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HomeMy WebLinkAboutFiscal Year 2021/22 Proposed Budget Review City of Huntington Beach File #: 21-400 MEETING DATE: 5/17/2021 Subject: Fiscal Year 2021/22 Proposed Budget Review City of Huntington Beach Page 1 of i Printed on 5/12/2021 p ere B Legistar- • i, 19/2021 City of Huntington Beach Proposed FY 2021/22 Budget Review City Council Study Session May 17, 2021 LF!" ■KM Presentation Overview • Overall City Fiscal Position • Current FY 2020/21 General Fund Update • Proposed FY 2021-22 General Fund Budget Review -CIP Budget Overview & Major Capital Equipment Acquisition • American Rescue Plan Act Discussion • Key City Council Polity Considerations For FY 2021/22 -Homeless Response Manager Position -Parking Fee Adjustment Proposal -EMS Fee Increase Consideration -Other? • Next Steps- FY 2021-22 Budget Approval • 5/19/2021 City's Financial Status Heading Into FY 2021/22 MUN,INGIOM .lKM Huntington Beach Is In A Terrific Financial Position! • As difficult as it is to believe given where we were a year ago, the City is now in an exceedingly strong fiscal position as we prepare to transition into a post-COVID-19 world • The City Council made difficult decisions during the past year, and the Proposed FY 2021122 Budget is reflective of HB's envious position as we move towards a full reopening of our local economy -Our FY 2021/22 budget is structurally balanced, with a$254,000 projected General Fund surplus -The General Fund transfer into the Infrastructure Fund for FY 2021/22-which has historically been set at -$5 million in prior years-is proposed to increase by 130%, to$11.5 million -The proposed CIP budget,which typically runs at around`525M /year, is proposed to be set at $39.3M for FY 2021122, an increase of greater than 57% • Also, none of our proposed spending plan contemplates use of American Rescue Plan Act funding ... $29.6 million in one-time dollars that the City can use to invest strategically to make what were previously only aspirational improvements for HB • 5/19/2021 The City Addressed Unprecedented Fiscal Challenges This Past Year • Over the last year, the City has had to address massive revenue declines • Our Pre-COVID-19 General Fund Revenues were projected at $236.9 million —During FY 2019/20, pandemic induced revenue declines dropped our General Fund revenues by 17 2 million, or 7.3' down to$219.7 million • Even as we recover, our proposed FY 2021/22 General Fund Revenue Budget of $228.0 million is still $8.9 million (or 3.8% lower) than pre-COVID-19 levels. —Despite these fiscal challenges, the City made difficult but necessary budget adjustments, and we ended FY 2019/20 with a $1.1 million General Fund surplus —Further,we are projecting a $578,000 surplus for the end of our current FY 2020121 Difficult Decisions Previously Made Are Providing Benefits Today • Major initiatives undertaken this past year to address our COVID-19 induced financial challenges include: —We implemented a comprehensive Citywide restructuring plan, which will save the City $6 million annually while maintaining all essential service levels —To accomplish this financial maneuvering, we have reduced our approved positions by 29 FTEs, from a count of 987.25 FTEs pre-COVID, down to 958.25 FTEs in the proposed FY 2021/22 budget —Refinancing 85% of our pre-existing pension debt at a historically low interest rate of 2.925%will allow the City to save $166.7 million during the next 24-year period —As part of our pension debt refinancing plan, the City also adopted an Unfunded Accrued Liability Pension Funding Policy, which mandates that we set-aside additional funds to payoff any new future pension debt >A $1.8 million transfer is included in the proposed FY 2021/22 budget to prefund pension liabilities via our Section 115 Trust • 3 • 5/19/2021 Current FY 2020-21 General Fund Update wx-rtwc,or. .wc� FY 2020/21 General Fund Budget Overview • Current budgetary performance continues to indicate that the FY 2020/21 budget is balanced — Major Citywide restructuring