TITLE
Recommendation to approve Fiscal Year 2010 fourth quarter departmental and fund budget appropriation adjustments in accordance with existing City Council policy. (Citywide)
DISCUSSION
On September 15, 2009, the City Council adopted the Appropriations Ordinance governing the City's Adopted Budget for Fiscal Year 2010 (FY 10). Periodically, changes in revenue or operating conditions require appropriation adjustments. For example, in certain cases these adjustments enable departments to expend recently awarded grant revenue for which there is no existing appropriation. In addition, changes for multi-year grants/projects are necessary to bring appropriations in line with final grant/project award amounts. In accordance with the City's practice, these adjustments are presented quarterly to the City Council for consideration. Please see Attachment A for a Fund Balance Analysis of impacted City funds and Attachment B for a recap of FY 10 General Fund Expenditure Budget Adjustments.
This matter was reviewed by Assistant City Attorney Heather A. Mahood on September 2, 2010.
TIMING CONSIDERATIONS
The following requests for adjustments to FY 10 departmental and fund appropriations are necessary to reflect changes in operating conditions. City Council action is requested on September 21, 2010 to enable the timely processing of payments and to help ensure the Citywide budget is balanced in an All Funds basis.
FISCAL IMPACT
Development Services
On April 20, 2010, the City Council authorized the Redevelopment Agency of the City of Long Beach (Agency) to issue tax allocation bonds for the Agency's North Project Area in the amount of $32,980,000. The anticipated uses of the bond proceeds include reserves, cost of issuance, and net proceeds of $30 million for various projects within or of benefit to the Project Area. The Agency will be solely responsible for debt service payments on the bonds, and an appropriation increase is necessary to expend the bond proceeds.
● Increase appropriations in the Redevelopment Fund (RD 230) in the Department of Development Services (DV) by $30,380,052.
A Residential Energy Efficiency Rebate program (Program) has been successfully implemented utilizing grant funding in the amount of $559,027 from the American Recovery and Reinvestment Act (ARRA) Energy Efficiency Community Block Grant (EECBG) Program as approved by City Council on February 16, 2010. The Program includes rebates for energy efficient devices/systems and rebates on building permits. This increase in expenditures is offset by a corresponding increase in grant revenue in the Special Revenue Fund.
● Increase appropriations in the General Grants Fund (SR 120) in the Department of Development Services (DV) by $559,027.
On April 20, 2010, the Department of Development Services received $108,025 in grant funds from the South Coast Air Quality Management District (AQMD) to implement the Tree Planting Partnership Program. The funds were appropriated in the incorrect fund and a technical adjustment is necessary to correctly account for the grant funding.
● Decrease appropriations in the Development Services Fund (SR 137) in the Department of Development Services (DV) by $108,025.
● Increase appropriation in the General Grants Fund (SR 120) in the Department of Development Services (DV) by $108,025.
Fire
In November 2006, the City received advanced funding for the Metropolitan Medical Response System grant. Since that time, interest has been earned on the advance funds, and an appropriation increase is necessary to expend the interest earnings.
These additional funds will be spent on furthering the original mission of the grant, which is to prepare the City for an emergency response.
● Increase appropriations in the General Grants Fund (SR 120) in the Fire Department (FD) by $6,606.
The Fire Department has received additional revenue to reimburse the unbudgeted staffing costs for television and movie production and other special events. An appropriation increase is requested to adequately budget the staffing costs, which will be fully offset by revenue derived from fees charged to television and movie producers as well as event promoters. . There is no net impact to the Tidelands Fund. '
● Increase appropriations in the Tidelands Fund (TF) in the Fire Department (FD) by $33,800.
The Fire Department provided staffing assistance .for California wild land fire events during July and August of 2010. As the overtime expense for backfilling the employees who left fire stations to provide staffing at the wild land fires is unbudgeted an appropriation increase is necessary. The appropriation increase will be offset by reimbursement revenue from the State of California. There is no net impact to the General Fund.
● Increase appropriations in the General Fund (GP) in the Fire Department (FD) by $135,000.
The United States Department of Justice, Bureau of Alcohol, Tobacco, Firearms and Explosives (A TF) reimburses the Fire Department for overtime expenses incurred in arson task force investigations. As this overtime expense is unbudgeted, an appropriation increase is necessary. The appropriation increase will be offset by reimbursement revenue from ATF. There is no net impact to the General Fund.
● Increase appropriations in the General Fund (GP) in the Fire Department (FD) by $15,579.
