CC SR 20240418 02 - FY24-25 Budget Assumptions
CITY COUNCIL MEETING DATE: 04/18/2024
AGENDA REPORT AGENDA HEADING: Regular Business
AGENDA TITLE:
Consideration and possible action to begin developing the Fiscal Year (FY) 2024-25
Preliminary General Fund Budget.
RECOMMENDED COUNCIL ACTIONS:
1. Review the budget assumptions used to develop the proposed FY 2024-25
General Fund Budget, and provide Staff with direction on the following:
• Affirming the FY 2024-25 budget assumptions, which include:
i. Revenue projections of $39,473,700 which includes continuing the
3% Utility User Tax rate and Transfers-In of $250,000;
ii. Personnel costs of $14,630,600:
1. Including all existing and approved positions for competitive,
part-time, confidential, and management;
2. Funding of 50% for the Associate Planner position aligned
with the Department’s recruitment schedule;
3. Continuing the cost-of-living adjustment (COLA), performance
merits, and benefits, pursuant to labor agreements;
4. Continuing to underfill Accounting Supervisor (Finance).
5. Continuing to freeze Executive Assistant (City Manager’s
Office).
6. Continuing to freeze GIS Coordinator (Community
Development Department).
iii. Non-Personnel costs of $20,579,550, including public safety
services, operational costs, one-time expenditures, and contingency
budget for emergency repairs; and,
iv. Transfers-Out of $4,177,500 that includes transfers to the Capital
Infrastructure Program (CIP), Improvement Authority for Portuguese
Bend, Sub-Region One, Abalone Cove Sewer, and Habitat
Restoration Fund.
• Funding priorities for the FY 2023-24 unallocated fund balance of $2.7
million which may include:
i. Additional funding for the City Council Goals;
ii. Additional transfers of $889,500 to the CIP Fund in accordance with
the City Council Reserve Policy No. 41;
iii. Transfers of $400,000 to the Employee Pension Service (EPS) Fund
in accordance with the Pension Guidelines; and/or
iv. Additional transfers the CIP Fund.
1
RANCHO PALOS VERDES
FISCAL IMPACT: N/A
Amount Budgeted: N/A
Additional Appropriation: N/A
Account Number(s):
ORIGINATED BY: Jason Loya, Senior Administrative Analyst
Vina Ramos, Director of Finance VR
REVIEWED BY: Vina Ramos, Director of Finance VR
APPROVED BY: Ara Mihranian, AICP, City Manager
ATTACHED SUPPORTING DOCUMENTS:
None
BACKGROUND:
The City's budget serves as a financial plan, forecasting anticipated revenues and
expenditures for the fiscal year spanning from July 1 to June 30. This annual plan upholds
the City's longstanding commitment to fiscal responsibility and transparency,
emphasizing the prioritization of public safety and the delivery of exceptional services to
the community. Following completion of the City Council Goals Workshop, the budget
process continues with a presentation of the proposed budget, emphasizing the General
Fund budget assumptions for the ensuing year.
The framework for developing the budget assumptions begins with a detailed review of
mid-year and year-end financial data, providing an outlook on trends and fiscal
requirements for the upcoming period. Before presenting the assumptions to the City
Council, the Finance Department presents the General Fund budget assumptions to the
Finance Advisory Committee (FAC) and the Public Works Department holds a series of
meetings with the Infrastructure Management Committee (IMAC) regarding the City’s
capital projects. Overall, the City Council's budget process encompasses the following
steps:
On March 13, 2024, at the City Council Goals Workshop, the Council received a third-
quarter status report on their FY 2023-24 goals. During this session, Staff proposed to
carry over these goals which includes infrastructure projects such as the Portuguese
Bend Landslide Remediation Project and along with a new goal supp orting and growing
local businesses. The budget allocation for these projects will be discussed during the
City Council
Goals
Workshop
March 13
Budget
Workshops
April 18 (GF)
April 29 (CIP)
Preliminary
Budget
June 4
Budget
Hearing &
Adoption
June 18
2
• • •
1f
budget workshops, including tonight’s workshop session for the General Fund and the
Capital Infrastructure Program (CIP) Fund workshop on April 29, 2024.
In preparation for the FY 2024-25 General Fund Budget Workshop, Staff have
incorporated the latest assumptions to help structure the proposed budget. Over the past
two months, the City Manager, Director of Finance, and Department Heads have held
various budget meetings to formulate the budget, ensuring balance (expenditures not
exceeding revenues), fiscal sustainability, and alignment with community and
organizational priorities. Within each discussion, Staff considered the status of the
baseline budget, year-end estimates, and programmatic changes approved by the City
Council. Adjustments were also made to accommodate regulatory requirements,
emergency response efforts, contractual obligations, and operational needs such as
personnel, maintenance, professional services, and equipment.
