City Council

LODI CITY COUNCIL AGENDA – Shirtsleeve Session Date: May 9, 2023 Carnegie Forum Time: 7:00 a.m. 305 West Pine Street, Lodi For information regarding this Agenda please contact: Olivia Nashed City Clerk Telephone: (209) 333-6702 Notice Regarding Public Comments Public Comment may be submitted in the following ways: • In-person • Email – councilcomments@lodi.gov  Received no later than 4:30 p.m. on the business day prior to the meeting. • Mail – City Clerk’s Office, P.O. Box 3006, Lodi, CA 95241 • Hand delivered to: City Clerk’s Office, 221 W. Pine Street, Lodi, CA 95240  Received no later than 4:30 p.m. on the business day prior to the meeting Public comment received via email, mail, or hand delivery will be provided to the City Council and included in the official minutes record of the meeting, but will not be read aloud at the meeting. A. Call to Order / Roll Call B. Topics B-1 Receive Presentation Regarding Fiscal Year 2023/24 General Fund and Measure L Budget and Five- Year General Fund and Measure L Forecast (ISD) C. Comments by Public on Non-Agenda Items THE TIME ALLOWED PER NON-AGENDA ITEM FOR COMMENTS MADE BY THE PUBLIC IS LIMITED TO FIVE MINUTES. Public comment may only be made on matters within the Lodi City Council's jurisdiction (Government Code Section 54954.3, Lodi City Council Protocol Manual Section 6.3l). The Council cannot take action or deliberate on items that are not on this agenda unless there is an emergency and the need to take action on that emergency arose after this agenda was posted (Government Code Section 54954.2(b)(2)). All other items may only be referred for review to staff or placement on a future Council agenda. If you wish to address the Council, please refer to the Notice at the beginning of this agenda. Individuals are limited to one appearance during this section of the Agenda. D. Adjournment Pursuant to Section 54954.2(a) of the Government Code of the State of California, this agenda was posted at least 72 hours in advance of the scheduled meeting at a public place freely accessible to the public 24 hours a day. ______________________________ Olivia Nashed City Clerk Revised 1/2023 5/4/2023 3:59 PM All staff reports or other written documentation relating to each item of business referred to on the agenda are on file in the Office of the City Clerk, located at 221 W. Pine Street, Lodi, and are available for public inspection. Agendas and staff reports are also posted on the City’s website at www.lodi.gov. If requested, the agenda shall be made available in appropriate alternative formats to persons with a disability, as required by Section 202 of the Americans with Disabilities Act of 1990 (42 U.S.C. Sec. 12132), and the federal rules and regulations adopted in implementation thereof. To make a request for disability-related modification or accommodation contact the City Clerk’s Office as soon as possible and at least 72 hours prior to the meeting date. Language interpreter requests must be received at least 72 hours in advance of the meeting to help ensure availability. Contact Olivia Nashed at (209) 333-6702. Solicitudes de interpretación de idiomas deben ser recibidas por lo menos con 72 horas de anticipación a la reunión para ayudar a asegurar la disponibilidad. Llame a Olivia Nashed (209) 333-6702. Meetings of the Lodi City Council are telecast on SJTV, Channel 26. The City of Lodi provides live and archived webcasts of regular City Council meetings. The webcasts can be found on the City's website at www.lodi.gov by clicking the meeting webcasts link. Members of the public may view and listen to the open session of this meeting at www.facebook.com/CityofLodi/.  