Agenda Item Wording:
title
Review and discuss the proposed Fiscal Years 2022/23 & 2023/24 Measure N budget and continue with the amended expenditure plan previously approved.
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Deadline for Action: 6/30/2022
Submitting Department: Finance and Technology Services
Contact Name and Phone Number: Renee Nagel 713-4375, Amee Swearingen 713-4170
Department Recommendation:
City Council review and provide comments on the City Manager’s recommended Measure N budgets for FY 2022/23 and 2023/24.
The Measure N Budget has to be adopted by June 30, 2022 to be able to spend in FY 2022/23. The City does a biannual budget and is currently in the process of preparing a two-year budget to bring forward to Council In June for adoption. In order for staff to incorporate the Measure N budget in with the rest of the City’s budget, staff has prepared a recommended budget for FY 2022/23 and FY 2023/24 for Council’s review. If approved, staff will then continue with the Measure N budget process as outlined in the report.
A copy of the proposed budget is available at the City Administration office, 220 N. Santa Fe, during normal work hours. The proposed budget can also be reviewed at <https://www.visalia.city/depts/finance/proposed_budget/default.asp>.
Background Discussion:
In November of 2016, the voters of Visalia passed a ½ cent Sales Tax Override, Measure N - The Visalia Essential City Services Measure. Sales Tax from Measure N will provide for essential city services such as police and fire, as well as maintenance of parks and roads. The measure uses a detailed, 10 year plan which includes hiring of personnel, construction of capital projects and equipment purchases.
As part of the measure, Council adopted an Accountability Ordinance (Ordinance 16-21) to
establish accountability measures as outlined:
Revenues:
• 10% of budgeted revenues must be deposited in an Uncertainty Fund. Money can only be accessed during a fiscal emergency;
• 10% of budgeted revenues must be deposited into the following categories:
o 2% Youth Programs
o 8% Maintenance and Emerging Needs
Expenditures:
• Money shall not be used for debt service payments;
• Annual expenditure plan must be approved by Council after the following has occurred:
o City Manager makes a recommendation to City Council and makes changes as requested (tonight’s discussion);
o Comments and recommendation received by Sales Tax Oversite Board;
o Two public Hearings are held at regular Council Meetings to consider expenditure plan
To ensure that the Measure N budget will be adopted with the rest of the City funds in June; staff is presenting the recommended fiscal year 2022/23 & 2023/24 budgets to start the approval process.
2022/23 & 2023/24 Proposed Budget
The budget includes the amended expenditure plan that includes changes over the past 6 years, as shown in Table 1, 2022/23 Proposed Measure N Amended Plan (Year 6). The recommended budget for the 2022/23 budget, including the Economic Uncertainty Fund, is $14.6 million. The budget includes $1.5 million in the Remaining Emerging Needs category. This amount doesn’t include prior years monies that have been accumulating since the plan started. These funds will be brought back to Council and the Oversite Committee once a policy and/or plan has been established.
Table 1
2022/23 Proposed Measure N Amended Plan (Year 6)
In FY 2022/23, the plan adds 1 professional staff position and 1 Police Officer. The professional staff position will be an additional Communications Operator to the Police Department. In addition, staff recommends amending the Measure N Plan to include another professional staff person. This position will be a Media & Community Relations Coordinator for the Police Department. These duties are currently being performed by a Sergeant and a Community Outreach Coordinator. With the increasing media outlets and demand for information, it has become difficult for the Department to keep up with the demand along with the other sworn duties that are assigned. The plan for FY 2023/24 will be adding 1 Police Officer and zero professional staff.
The recommended budget for FY 2023/24 is $14.6 million as shown in Table 2, 2023/24 Proposed Measure N Amended Plan (Year 7).
Table 2
2023/24 Proposed Measure N Amended Plan (Year 7)
Measure N Sales Tax
The original Measure N plan was established in FY 15/16 which used a lower base line and a conservative growth to offset rising cost. Table 3 Measure N Sales Tax Projection shows the Sales tax coming in higher than the plan each year. The increase for the last two fiscal years is higher than normal with an increase of 18% and a projected 12% for this fiscal year. This higher-than-normal growth is due to the COVID Stay-at-home order which ended June 2021. During this time, most people spent their money on taxable goods instead of nontaxable items, such as travel and entertainment, as well as receiving multiple rounds of stimulus money. Staff is projecting the sales tax growth to continue over the next two years but at a much smaller percentage. The projected growth for FY 2022/23 & 2023/24 is 2% annually. This is a conservative number, however, could be realistic as this number builds upon the last two fiscal years that had higher than normal growth.
Table 3
Measure N Funding Sales Tax Projection
(in millions)
Any additional revenue that is received is split among 4 categories as outlined in the Measure N ordinance. In order to meet the requirements and to be able to track revenues and expenditures, per these categories, Measure N is tracked in 4 separate funds. This also allows each category to earn its own interest. It is important to have cash available in each category to be able to advance projects in the plan (if needed) and/or cover higher costs than what was outlined in the plan. Table 4 Measure N Fund Balance Summary, shows each funds ending cash for both years based on the proposed 2 year budget.
Table 4
Measure N Fund Balance Summary
Once the recommended budget is approved by Council, staff will present the 2 year budget to the Measure N Oversite Committee. Staff will then return to Council with comments and will hold two public hearings.
Fiscal Impact:
None
Prior Council Action: None
Other: N/A
Alternatives: N/A
Recommended Motion (and Alternative Motions if expected):
recommendation
Move to approve the recommended Measure N budgets for FY 2022/23 & 2023/24, approve recommended plan changes, and continue with the expenditure plan process.end
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