15. Mid-year budget adjustment #2 08-09ADMINISTRATIVE SERVICES DEPARTMENT
CITY HALL
10300 TORRE AVENUE • CUPERTINO, CA 95014-3255
D U P E RT A N O (4os> 777-3220 -FAX (408) 777-3109
SUMMARY
Agenda Item No. l S Meeting Date: February 3, 2009
SUBJECT AND ISSUE
Review and approve 2008/09 mid-year budget adjustment #2 which includes a report on
City revenue and expenditures.
BACKGROUND AND FISCAL IMPACT
General Fund
Staff reported on the City's economic condition and the State's situation affecting that
condition in November 3, 2008. General Fund sales tax, planning and permit fees, and
investment earnings forecasts were reduced ley $1 million based on current economic
trends. $915,000 was placed in reserves to address talk of a second State hit on local
revenues and the State had just sold bonds to ease a pending cash crunch.
State officials now warn that the State will run out of cash this month because of their $40
billion budget deficit through the end of fiscal 2009/1 O and the related inability to sell more
bonds in the current market environment. The cash shortfall, the State budget problem, the
deepening recession, and worsening employment numbers will likely mean that the City's
revenue downturn will continue into fiscal 2~~09/10 and possibly extend into 2010/11.
Already $800,000 in grant reimbursements for the Stevens Creek Corridor Park have been
frozen and because of the reduction in car sales, $40,000 in vehicle license fees stopped
flowing into the City in November and December. The $915,000 City reserve and low
State investment pool balance are current contingencies for State issues. As mentioned to
Council last November, since the lower reveriue picture for 2008/09 persists, staff now
proposes the following mid-year 2008/09 exI>enditure reductions and increases that, in
total, offsets this year's $1 million revenue decline.
General Fund Expenditures (Decrease)/
Increase
City Attorney interest payoff on outsl:anding loan $(67,000)
Assistant City Attorney - 9 month vacancy (119,835)
Community Development Dir. -Part-time and new hire (19,454)
City Planner - 3 month vacancy (46,600)
Senior Planner - 9 month vacancy (98,550)
Plan Check Engineer - 1.5 month vacancy (15,300)
is-i
Mid-Year Budget Adjustment #2 and City Revenues and Expenditures
February 3, 2009
Page 2 of 2
Public Works Director - 90% position - 6 months
Public Works Fleet Supervisor - 3 month part-time
Maintenance Worker II - 1 O month vacancy
Equipment Mechanic - 5 month vacancy
Environmental Affairs Coordinator - 3 addt'1 month vacancy
Human Resource Analyst - 3 month vacancy
Senior Office Assistant- City Clerk - 1 month vacancy
Sheriff contract savings
City Hall emergency generator project savings
Simms House rent formerly in below market rate fund
School sports field repair and replacement to RDA
General Fund reserves
Improve financial system security per audit recommendation
Net General Fund expenditure decrease
(12,420)
(10,000)
(73,348)
(43,393)
(3 5,100)
(29,800)
(6,600)
(125,000)
(200,000)
(30,000)
(67,600)
(10,000)
10,000*
(1.000.0001
* Expenditure need identified subsequent to fiscal 2008/09 budget adoption.
Redevelopment Agency
Because of last year's sale of certain Rosebowl and Cupertino Square parcels to new
owners, the Redevelopment Agency's property tax receipts will increase by $591,000 this
year. After budgeting for the amounts required to be given to schools, special districts, and
the County and after picking up one-time school field maintenance costs, $350,000 is
placed into Agency reserves which are needed for future development and housing needs.
Redevelopment Agency Revenues Increase
Total property tax revenue increase 591.000
Redevelopment Agency Expenditures
Required pass-through to county, schools, and other districts 160,000
State budget action 12,900
School sports field repair and replacement 67,600
Agency reserves and housing set-aside 350,500
Total RDA expenditure increase 591.000
RECONi1VIENDATION
Review and approve 2008/09 mid-year budget adjustment #2 which includes a report on
City revenue and expenditures.
Prepared by: David Woo, Finance Director
Submitted by: Approved for submission:
G~ .
Carol A. Atwood
Director of Administrative Services
(.~
yid W. Knapp
Ct y Manager
is-z
Ci of Cupertino
General Fund Bud et Report
December 31, 2008
Bad et Actual
2007108 2008!09 12/3112007 12131!2008 Anal sis of Trends
Taxes:
Sales Tax 14,190,000 13,390,000 5,675,385 5,132,883 Down 10%
Pro erty Tax 6,710,000 7,010,000 3,016,223 3,274,051 Sustained growth this yeaz; but not as strong nxt yr
TransientOcc ancy 2,660,000 2,660,000 1,105,163 1,128,944 Trendingdownwazd
Utility Tax 3,240,000 3,300,000 1,245,738 1,231,073
Franchise Fees 2,580,000 2,630,000 449,008 495,826
Other Taxes 1,400,000 1,500,000 650,719 521,398 Pro erty transfer tax down
Licenses and Permits 3,030,000 2,980,000 1,409,155 1,462,240 Eazl year permits for a arlment ro'ect
Use of Money 8c Pro rty 2,100,000 1,200,000 964,420 607,550 Portfolio shift to safety
Inter ovemmental 4 509,871 4 558,892 426,709 214,390 VLF down, COPS reed by installments
Ch es for Services 1,151,685 1,468,000 598,303 767,021 Senior Ctr tri s, new tree ermits
Fines & Forfeitures 800,000 820,000 231,630 281,500
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Total Revenue Down 4% thru Dec; may end u 0.6% over last yr.