AGENDA ITEM B-01 COUNCIL COMMUNICATION AGENDA TITLE: Receive Presentation Regarding Fiscal Year 2023/24 General Fund and Measure L Budget and Five-Year General Fund and Measure L Forecast MEETING DATE: May 9, 2023 PREPARED BY: Deputy City Manager RECOMMENDED ACTION: Receive presentation regarding Fiscal Year 2023/24 General Fund and Measure L budget and the five-year General Fund and Measure L forecast. BACKGROUND INFORMATION: Staff has planned two presentations to provide the City Council and public an opportunity to review and comment on basic assumptions within the FY 2023/24 budget to be proposed to Council next month. The draft budget will be released and made available for public review online once the draft is finalized. This session is designed to provide information on the general economic conditions facing City staff and Council in allocating resources to most effectively deliver services, with particular focus on the General Fund and Measure L. Included in the presentation will be a discussion of Fiscal Year 2023/24 General Fund and Measure L expenditures and the General Fund and Measure L five-year forecast. The forecast is a critical planning tool for staff and Council to use to anticipate future resource or service level adjustments. The forecast presented will include a baseline scenario that keeps normal operations with no change in service levels. The next Council presentation will focus on other aspects of the City budget beyond the General Fund and Measure L. The first opportunity for the City Council to adopt the Fiscal Year 2023/24 budget will be at its regular meeting on June 7, 2023. FISCAL IMPACT: There is no impact from this informational presentation. FUNDING AVAILABLE: The draft General Fund and Measure L budgets for Fiscal Year 2023/24 is projected at $80,565,740 for both revenues and expenditures. _______________________________________ Andrew Keys Deputy City Manager/Internal Services Director APPROVED: ________________________________ Stephen Schwabauer, City Manager Fiscal Year 2023/24 Budget General Fund Presented by Andrew Keys, Deputy City Manager  Budget Timeline • May 9 – General Fund • May 16 – Special Revenue/Enterprise Funds • May 23 – Capital Projects Overview • June 7 – Consider Adopting FY 2023‐24 budget, CIP and Fiscal Policies • June 21 (if needed) *Budget must be approved by June 30 to avoid risk to state and federal funds.  Overview • General Fund Overview/Revenues/Expenses Key Inputs Five Year Forecast Pension Stabilization Policy Update  General Fund Overview • “Decent news” budget • Overall revenues are projected at a small increase • Expenditures are showing increases primarily in salaries, PERS cost, medical benefits, additional support to Library and PRCS operations and general goods and services cost increases • Increase of 2.0 positions • No new service capacity  General Fund Revenues $80,565,740 Budget Revenue FY 2023/24 Tax Revenues $ 56,329,670 69.9% Revenue from Others $ 8,695,220 10.8% Operating Transfers In $ 7,725,810 9.6% Charges for Services $ 1,699,410 2.1% Property Revenue $ 4,585,430 5.7% Fines & Forfeitures $ 1,007,100 1.3% Other Revenue $ 460,890 0.6% Licenses & Permits $ 62,210 0.1% Total $ 80,565,740 100.0%  General Fund Expenditures $80,565,740 Budget General Fund Expenditures by Department FY 2023/24 % Police Department $ 30,976,320 38.4% Fire Department $ 18,159,110 22.5% Non‐Departmental $ 15,573,940 19.3% Internal Services Department $ 7,890,950 9.8% Public Works (General Fund) Department $ 4,105,730 5.1% City Attorney $ 1,152,110 1.4% City Clerk $ 676,420 0.8% City Manager $ 833,910 1.0% Economic Development $ 587,530 0.7% Code Enforcement $ 491,770 0.6% Library (from Measure L) $ 117,950 0.1% Grand Total $ 80,565,740 100.0%  General Fund Expenditures $80,565,740  General Fund Expenditures $80,565,740 General Fund Expenses by Type Budget 2023‐24 % of Total Salaries & Benefits $44,904,180 