On July 8, 2008, the City Council authorized the City Manager to receive and expend Department of Homeland Security grant funding for the 2007 Urban Area Security Initiative (UASI) grant at an amount not to exceed $6,671,216. The City of Long Beach has been notified that it will receive a supplemental award of $2,586,343 bringing the total grant to $9,257,559. In addition, adjustments to departments' current allocations are necessary to align each department's share of the modified grant allocation. These additional funds will primarily be used for Port of Long Beach security enhancements and interoperable radio equipment. As these additional funds are not budgeted, an appropriation increase is necessary and will be offset by grant revenue.
● Increase appropriations in the General Grants Fund (SR 120) in the Fire Department (FD) by $2,099,343.
● Increase appropriations in the General Grants Fund (SR 120) in the Technology Services Department (TS) by $500,000.
● Decrease appropriations in the General Grants Fund (SR 120) in the Health and Human Services Department (HE) by $13,000.
Library
A payment totaling $60,000 has been received from Jet Blue in-lieu-of City fines and, per Jet Blue's agreement with the City Prosecutor, these fines are designated for purchase of Library materials. In addition, $25,000 has been received from the John Crews Estate. This funding will also be used to purchase Library materials. A budget adjustment is required in order to expend the additional funding, and is offset by a corresponding increase in revenue in the Special Revenue Fund.
● Increase appropriations in the Special Revenue Fund (SR 120) in the Department of Library Services (LS) by $85,000.
Long Beach Gas & Oil
In May 2010, Long Beach Gas and Oil requested a budget adjustment to reflect increasing oil prices. At the time, staff estimated the average price for a barrel of oil would close the fiscal year at $70; however, since that time oil prices have trended slightly higher, resulting in the ability to transfer an additional $1.2 ,million to the General Fund. The additional revenue will help offset the budget shortfall in the General Fund. The requested appropriation increase is fully offset by net oil revenue.
● Increase appropriations in the Upland Oil. Fund (SR 134) in the Long Beach Gas and Oil Department (GO) by $1,200,000.
The Southeast Resource Recovery Facility (SERRF) is owned and operated in partnership by the City of Long Beach and The County Sanitation Districts of Los Angeles. The facility processes approximately 1,380 tons of solid waste daily, generating up to 36 megawatts of electricity. The two primary revenue sources are fees charged . to dispose waste, called "tip fees," and electricity sold to service providers. Tip fees are established by The County Sanitation District and can fluctuate depending on demand. If tip fees are collected by Long Beach operations in excess of disposal costs, the differential is rebated back to the Refuse Fund.
In addition to generating revenue for the City's General Fund, SERRF also helps reduce costs for refuse operations. Long Beach refuse trucks use SERRF to dispose of waste, saving significant transportation costs that would otherwise result from driving to the nearest landfill in Puente Hills. This savings keeps rates for Long Beach customers lower than surrounding areas.
For fiscal year 2010, SERRF will transfer $3 million to the General Fund as the City's share of profit. In addition, it is estimated there is a 10 percent variance between tip fees collected and disposal costs, making about $2.3 million available for return to the City. The Tip Fee rebate to the City is considered by SERRF as an expense and is not calculated as profit. In reviewing the Joint Powers Authority agreement related to the operation of SERRF, this rebate can be refunded to the City's General Fund and not necessarily to the Refuse Fund as has been the past practice. This action would increase the SERRF contribution to the General Fund by $2.3 million and reduce the transfer to the Refuse Fund by an equal amount to help end the current year in balance. The FY 11 Adopted General Fund Budget assumes a similar transfer will happen next year.
As the FY 11 Adopted Budget already included a transfer to the Refuse Fund of $2.3 million from the SERRF Fund, an appropriation increase is not needed. However, City Council approval is requested to redirect the transfer from the Refuse Fund to the General Fund on an ongoing basis.
Health and Human Services
The Health Department's Animal Care Services Bureau anticipates that it will exceed appropriations by $281,000. An appropriation increase is requested to cover expenditures due to one-time costs associated with the purchase and implementation of the Bureau's new licensing, dispatch, and kennel management system (Chameleon); shelter improvements; and one-time payments for shared operating costs associated with the spcaLA facility agreement. Revenues from the new administrative citations process, spcaLA reimbursements, and a one-time transfer of donated grant funds from the Animal Care Trust will offset the requested increase in appropriations.
● Increase appropriations in the General Fund (GP) in the Health and Human Services Department (HE) by $281,000.
