This report outlines the required actions for adoption of the Fiscal Year 1999/2000 budget. It is recommended that the City Council adopt the Fiscal Year 1999/2000 budget and related matters as contained in this report.

On May 18, 1999, City Council held a Budget Workshop to review in detail the proposed Fiscal Year 1999/2000 Budget and the Ten Year Resource Allocation Plan. On May 25, 1999, City Council held a Public Hearing on the 1999/2000 Resource Allocation Plan, Establishment of Appropriations Limit, and Proposed Fee Increases (Attachment A is Report to Council #99-230). At this hearing, members of the public presented comments regarding the budget. Notice of the Public Hearing was sent to those persons specifically requesting notice pursuant to the provisions of the Government Code on Fee Increases and Potential Recipients of the City's outside funding provision.

Section 1304 of the City Charter requires the City Council to adopt the budget for the upcoming fiscal year on or before June 30. State legislation requires that the City annually adopt a spending limit for the coming year.

Three actions by the City Council are required at the meeting of June 15, 1999. The sequence of actions is set forth in the recommendation section of this report. First, the City Council must consider and take action on proposed fee changes. The proposed changes are set forth in the resolution contained in Attachment B.

Second, the City Council must adopt, by resolution, the Fiscal Year 1999/2000 Budget. The budget resolution, contained in Attachment C, incorporates the proposed budget, which includes the recommendations for the funding of outside groups. A separate action on each item is not necessary, unless the City Council wishes to change any recommendation. It is recommended that the budget, as proposed, be introduced with Council’s desired changes being dealt with as amendments by motions.

Third, the City Council must adopt, by resolution, the Fiscal Year 1999/2000 Spending Limit. The calculations and the detailed supporting information are contained in Attachment D.

Below is a discussion concerning each of the actions required by Council.

The Public Hearing on the proposed fee changes was held as part of the Public Hearing for the Fiscal Year 1999/2000 budget on May 25, 1999. Attachment B is a consolidation of fees and charges into one resolution organized by department and fee type. Most fees have been increased approximately 3%, to assure recovery of the cost of services. The resolution also includes changes which staff has recommended for legal conformance or which have been approved by City Council in prior action.

The budget resolution, listed as Attachment C, outlines the recommended capital and operating budgets for Fiscal Year 1999/2000. A ten-year Resource Allocation Plan, as well as General Fund Projections for an additional ten years, was provided earlier to Council. The Fiscal Sub-Element of the General Plan requires under action statement 7.1B.5i that the City Manager "Present a balanced Ten-Year Resource Allocation Plan to the City Council annually . . ." Although budgets are required by the Charter only on an annual basis, the Fiscal Sub-Element requires a multi-year plan.

Article XIIIB of the California Constitution established a spending limitation on government agencies within California. Attachment D provides information on the appropriations limit which is a calculation of how much the City is allowed to spend. Calculations for the 1999/2000 fiscal year indicate that the City will be below the spending limit by approximately $35 million based on the proposed 1999/2000 budget. State legislation requires that the City annually adopt an appropriations limit for the coming year. Also, Council must select one factor from each component by which to calculate the limit. The options available are as follows:

Inflation Factors

1) California per capita income

2) Increase in non-residential assessed valuation due to new construction

Population Factors

3) City population growth

4) County population growth

Staff recommends that Council select the combination of factors which yields the most favorable amount under the spending limitation. The two factors which accomplish this objective for the Fiscal Year 1999/2000 limit are the California per capita income and the County population growth. Based on this selection, the appropriations limit for Fiscal Year 1999/2000 is calculated to be $99,745,512. For each year thereafter, the factors may be changed and options selected by a recorded vote of the City Council.

Although the City is well below the limit, it is beneficial in the long run to select the growth rate option which establishes the amount under the spending limitation at the maximum allowed by existing regulations.

Overall, the revised recommended operating budget for Fiscal Year 1999/2000, which was reviewed in detail at the budget workshop on May 18, 1999, represents a 4.49% increase over the Fiscal Year 1998/99 budget (excluding carryover projects or budget modifications). This includes the budget supplements for the Public Safety dispatchers, fee waiver program and teen services expansion. Table 1, on the next page, presents the recommended budget for all funds for FY 1999/2000, as compared to FY 1998/99.

On May 25, 1999, the City Council held a Public Hearing on the Budget. The Hearing was formally closed on that date. Information requested at the Public Hearing is presented below:

• Council Member Kawczynski requested financial information regarding Senior Center construction costs and the impact on the budget. At this time, staff does not have final cost figures. When the engineering estimates are complete, staff will present various funding options for Council consideration.

• Council Member Kawczynski requested a list of all consultants used by the City. This list was provided to Council Member Kawczynski on May 26, 1999 and subsequently to all other Council Members.
• Council Member Kawczynski requested financial information on the contract with the Chamber of Commerce for the Visitor Information Program to determine if the dollars allocated can be reduced. The contract with the Chamber of Commerce is for $40,000, half of which was payable at the initiation of work. The remaining balance is due upon the Chamber showing the City via a written report that half of the work has been completed to the City’s satisfaction. A number of factors have conspired to delay the start of the project, including a refinement in the scope of the program to make it more Internet based. However, staff has been assured that the Chamber is moving forward. Staff will require proof of their progress before any further payment is made.
• Council Member Kawczynski requested a review of travel expenditures for the entire City. A listing of year-to-date travel expenditures by department has been sent to Council Member Kawczynski.
• Council Member Fowler requested a staff report to determine what Parks and Recreation Department resources would be required to study the Fremont pool issues and how staff’s time would be reprioritized to undertake this study. Parks and Recreation director Robert Walker agreed to present this report at a future council meeting.
• Council Member Fowler and Members of the Public, Tim Risch and Tom Mayer requested an increase in funding for the Sidewalks and Curb Ramp Installation Project. Currently for FY 1999/2000, $ 50,000 in CDBG funds has been programmed for curb retrofits, along with $ 20,000 in General/Gas Tax Funds. At Council’s direction, this funding level from CDBG can continue to be programmed for future years. In addition, because the project is eligible for Measure A and B monies, funding can potentially be increased by this source. Staff is currently undergoing a prioritization process to allocate Measure A and B funds for eligible projects, and will be bringing a recommendation back to Council in the near future. Council may direct staff to give the Sidewalks and Curb Ramp Installation project high priority for these funds.
• Member of the Public Tom Mayer requested the use of the word "Budget" in the Notice of Public Hearing instead of "Resource Allocation Plan." The Public Hearing notice, published in "The Sun" on May 11 and 18, 1999, does use the word "Budget" throughout the notice (see Attachment A). However, the Report to Council on the Public Hearing uses "Resource Allocation Plan" in the title. Staff will take into consideration the use of "Budget" in next year’s Report to Council.

The various fiscal impacts of the budget have been outlined throughout this report as well as contained in the materials previously provided to the City Council.

The Public Hearing on the budget was conducted on May 25, 1999 and was formally closed on that date.

The following boards and commissions have been provided the budget for their review.

• Arts Commission
• Board of Library Trustees
• Housing and Human Services Committee
• Parks and Recreation Commission
• Planning Commission

Additionally, public contact has been accomplished through publication and posting of the Council agenda. Further, Reports to Council are available in the Library and on the City’s web page.

It is recommended the following actions be approved:

Prepared by:

Grace H. Kim
Management Analyst - Budget

Reviewed by:

Gabriel A. Silva
Finance Manager

Reviewed by:

Mary J. Bradley
Director, Department of Finance

Approved by:

Robert S. LaSala
City Manager