Item 20 Visual Slideshow provided by Staff at MeetingPROPOSED FISCAL YEAR 2020-21 OPERATING BUDGET
AND CAPITAL IMPROVEMENT PROGRAM
JUNE 16, 2020
ModerateU
Virus Contained Summer;
Slower Growth Rebound
Peak: March 2020
Trough: Fall 2020
Recovery: June 2023
Duration: ~3 years
Annual revenue loss: $3M -$4M
Cumulative revenue loss: $9 -$12M
Recession Scenarios
MildV
Peak: March 2020
Trough: April -May 2020
Recovery: July –August 2020
Virus Contained Spring;
Strong Growth Rebound
Duration: ~6 months
Effective Interventions Ineffective Interventions
Annual revenue loss: $1M -$1.5M
Cumulative revenue loss: $1 -$1.5M
ModerateV
Virus Contained Spring;
Slower Growth Rebound
Peak: March 2020
Trough: July –August 2020
Recovery: June 2022
Duration: ~2 years
Annual revenue loss: $1.5M -$2.5M
Cumulative revenue loss: $3 -$5M
SevereU
Virus Contained Fall;
Slow Growth Rebound
Peak: March 2020
Trough: Fall 2020
Recovery: June 2025
Duration: ~5 years
Annual revenue loss: $5M -$6M
Cumulative revenue loss: $25 -$30M
(Self-reinforcing recession dynamics occur)(Minimal economic structural damage)
Initial Unemployment Claims (Weekly, SA)
6/6/20:1,542,000
5/30/20:1,897,000
5/23/20:2,123,000
5/16/20:2,446,000
5/9/20:2,687,000
5/2/20: 3,176,000
4/25/20: 3,867,000
4/18/20: 4,442,000
4/11/20:5,237,000
4/4/20:6,615,000
3/28/20:6,867,000
3/21/20:3,307,000
3/14/20:282,000
3/7/20:211,000
Nonfarm payroll employment rises by 2.5 million
in May; unemployment rate falls to 13.3%
-BLS 6/5/20
Retrenchment Techniques
Level1
-Defer non-essential purchases
-Reassess discretionary spending
-Evaluate vacant positions
Level2
-Defer Capital Projects
-Delay vendor payments
-Defer FY 19/20 capital
replacement charges
Level3
-Defer FY 20/21 capital
replacement charges
-Defer PCPA operations
-Use reserves
Level4
-Defer PERS unfunded payments
-Staffing cuts: furloughs
-Service cuts
Baseline Deep Recession
-Use unassigned fund balance-Reassess ISF charges -Staffing: benefits -Staffing cuts: layoffs
-Use capital replacement funds
General Fund As of April 29, 2020
Operating Revenue $47,481,586
Non-Operating Revenue 794,754
Total Revenue $48,276,340
•Where were we going before retrenchment:
Projected Fund Balance (Fiscal Year 2020-21)
General Fund As of April 29, 2020
Operating Revenue $47,481,586
Non-Operating Revenue 794,754
Total Revenue $48,276,340
Operating Expenditures $50,073,879
Transfers Out 2,866,937
Total Expenditures $52,940,816
General Fund As of April 29, 2020
Operating Revenue $47,481,586
Non-Operating Revenue 794,754
Total Revenue $48,276,340
Operating Expenditures $50,073,879
Transfers Out 2,866,937
Total Expenditures $52,940,816
Projected Change in Fund Balance ($4,664,476)
Projected Revenues (Fiscal Year 2020-21)
General Fund Revenues As of June 2, 2020
Total Operating Revenue (Pre-Covid)$49,945,438
Sales Tax Reduction1 (1,480,852)
Property Tax Reduction2 (445,000)
TOT Reduction3 (115,000)
Interest Reduction4 (100,000)
Subtotal: Operating Revenue Estimate $47,804,586
Non-Operating Revenue 794,754
Total Revenue $48,599,340
1.Based on HDL’s April 15 estimates; a 10% decrease from January estimates.
2.Revised up $323k from April estimates ($768k) based on actuals through beginning of May.
