CITY OF CARMEL-BY-THE-SEA

CITY COUNCIL
Staff Report

September 12, 2017

CONSENT AGENDA

TO: Honorable Mayor and City Council Members

SUBMITTED Sharon Friedrichsen

BY:

Approve Fiscal Year 2016-2017 year-end budget adjustments; Approve Fiscal Year 2017-2018
SUBJECT: supplemental appropriations totaling $452,750

RECOMMENDATION:
1. Adopt a resolution approving Fiscal Year 2016-2017 year-end budget adjustments.
2. Adopt a resolution approving Fiscal Year 2017-2018 supplemental appropriations totaling $452,750.
BACKGROUND/SUMMARY:
The purpose of this agenda is twofold: (1) to provide a preliminary update regarding the 2016-2017 Fiscal Year and
approve necessary budget adjustments and (2) to consider appropriation requests pertaining to the Fiscal Year 2017-
2018 Adopted Budget. Since the close of the 2016-2017 Fiscal Year on June 30, staff have been reviewing and
adjusting accounts to accurately capture known financial activity that occurred (year-end closing). The year-end close
is important as it lays the groundwork for preparing the Citys financial statement and assessing the amount of year end
fund balance available to be used for the next fiscal year and/or to be held in reserves. On June 6, 2017, the City
Council adopted the $23.4 million Fiscal Year 2017-2018 Budget and directed staff to return in September for
supplemental funding for legal services. As a result, this agenda item also seeks approval for increased funding of
$452,750 for legal services and capital projects.

FISCAL YEAR 2016-2017 YEAR-END OVERVIEW

Below is a high-level overview regarding Fiscal Year 2016-2017 Estimated Actuals. These estimates will be finalized
in late 2017 after the completion of the Fiscal Year 2016-2017 audit that is currently underway.

Revenues
Overall, General Fund revenues are $2.2 million more than budgeted. However, this is primarily due to the receipt of
$1.6 million from the PG&E settlement. Otherwise, revenues are within projections and overall anemic.

Property tax, budgeted at $5.9 million, is under budget by $142,000.

The statewide sales tax, budgeted at $2.3 million, is up by $279,000; however, the local Measure D sales tax is
down by $266,000 over the original budget amount of $3.0 million.
Transient occupancy tax, budgeted at $6.1 million is under budget by $41,000.

Table 1: Summary of Major Revenue Performance

Source Adopted 2017 Estimated Actual 2017 Estimated Actual

Budget (as of March 21, 2017) (as of June 30, 2017)
Property Taxes $5,905,000 $5,940,100 $5,797,611
Sales and Use Tax- Bradley 2,350,000 2,350,000 2,628,647
Burns
Sales and Use Tax- Measure D 3,011,011 2,800,000 2,745,153
Transient Occupancy Tax 6,103,754 6,153,754 6,112,347
In other revenue categories there is relatively minor change from the budgeted projections. In some cases, increased
revenues are offset by decreases in other sources resulting in a relative flatness to citywide revenues. For example,
business license tax is down $93,000 from its revised projection of $638,000. However, there is $103,000 in
unbudgeted administrative fees for processing the licenses that negative the decrease. Similarly, plan check fees are
up $219,000, but building permits are down $101,000. Franchise fees are up $38,000 from the $593,000 budget.

Expenditures
General Fund expenditures for operations were budgeted at $17.6 million and are under budget by about $1.1 million,
primarily due to salary and benefit savings from vacant positions.

Council is under budget by $22,000, primarily due to savings in the training budget.
Legal is under budget by $214,000 in outside legal assistance.
The City Engineer is under budget by $10,000 as the assistance rendered in the fiscal year was charged to
capital projects.
Administration is under budget by $115,000.
Non-departmental expenses are over budget by $55,000, primarily due to expenses in self-funded dental/vision
claims.
Community Activities is under budget by $48,000, primarily due to under spending in contractual services as well
as salary and benefit savings. Increased spending in salaries is offset by savings in part-time savings resulting in
an overall savings of about $6,000 in Library.
Community Planning and Building expenditures are under budget by $72,000, primarily due to salary and benefit
savings. Public Works expenditures are also under budget by $432,000, primarily due to savings in salaries and
benefits and in the stormwater program.
Public Safety: While salaries are over budget, there are savings in contractual services resulting in a net savings
of $33,000 for Ambulance. Fire expenditures are under budget by $46,000, primarily due to savings in contractual
services and materials and supplies. However, overall expenditures within the Police are over budget by $137,000,
primarily in salaries.

Spending for capital projects is under budget by $1.7 million, primarily due to projects that were not started or fully
completed by June 30, 2016. The Fiscal Year 2017-2018 Adopted Budget assumed nearly $1.5 million in carryover
capital project funding so the year-end estimate is in alignment with the budget projection.

