City of Alameda

General Fund Budget Study Session

March 29, 2011

1
 Budget Presentation Outline

ƒ General Fund Budget Overview

ƒ General Fund Budget: Revenue and Expenditure

Trends

ƒ Options for Addressing Projected Budget Deficits

ƒ Discussion of Council Priorities for Closing the Gap

2 Budget Study Session March 29, 2011

 General Fund Budget Overview

ƒ July 2010 – City Budget Adopted:

• Balanced budget of $71 million for FY10-11

• Forecast balanced budget of $69 million

for FY11-12

• Projected ending available fund balance of

$12 million (17% of budget) for FY11-12

3 Budget Study Session March 29, 2011

 General Fund Budget –
Major Expenditure Categories
Public Safety - Fire
13% (31%)

Public Safety - Police

31% (38%)
9%
General Gov't & Adm
Svcs (9%)
9%
Comm Svcs & Public
Svcs (9%)

Other Exp and

Transfers (13%)
38%

4 Budget Study Session March 29, 2011

 General Fund Budget –
Major Revenue Sources
Property Taxes (32%)
8%

11% Other Local Taxes

32% (36%)

Revenue from Other

Agencies (13%)
13%
Fees for Services
(11%)

Other Revenues and

Transfers (8%)
36%

5 Budget Study Session March 29, 2011

 General Fund Budget Overview
(continued)

• February 2011 – Audit / Mid-Year Reports Issued:

• Mid-year report projects revised balanced budget

of $73 million for FY10-11 attributed to
Alameda Towne Centre property transfer tax

• Audit reports ending unrestricted fund balance of

$15 million (22% of annual expenditures) for
FY10-11

6 Budget Study Session March 29, 2011

 General Fund Budget Overview
(continued)

• March 2011 – Staff Prepared Initial Budget Estimates

for FY11-12 through FY15-16
• Projects $6 to $8 million deficits each year thru FY15-16
• Assumes revenue growth of 2-3% annually
• Incorporates new Miscellaneous / Safety PERS rates
• Assumes health and OPEB increases of 14% per year
• Assumes no salary increases through FY15-16
• Assumes 2-3% increases for all non-personnel expenses
resulting from inflation

7 Budget Study Session March 29, 2011

 General Fund Budget Overview
(continued)

5 Year Projections for FY11-12 through 15-16

(In Millions)

11-12 12-13 13-14 14-15 15-16

Revenues $ 67.3 $ 68.6 $ 70.7 $ 72.8 $ 75.0
Expenses 73.5 74.9 78.6 80.9 83.4
Deficit For Year $ (6.2) $ (6.3) $ (7.9) $ (8.1) $ (8.4)
Ending Available
Fund Balance $ 8.9 $ 2.6 $ (5.3) $ (13.4) $ (21.8)

Ending Available Fund Balance assumes no cost-saving

measures are taken.

8 Budget Study Session March 29, 2011

 Changes for FY11-12
ƒ Revenues
• Projected loss of cost allocation reimbursements:
• CIC ($581,000)
• Golf ($277,000)
• Ferry ($45,000)
• Decreased sales tax revenues - ($710K)
• Decreased other revenues ($150K)

ƒ Revised revenue estimate of $67.3 million (down

2%)

9 Budget Study Session March 29, 2011

 General Fund Budget
Total Revenue Trend
($ in millions)

$80 $73 $74

$69 $69 $69
$70 $63
$59
$60 $55 $55 $58
$50

$40

$30

$20

$10

$0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

10 Budget Study Session March 29, 2011

 General Fund Budget
Property Tax Revenue Trend
($ in millions)

$25
$22 $23 $22
$21
$20 $19
$17
$15 $15 $15
$15 $13

$10

$5

$0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

11 Budget Study Session March 29, 2011

 Changes for FY11-12
(continued)

ƒ Expenditures
• Increased costs for employee benefits
• PERS for Miscellaneous employees $ 413,000

