TITLE
Recommendation to declare ordinance approving Resolution No. WD-1357, a resolution of the City of Long Beach Board of Water Commissioners establishing the rates and charges to be charged for water and sewer service and declaring the urgency thereof, and providing that this ordinance shall take effect at 12:01 A.M. on October 1, 2016, read and adopted as read.
DISCUSSION
On August 1, 2016, the City Manager's Proposed Budget for Fiscal Year 2017 (FY 17) was delivered by Mayor Garcia to the City Council and community with recommended amendments for consideration. Budget meetings were set for March 8, August 2, August 9, August 16, August 23, September 6, and September 13, along with five Budget Oversight Committee (BOC) meetings, and ten community meetings at which the FY 17 Proposed Budget was discussed. We are pleased to report that through the scheduled hearings, BOC and community meetings, there have been 22 separate opportunities for public feedback, deliberation and input. In addition, this year, the City has solicited input through the Budget Priority Survey to obtain feedback on what the City's General Fund priorities should be. The survey was promoted, along with OpenLB, which shows the budget visually, on the City's website, through Twitter and Facebook, and at the community meetings.
At the conclusion of the hearings, the City Council will amend the proposed budget as it deems appropriate, and adopt the proposed budget as amended. Since the publication of the FY 17 Proposed Budget, updated estimates of revenue and expense, which primarily address technical corrections, are listed by fund and department in Attachments B, C and D to this letter. The reasons are discussed at the end of this letter.
There are three Ordinances in Attachment A. The first Ordinance approves Resolution No. WD-1357 (A-3), which establishes the rates and charges for the water and sewer service, and the second is the Appropriations Ordinance (A-16), which officially adopts the FY 17 budget and authorizes expenditures in conformance with the adopted budget. In order for these two Ordinances to become effective October 1, 2016, the City Council must first declare an emergency to exist before adopting each Ordinance (A-2 and A-15). The third Ordinance amends the Departmental Organization of the City (A-12). There are also five Resolutions that provide for approval of the budget for the Harbor Department (A-1), the budget for the Water Department (A-4), the Master Fees and Charges Schedule (A-5), establish the Gann Appropriations Limit (A-9), and amend Salary Resolution (A- 13). There will also be motions that request approvals for the following: the FY 17 Capital Improvement Program (A-6); FY 17 Budget for the Long Beach Community Investment Company (A-7); the Harbor Revenue Fund Transfer (A-8); the Mayor's Recommendations (A-10); the Budget Oversight Committee (BOC) Recommendations (A-11); and a motion amending the Proposed FY 17 Budget (A-14).
This matter was reviewed by City Attorney Charles Parkin on August 24, 2016.
TIMING CONSIDERATIONS
In accordance with the Long Beach City Charter, the FY 17 budget must be adopted by September 15, 2016. Should the City Council fail to adopt the budget by that date, the City Manager's FY 17 Proposed Budget will be deemed the budget for the 2017 fiscal year. The Mayor has five calendar days from City Council adoption of the budget to use his veto authority. The City Council would then have until September 30, 2016, to override veto action by the Mayor with a two-thirds supermajority vote (six Councilmembers).
FISCAL IMPACT
The City Charter requires that the Appropriations Ordinance shall govern and control the expenditure and commitment amounts stated therein relating to the City's departments, offices and agencies during each fiscal year. The total Proposed FY 17 budget for all departments and funds is $3,097,225,448, which comprises $2,610,195,313 in new appropriation and $487,030,135, in estimated carry-over from FY 16 for multi-year grants and projects.
The Appropriations Ordinance, included as Attachment A-16 to this letter, totals $2,200,333,310 for all funds except Harbor, Sewer, and Water, and $2,203,622,682, for all departments except Harbor and Water. The $3,289,372 difference between funds and departments in the Appropriations Ordinance is due to general City indirect costs budgeted in the Financial Management Department, but charged to the Harbor, Water and Sewer funds, which are not included in the Appropriations Ordinance by fund.
