF distribution in next two years – ongoing loss of $0.9 – 1.4 million annually Based on Assessor’s secured roll, 4.0% increase assumed for FY 2014-15 Five-year forecast assumes 3.32% compound annual growth rate (CAGR) 14 FY2014-15 FY2015-16 FY2016-17 FY2017-18 FY2018-19 Property Tax $15,134,000 $14,982,680 $15,477,268 $15,988,293 $16,516,300 Property Tax Assumptions 15 City of Burlingame Net Assessed Valuations Category Parcels Net Assessed Value % Total Residential 7,697 5,284,568,829 71.10% Commercial 466 1,237,794,129 16.65% Industrial 198 469,569,724 6.32% Gov't Owned 2 490,841 0.01% Institutional 43 5,313,527 0.07% Miscellaneous 126 88,284,961 1.19% Recreational 18 21,330,221 0.29% Vacant 64 47,312,741 0.64% SBE Nonunitary 4 2,560,452 0.03% Unsecured 985 275,840,943 3.71% Totals 9,603 7,433,066,368 100.0% Historical growth in annual net assessed value has been about 3.17% compounded annually 16 Sales Tax Assumptions 0.5% increase in County sales tax appears to have had minimal impact on foot traffic sales Some changes expected over the next 5 years Internet Taxation Burlingame Avenue Streetscape California “Triple Flip” sales tax backfill will expire in fiscal year 2016-17 No expected impact to sales tax revenue 17 Sales Tax Assumptions 18 Taxable Sales by Category 3rd Quarter 2013 % of Total Projected FY2013-14 Growth Projected FY2014-15 Growth Autos & Transportation 41.0% 9.0% 5.0% Building & Construction 5.0% 9.7% 5.0% Business & Industry 12.2% 2.0% 2.5% Food & Drugs 4.3% 2.6% 2.5% Fuel & Service Stations 5.3% -2.4% -2.0% General Consumer Goods 14.9% 3.7% 3.0% Restaurants & Hotels 17.3% 6.2% 5.0% Total 100.0% 5.0% 3.3% Expected 3.3% average growth statewide in fiscal year 2014-15 across all categories Sales Tax Assumptions Expected growth in US Real GDP is 4.1% Per CA Department of Finance, California GDP growth is 1.4% (2012) Five year forecast utilizes City’s historical CAGR of 4.25%, which coincides with other indicators Excludes fiscal years 2008-09 and 2009-10 (depressed economic conditions) 19 FY2014-15 FY2015-16 FY2016-17 FY2017-18 FY2018-19 Sales & Use Tax $10,015,200 $10,440,846 $10,884,582 $11,347,177 $11,829,432 20 TOT Assumptions The City’s largest and most economically sensitive revenue source Five-year forecast assumes 5.0% CAGR Assumes capped growth in ADRs due to price elasticity (currently averaging $194 in San Francisco-San Mateo) Assumes continued high occupancy rates regionally Stable 3,742 hotel rooms Adjustment made for new SFO hotel (est. 400 rooms, FY17-18) Staff will continue to monitor receipts and will revise forecast if needed 21 FY2014-15 FY2015-16 FY2016-17 FY2017-18 FY2018-19 TOT $21,105,000 $22,160,250 $23,268,263 $23,030,076 $24,181,579 Projected Revenues: All General Fund Sources 22 FY12-13 Actuals FY13-14 Budget FY13-14 Projected Budget Up (Down) $ Budget Up (Down) % Property Tax $15,384,141 $14,441,000 $15,275,203 $834,203 5.8% Sales and Use Tax 9,198,871 9,445,000 9,630,000 185,000 2.0% Transient Occupancy Tax 18,244,310 18,570,000 20,100,000 1,530,000 8.2% Other Taxes Franchise Tax 1,572,005 1,420,000 1,547,000 127,000 8.9% Business Licenses 952,804 991,000 991,000 0 0.0% State HOPTR 65,337 64,000 64,000 0 0.0% Real Property Transfer Tax 379,542 406,000 375,000 (31,000) -7.6% Licenses & Permits 101,753 110,000 110,000 0 0.0% Fines, Forfeitures and Penalties 860,476 815,000 692,000 (123,000) -15.1% Use of Money & Property 199,186 226,000 191,000 (35,000) -15.5% Charges for Services 3,680,054 3,686,600 3,991,991 353,311 9.7% Miscellaneous Revenue 110,196 38,500 38,500 0 0.0% State Subventions 404,875 132,000 89,012 (42,988) 32.6% Interest Income 133,386 200,000 200,000 0 0.0% Total, General Fund Revenue $51,286,936 $50,497,100 $53,294,626 $2,797,526 5.5% General Fund Revenue Forecast (Summary) 23 Projected FY2013-14 FY2014-15 FY2015-16 