HomeMy WebLinkAboutCC Reso 2019-10 RESOLUTION NO. 2019-10
A RESOLUTION BY THE CITY COUNCIL OF THE CITY OF
CATHEDRAL CITY, CALIFORNIA, APPROVING A BUDGET FOR THE
FISCAL YEARS 2019-20 AND 2020-21.
WHEREAS, a municipal budget for the Fiscal Years 2019-20 and 2020-21 has
been prepared by the City Manager and Administrative Services Director; and
WHEREAS, the City Council examined said budget and conferred with the City
Manager and the Administrative Services Director; and
WHEREAS, the City Council desires to adopt a final budget for the fiscal years;
and
WHEREAS, the City Council has, after due deliberation and consideration, made
such amendments in the proposed final budget as it considered desirable;
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of
Cathedral City as follows:
SECTION 1. The budget, summary of which is attached hereto and made a part
of hereof, is hereby approved and amounts thereby appropriated to the departments,
activities, and projects. The revenue estimates contained are hereby accepted.
SECTION 2. The Administrative Services Director shall have the authority to
adjust the appropriations within each fund, provided however, the total appropriations
for the entire fund do not exceed the amounts approved in this budget resolution (or
amending resolution). Said adjustments of the appropriations for each department or
activity shall be made only upon written request to the City Manager and/or the
Administrative Services Director, the form of which shall be prescribed and approved by
the Administrative Services Director. Once such a written request is properly executed
and approved, the Finance Department shall make such funds available.
SECTION 3. Transfers of fund balances from one fund to another shall be
approved by the Administrative Services Director.
SECTION 4. At the close of a fiscal year, outstanding Operating Budget
purchase commitments for goods and services will not be carried forward into the next
fiscal year. Budgets for Capital Improvement Projects are appropriated for the duration
of the project. Therefore, appropriations for Capital Improvement Projects and
unfulfilled Capital Improvement purchasing commitments at the end of a fiscal year are
automatically carried forward to the next fiscal year.
SECTION 5. Administrative Services Director is authorized to advance pay the
City's annual obligation to CaIPERS should the advance pay result in savings to the City
and any savings would be allocated to the City's CaIPERS reserve to mitigate future
rate increases.
SECTION 6. The repayment of demands prior to audit may be made by the
Administrative Services Director in conformity with the authority provided by Section
37208 of the Government Code of the State of California.
SECTION 7. The Administrative Services Director shall render a semi-annual
report to the City Council on the status of City operational revenues and expenditures.
PASSED, APPROVED, AND ADOPTED this 8th day of Ma 2019.
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Mark I arnevale, ayor
ATTEST:
Tracey . a z, City Clerk
APPROVED AS TO FORM:
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1 , GD ‘,\ �a�, 4,4*I
I, TRACEY R. MARTINEZ, CITY CLERK of the City of Cathedral City, do hereby
certify that the foregoing Resolution was introduced and adopted at a regular meeting of
the City Council of the City of Cathedral City held on the 8th day of May 2019 by the
following vote:
AYES: Councilmembers Gutierrez and Gregory; Mayor Pro Tem
Aguilar and Mayor Carnevale
NOES: None
ABSENT: None
ABSTAIN: None
Tracey R. Kartinez,ICity Clerk
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BUDGET MESSAGE
• Budget Message
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Cathedral City
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BUDGET MESSAGE
Cathedral City
HONORABLE MAYOR, MEMBERS OF THE CITY COUNCIL AND RESIDENTS OF CATHEDRAL CITY:
After months of review and discussions, we are pleased to present the adopted Biennial Budget for Fiscal Years
(FY)2019-20 and 2020-21 for the City of Cathedral City(Operating Budget and Capital Improvement Project(CIP)
Plan), the Successor Agency to the Cathedral City Redevelopment Agency ("Successor Agency"), Cathedral City
as the Housing Successor Agency, and the Cathedral City Public Financing Authority.
This biennial budget was developed with a primary focus to accomplish City Council goals established in January
2019. Departments reviewed their past accomplishments and developed objectives focusing on achieving these
overarching City Council goals:
• Economic Development
• Infrastructure
• Fiscal
• Public Safety
• Code Enforcement
• Parks
• Human Resources
• Housing
• Council Planning, Future Actions
FINANCIAL STATUS OVERVIEW
In the past two years, we are happy to see the City of Cathedral City continuing to experience positive signs of an
economic recovery. There continues to be increases in property values and decreases in unemployment rates.
These indicators are translating into increased revenues for the City.