plan that was instituted reduced ongoing General Fund expenditures by"$6M/year — General Fund is projected to end the FY 2020/21 with a $578K surplus (in thousonds) Projected Revenues $219,704 Expenditures less UAL 190,660 CaIPERS UAL 29,466 Total Expenditures 219,126 Surplus $578 4 • 5/19/2021 Proposed FY 2021-22 General Fund Budget Review IR.N1MGlOM E•CN Economic Overview & Local Budgetary Impacts • A year ago,the US economy contracted at a pace never experience before due to COVID - U.S. real GDP decreased -5.0%In Q1 2020 u . in Q2 2020 • By the end of 2020 the US economy has regained 70% of the activity lost in the first two months of the pandemic. - U.S.real GDP increased 33.4%in Q3 2020,4.3%in 04 2020, and 6.4%in Q1 2021 - The economy rebounded significantly over the last year although still short of pre-00w D 19 levels - The economic recovery is attributed to government assistance in response to the pandemic,vaccination efforts,declining COVID-19 cases, reopening of establishments, and the loosening of restrictions CA unemployment rate Improved to 8.3%In March 2021 compared to high of 16%in April 2020 - However,State's labor force decreased by 530,000(-2.7%)workers since pre-pandemic peak in February 2020 - O.C.unemployment rate at improved to 6.4%in March 2021 compared to high of 14.9%in May 2020 • Current trends signal a continued economic recovery from the financial impacts of COVID-19 - Economists are forecasting an annualized GOP increase of 4.6%in Fy 2021/22 5 • 5/19/2021 FY 2021/22 General Fund Proposed Budget Review •Proposed FY 2021/22 General Fund Budget is structurally balanced, with a projected $254K surplus - Major cost saving initiatives were implemented in FY 2020/21 due to the revenue decline caused by COVID-19 - Based on the current spending plan, the Proposed FY 2021122 General Fund Budget projects a 5254K surplus Proposed fludget Revenues 5227,980 Expenditures less UAL 208.779 CaIPERS UAL 4,896 POS Payment 14.051 Total Expenditures 227,726 Surplus $254 FY 2021/22 General Fund Proposed Revenues Projected Proposed Rewnsues Revenues Increase) Increasei L'2 r' tDecireasel Property Tax 92.203 93.213 1.010 1 1% Sales Tax "'Sol 44,641 140 0 3% Franchises 7.300 7.120 (180) -2.5% Transient Occupancy Tax 9,197 10.693 1,496 16 3% Utility Users Tax 16.884 16.884 0 0 O% License 8 Permits 8.873 7.779 906 13 2% Fines 5 Forfeitures 4.056 3.794 (262) .65% Use o1 Money 5 Property 14.419 16.172 1.753 12 2% Revenue ham OIMr Agencies 2.544 Z419 1124) 9% Crarges for Current Services 20.716 23.926 3,210 15 5% Olner Revenue 567 896 328 57 9% Non.Owating Revenue 443 443 0 00% Total 218,794 227.910 8,217 3.9% • 5/19/2021 FY 2021/22 General Fund Proposed Revenues - $228M from ptner Charges for Current Other Revenue Non-Operating Revenue Revenue6ervxes 0.4% 0.2% A from 1,1% p5% Use of Moray L Property 7.1% Funs L Forffnures property Ta. l.]% Q 9% LKene L PHTRS 3,4% Utility Usen Tex 4% TramKm DCNpaMy Ta. 4.7% FrancNius 3.1% Sales lox 196% FY 2021/22 General Fund Proposed Revenues - $228M • General Fund revenues anticipated to increase by$8.3 million in FY 2021/22 compared to FY 2020/21 projected revenues of$219.7 million - FY 2021122 revenues are still projected to be$8.9 million below pre COVID-19 estimates of$236.9 million 2019/20 • Major revenue variances include: - Property Tax:$93.2 million(1.1%or$1 million increase) > Higher assessed valuations as of January 1,2021 versus prior fiscal year - Saks Tax:$44.6 million(0.3%or 5140,000 increase) > Mild increases in projected economfc activity in FY 2021/22 after strong sales in FY 2020121 driven by stimulus spending,re openings,pent up demand and increased visitors to Huntington Beach - Transient Occupancy Tax:$10.7 million(16.3%or$1.5 million increase) > Increases driven by re openings.vaccinations,and reduced travel restrictions expected to fuel increased local tourism to Huntington Beach,but still below pre{OVID19 estimates of$14 million Use of Money&Property:$16.2 million(12.2%or$1.8 million increase) > Expected increase in parking and concessionaire revenues due to re openings and demand for travel - Charges for Current Services:$23.9 million(15.5%or$3.2 million increase) > Primarily attributed to increases in Community Service Recreation Program offerings and Special Events • 5/19/2021 FY 2021/22 General Fund Proposed Expenditures USES OF FUNDS BY DEPARTMENT Transfer" publK „s aver• wmn,m.n.e cwnmun,n 17.6% a 1% (ommun,ly Debt Service Sa,nrr s< , s.