Calexico Council Approves 2016-17 Budget Adjustment At Special Session
BY MARIO CONDE
The Calexico City Council approved a resolution approving a midyear amendment of the 2016-17 General Fund Budget.
The City Council met in special session last Tuesday, May 9, to hear a presentation about the audited financial and future capital improvement projects for the City. The City Council discussed the resolution to amend the 2016-17 budget to reflect year-to-date revenue trends and to adjust expenditures to maintain a balanced budget for the fiscal year.
On January 11, 2017, six months into the fiscal year, the City Council received a midyear budget monitoring report. At that time, the City Council took action to amend the budget to update revenue projection and expenditures appropriation with the intent to maintain a balanced budget for the fiscal year. The January 11, 2017 budget amendment included the results of revenue fee increases and contract negotiations with employee associations that contributed to maintaining a balanced budget.
On April 19, 2017, the City Council received a 9-month midyear budget report that identified a newly emerging 2016-17 General Fund budget shortfall of approximately $1 million. The City Council directed the City Manager to return with options to rebalance the budget with reductions to be effective within the fiscal year.
Financial consultant Susan Meyer told the council that this report returns with a proposed budget amendment to again rebalance the 2016-17 General Fund budget.
“Because the General Fund’s fund balance is depleted, ongoing budget monitoring and adjustments such as this action are important step to respond to current trends and to control expenditures with available resources. The proposed action continues the City’s path to fiscal recovery.” Meyer told the Council.
General Fund revenue budget adjustments are proposed to align with year-to-date trends for property tax, sales tax, franchise fees, transient occupancy tax, and other minor revenue sources. A new revenue budget line is proposed to reflect a previously awarded contribution from the Heffernan District to support Fire Department operations.
Expenditure adjustments are proposed to augment the Fire Department budget for unachieved employee contract savings that have been backfilled with the recent Heffernan District contribution. Salary and benefits have also been adjusted to address year-to-date trends in other departments including unbudgeted employee leave payout and Fire Department leave backfill. The January 2017 budget amendment included a placeholder vacancy assumption and this amendment spreads the vacancy assumption to individual departments based upon year-to-date trends and projected costs for remaining periods of the fiscal year.
Expenditures increases are proposed for the Police Department to backfill for underachieved grant funding from the Operation Stonegarden and Asset Forfeiture programs. Increases are proposed to Administration expenditures for unbudgeted contract and operating costs. An expenditure increase is also proposed to remove residual Measure H support for General Fund programs other than as approved for Police and Fire salaries and for a Fire Department equipment lease.
The largest source of General Fund expenditure savings is from favorable cost trends in each of the City’s self insurance programs, including the medical, unemployment, and workers compensation internal service funds.
Year-to-date costs in these insurance programs indicate that budgeted contributions by program departments can be reduced to return the available surplus to help re-balance the General Fund. As the City develops a long-term financial strategy, each of the City’s self-insurance programs will benefit from strategic operating reserves to best protect the City from unexpected claims. At this time, however, surplus internal service fund cash reserves are proposed to be drawn to balance the budget.
Proposed General Fund revenue adjustments match expenditures adjustments to maintain a balanced budget within the 2016-17 fiscal year. However, the General Fund carries forward a deficit from the prior year that has been substantially financed through a previously approved loan from Wastewater Fund. The 2016-17 General Fund budget includes the first of four annual installment payments to retire the Wastewater Fund loan to begin to restore General Fund solvency.