For the past ten years, balancing the budget has been a challenge. For the three successive years from FY 2009-
10 through 2011-12, the City adopted general fund budgets with structural deficits. In order to achieve stabilization
in balancing the budgets for the next five successive years, FY 2012-13 through FY 2016-17, difficult employee-
related decisions, including layoffs and concessions,were necessary. For the past two fiscal years,the general fund
budgets were adopted with structural deficits; however, net surplus was achieved in FY 2017-18, and we anticipate
a net deficit will be recognized in FY 2018-19.
To illustrate, revenues remained flat from $33.982 million in FY 2009-10 to$33.876 million in FY 2012-13. With the
economic downturn, it was necessary to generate a stable source of revenues to ensure the City's ability to maintain
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BUDGET MESSAGE,continued
financial solvency.This stability was achieved through the support of Cathedral City residents to pass local revenues
measures. The transactions and use tax (Measure H) was passed in 2010 coupled with Measure B in 2014
eliminating the Measure H tax sunset resulting in a secure revenue source. In FY 2015-16,the City Council pursued
diversifying the City's tax revenue source through a Cannabis and Marijuana Tax (CMT) allowing this burgeoning
business sector to establish dispensary, cultivation and manufacturing businesses in the City. During these next two
budget years, we anticipate continued growth of the new CMT revenue source.
Revenues/Transfers In vs. Expenditures/Transfers
Out
(thousands)
$52,664
$52,000 — _____ $50,684
$49,500 – ._._.___.__ _._.-_.._-- __.----..______,_____ __—____ __._.__.. __ _�__ 462Q
$47,000 _ $52,661
$44,
$44,500 �._..
$42,000 — _.__`.____._. .__.._______.___ — —______ __$46,024
$39,500 $37,1,78__$36,3 $43,422
$37,000 $341987 $3b3'I3
$34,500 -- e;
$32,000 $34,488 $34,#4$
$29,500 --$33.Q56 - _ $32027
$27,000 $31,068 '
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19e 2019-20b 2020-21b
amO•Revenues/Transfers In 640.Expenditures/Transfers Out
FY 2019-20 AND FY 2020-21 BUDGET OVERVIEW
Citywide Financials
The City's operating budget includes a variety of funding sources. The General Fund is the largest single fund and
represents the City Council's most discretionary revenue. Other funds include the following non-General Fund
revenue sources: special revenue funds, capital projects funds, debt service funds, internal service funds, and
private purpose trust funds.The total City expenditure budget for FY 2019-20 is$113.6 million;and for FY 2020-21,
the total City expenditure budget is$110.6 million.Within the General Fund for FY 2019-20,the budgeted revenues
are$50.684 million,and the budgeted expenditures are$50.673 million, resulting in a net surplus of$10,751.Within
the General Fund for FY 2020-21, the budgeted revenues are$52.664 million, and the budgeted expenditures are
$52.661 million, resulting in a net surplus of$3,598. With these projections for FY 2019-20 and FY 2020-21, the
General Fund should retain a fund balance of$21.631 million,which surpasses our policy of maintaining a minimum
33% fund balance of budgeted expenditures/transfers out ($17.378 million). This change in the General Fund is
primarily due to rising costs attributable to labor-related expenditures, California Public Employees' Retirement
System (CaIPERS) retirement rates, and the Other Post-Employment Benefits (OPEB) liability.
Citywide Staffing
Over the years, labor force reductions have been in response to budget shortfalls and causing various departments
to do more with less. Staffing resources have declined from a high of 238 FTEs (full-time equivalents) in FY 2007-
08 to a projection of 200.5 FTEs in both the FY 2019-20 and FY 2020-21 budgets, resulting in a staffing decrease
of 15.75%. In doing so, City departments and staff believe in following the "work smarter, not harder" approach in
BUDGET MESSAGE,continued
providing high-quality services while protecting the safety of Cathedral City residents through innovation, ingenuity,
and employee productivity. To that means, the City is moving closer to enhancing our customer service capabilities
through the implementation of a new enterprise-wide resource planning (ERP) system to better service the needs
of the Cathedral City community.
FINANCIAL OPPORTUNITIES
Over the last 10 years, the periodic question from the community has been: "why does the City appear to have a
never-ending budget problem?"And, more specifically, "why is there still a problem given the City has had various
tax measures?" These questions are valid and are primarily due to these two components: the City is still
experiencing a recovery of core revenues, and the City is experiencing increased labor costs.
The City's core annual revenues traditionally consisted of taxes(property, sales and use,and transient occupancy),
franchise fees, licenses and permits, charges for services, fines and forfeits, intergovernmental revenues, use of
money and property, and miscellaneous revenues. In addition to these core revenues, the General Fund would
receive transfers in from other City funds for miscellaneous reimbursements.