55.7% Supplies & Services $13,597,950 16.9% Operating Transfers Out $10,608,590 13.2% UAL $8,668,600 10.8% Debt $1,646,000 2.0% Insurances $1,140,420 1.4% Grand Total $80,565,740 100.00%  General Fund Expenditures $80,565,740  General Fund Transfers Out $10,608,590 Purpose Amount Capital $435,000 IT Network Refresh $247,680 Library Operations $1,760,040 Computer Replacment $94,530 PRCS Operations $5,903,780 Streets Maintenance of Effort $755,600 Equipment Replacement $737,000 Vehicle Replacement $674,960 Grand Total $10,608,590  General Fund Key Inputs • Net increase of 2.0 full‐time positions Job Title Department +/‐ Animal Services Manager Police +1 Associate Civil Engineer* Public Works +1 Total 2.0 * This position is for succession planning and is temporary  General Fund Key Inputs • Increased base operational support to Library and Parks, Recreation and Cultural Services by 2.86% based on the increase in repeatable general revenues • Library: $43,630 funded by Measure L • PRCS: $110,10 funded by Measure L • Continue transfer to Parks Capital Fund • $400,000 funded by Measure L  Parks, Rec & Cultural Svs. Support $6,337,510 • General Fund support for Parks, Recreation and Cultural Services: • Operational Support of $4,295,600 • $3,377,390 General Fund base support • $756,160 Measure L base support • FY 22 base $342,370 • FY 23 base $302,880 • FY 24 base $110,910 • $24,440 for vehicle replacement fund  Parks, Rec & Cultural Svs. Support $6,337,510 • General Fund support (cont.) • Cost of Services of $1,205,230 • Debt Service of $436,680 (Hutchins Street Square) • Ongoing Capital Support of $400,000 funded by Measure L • FY 24 Operating Deficit ($527,260)  Library Support $1,873,410 • General Fund support for the Library: • Operational Support of $1,566,390 • $1,289,700 General Fund base support • $276,690 Measure L base support • FY 23 base $233,060 • FY 24 base $43,630 • Cost of Services of $193,650 • Librarian position funded in Measure L $113,370 • FY 24 Operating Deficit ($32,000)  Measure L • Revenues: $9,322,220 • Expenditures: $9,322,220 FY 2022/23 FY 2023/24 Measure L Funded Positions Budget Budget Cost: Police Officers 26 25 $ 4,322,710 Firefighters 8 8 $ 1,368,870 Librarian 1 1 $ 113,370 Street Maintenance Worker 0.2 0.2 $ 32,880 Total Full‐Time 35.2 34.2 $ 5,837,830 Public Safety Overtime $ 1,628,820 Part‐Time Community Service Officers (2) $ 66,600 Supplies, Materials, Training $ 356,120 Library Operations $ 276,690 Parks, Recreation & Cultural Services Operations $ 756,160 Parks Capital $ 400,000 Measure L Total $ 9,322,220 Vehicle Replacement Fund  DRAFT Strategic Initiatives • City Council will be asked on May 17 to consider approval Strategic Initiatives recently developed in a public meeting • Downtown • Economic Development • Fiscal Health • Housing • Infrastructure • Parks • Public Safety • Public Well‐Being • Staff will continue aligning workplan to these initiatives and the milestones within. • Update will be provided to Council prior to June 7th budget hearing  5 Year Forecast ‐ Assumptions • FY 2024 budget as recommended is projected forward • Includes continued contributions to PRCS capital, network infrastructure, vehicle replacement and continued increases to PRCS and Library operating support • Labor contracts expire June 30, 2025 or December 31, 2025 • No fiscal impact from future negotiations is factored into this forecast • Assumes 100% full employment (no vacancies) • Slow growth is anticipated through he forecast term  5 Year Forecast ‐ Assumptions Revenue Category FY 23/24 B FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 Property Taxes - Secured 3.2% 2.5% 2.5% 2.5% 2.5% 2.5% Sales & Use Taxes -0.7% 1.0% 3.0% 3.0% 3.0% 3.0% Transient Occupancy Tax [1] 14.1% 5.0% 3.0% 3.0% 3.0% 3.0% Business