• PERS for Safety employees $1,335,000

• Health and dental premiums $ 737,000

• Increased OPEB contributions $ 298,000

12 Budget Study Session March 29, 2011

 PERS Rates Trend
45%
2015/16
19%

44%
2014/15
19%

44%
2013/14
19%

39%
2012/13 Safety
16%

37% Misc
2011/12
15%

31%
2010/11
13%

31%
2009/10
13%

30%
2008/09
13%

0% 10% 20% 30% 40% 50%

13 Budget Study Session March 29, 2011

 Changes for FY11-12
(continued)

ƒ Expenditures
• Increased costs for non-personnel items
• Supplies and services (including fuel) $622,000

• EMS payment to County $860,000

• Radio system $ 75,000

• Fee and Cost Allocation Study $ 50,000

ƒ Revised expense estimate of $73.5 million (up 6%)

14 Budget Study Session March 29, 2011

 General Fund Budget –
Revenue and Expense Trends
($ in millions)

$85

$80

$75

$70

$65

15

16
07

11
08

09

10

12

13

14

20
20

20

20

20
20

20
20

20

20
Revenues Expenses

15 Budget Study Session March 29, 2011

 Addressing Projected Budget Deficits:
Expenditure Reductions

5% 10%
Non Departmental 35,000 70,000
General Government 164,000 328,000
Administrative Services 177,000 354,000
Police 1,353,000 2,706,000
Fire 1,243,000 2,486,000
Public Works 118,000 236,000
Library 85,000 170,000
Recreation/Parks 233,000 466,000
Total 3,408,000 6,816,000

16 Budget Study Session March 29, 2011

 Addressing Projected Budget Deficits
Expenditure Reductions
(continued)

A. Structural Changes

ƒ Focus on provision of core services

ƒ Evaluate shared-service models with other
jurisdictions and/or contracting out for services

ƒ Consider reductions in workforce

ƒ Reduce funding for non-core levels of service
ƒ Eliminate programs

17 Budget Study Session March 29, 2011

 Addressing Projected Budget Deficits
Expenditure Reductions
(continued)

B. Negotiations with employee unions

ƒ Furloughs
ƒ Employee cost-sharing for PERS retirement
ƒ Employee cost-sharing for health premiums
ƒ Two-tier system for future employees for PERS
and health
ƒ Reductions in pay

18 Budget Study Session March 29, 2011

 Addressing Projected Budget Deficits
Expenditure Reductions
(continued)

C. Other One-Time Items

ƒ Receive early repayment from loans made by

General Fund to Other Funds

ƒ Consider making one-time transfer of other

unrestricted funds to General Fund (ex. Capital
Discretionary)

ƒ Reduce contributions from General Fund to

Internal Service Funds

19 Budget Study Session March 29, 2011

 Addressing Projected Budget Deficits
Revenue Increases
A. Increase Existing Taxes
1. Sales Tax – 9.75%
Increase .25%-.5% - $1.5 to $3 million
2. Utility User Tax – 7.5%
Increase of 1% - $1.2 million
3. Transient Occupancy Tax – 10%
Increase of 1% - $100,000
4. Property Transfer Tax – $12 per $1,000 of valuation
Increase by $2 per $1,000 - $500,000 to $700,000
5. Business Licenses – Rentals $20/Unit, Other $79-$155
Increase by $20 - $340,000

20 Budget Study Session March 29, 2011

 Addressing Projected Budget Deficits
Revenue Increases
(continued)

B. Other Revenue Generation Options:

ƒ Consider new taxes:

1. Parcel tax for public safety services
2. Admission tax on theater tickets

ƒ Implement fee study proposed for FY11-12

ƒ Review options for increasing franchise taxes

21 Budget Study Session March 29, 2011

 Closing the Gap
ƒ Do we address the deficit through structural
changes to our budget or through a combination
of structural and one-time fixes?
ƒ Can we solve our problems now and in the
future by looking only at the cost side?
ƒ Do we focus on program elimination/workforce
reductions and/or items requiring employee
contract negotiations?
ƒ Do we employ across the board cuts, or should
we be more surgical?

22 Budget Study Session March 29, 2011

 Next Steps
z Acting City Manager and Finance staff review
of department budget proposals – April

z Council workshop on budget – May

z Budget adoption – June

23 Budget Study Session March 29, 2011

 City of Alameda
General Fund Budget Study Session
March 29, 2011

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