RPVCCA_CC_SR_2014_11_18_08_Telecommunications_UUT_RevenueCITY OF RANCHO PALOS VERDES
MEMORANDUM
TO:
FROM:
DATE:
SUBJECT:
HONORABLE MAYOR & CITY COUNCIL MEMBERS
DENNIS McLEAN, DIRECTOR OF FINANCE
NOVEMBER 18, 2014
FY14-15 BUDGET ADJUSTMENTS TO OFFSET
TELECOMMUNICATIONS UTILITY USER TAX
REVENUE
REVIEWED: CAROLYNN PETRU, ACTING CITY MANAGE~
Staff Coordinator: Kathryn Downs, Deputy Director of Finance ll{)
RECOMMENDATION
Adopt Resolution No. 2014-, A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF RANCHO PALO,S VERDES, AMENDING RESOLUTION 2014-41, THE BUDGET
APPROPRIATION FOR FY14-15, TO ADJUST THE BUDGET IN THE GENERAL FUND
AND THE CAPITAL IMPROVEMENT PROJECTS FUND.
BACKGROUND AND DISCUSSION
On August 19, 2014, the City Council took action to suspend collection of Utility User Tax
(UUT) from telecommunication providers. As part of the action, all telecommunications
UUT collected since August 13, 2013 (the beginning of the established one-year claim
period) will be transferred to a UUT Telecommunication Claim Account, and will not be
recorded as General Fund Revenue. Staff expects that the monies set-aside in the Claim
Account will be sufficient to pay for refund claims, as well as the administration of those
claims.
The FY14-15 General Fund budget includes an estimate of $770,600 for UUT revenue
from telecommunication providers. The purpose of this staff report is to consider proposed
adjustments to the FY14-15 structural budget to offset the loss of UUT revenue, and to
rebalance the General Fund budget.
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FY14-15 BUDGET ADJUSTMENTS TO OFFSET TELECOMMUNICATIONS UTILITY
USER TAX REVENUE
November 18, 2014
Page 2 of 3
Public outreach for voter approval of the UUT in 1996 and 2004 included information that
additional General Fund revenue was needed to fund an annual program of residential
street rehabilitation. The FY14-15 budget includes a $3 million transfer to pay for a
residential project that includes streets, curbs, sidewalks, traffic signs and other
infrastructure improvements in Zones 2 & 6 (northwestern and southern portions of the
City). Public Works Staff has indicated that the scope of the FY14-15 project can be re-
worked to fit within a $2.2 million revised project budget. Therefore, Staff proposes to
reduce both the annual funding transfer and the residential project by $770,600 to offset
the reduction in UUT revenue.
As an alternative, the City Council may choose to provide direction to Staff regarding the
services budgeted in FY14-15 that should be reconsidered to offset the loss of revenue.
FY15-16 Budget Process
Staff offers the following to be considered while preparing forthe FY15-16 budget process.
• City Council Policy No. 45 -Balanced Operating Budget directs that recurring
expenditures shall not exceed recurring revenues.
• In the 2014 Capital Improvement Plan, the estimated costs of residential street
projects for years 2 through 5 (FY15-16 through FY18-19) range from $2 million to
$2.1 million.
• Additional recurring expenditures have been identified for FY15-16 that include
increased costs of storm water quality compliance, neighborhood traffic calming,
maintenance of the new Abalone Cove parking system, an increased contribution to
the Sheriff's Liability Trust Fund, a full year of funding for employee positions that
were only partially budgeted for FY14-15, and an increased General Fund subsidy
for right-of-way maintenance. Increased expenditures may be partially offset by
improved estimates of revenue (e.g. property tax); but the exercise of balancing the
FY15-16 operating budget may require in-depth analysis, great care, and difficult
choices.
• Over the last 10 years, favorable General Fund expenditure variances have
averaged about $1 million annually. City Council Policy No. 41 -Reserve Policies
directs the transfer of favorable General Fund expenditure variances to the Capital
Improvement Projects Fund. Preparation of the FY15-16 budget may include a fine-
tuning of expenditure estimates, which may result in a reduced budget variance at
June 30, 2016.
FISCAL IMPACT
If the City Council adopts the proposed resolution, the net impact to the General Fund is
zero; and the General Fund will be structurally balanced for FY14-15.
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FY14-15 BUDGET ADJUSTMENTS TO OFFSET TELECOMMUNICATIONS UTILITY
USER TAX REVENUE
November 18, 2014
Page 3 of 3
Attachments
Resolution No. 2014-, A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
RANCHO PALOS VERDES, AMENDING RESOLUTION 2014-41, THE BUDGET
APPROPRIATION FOR FY14-15, TO ADJUST THE BUDGET IN THE GENERAL FUND
AND THE CAPITAL IMPROVEMENT PROJECTS FUND.
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RESOLUTION NO. 2014 -
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO PALOS
VERDES, AMENDING RESOLUTION 2014-41, THE BUDGET APPROPRIATION
FOR FY14-15, TO ADJUST THE BUDGET IN THE GENERAL FUND AND CAPITAL
IMPROVEMENT PROJECTS FUND
WHEREAS, Section 3.32 of the Rancho Palos Verdes Municipal Code provides that all
expenditures in excess of budgeted allocations must be by supplemental appropriation
of the City Council: and
WHEREAS, on June 17, 2014, the City Council of the City of Rancho Palos Verdes
adopted Resolution 2014-41, approving a spending plan and appropriating a budget for
FY14-15: and
WHEREAS, on August 19, 2014, the City Council suspended the collection of Utility
User Tax (UUT) from telecommunication providers; and
WHEREAS, the FY14-15 General Fund budget includes an estimate of $770,600 for
UUT revenue from telecommunication providers; and
WHEREAS, the City Council desires that the FY14-15 budget be adjusted to offset the
loss of UUT revenue, and to rebalance the FY14-15 General Fund structural budget.
BE IT, THEREFORE, RESOLVED BY THE CITY COUNCIL OF THE CITY OF
RANCHO PALOS VERDES:
The following adjustments are made to the FY14-15 budget:
General Fund
Telecommunications Utility User Tax 101-6000-315-XX-XX
Transfers to CIP Fund 101-6000-491-91-00
Capital Improvement Projects (CIP) Fund
Transfers from General Fund 330-3031-391-10-00
Residential Street Improvements 330-3031-461-73-00
($770,600)
($770,600)
($770,600)
($770,600)
PASSED, APPROVED, AND ADOPTED THE 181h DAY OF NOVEMBER 2014.
ATTEST:
CITY CLERK
MAYOR
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State of California )
County of Los Angeles )ss
City of Rancho Palos Verdes )
I, CARLA MORREALE, City Clerk of The City of Rancho Palos Verdes, hereby certify
that the above Resolution No. 2014-was duly and regularly passed and adopted by
the said City Council at regular meeting thereof held on November 18, 2014.
CITY CLERK
CITY OF RANCHO PALOS VERDES
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