Effective April 1, 2009, the Utility Users' Tax (UUT) became effective. The UUT imposed a 3% tax on the use of
telecommunications, cable (video), electricity (including cogenerated), gas, and solid waste. In FY 2019-20, the
UUT is projected to generate $2.7 million in annual revenues. Effective June 2010, the Transactions and Use Tax
(TUT)became effective imposing a 1%tax on all retailers doing business within the city. In FY 2019-20, the TUT is
projected to generate $6.987 million in annual revenues. During FY 2015-16, cannabis and marijuana tax (CMT)
tax revenues became effective for licensed/operating dispensary, cultivation and manufacturing facilities. In FY
2019-20, CMT is projected to generate$6.25 million in annual revenues.
Going forward, the challenge will be to balance each fiscal year's budget on its own without dipping into General
Fund reserves. To ensure long-term viability, the City needs to maintain (and grow) not only the core revenues
discussed above, but also the UUT, TUT and the new CMT revenues.
Economic and Business Development
As was pointed out in the previous section, revenue growth has occurred in core revenues, most notably sales and
use taxes which are generated from taxable transactions on goods sold.Total taxable transactions reached a peak
of more than$1 billion in Calendar Year(CY)2006, and then a low of$600 million just three years later in CY 2009.
Fortunately,the City has seen a consistent rise in taxable transactions since CY 2009 to the current reportable level
of$910 million in CY 2017. In the coming years, we strive to pursue opportunities for Cathedral City to not only
surpass the$1 billion peak in taxable transactions, but to maintain sustainable growth well into the future.
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BUDGET MESSAGE, continued
Total Taxable Transactions
(thousands)
$1,000,000 _
$9oo,o00
I
$800,000 _
$700,000T_ ._.
$600,000 _ -__
$500,000 __ i- ---r- -..__..-- t_-
$ 400,000
$300,000 _ j. ... ._ _ ___.____ I
$200,000 '
$100,000 __..__;_ _..__. —
$0
CY 2008 CY 2009 CY 2010 CY 2011 CY 2012 CY 2013 CY 2014 CY 2015 CY 2016 CY 2017
Taxable $753,076 $606,523 $622,226 $677,067 $717,203 $792,140 $839,998 $899,842 $892,558 $909,764
For the City to continue this growth trend, core revenue growth is accomplished not only by the economy, but also
through community engagement and strong community relations, a goal established by the City Council that
continues into the upcoming biennial budget period. This will be accomplished through community newsletters,
social media presence and the continued growth of special events.As the economy continues to recover, City staff,
under the direction of City Council, continues to devise and implement new revenue-generating strategies in order
to provide Cathedral City residents with the necessary level and highest quality services available within our current
capabilities. Through the City Council-adopted goals, one of the key strategies for that growth is to continue to
maintain and improve upon the infrastructure of Cathedral City. Included in this biennial budget, is the Capital
Improvement Project (CIP) Plan recommending significant investments in the City's streets and roads, parks, and
facilities, not only for our existing residents and businesses that call Cathedral City home, but also in attracting new
residents and businesses as part of our City's future growth, especially in the northern portions of Cathedral City.
Other key strategies adopted by the City Council are to look at ways to provide necessary infrastructure (both new
and improved)and to expand the City's footprint through growth and development opportunities; review and update
the City's General Plan; refine our marketing narratives to appropriately define who we are; and continue the
fundraising and planning for the development of the downtown Festival Park while the new Heritage
Park/Commons, now known as the Cathedral City Community Amphitheater, is finalized during this two-year budget
period. In addition, City Council and staff continue to enhance the transparency of city government and the
availability of information to the public, while ensuring the ongoing public safety commitment to protect our entire
community. In doing so, we feel these investments will continue to attract new businesses and residents in
strengthening Cathedral City.
ACKNOWLEDGEMENTS
We would like to thank the City Council and City Manager for their leadership and overall direction of this budget.
We would also like to thank the many residents and business owners providing input and feedback to not only the
City Council, but also City staff throughout the year. This has become a valuable resource we are able to tap into
during the budget process.All are to be commended for taking the time for being involved in this very important
process.
BUDGET MESSAGE, continued
Finally, we would like to take this opportunity to thank all City staff who participated in developing this budget
document. Preparing the budget is a demanding and time-consuming effort for all staff members.This is especially
true considering the continued workloads of staff in other areas of responsibility and the budgetary challenges facing
the City. "Teamwork"among individuals and departments resulted in this budget document.This same "teamwork"
will continue Moving Cathedral City Forward into the future.
Respectfully submitted,
Lti/,‘f � -
Tami Scott
Administrative Services Director
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