•x 0.9% once 16% rake Operating 11 y% Expenses r„e 18.8% Personnel 21_0% Services 62.8% Bon-oepv4n.nW •Transfers include pension obligation Bond,lnhastructure,Equipment. "Other includes C"Council.CM Manager City Ano,n., Bond Debt service,General babildy&section 115 Trust Transfers City Clerk,and CM Treasurer Recommended FY 2021/22 Authorized Positions •If approved as recommended, the proposed FY 2021/22 Budget reflects a reduction of 29 positions when compared with pre-COVID-19 staffing levels - With a total proposed headcount of 961.25 FTEs, the City is just slightly above the staffing levels of 960 FTEs in FY 2012/13 •New positions included in the FY 2021/22 Budget are as follows: - (1)Administrative Aide&Ill Administrative Analyst in Public Works which will focus on sustainability projects and programs - (1) Principal Administrative Analyst in the Administrative Services Department to coordinate Citywide performance management and data analysis g • 5 19;2021 FY 2021/22 Full Time Equivalent — All Funds 99 . :.,VIA MOO - i96:5 99)35 960 00 918 3 97500 97300 973. 9)000 Pro posed o Budget 961 35 960 00 96o m 95500 Great Recession Restructure 95000 plan FY 11/13 h 13/13 h 13/14 h 14/15 h 15/16 h 16/17 h 17/13 hla/19 h 19/30 h M121 FY 31/3: FY 2021-22 Capital Improvement Budget Review J. V 2 M1M199G10M w.KX . 9 • 5/19/2021 CIP Budget Overview • FY 2021/22 Budget includes$39.3 M in proposed capital enhancements,a 57%increase over our typical annual budget of`$25 M in capital upgrades • Key improvements include: - Facilities - Parks > Harbor View Clubhouse > Blufhop Park > Huntington Central Park Sports Complex Lighting > Edison Park Reconfiguration > Central Library Fountain Restoration > Playground equipment @ Glen View and Sun View > Oakmew Community Center Rehab > Beach Parking Lot Rehabilitation(Huntington to 10 St) > Lifeguard and Y.Lifeguard Ho Upgrades > Huntington Bluffs Stabilization - utilities - Streeb > Humboldt Lift Station > Residential Overlay in Zone 5 > Sewer relining > Arterial Rehabilitation Project-Edinger,Warner,Talbert, • Water main replacement Newland,and Brookhurst CIP Funding Sources Caprbl hnprMment P*VMM Fy 20z I/II New Appm,xinpm by FuMmq$puree $39,326.723 RM" Park Funds 12% 94 Gas Tax/P."42 9% Water FunOF , e% Measure M 1% TIF e% MF11aF[rlrCtlrre Fund 37% 10 • 5/19/2021 Key Facility Upgrades • Harbor View Clubhouse - 5775 K to complete building improvements and address ADA issues • Huntington Central Park Sports Complex Lighting - $477 K to mstall new LED light futu,es at fields 1 and 2 • Central Library Fountain Restoration - 51.7 M for renovations to the eelenor fountains at the Central Library • Oak View Community Center Rehab$900K s it • p 1 r i i Key Facility Upgrades (Continued) 1 1 • Central library Rest room ADA Rehab(Design) $30K • Central Library Exterior Paint$82K • City Gym&Pool Interior&Exterior Paint S90K • Lifeguard 88 Junior Lifeguard HQ Upgrades$320K i - z t • 51:912021 Key Facility Upgrades (Continued) • Pier Piling Inspection&Maintenance 5500K • Helipad Lot Rehab SSOOK • Police Communication Center Remodel 5780K • Police Traffic Office Remodel 5180K A s 4-. Key Park Upgrades • Blufftop Park - 5750K in additional funding to upgrade Blufhop Park • Playground equipment - 5442K for playground equipment upgrades - Upgrades planned at Glen view and Sun View Parks • Beach Parking Lot Rehabilitation - 51.48M for parking lot rehabilitation from Huntington to 1•Street • Huntington Bluffs Stabilization Project - 5400K for design end study to stabilize two localized erosion areas • H.C.P Disc Golf Course 5100K • Park