License Tax [1] 15.5% 5.0% 3.5% 3.5% 3.5% 3.5% Other Taxes 8.0% 5.0% 5.0% 5.0% 5.0% 5.0% EU Pilot 1.0% 0.5% 0.5% 0.5% 0.5% 0.5% Property Tax in Lieu VLF 4.0% 3.7% 3.7% 3.7% 3.7% 3.7% Transfers In 8.6% 5.0% 4.0% 4.0% 4.0% 4.0% Property Taxes - CFD [2] 36.6% 10.0% 5.0% 5.0% 5.0% 5.0% Measure L 1.5% 1.0% 3.0% 3.0% 3.0% 3.0% Other Revenues -1.5% 2.0% 2.0% 2.0% 2.0% 2.0% Expense Category FY 23/24 FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 Salaries [1] 100% Staffed 3.0% 3.0% 2.5% 2.5% 2.5% PERS Normal Cost 100% Staffed 3.0% 3.0% 2.5% 2.5% 2.5% PERS UAL Aug 2022 Repo 3.5% 3.5% 3.0% 3.0% 3.0% Other Benefits 100% Staffed 2.0% 2.0% 2.0% 2.0% 2.0% Operations Work Plan 5.0% 5.0% 5.0% 5.0% 5.0% Debt [2] Actual Actual Actual Actual Actual Actual Transfers Actual 0.5% 0.5% 0.5% 0.5% 0.5% [1] Includes current contracts only with known contracts considered. [2] Based on actual debt service including the new animal shelter financing.  5 Year Forecast ‐ Revenue Revenue FY 22/23 E FY 23/24 B FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 Property Taxes 13,070,000 13,486,880 13,825,000 14,171,000 14,526,000 14,890,000 15,263,000 Sales & Use Taxes 16,891,970 16,779,430 16,948,000 17,457,000 17,981,000 18,521,000 19,077,000 Transient Occupancy Tax 1,490,000 1,700,000 1,785,000 1,839,000 1,895,000 1,952,000 2,011,000 Business License Tax 1,900,000 2,193,720 2,304,000 2,385,000 2,469,000 2,556,000 2,646,000 Other Taxes 4,016,220 4,337,070 4,554,000 4,782,000 5,022,000 5,274,000 5,538,000 EU Pilot 7,564,240 7,636,350 7,675,000 7,714,000 7,753,000 7,792,000 7,831,000 Property Tax in Lieu VLF 6,820,000 7,090,000 7,353,000 7,626,000 7,909,000 8,202,000 8,506,000 Transfer In 7,115,470 7,725,810 8,113,000 8,438,000 8,776,000 9,128,000 9,494,000 Property Taxes - CFD 640,000 874,000 962,000 1,011,000 1,062,000 1,116,000 1,172,000 Measure L 9,183,800 9,322,220 9,416,000 9,699,000 9,990,000 10,290,000 10,599,000 Other Revenues 6,723,590 6,620,260 6,753,000 6,889,000 7,027,000 7,168,000 7,312,000 Total Revenue [1] 75,415,290 77,765,740 79,688,000 82,011,000 84,410,000 86,889,000 89,449,000 Revenue Growth Staff Estimate 3.1% 2.5% 2.9% 2.9% 2.9% 2.9%  5 Year Forecast ‐ Expenses Expense Category FY 22/23 E FY 23/24 B FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 Salaries 32,190,510 33,160,610 34,155,000 35,180,000 36,060,000 36,962,000 37,886,000 PERS Normal Cost 2,358,740 3,218,590 3,315,000 3,414,000 3,499,000 3,586,000 3,676,000 PERS UAL 8,640,220 8,668,600 8,972,000 9,286,000 9,565,000 9,852,000 10,148,000 Other Benefits 9,108,750 10,153,160 10,356,000 10,563,000 10,774,000 10,989,000 11,209,000 Operations [1] 16,480,040 16,636,358 17,468,000 18,341,000 19,258,000 20,221,000 21,232,000 Debt 1,207,210 1,209,326 1,209,030 1,207,390 1,208,120 1,208,120 1,208,120 Transfers 5,194,040 4,719,096 4,743,000 4,767,000 4,791,000 4,815,000 4,839,000 Total Expenditure [2] 75,179,510 77,765,740 80,218,030 82,758,390 85,155,120 87,633,120 90,198,120 Expenditure Growth N/A 3.4% 3.2% 3.2% 2.9% 2.9% 2.9% Revenue - Expenditure 235,780 0 (530,030) (747,390) (745,120) (744,120) (749,120) Total Fund Balance [3] 27,060,234 27,060,234 26,530,204 25,782,814 25,037,694 24,293,574 23,544,454  5 Year Forecast – Fund Balance Category FY 22/23 FY 23/24 FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 Catastrophic Reserve [4] 5,298,519 5,475,482 5,621,760 5,784,960 5,953,600 6,127,920 6,308,000 Economic Reserve [4] 5,298,519 5,475,482 5,621,760 5,784,960 5,953,600 6,127,920 6,308,000 Measure L Catastrophic Re 734,704 745,778 753,280 775,920 799,200 823,200 847,920 Measure L Economic Rese 734,704 745,778 753,280 775,920 799,200 823,200 847,920 Pension Stabilization Fund 14,993,788 14,617,716 13,780,124 12,661,054 11,532,094 10,391,334 9,232,614 Available Resources [3] 27,060,234 