FY2016-17 FY2017-18 FY2018-19 Property Tax $15,275,200 $15,134,000 $14,982,680 $15,477,268 $15,988,293 $16,516,300 Sales and Use Tax 9,630,000 10,015,200 10,440,846 10,884,582 11,347,177 11,829,432 Transient Occupancy Tax $20,100,000 $21,105,000 $22,160,250 $23,268,263 $23,030,076 $24,181,579 Other Taxes Franchise Tax 1,547,000 1,593,410 1,641,212 1,690,449 1,741,162 1,793,397 Business Licenses 991,000 1,015,054 1,050,520 1,087,289 1,125,413 1,164,944 State HOPTR 64,000 66,560 68,772 71,057 73,419 75,859 Transfer Tax 375,000 383,826 392,860 402,106 411,570 421,257 Licenses & Permits 110,000 113,146 116,382 119,711 123,134 126,656 Fines, Forfeitures & Penalties 692,000 711,791 732,148 753,088 774,626 796,780 Use of Money & Property 191,000 191,000 192,910 194,839 196,787 198,755 Charges for Services 3,991,911 4,106,080 4,223,514 4,344,306 4,468,553 4,596,354 Other Revenue 38,500 38,500 38,500 38,500 38,500 38,500 State Subventions 89,012 89,012 89,012 89,012 89,012 89,012 Interest Income 200,000 210,000 231,000 254,100 304,920 365,904 Total Revenue $53,294,626 $54,772,579 $56,360,606 $58,674,570 $59,712,643 $62,194,729 Year -to-Year Growth Base Year 2.77% 2.90% 4.11% 1.77% 4.16% General Fund Expenditures Forecast Assumptions 24 Personnel Costs •Includes effect of current collective bargaining agreements (most set to expire in fiscal year 2014-15 or 2015-16) •2.5% annual growth in salaries beginning fiscal year 2014-15, offset by increased employee share of benefits •CalPERS rates to rise, significantly in forecast years •Other benefits to increase at varying rates (from 0-8%) •Does not include contribution to Retiree Medical (OPEB) Trust Fund (shown as operating transfer out) Non-Personnel Costs •Contractual costs increase 7%, utilities (electric, gas, water and fuel) increase 4-15%, other operating costs increase at varying rates (2- 4%), capital outlay to increase at 2%; operating expense assumptions as a whole equate to a 5%-6% annual growth rate Debt Service •Actual debt service for all outstanding bond issues; includes payoff of the 2004 Library Lease Refunding Bonds on June 1, 2016 ($750k) and $2.7 million drop in principal payments on Pension Obligation Bonds June 1, 2019 •Assumes no new debt service, refinancings, and issuances Capital Projects •Continuing the annual General Fund investment in Capital Projects equivalent to 2% of TOT revenues OPEB Trust Fund (Transfer Out) •Contributions to the Retiree Medical (OPEB) Trust Fund shown as Transfer Out; includes normal costs and amortization of all prior year costs per actuarial analysis August 2013 Forecast of CalPERS Rates FY 2013-14 Rates (base) Miscellaneous Employees 17.226% Safety Employees 27.877% Estimated rates for remaining 5 years on p. 22 Estimates were made prior to notice of longevity rate hike and any further changes to be included in Proposed Budget 25 Estimated CalPERS Rates Fiscal Year Misc Rate Safety Rate 2014-15 19.3 29.7 2015-16 21.3 32.1 2016-17 23.3 34.3 2017-18 25.3 36.9 2018-19 26.3 39.5 Forecast of OPEB Contributions OPEB contributions will in fact increase as shown: However, OPEB costs will be partially allocated to other funds, including Enterprise Funds (17%) 26 Year ARC (millions) 2014/15 $ 5,045 2015/16 5,130 2016/17 5,215 2017/18 5,297 2018/19 5,381 General Fund Expenditure Forecast (Summary) 27 1 - Beginning Fiscal Year 2014-15, the pay-as-you-go current OPEB expense will be shown as part of the annual OPEB Pre-Funding (OPEB Internal Services Fund). The FY2013-14 original appropriation was approximately $2.3M. General Fund Forecast (Summary) 28 Next Steps 29 Amend the Fiscal Year 2013-14 Adopted Budget for supplemental appropriations per proposed resolution Provide direction to staff regarding an assignment of $500,000 General Fund balance for General Plan Update 30 Questions & Comments?