Improvements- LeBard,Marina,Carr,Schroeder Park 51.SSM • Huntington Central Park Restrooms 5363K • Huntington Lake Elevated Pathway 5250K • 12 • S/19/2O21 Key Street Upgrades • Residential Overlay in Zone 5 - $4.gM allocation to fund neighborhood street and curb ramp improvements in Zone 5 • Arterial Rehabilitation project - $5.4M allocation to fund our annual arterial - arterials slated for rehabilitation include Edinger.Warner,Talbert,Newland,and Brookhurst • Citywide Mobility&Corridor Improvements 5800K • Fiber Optics projects/Design(City Hall-Utility Yard,Oak View,Garfield,Gothard,and Bushard)5653K • Downtown Street Lighting 51.3M • Residential Alleys S1.1M Arterial Rlrab-Before All,, lima.^, After kid lia t Zone 5 Key Utility System Upgrades • Humboldt Lift Station - $4.OM to improve Humboldt lift station • Sewer Relining - $1.1M for lining sewers in various locations • Water Main Replacement - 52.45M for water main replacement • 13 • 5/19/2021 FY 2021-22 Major Capital Equipment Acquisition is FY 2021-22 Proposed Capital Equipment Acquisition -The proposed FY 2021-22 budget contemplates acquiring several pieces of major capital equipment to support our public safety operations -Replacing 3 Helicopters: $6.97 M > City has 3 helicopters IMD520N aircraft)that were placed into service in 1999,2001,and 2007 > To replace all 3 helicopters would cost 59.5 million > Sale of our e.isung helicopters would net$2.7 million -Replacing Fire Engine: $867,440 > Current engine has been in service for 16 years with high usage,and would he replaced with a Pierce model,consistent with the Fire Engines currently in use -Replacing a Rescue Boat: $560,000 > The City current has 3 Lifeguard Rescue goats,and at least one of the units(which is 33 years old)is recommended for replacement • 14 • 5/19/2021 Capital Equipment Replacement Options • Funding in the amount of $935K has been included as part of the proposed FY 2021/22 Equipment Replacement Fund, to finance the acquisition of the 3 helicopters, the fire engine, and the rescue boat -This funding level is based on a conservative 2% interest rate for a 10-year loan of-$8.4M -Alternatively, the City Council could choose to fund the acquisition of these pieces of equipment with American Rescue Plan Act funds American Rescue Plan Act Funding 1 IMIIYK1pY NKM • 15 • 5/119/2021 American Rescue Plan Act • On March 12, 2021,the$1.9 trillion American Rescue Plan Act was signed into law delivering $350 billion to state, local, territorial,and Tribal governments in response to COVID-19. • Huntington Beach is estimated to receive$29.6 million,split into two payments, one in the current fiscal year and another a year later • On May 10, 2021, US Department of Treasury released details on how funds may be used The objectives of the Coronavirus State and local Fiscal Recovery Funds Include: -Support urgent COVID-19 response efforts to continue to decrease spread of the virus and bring the pandemic under control - Replace lost public sector revenue to strengthen support for vital public services and help retain jobs -Support immediate economic stabilization for households and businesses -Address systematic public health and economic challenges that have contributed to the unequal impact of the pandemic Fiscal Recovery Funds Allowable Uses ® Support Public Health Response V Address Negative Economic Impacts a Fund COVIO-19 mitigation efforts,medical u Respond to economic hams to workers,labile; expenses,behavioral healthcare,and certain small businesses,impacted industries.and the public health and safety staff public sector Replan Public Sector Revenue Lou Premium Pay for Essential Workers Use funds to provide government services to Offer additional support to those who have and the extent of the reduction in revenue will bear the greatest health risks because of the, experienced due to the pandem.c serve m critical infrastructure sectors �[ Water and Sewer Infrastructure (t11, Broadband Infrastructure �JO Make necessary investments to improve access Make necessary investments to provide unserveo