27,060,234 26,530,204 25,782,814 25,037,694 24,293,574 23,544,454 Fund Balance % 16.0% 16.0% 16.0% 16.0% 16.0% 16.0% 16.0% [1] All pandemic related activity is netted out of operations. [2] Does not include $2.8 million in expenditures related to the new Peaker power plant revenue. Of that $2.24 million is programmed as restricted fund balance to purchase the plant in 5 years and $560,000 is programmed as additional Parks Capital transfer out. [3] Does not include $7.6 million in one time funds from reserves over 16% available at close of FY 2021/22. [4] Per policy, this is set at 8% of revenue, catastrophic reserves are prioritize, then economic reserves, then unassigned. [5] Earnings accumulate at 6.25%. Per the Pension Stabilization Policy, all reserves in excess of 16% in the General Fund are deposited at the close of the year. Investments from budget savings from annual UAL payments are not factored in this analysis. Draws of stabilization reserves are projected every year beyond FY 2023/24 through the forecast term.  5 Year Forecast – Risks/Opportunities Risks • Local Recession • Labor Contracts • General Fund labor contracts expire June 30, 2025, or December 31, 2025 • Pace of Development • Inflation • CalPERS – Assumption changes and investment risk • Additional service needs/demands from the public Opportunities • Recent revenue trend line is above the forecast base case • Economic development • Loan program • Substantial new municipal capital spending (nearly $25 million for a new animal shelter and variety of projects using one‐time surplus dollars) • Revenue enhancement • Vacancies and Workforce Demographics Pension Stabilization Policy Update • The PSP was adopted in its current form in 2017. • Favorable economic conditions led to the City accumulating significant balance since 2017 in the PSP and to annual excess fund balances far exceeding staff expectations or the City’s history experience. • The Policy Update is designed to maintain the PSF balance to provide insurance against increasing pension costs, put downward pressure on future pension bills and to address outsized fund balance excess should it occur in the future.  Pension Stabilization Policy Progress 6.30.21 PERS Actuarial ‐ as of 12.31.22 MVA Liability Funded Ratio Safety $ 156,554,968 $ 233,987,791 66.9% Miscellaneous $ 177,481,645 $ 224,689,925 79.0% All Plans $ 334,036,613 $ 458,677,716 72.8% PARS Balance 3.31.22 $ 20,902,055 N/A 4.6% Total Pension Funding at 12.31.18 $ 354,938,668 $ 458,677,716 77.4% • Does not include ‐6.1% nominal earnings for Fiscal Year ending June 30, 2022, which is similar to a ‐12.9% real loss for the fund.  Pension Stabilization Policy Progress MVA of an 80% Funded Plan $ 366,942,172.80 Investments/Earnings Needed to reach 80% $ 12,003,505 % of Progress Towards 80% Funded Since PARS Implementation 63.5% Investments/Earnings Needed to reach 100% $ 103,739,048 % of Progress Towards 100% Funded Since PARS Implementation 20.1% • Does not include ‐6.1% nominal earnings for Fiscal Year ending June 30, 2022, which is similar to a ‐12.9% real loss for the fund.  Pension Stabilization Policy Proposed Changes • Maintain 80% target funding when combining PERS and PARS assets. • Cap annual PSF contributions from the General Fund at 5% of revenue with excess brought to Council for appropriation (one time funds). • This provision is in effect until the PSF is equal to 5% of the total Liability for Safety and Misc Combined (currently $22.9 million) • Subsequently, annual excess fund balance in the General Fund continues to be used for pensions but is made as Additional Discretionary Payments (ADP) to CalPERS. • Formally recognizes the practice of making the Library and PRCS contributions to PSF or ADP a General Fund responsibility. Questions? 30