3.Assumes hotel vacancy impacted until October; a 16% decrease from March estimates.
4.Assumes external portfolio at 2% & money market at 1% on slowly declining balances; a 12.5% decrease from March estimates.
Projected Expenditures (Fiscal Year 2020-21)
Department
FY 19-20
(Adopted)
FY 20-21
(Requested)Change ($)
Legislative & Administrative $1,152,894 $1,187,454 $34,560
Finance 1,772,647 1,803,427 30,780
Human Resources 1,109,862 1,199,641 89,779
Community Services 6,150,127 6,126,926 (23,201)
Development Services 4,949,799 5,086,941 137,142
Public Works 6,109,188 6,642,322 533,134
Fire 12,908,303 13,734,587 826,284
Law Enforcement 13,491,761 14,292,581 800,820
Total $47,644,581 $50,073,878 $2,429,298
Insurance premium increases ($160k)
Cost sharing increases ($67k)
Water increases ($313k)
Janitorial increases ($67k)
Holiday pay correction ($200k)
PERS increases ($386k)
Contract increases ($800k)
Retrenchment (Fiscal Year 2020-21)
General Fund Operating Expenditures As of June 2, 2020
Total Operating Expenditures (Post Cost Allocation)$50,420,842
Retrenchment (Phase 1)
Salaries & Benefits Reduction (634,884)
Professional/Contract Services Reduction (96,042)
Supplies Reduction (14,962)
Asset Management (Maintenance) Reduction (24,112)
Asset Management (Replacement) Reduction (1,091,087)
Misc. Operating Expenses (93,178)
Capital Outlay (38,926)
Subtotal: Operating Expenditures $48,427,651
General Fund Non-Operating Expenditures As of June 2, 2020
Non-Operating Expenditures $2,861,602
Retrenchment (Phase 1)
Capital Replacement Transfer (679,100)
Reserve Transfer (Recalculation)(522,274)
Subtotal: Non-operating Expenditures $1,660,228
General Fund Expenditures As of June 2, 2020
Operating Expenditures $48,427,651
Non-operating Expenditures 1,660,228
Total Expenditures (Retrenchment Phase I)$50,087,879
Retrenchment (Fiscal Year 2020-21)
Level
Salaries & Benefits (GF Impact)1:
-Comm. Serv. Director ($203k)
-PCPA Rec. Supervisor ($97k)
-PCPA Admin. Asst. II ($41k)
-Sen. Mgmt. Analyst ($56k)
-Other Positions/Salaries ($238k)
Level2
TOTAL: $1.77M
Capital Projects2:
-CMP Program ($300k)
-Community Park Ribbon Drain
($150k)
-Civic Center Fiber ($88k)
-Lake Poway Playground
Renovation ($350k)
-Blue Sky Shade Structure ($12k)
-Community Park Paving ($186k)
Level3
Capital Replacement (GF Impact):
-Defer FY 20/21 Repl. ($1.1M)
-Defer FY 20/21 Equip. ($679k)
TOTAL: $1.77MTOTAL: $1.42M
1.Positions were unfunded; the dollars were removed but the FTE remains.
2.Amounts not listed on previous slide because focus was on operating.
1
Misc. Operating Expenses ($267k)
Reserve Savings ($522k)
General Fund Summary
Reserves
GF Reserves
June 30, 2019 $20,961,853
Extreme Events: Boil Water (Feb. 4, 2020)($339,000)
Extreme Events: Mid-Year (Mar. 17, 2020)$339,000
Extreme Events: PEARL (Apr. 16, 2020)($2,000,000)
TOTAL (Apr. 2020)$18,961,853
FY 20-21 Transfer to Reserves $558,064
FY 20-21 Transfer from Reserves ($1,500,000)
Projected Total (July)$18,019,917
Capital Repl.