to clean drinking water and invest in or underserved locations with new or expanded wastewater and stormwater infrastructure broadband access Fiscal Recovery Funds must be used on eligible costs from March 3, 2021 and December 31, 2024 • ;v • 5/19/2021 COVID-19 has significantly impacted the City's Revenues • Revenue loss In the General Fund are estimated to be $57.6 million for FY 2019/20 and FY 2020/21 • U.S.Treasury allows agencies to have broad latitude to use this funding to support government services, up to lesser of the amount of lost revenue or the agency allocation(Ha's$29.6 million) (in thousands) Actual Actual Projected Total Total General Fund Revenue 236,631 225,487 219,704 681,822 Revenue for ARPA Calculation 4.1%National Growth Rate 236,631 246,333 256,433 739,396 Revenue Loss -20,846 -36,729 -S7,S74 Ineliaible Use • Extraordinary payments into a pension fund • Funding debt service, legal settlements or judgments, deposits to rainy day funds or financial reserves Possible American Rescue Plan Act Funding Framework Repair Past COVID•19 Impacts Replace essential safety equipment 13 Helicopters, Fire Engine&Lifeguard Rescue Boat, COVID-19 Expenses not covered by FEMA or CARES funding Respond to Present Needs Downtown revitalization improvements Homeless response Police technology-CAD/RMS Funding Edison Park upgrade Carr Park Additional Mob, mats Plan for Has Future Grow HB Fund Business Expansion Fund Funds to Support Economic Development Efforts Permanent Supportive Housing Project Mobility Capital Improvements Additional City Council renew of ARPA funding expenditures are recommended during the next few months • 17 • 5/19/2021 Key City Council Policy Considerations For FY 2021/22 Nt;N11NG1pM 4MH City Council Policy Direction Needed •As we've developed the Proposed FY 2021/22 Budget for City Council consideration, there are several possible budgetary adjustments that require additional City Council deliberation —ARPA Funding Protocols —Dedicated Position For Homeless Response —Seasonal Parking Fee Adjustments —EMS Fee Increase Consideration —Other? • 18 • 5/19/2021 Homeless Response Position *At our January 2021 City Council goal setting retreat, staff was directed to consider developing a position dedicated to coordinating the City's homeless response efforts •The Police Department and City Manager's Office has assessed the need for such a position, and given the increasing complexity of managing the various programs that we've established, there is a demonstrable need for such a role -Staff has developed a new classification as a Deputy Director of Homeless & Behavioral Services, however, the position is not currently included in the proposed FY 2021/22 operating budget —The City's operating budget can absorb the cost of adding such a position, if directed to do so by the City Council >The hourly rate for the role established is$72.82 - $90.21 / hour Seasonal Parking Fees Proposal •Parking meter rates were last adjusted in January 2019 with Ordinance 4148 •The proposed meter adjustments would reintroduce seasonal rate changes in order to manage increased demand during the peak season (Memorial Day weekend through Labor Day) while keeping rates comparable with nearby coastal cities Current Rate Rate Meter Zone Year Round Off-Peak Peak Season Downtown/Residential $2.00 $2,25 $3,00 Bluff Top,Dog Beach,PCH,warner Lot, 1st&Atlanta 2,00 2.25 2.50 Pier Plaza pots north/south of pier) 2.00 2.25 3.00 Beach Blvd 2.00 2.25 2.25 • 19 • 5/19/2021 Parking Meter Rate Survey for Coastal Cities Off-Peak Hourly Rates Peak Season Hourly Rates Beach Access Downtown Access Beach Access Downtown Access Huntington Beach-Proposed• 52.25 $2.2S S2-25-2.50 S3011 Laguna Beach 2 50 3.00 3 00 2.50-4 50 4 50 Long Beach 2.00 1.50-3.00 2.00 1.50-3.00 Newport Beach 1.75-2.55 1.75-2.55 2.55- 5 30 3,50(2hr)-4.35 1 Santa Monica 2.50-3.50 2.50 2.50- 3.50 2.50 •Generally,Beach Access zones include Bluff Top,Dog Beach,PCH,Wainer Lot,1st 3 Atlanta,and Beach Blvd. Downtown Access tones indude P,er Plaza,Downtown,and