Parks, Recreation and Marine
The Rancho Los Cerritos Foundation, a not-for-profit entity, has contributed $49,900 to offset a portion of the City's operating costs for the Rancho Los Cerritos historic site. A budget adjustment is required to expend the donation.
● Increase appropriations in the General Fund (GP) in the Department of Parks, Recreation and Marine (PR) by $49,900.
The Douglas Park Community Facilities District (CFD) is responsible for the irrigation and maintenance of the property and street medians along Lakewood Boulevard from Spring Street to Carson Street. Based on an agreement between the City and Boeing, the unbudgeted expense for reclaimed irrigation water may be reimbursed from assessment funds designated for the maintenance of the CFD infrastructure improvements. The appropriations. increase represents unbudgeted expense reported for FY 10, and will be offset by the reimbursement from the CFD.
● Increase appropriations in the General Fund (GP) in the Department of Parks, Recreation and Marine (PR) by $26,434.
First Serve, Inc., has a permit for the operation and management of the two Tennis Centers, Billie Jean King (BJK) and EI Dorado Park. All revenue from the tennis center concessions is deposited in a Tennis Trust Account and all expenditures from this Trust Account must be expended towards the facilities for public tennis. As of July 2010, the Tennis Trust Account had a balance of $229,571.
The BJK facility was originally constructed in the late 1960's and, in the last decade, has had chronic maintenance issues including inferior roofing. A refurbishment project has been underway to mitigate all structural, plumbing, electrical and operational issues at the facility. As of July 2010, $177,902 of unbudgeted expense had been incurred for these one-time improvements, and a budget adjustment is necessary to utilize the funding in'the Tennis Trust Account to offset the expense.
● Increase appropriations in the General Fund (GP) in the Department of Parks, Recreation and Marine (PR) by $177,902.
Police
The Chief of Police authorizes the use of the State Asset Forfeiture Fund - Youth Intervention/Prevention to fund a Police Department Cadet Program. By law, these funds can only be used for youth programs. This program was created to provide hands-on experience and training for up to eight college students to prepare them for a law enforcement career with the Police Department. The estimated FY 10 cost is $141,910, which includes Cadet salaries and Police Officer overtime for supervising the program. The amount requested includes a $3,000 contribution to the NAACP's Afro-Academic, Cultural, Technological and Scientific Olympics (ACT-SO). This program targets at-risk youth by challenging youth to excel in academic and artistic activities. The requested increase in appropriation will be fully offset by Asset Forfeiture Funds.
● Increase appropriations in the General Fund (GP) in the Police Department (PO) by $144,910. .
The Chief of Police authorized the use of Asset Forfeiture funds to cover the $148,060 uninsured portion of the repair and required maintenance costs for the damage done to helicopter #1908 by the foam accident at the heliport in 2009. The costs for the repairs and regularly scheduled maintenance performed while the helicopter was out of service were $452,661. Insurance covered $304,601 of the costs, with a remaining unbudgeted cost of $148,060.
The Chief of Police authorized the use of Asset Forfeiture funds for the following uses:
forensic video investigative costs of $25,492; the upgrade of software for instruments in the Narcotics Lab of $4,629; and the acquisition of a new server for the Crime Lab's digital imaging system of $56,963. All requested increases in appropriation will be fully offset by Asset Forfeiture Funds.
● Increase appropriations in the General Fund (GP) in the Police Department (PO) by $235,144.
The Chief of Police has authorized the use of Prisoner Welfare Funds to cover $21,756 in costs related to prisoner welfare in the Police Department Jail. The expenses include bedding, smoke hoods for evacuation during a fire, inmate clothing and hygiene supplies, broken window repair and upgraded guard system software to record rounds made by the jailers. The requested increase in appropriation will be fully offset by the Prisoner Welfare Fund.
● Increase appropriations in the General Fund (GP) in the Police Department (PD) by $21,756.
The operating budget for the North Long Beach PAL facility at 2311 South Street was reduced in FY 09 in anticipation that the City would find a sub-lessee for the remaining lease obligation. While a long-term sub-lessee was not found, in its stead, Workforce Development and Parks, Recreation and Marine are temporarily subleasing portions of the facility, while only covering their proportionate share of utilities. Revenue reserved from bus shelter advertising that was originally pledged to support the operating. expense for the North PAL facility will offset a portion of the remaining unbudgeted lease expense.
● Increase appropriations in the General Fund (GP) in the Police Department (PO) by $213,491.