June 30, 2019 $13,878,638
Revenues $4,628,577
Expenses ($4,335,729)
TOTAL (Apr. 2020)$14,171,486
GF Unassigned
June 30, 2019 $7,308,113
Mgmt Confidential –Year 1 (Sept. 17, 2019)($230,000)
Mgmt Confidential –Year 2 (Sept. 17, 2019)($153,000)
Teamsters –Year 1 (Dec. 17, 2019)($162,000)
Teamsters –Year 2 (Dec. 17, 2019)($109,000)
Fire SCBA’s (Jan. 21, 2020)($315,000)
Mid-Year: Boil Water (Mar. 17, 2020)($339,000)
TOTAL (Apr. 2020)$6,000,113
Poway Commons (April 2020)$3,227,195
Miscellaneous Activity $929,169
Fire –Year 1 + 2 (Jun. 16 2020)($280,906)
Projected Total (July)1 $9,875,571
1. Anticipated items such as Espola Rd, Los
Penasquitos, LMDs, pending litigation,
among others could impact the availability
of these funds.
•Unfunded positions
•Staffing changes
•Decrease 1.0 FTE Construction Project Manager (Limited Term)
•Increase 2.0 FTE Water Utilities Worker I
•PFA negotiations
Personnel Highlights
•Others funds less impacted by economic environment
•Frequently evaluate revenues and expenditures
•Budget may change often in response to economic
environment
•Long range forecast
Other Considerations
Purpose:
The purpose of the Capital Improvement Program
(CIP)is to plan and implement those Capital
Improvements that the City Council determines to be
most important for maintaining the City’s infrastructure
and long-term quality of life for the community of
Poway.
FY 20/21
Capital Improvement Program
Capital Improvement Program
Completed Projects:
•WTP Washwater Tank Rehabilitation
•2018-2019 Street Overlay
•PCPA Smoke Hatch Winch Replacement
•Poway Road Turn Pocket Extension
•2019-2020 Street Maintenance
•Poway Dam Security Upgrades
•2019-2020 Citywide Striping
•Buehler Reservoir Rehabilitation
•FY 18/19 ADA Barrier Removal –Lake Poway Fishing Dock
•City Hall Hydronic Piping Replacement
Streets & Highways –9 Projects
Drainage –4 Projects
Public Facilities –8 Projects
Water –12 Projects
Sewer –6 Projects
39 Projects –Total Funding $53.86 MIL
Capital Improvement Project Types
Streets & Highways
Active Projects:
•Espola Road Safety Improvements
•Espola Road Bike Lanes $254,000
•Traffic Signal Controller Upgrades $250,000
•LED Street & Safety Lighting Conversion
•Neighborhood Sidewalks
•FY 19/20 Street Overlay
Total FY 20/21 Funding: $504,000
Pavement Management Projects:
•FY 20/21 Street Maintenance $1,258,400
•FY 20/21 Street Overlay $896,548
•FY 20/21 Street Striping $320,000
Total Funded through Department Operating Budgets: $2,474,948
Drainage
Active Projects:
•Annual Corrugated Metal Pipe Repair/Replace
•Rattlesnake Creek Integrity Study
•Sebago Avenue Channel Repair
•Annual Trash Capture Program $130,000
Total FY 20/21 Funding: $130,000
Public Facilities
Active Projects:
•Mickey Cafagna Community Center
•Swim Center Valve and Strainer Replacement
•Swim Center Deck Coating
•Public Facilities Renovation
•Valle Verde Park Playground Renovation
•Blue Sky Amphitheater Improvements
•19/20 ADA Barrier Removal $29,450
FY 20/21 Proposed Projects:
•20/21 ADA Barrier Removal:$106,226
Total FY 20/21 Funding $135,676
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Water
•Active Projects:
•Annual Water Valve Replacement $169,000
•Boulder Mountain Reservoirs 1 and 2 Rehabilitation $155,000
•36” Steel Distribution Main Assessment
•WTP Chemical Building and Tank Farm Upgrades
•Clearwell Upgrades $2,060,000
•WTP Clearwell Distribution Flow Meters
•Power to Blue Crystal Reservoir
•Clearwell Overflow Structure Modifications $350,000
•SDCWA Treated Water Connection $1,500,000
FY 20/21 Proposed Projects:
•Clearwell Bypass $2,350,000
•PRV Station Access Assessment $50,000
•WTP Electrical System Assessment $128,000
Total FY 20/21 Funding: $6,762,000
Existing RAM 2
Existing 24” Pipeline
Existing 36” Pipeline
Existing RAM 2/ Proposed Poway FCF
Existing 24” Pipeline
Proposed Treated Water Pipeline Proposed Redundant Pipeline
Existing 36” Pipeline
Proposed
Pump Station
Sewer
Active Projects:
•Annual Sewer Line Repair/Replace $281,000
•Annual Sewer Manhole Rehabilitation $169,000