Residential areas. Other Proposed Parking Adjustments South Beach Attended Lots •Based on rising demand in recent years, staff is proposing to increase the current daily rates for the South Beach attended lots from $15 to $20 per day on weekends (peak season only), Memorial Day, and Labor Day for autos, pickup trucks, and motorcycles only •Adjustment would be coordinated w/ the State beaches •Annual Beach Parking Pass rates would remain unchanged • 20 • 5/19/2021 Other Proposed Parking Adjustments (continued) Main Promenade Parking Structure •Staff is proposing to replace the current customer validation program with an adjusted rate schedule that includes one hour of free downtown parking •The proposed schedule would allow all Downtown business to benefit from an initial free hour while helping to alleviate traffic congestion in the downtown area CURRENITRATESTItUCTURE First 30 minutes No Charge Up to Two Hours(includes first 30 minutes) $1.00/hour After Two Hours $1.00/Each 20 minutes Customer Validation/hour(Max two validaWris per ticket) $.50/hour PROPOSED RATE STRUCTURE First Hour No Charge Second Hour $2.00 After Two Hours 51.00/Each 20 minutes Parking Adjustments Summary •Parking Meter Adjustments -Meter rate changes are estimated to generate -S1.32M in General Fund revenue annually *Seasonal Attended Parking Lot Fee Adjustment -The proposed adjustment is estimated to generate -$376k in General Fund revenue annually •Parking Structure Adjustment -The parking structure adjustments are expected to decrease General Fund revenues by -S16k annually • 21 • 5/19/2021 Proposed Emergency Medical Service Fee Update •EMS fees were last updated in September 2012 by Resolution 2012-61 —Over the past three years, the City generated an average of$6.8 million /year in EMS fees *The City hired Matrix Group to perform a comprehensive analysis of the City's EMS fees •Based on the EMS fee study, the City has an opportunity to increase fees to recover the cost of providing Emergency Medical Services to residents and visitors of HB •Under the proposed fee adjustment, there would be no financial impacts for any Fire Med Program subscriber ($60/year covers all EMS related costs) •Recommendation is to set fees at full costs, which are also in line with fees charged by neighboring agencies Proposed EMS Fee Level Fee Name Current Fee Fee is X%of Proposed Current Fees at Full Costs Cost Base BLS Rate S1,130 68% S1,655 ALS Surcharge $100 57% $174 Non-Resident Surcharge $450 95% I $474 Treat No Transport $350 96% $366 Mileage $16.54 105% $15.77 Oxygen $81 70% ! $125 ECG $60 93% I $64 • 22 • 5/19/2O21 Emergency Medical Service Fees Comparable Agencies Fee Name Huntington Newport Beach CashMM Fountain Orange Beach VAN" Base BLS Rate $1,655 $1,799 $1,198 $2,333 $1,511 ALS Surcharge $174 N/A $399 N/A $103 Non-Resident $474 N/A N/A N/A N/A Surcharge Treat No $366 $300 BLS/$400 $275 $513 S405 BLS/$508 Transport ALS ALS Mileage $15.77 $9.49 $19.75 $20.50 $18.19 Oxygen $115 N/A $92 $92 $89.17 ECG $64 N/A $60 $30 N/A Fee Comparison ALS Scenano- 10 miles.Oxygen Use anc 12-Leao ECG Use va Ieoao n sw f�Ooo Nao w N�Ypv •�O� ctiV MI�n LM•Yw, fafY fJf4+ •n Ofnl,► ]Yff NY ter Yrn.Tdf yry •• �r6 As the chart indicates,the current fee for Huntington Beach ($1,536) is on the lower end compared to other jurisdictions, whereas the full cost fee ($2,166) is only slightly above the average fee($1,906)charged by other jurisdiction sa. • 23 • 5/19/2021 FY 2021-22 Budget — Next Steps City Council Feedback Requested •City Council review / feedback of the proposed FY 2021/22 Budget is requested, especially as it relates to: —Development of ARPA Funding Plan —Homeless Response Position —Parking Fee Adjustment —EMS Fee Increase Consideration —Other? • 24 • 5/19/2021 FY 2021/22 Budget Next Steps •Based on City Council feedback tonight, staff will make requisite adjustments to the proposed FY 2021/22 Budget •Revised budget will be brought back for formal City Council consideration/ adoption on June 1st Questions? 10..iit lMLt(n M�(N • 25