Opera' Ex enditures:
Administrative 1,499,095 1,603,230 624,334 614,799
Law Enforcement 7,982,421 8,505,671 3,870,130 4,117,126 Matches budget increase
Public & Environ. Affairs 1,275,848 1,547,896 554,523 702,252 Biannual survey, new video roductions
Administrative Service 4,540,611 4,287,829 1,875,688 1,751,379 No elections this year
Recreation Service 3,910,044 4,398,278 1,726,221 1,747,300 Corridor Pazk roject mgr m ublic works
Community Development 3,722,479 4,339,246 1,504,688 1,508,923 Contractplancheckingdown
Public Works 11,032,844 11,847,487 4,875,247 5,293,201 Engineering, maintenance rojects up
Total Ex enditures U 5%; a ect budget savings at yeaz-end
Transfers In 1,300,164 70,000 615,000 34;980 Resource Recovery, CIP savings last year
Transfers Out -18 334,750 -7100,000 -7 824 000 -3,549,960 Corridor Pazk last yeaz
Net Gain/ ss -
V7
W
Sales Tax Projections vs. Actual
„~ $8,000
a
Q~
F $6,000
M
m
m
F $4,000
A
m
$2,000
$O
~ -Projected, per current budget
--i- Actual
10/08 1 1 /08 12/08
Month
Property Tax Projections vs. Actual
,,, $3,500
v
c
$3,000
~ $2,500
q
$2,000
O
O
$1,500
Y
$1,000
$500
$O
10/08
~-Projected, per current budget
-t- Actual
11 /08
Month
12/08
15-4
Transient Occupancy Tax Projected vs. Actual
y 1,200
800
NQ
TO
D
b
r
A
0
~-
400
O
=~-Projected, per current budget
-~- Actual
Licenses 8. Permits Projected vs. Actual
~ 2,000
0
M
tb 1,000
Y
O
_- _
_ ~~
_ /~~
-~ -Projected, per current budget
t Actual
10/08 11 /08 12/08
Month
15-5
Charges for Services Projected vs. Actual
~ 1,000
N
500
O
~~ ~ ~~
_ ~~ i
~~
-~-Projected, per current budget
t Actual
10/08 1 1 /08 12/08
Month
General Fund Expenditures Projected vs. Actual
„~ 20,000
v
'cq
3
0
~ 15,000
d
Iv
10,000
a~
Y
5, 000
-~-Projected, per current butlget
-i--Actual
O
10/08
1 1 /08
Month
12/08
15-6
EXHIBITS
BEGIN
HERE
2~s~ZOOs
Cc .~ f 31 oq ~#~~
City Revenue and Expenditures
Item #15
February 3, Zoog
Major Changes
Revenues
• Property tax equity
allocation (TEA)
• Insight
• Strong economy to
recession
Expenses
• Expanded library hours
• ARr~; e deputies
• Undertake deferred
maintenance
• Retiree health
• Pensions
1
2/3/2009
General Fund Revenues/Expenses
i_.__________.____.. ~______ __._._.______..r_~_______-~
i ~ 450 '~
i_
445 ^/~/+y.
_ r
435 ~~~~ ~" -
~..~..,......-p--
s3o
sx5 ~
i
Ezc L - _ _._. _.. _- - __- __-_ -_.-. _ -___.___-_-_.
zoos zoo6 xoc7 xoog zocg
-Revenue ~~--- Expense ----Expense.lnfrastructure
i _.~. _-._~ -__~. r. __~_.
Sales Tax Protections vs. Actual
58,000
$8.000 ------ ----- _
±$4.000 _ .~ ~ _ ~ ~ } ~'___,.-_
s ~ 52.000 -- ---.._--------
S
50
10/OB 11 /08 12/08
Monet '~-'~'zlected, per curtent butlget
-~ Actual
Licenses & Permits Projected vs. Actual
2,000
1,000 ~ ---____~---_~_
h
Y 0 .
10/08 11/08 12/08
Monet
2
2/3/2009
General Fund Expenditures Projected vs. Actual
y 20,000
~ ~ ~
~ ~~
0
F 15,000 ___-~ ~` ~
~ r .
0
c 10,000 -- --- --
N -___-
---~-Pmjaded, per currant hudgat,
T i
5,000 - -~~ --~-actual ~._-
0
10/08 11/08 12/08
Month
Closures /Bankruptcy
• M e rvy n's
• TGI Friday`s
• Shane Company
• Total ~170,00o sales tax
3
2/3/2009
Sales tax trends
• Business-to-business (largest sector) 12% i in
1St Q; deepens in 2nd Q.
• Retail 16%.I in 1St Q; likely worse in 2nd Q
• State "true-up" 64% ~
State I m pa ct
• ~800,00o grant reimbursements for Corridor
Park delayed
• No VLF -Nov & Dec X40,000
• Possible State actions
- Postpone Gas tax /Sales tax on gas
- More RDA takeaways
4
2/3/2009
Declining Interest Rates -Jul 07 to Present
e%
s%
4%
3%
2%
1% -
0%
J-07 A-07 5-07 0-07 N-07 D-07 J-OB F-OS M-08 A-OB M-OS J-08 J-08 A-08 S-OB 0-08 N-OB D-OB
Savings
• Selective hiring freeze
• Capital projects
• Sheriff contract
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