•Butterfield Trail Sewer Upsize
•Martincoit Road Sewer Upsize
•Exposed Sewer East of Martincoit
FY 20/21 Proposed Projects:
•Bowron Road Sewer Upsize $400,000
Total FY 20/21 Funding:$850,000
FY 20/21 Total Project Funding
Streets & Highways:$504,000
Drainage:$130,000
Public Facilities:$135,676
Water:$6,762,000
Sewer:$850,000
Total FY 20/21 CIP Funding $8,381,676
Total Pavement Management $2,474,948
Total Program Funding $10,856,624
Questions
Budget Review Committee
CITY OF POWAY
CITY COUNCIL MEETING
JUNE 16, 2020
Budget Review Committee Charter
“The purpose of the Budget Review Committee (BRC) shall be to review
the annual Operating and Capital Improvement (CIP) Budget as
proposed by the City Manager and report its findings to the City Council.”
Three BRC meetings this Spring:
Wednesday, April 29, 2020
Wednesday, May 6, 2020
Wednesday, May 13, 2020
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Committee Members
Brian Pepin, Chair
Peter DeHoff, Vice Chair
Mike Firenze
Bernie Guzman
Bob McKeon
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City Staff
City Manager Chris Hazeltine
Assistant City Manager Wendy Kaserman
Director of Finance Aaron Beanan
Budget Administrator Alex Castanares
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Introduction
The City of Poway is a well-governed and well-managed city.
The budget is built on good accounting procedures and a long history of
efficient, focused and conservative revenue application.
However, the financial repercussions of the Coronavirus lockdown will
have a significant impact on the city’s tax revenue and financial forecast.
Even with normal revenues, the city’s finances are a challenge:
Despite good leadership and proficient management, Poway is experiencing
what almost every other California public agency is experiencing: an extremely troubling financial forecast in coming years.
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Impact of Coronavirus Pandemic
There is no playbook for what we saw over the last three months.
Revenue projections had to be adjusted throughout the BRC process and may be adjusted throughout this year because of the unprecedented nature of this economic shutdown.
Tax revenue is projected to decrease by $2.5 million due to impacts to the following categories:
$1.5 million less in sales tax revenue
$800,000 less in property tax revenue
$100,000 less in hotel tax (TOT) revenue
$100,000 interest reduction
Revised to $2.2 million since BRC issued its report on May 13th.
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The FY 2020-2021 Budget
City was initially looking at a $4.7 million deficit.
$2.2 million in reduced revenue due to coronavirus (on last slide).
$2.4 million in increased costs over last year due to a number of increasing costs
largely outside of city’s immediate control.
This includes insurance premium increases, contract increases like the Sheriff’s
Department, and a larger water bill for the city.
This was addressed with:
$3.1 million in “retrenchment.”
$1.5 million in reserves.
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Ongoing Challenges Beyond 2021
High personnel costs.
Pension, healthcare and other benefits must be addressed.
Slow revenue growth.
Poway must “grow the pie” and increase tax revenue without tax increases.
Unfunded state mandates such as prevailing wage requirements.
A number of costly items currently being funded in an unsustainable
manner, including the Poway Center for the Performing Arts.
$700,000 per year in General Fund tax revenue and $5 million in deferred
maintenance.
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Solutions for Poway
Cost efficiencies
Control and reduce personnel costs.
Pension costs and healthcare expenses are the most immediate concern.
Don’t fill unneeded vacancies.
Revenue growth
Support ways to “grow the pie,” thereby increasing tax revenue
without raising tax rates.
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Budget Review Committee
CITY OF POWAY
CITY COUNCIL MEETING
JUNE 16, 2020