Agenda Item Wording:
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Conduct the second public hearing and approve the proposed Fiscal Years 2022/23 & 2023/24 Measure N budget.
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Deadline for Action: 6/30/2022
Submitting Department: Finance and Technology Services
Contact Name and Phone Number: Renee Nagel Finance and Technology Director 713-4375, Amee Swearingen Financial Analyst 713-4170
Department Recommendation:
That the City Council conduct the second public hearing to receive comment on the proposed Measure N budgets for FY 2022/23 and 2023/24. Following the public hearing, staff recommends that Council approve the proposed budgets that will then be adopted with the City Budget.
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
The Measure N Budget requires two public hearings and has to be adopted by June 30, 2022 to be able to spend in FY 2022/23. In order to meet this timeline, staff presents the Measure N budget separately from the Citywide budget. The proposed Measure N budget for FY 2022/23 and 2023/24 was reviewed with Council on May 2, 2022. The Measure N Oversight Committee reviewed the proposed budget on May 19, 2022 and unanimously approved the recommended budget. The first public hearing was held on June 6,2022.
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 is $13.8 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, which will occur following the completion of this budget process.
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 in the Police Department. In addition, staff recommends amending the Measure N Plan to include an additional 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)
Both years does not include funding for building maintenance as per the plan. However, the building maintenance capital project is projected to have a large balance of $1.7 million at the end of this fiscal year. This balance will be used over the next two years. Staff will request in the next budget to amend the plan and appropriate additional funds.
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. The essentials services fund has a large projected cash balance, however there are several current projects that will need additional funds such as Fire Station 56 & 51. 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
Council and the Measure N Oversite Committee has approved the proposed 2022/23 and 2023/24 budgets. This is 2 of 2 public hearings.
Fiscal Impact: None
Prior Council Action: May 2, 2022 & June 6,2022
Other: Measure N Oversite Committee - May 19, 2022
Alternatives: None
Recommended Motion (and Alternative Motions if expected):
recommendation
I move that Council approve the proposed Measure N budget for FY 2022/23 and 2023/24.
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Environmental Assessment Status: N/A
CEQA Review: N/A
Attachments: Measure N Budget Presentation