On June 23, 2009, the City Council authorized the City Manager to execute all necessary documents to receive and expend grant funding from the Edward Byrne Memorial Justice Assistance Grant Program FY 09 in the amount of $367,351. The grant funds cover salaries and administrative overtime costs. The Police Department has been notified of an increase of $4,793 for a total award amount of $372,144. To utilize these funds, an appropriation increase is necessary. There is no impact to the General Fund.
● Increase appropriations in the General Grants Fund (SR 120) in the Police Department (PO) by $4,793.
On July 20, 2010, the City of Long Beach received the last of four installments of a $495,553 grant from the State of California Citizens Option for Public Safety Program from the County of Los Angeles Supplemental Law Enforcement Services Fund (State COPS 10). Due to an over-payment of $97,616 in FY 09, the net total funding for State COPS 10 is $397,937. Since FY 97, the City has received and utilized State COPS funding for front-line law enforcement efforts, including police. overtime hours and equipment purchases. To utilize these funds, an appropriation increase is necessary .
● Increase appropriations in the General Grants Fund (SR 120) in the Police Department (PO) by $397,937.
Public Works
The Department of Public Works (PW) was designated $29,080 additional funds from the Fourth Council District's FY 09 budget savings, which currently reside in the General Fund FY 10 fund balance. The requested use of these additional funds include: $24,080 for street repairs and $5,000 for tree trimming. In addition, $25,000 has been designated from the Third Council District's projected FY 10 budget savings to be used for infrastructure repairs in the Third District. The increase in appropriations is offset by the associated General Fund balance.
● Increase appropriations in the General Fund (GP) in the Department of Public .
Works (PW) by $5,000.
● Increase appropriations in the Capital Projects Fund (CP) in the Department of Public Works (PW) by $49,080.
On April 20, 2010, City Council awarded a contract to Sully-Miller Contracting company for the rehabilitation of Wardlow Road between Clark Avenue and Palo Verde Avenue in the amount of $1,518,320. An additional amount of $227,748 was authorized for project support for a total project budget of $1,746,068. '
Then on August 3, 2010, City Council awarded a new contract for the work to All American Asphalt in the amount of $1,433,633. An additional amount of $215,045 was authorized for project support (not part of the contract award) for a total project budget of $1,648,678. It is therefore necessary to reduce the initial appropriation approved for the previous contract.
● Decrease appropriations in the Gas Tax Street Improvement Fund (SR 181) in the Department of Public Works by $1,746,068.
The City receives Proposition 42 funds from the State of California for street and roadway maintenance and reconstruction. The City normally appropriates funding annually for the upcoming fiscal year based on estimates provided by the State. However, due to the uncertainty associated with the State's fiscal problems, no new Proposition 42 appropriations were added at the beginning of FY 10. Funds have now been received by the City for FY 10 and, based on the existing funds available and current appropriations, an increase in Proposition 42 appropriations is necessary.
● Increase appropriations in the Gas Tax Street Improvement Fund (SR 181) in the Department of Public Works (PW) by $3,502,078.
As previously reported, due to the ongoing economic crisis and the resulting $12 million revenue shortfall in the current year, the Department of Financial Management has identified several strategies to ensure the General Fund ends the year in balance. One of the strategies was to identify available alternative funding sources for General Fund supported programs. Infrastructure improvements are currently funded through the Capital Projects Fund which receives an annual transfer from the General Fund. Due to a recent County-wide ballot measure, the City receives Measure R transportation funds from the Los' Angeles County Metropolitan Transportation Authority (MTA). Measure R is funded with a half-cent sales tax and 15 percent of the tax is designated for Local Return to cities and counties based on population. The use of Measure R funds for the infrastructure improvement program was approved by the MTA per the Approved Projects Notification effective August 3, 2010. It is recommended that available and unexpended Measure R funds totaling $990,000 be utilized to support the Infrastructure Improvement Program, thereby reducing expenses in the Capital Improvements Fund and General Fund, for a net neutral effect.
● Increase appropriations in the Transportation Fund (SR 182) in the Department of Public Works (PW) by $990,000.
● Decrease appropriations in the Capital Projects Fund (CP 201) in Department of Public Works (PW) by $990,000.
SUGGESTED ACTION
Approve recommendation.
Respectfully Submitted,
LORI ANN FARRELL
DIRECTOR OF FINANCIAL MANAGEMENT/CFO
APPROVED:
PATRICK H. WEST
CITY MANAGER