Budget Adjustments
Budget adjustments will allow staff to transfer savings from one line item account to another within each departmental
budget as needed. However, the Municipal Code 3.06.030 requires transfers of appropriations between departments
to be approved by Council. In accordance, the attached resolution authorizes staff to make adjustments to transfer
savings among departments to balance the budget.

Fund balance
The City currently utilizes specialized funds to track specialized revenues like Measure D and other restricted funding
sources as well as to monitor expenditures for such items as citywide operations (General Fund), debt services and
capital projects and equipment. As of June 30, 2017, the preliminary fund balance for Measure D is estimated at $2.5
million while the General Fund is estimated at nearly $11 million.

FISCAL YEAR 2017-2018 OVERVIEW

With less than a quarter of the 2017-2018 Fiscal Year expended, it is challenging to provide a detailed update on the
status of the current fiscal year. However, an overview is provided based upon the revenues received to date as well
as current expenses.

Revenues
At this point in time, the revenues that have been received are being reviewed and reconciled to ensure they are
posted to the correct fiscal year. Many of the revenues for Fiscal Year 2017-2018 have not yet been received due to
timing, such as property tax or transient occupancy tax. (For the latter, for example, July and August revenues are due
to the City in September). However, as the business license registration and renewal process occurs in the first part of
the fiscal year, the City has received $524,000 of the $586,000 budgeted for business licenses thus far.

Expenditures
Expenditures
With 19% of the fiscal year expended, expenditures within the operating budget, exclusive of capital projects, are $3.2
million, or 17% of the $18.8 million budget.

FISCAL YEAR 2017-2018 Supplemental Appropriation Requests

In addition to funding for legal services, the proposed supplemental appropriation requests listed below include
monies for existing capital projects that were not completed by June 30, 2017 and one new phase of a completed
project. These projects propose to use a combination of General Fund and Measure D. As of June 30, 2017,
Measure D had a balance of $2.8 million. Of this $2.8 million, it is assumed that $150,000 is allocated for the fuel
system decommissioning project included as a separate agenda item within this packet, leaving $2.65 million available
for these supplemental appropriations.

1. An adjustment to increase expenditures within the General Fund by $280,000 for the City Attorney (Legal)
to pay for additional legal services beyond the monthly retainer for the City Attorney; for other specialized legal
services and for payment of any pending and/or potential legal settlements.

2. An adjustment to increase expenditures within the Capital Improvement Fund by $172,750 funded by a
transfer from General Fund (Measure D) revenue.

3. An adjustment to create a project budget of $83,500 for the Junipero and Fifth Storm Drain project funded
by a transfer per #2 above. Due to the timing of the project, re-appropriate the unspent fiscal year 2016-2017
funds from capital project fund balance to this account to pay for construction and other project-related costs.

4. An adjustment to create a project budget of $17,500 for the 4th Avenue Irrigation project funded by a
transfer per #2 above. Due to the timing of the project, re-appropriate the unspent fiscal year 2016-2017 funds
from capital project fund balance to this account to pay for construction and other project-related costs.

5. An adjustment to create a project budget of $51,750 for the Citywide Phone System project funded by a
transfer per #2 above. Due to the timing of the project, re-appropriate the unspent fiscal year 2016-2017 funds
from capital project fund balance to this account to pay for switches, handsets and wiring.

6. An adjustment to create a project budget of $20,000 for the Council Chambers Camera Automation project
funded by a transfer per #2 above. This new project involves the furnishing and installation of equipment to
implement an automated camera system in the Council Chambers. The use of an automated camera system
eliminates the need for a camera operator in the broadcast control room at City Hall. The City has utilized a
variety of options such as utilizing existing staff (and incurring overtime expenses) as well as contracting with the
private sector and other governmental entities for the recording of meetings. In addition to the automated
cameras, the project will also address a vibration issue and integrate existing table microphone system into the
new AV system for situations when table microphones need to be used, such as during public workshops.
FISCAL IMPACT:
The Fiscal Year 2018 supplemental appropriation requests total $452,750. As noted in the staff report on the Fiscal
Year 2016 audit within this agenda packet, the Measure D fund balance as of June 30, 2016 was $2.3 million. Staff
estimates the fund balance at $2.5 million as of June 30, 2017. Based upon the creation of a new capital project, the
fuel system decommissioning for $150,000, as well as these other capital appropriations, the projected Measure D
fund balance is just shy of $2.2 million. The General Fund estimated balance as of June 30, 2017 is around $11
million. The increased appropriation for legal services will decrease this balance by roughly $300,000.
PRIOR CITY COUNCIL ACTION:
Council received a report on the Fiscal Year 2016-2017 Budget on March 21, 2017 and adopted the Fiscal Year 2017-
2018 Budget on June 6, 2017.
Attachments:

Attach1 _Resolution_FY 2017 Year End Adjustments

Attach 2_ Resolution_ FY 2018 Adjustments
Attach 2_ Resolution-Exhibit A
 Attachment 1Attachment 1
CITY OF CARMEL-BY-THE-SEA
CITY COUNCIL

RESOLUTION NO. 2017-

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA AUTHORIZING

FISCAL YEAR 2016-2017 YEAR-END BUDGET ADJUSTMENTS

WHEREAS, the City Council approved the Fiscal Year 2016-2017 Operating Plan (the Adopted
Budget) on June 7, 2016 by resolution 2016-037; and

WHEREAS, as of June 30, 2017, overall citywide expenditures in the General Fund are estimated to be
about $16 million and $1.1 million under the adopted budget; and
WHEREAS, while there are expenditure savings in the majority of City departments, there are cost
overruns in such departments as Police and non-departmental expenses; and
WHEREAS, Carmel Municipal Code Section 3.06.030 requires transfers of appropriations between
departments to be approved by City Council; and
WHEREAS, staff seeks Council authorization to proceed with various budget adjustments to transfer
funds among departments in order to reconcile the Fiscal Year 2016-2017 budget.

NOW THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF THE CITY OF CARMEL-BY-
THE-SEA DOES HEREBY:
Authorize staff to make necessary budget adjustments including transferring savings among departments
in order to balance as part of the Fiscal Year 2016-2017 year end close process.

PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA this
12th day of September, 2017, by the following roll call vote:

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

ABSTAIN: COUNCILMEMBERS:

SIGNED: ATTEST:

_______________________ ___________________________
Steve G. Dallas, Mayor Ashlee Wright, City Clerk
 Attachment 2Attachment 2
CITY OF CARMEL-BY-THE-SEA
CITY COUNCIL

RESOLUTION NO. 2017-

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA AMENDING THE

FISCAL YEAR 2017-2018 ADOPTED BUDGET AND AUTHORIZING A BUDGET ADJUSTMENT IN THE
AMOUNT OF $452,750

WHEREAS, the City Council approved the Fiscal Year 2017-2018 Operating Plan (the Adopted
Budget) on June 7, 2017 by resolution 2017-062 and authorized appropriations in the total amount of
$23,412,232, including $3,321,175 for capital improvements; and
WHEREAS, when adopting the Fiscal Year 2017-2018 budget, Council directed staff to return to
Council to increase the appropriation for legal services; and

WHEREAS, due to timing, certain capital projects were not completed before June 30, 2017 and the
budgets for these projects need to be re-established within the Fiscal Year 2017-2018 Budget; and

WHEREAS, Carmel Municipal Code Section 3.06.030 requires transfers of appropriations between
departments or in regards to capital items or projects to be approved by City Council; and
WHEREAS, there is sufficient funding in the General Fund and Measure D to cover these costs; and
WHEREAS, the approval of this budget adjustment will not cause the City to exceed the adopted
appropriation (GANN) Limit of $31 million.

NOW THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF THE CITY OF CARMEL-BY-
THE-SEA DOES HEREBY:
Authorize budget adjustments as shown in the attached Exhibit A and increase the Fiscal Year 2017-
2018 Adopted Budget by $452,750.

PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA this
12th day of September, 2017, by the following roll call vote:

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

ABSTAIN: COUNCILMEMBERS:

SIGNED: ATTEST:

_______________________ ___________________________
Steve G. Dallas, Mayor Ashlee Wright, City Clerk
 Attachment 2
Exhibit A
Exhibit A
Supplemental Appropriation
Fiscal Year 2017-2018 Budget

Staff Report Reference Account G/L Account Description Amount Adjustment Adopted Budget Amended Budget
Request #1 01-61051 City Attorney/Legal Professional Services $280,000 Increase appropriations in the General Fund for City Attorney/legal $ 250,000 $ 530,000
professional services

Request #2 05-49013 Measure D Fund $172,750 Transfer Gneral Fund (Measure D) to the Capital Project Fund $ 3,471,175 $ 3,643,925

Request #3 13-89583-0006 Junipero and Fifth Storm Drain Project $83,500 Create a new project budget within the Capital Project Fund $0 $ 83,500

Request #4 13-89639 4th Avenue Irrigation Project $17,500 Create a new project budget within the Capital Project Fund $0 $ 17,500

Request #5 40-67911 Citywide Phone System Replacement Project $51,750 Create a new project budget within the Capital Project Fund $0 $ 51,750

Request #6 13-88355 Council Chambers Camera Automation Project $20,000 Create a new project budget within the Capital Project Fund $0 $ 20,000