The proposed Harbor, Water and Sewer fund budgets are in separate City Council Resolutions included as Attachment A-1 and A-4 to this letter, respectively, and total $897,411,822. The Board of Harbor Commissioners adopted the budget for the Harbor Department by minute order on May 23, 2016. The Board of Water Commissioners adopted the budget for the Water Department by Resolution on June 16, 2016.
User fees and charges in the Master Fees and Charges Schedule as Attachment A-5 have been adjusted due to changes in service and other factors. For details regarding these proposed new fees, deletions and adjustments, please see the List of Proposed Fees Adjustments for FY 17 that has been incorporated as Exhibit C to the Master Fees and Charges Resolution.
Other requested City Council actions include approval of the FY 17 One-Year Capital Improvement Program (CIP) budget, included in Attachment A-6, which is contained in the Appropriations Ordinance. The Planning Commission, at its meeting of August 18, 2016, approved the CIP for FY 17 as conforming to the General Plan.
The City Council is also requested to adopt the Resolution, included as Attachment A-9, establishing the Gann Appropriations Limit (Limit) for general purpose expenditures. In November 1979, the voters of the State of California approved Proposition 4, also known as the Gann Initiative (Initiative). The Initiative places certain limits on the amount of tax revenue that can be appropriated each fiscal year. The Limit is based on actual appropriations during FY 79 and prevents overspending proceeds of taxes. Only those revenues which are considered as "proceeds of taxes" are subject to the Limit. The Limit is recalculated each fiscal year based on certain inflation and population factors provided by the State. The Proposed Budget includes tax revenue estimates that are at 46.60 percent of the 2016-2017 Appropriations Limit and, therefore, does not exceed the Limit. This calculation is reviewed by the City Auditor for conformance to the law.
A motion is also being requested to amend the Departmental Organization Ordinance, included as Attachment A-12. This amendment incorporates changes to departments, bureaus, and divisions for FY 17. These organizational changes are necessary to implement changes reflected in the Proposed FY 17 budget. (A red line version is also provided). A motion is also being requested to adopt the Salary Resolution, included as Attachment A-13.
After the City Manager delivered the FY 17 Proposed Budget to the Mayor, technical adjustments were made to the budget. These changes are generally not substantive and are shown in Attachment B, C and D of this letter. The Housing Development Fund (SR 135) had a technical correction to reduce budgeted revenue by $9.8 million to reflect removing the one-time revenue received in FY 16 for the Successor Agency's loan repayments to the Housing Development Fund. Also, there was a technical correction of $19.2 million in the Employee Benefits Fund (IS 391) to account for the pass-through of employee benefits for FY 17, which reflects updates to budgeted overhead costs since FY 16, such as PERS changes that are impacted by FTE changes and cost trends as reflected in the Proposed Budget. Finally, there was a realignment of general administrative support in the amount of $415,216 for capital projects that was moved from the Capital Projects Fund (CP 201) to the General Fund (GF). These costs are offset by revenue from CIP overhead rate applied to capital projects, resulting in zero net impact to either fund. The remaining changes were minor technical adjustments made to various funds and departments in order to align the budget with grants and/or revenues.
SUGGESTED ACTION
Approve recommendation.
BODY
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF LONG BEACH APPROVING RESOLUTION NO. WD-1357, A RESOLUTION OF THE CITY OF LONG BEACH BOARD OF WATER COMMISSIONERS ESTABLISHING THE RATES AND CHARGES TO BE CHARGED FOR WATER AND SEWER SERVICE AND DECLARING THE URGENCY THEREOF, AND PROVIDING THAT THIS ORDINANCE SHALL TAKE EFFECT AT 12:01 A.M. ON OCTOBER 1, 2016
Respectfully Submitted,
JOHN GROSS
DIRECTOR OF FINANCIAL MANAGEMENT
APPROVED:
PATRICK H. WEST
CITY MANAGER