Following thorough discussions and approval from the City Manager, Staff prepared this
staff report with a focus on the General Fund. In summary, the following information is
presented:
• FY 2023-24 General Fund Year-End Estimates
• FY 2024-25 Revenue and Expenditure Assumptions
• Recurring vs. One-time Revenues and Expenditures
• FY 2024-25 Fund Balance Summary
DISCUSSION:
FY 2023-24 General Fund Year-End Estimates
To develop the FY 2024-25 proposed budget, Staff reviews and uses the projected year-
end for FY 2023-24, as outlined below.
The General Fund’s projected fund balance, including transfers out, is almost $34.6
million, marking a $1.5 million or almost 5% increase over the revised budget. After
applying the 50% City Council Reserve Policy, and other transfers out to CIP Fund, and
Employee Pension Services (EPS) Fund, the estimated unallocated fund balance is
almost $16.8 million, reflecting an increase of approximately $1.5 million or 10% from
June 30, 2023.
As indicated in Table 1 on the next page, City revenues are anticipated to finish the year
roughly $38.8 million or $65,700 or 0.2% higher than budgeted, with expenditure
estimated to be almost $1.5 million or 4% lower than budgeted. A summary of the mid-
year and year-end estimates will also be part of Staff’s presentation this evening.
CONTINUED NEXT PAGE
3
Table 1: FY 2023-24 General Fund – Fund Balance Summary
FY 2024-25 General Fund Revenue Assumptions
Overview – Revenues
A growing economy helped sustain revenue growth over the past two fiscal years. Despite
its various impacts, persistent inflation has elevated revenues through FY 2022 -23,
resulting in a 7.8% increase over the prior year, reaching nearly $38.7 million, exc luding
transfers. As the trend of disinflation continues, however, FY 2023-24 revenues remain
relatively steady, but have grown at a slower pace compared to the past two years.
To date, FY 2023-24 year-end estimates indicate a subtle increase of 0.2% over the
revised budget. As noted, the slower pace of growth is attributed to the tighter monetary
policy and efforts to bring inflation down to the 2% level. This overall trend, along with
various factors for each revenue source, has influenced the assumptions used to develop
the FY 2024-25 proposed budget.
Anticipated FY 2024-25 General Fund revenues, including transfers, are expected to
reach nearly $39.5 million. Projections suggest a $0.7 million, or 1.8%, increase over the
FY 2023-24 revised budget, and a $0.6 million, or 1.6%, increase over year-end
estimates. The proposed budget acknowledges industry -specific trends amid ongoing
economic uncertainty and preserves a conservat ive outlook, with ongoing monitoring
expected throughout the budget cycle. A comprehensive discussion and analysis of the
General Fund's primary revenue sources follows below.
General Fund
FY 2023-24
Revised
Budget
FY 2023-24
Year-End
Estimates
Beginning Fund Balance 33,260,494 33,260,494 - 0%
Add: Revenues 38,511,800 38,577,500 65,700 0.2%
Add: Transfers-In 270,000 270,000 - 0.0%
Total Revenues 38,781,800 38,847,500 65,700 0.2%
Less: Expenditures (34,378,400) (33,247,200) (1,131,200)-3.3%
Less: Transfers to CIP (TOT) (4,421,000) (4,121,000) (300,000)-7%
Less: Other Transfers-Out (145,000) (245,000) 100,000 69%
Total Expenditures (38,944,400) (37,613,200) (1,331,200) -3%
Projected Ending Fund Balance 06/30/2024 33,097,894 34,494,794 1,396,900 4%
City Council Restricted Fund Balance
Less: Additional Transfers - CIP Ladera (PY Surplus) (889,500) (889,500) - 0.0%
Less: Transfers to Pension (PY Surplus) (291,300) (291,300) - 0.0%
50% Reserve Policy (16,756,750) (16,623,600) 133,150 -0.8%
Projected Unallocated Fund Balance - 06/30/24 15,160,344 16,690,394 1,530,050 10%
Increase/(Decrease) from
Revised Budget
4
Analysis – Revenues
Property Tax
Property Tax is the primary and most stable revenue source in the General Fund. The FY
2024-25 proposed budget forecasts property tax revenues to surpass $17.5 million,
marking an increase of $0.4 million, or 2.3%, over the FY 2023-24 revised budget. When
compared to year-end estimates, anticipated revenues in FY 2024-25 reflect a similar
increase of approximately $0.4 million, or 2.4%. Growth in revenue stems from assessed
property values, which typically rise annually by no more than 2%, with potential ad ditional
growth from home sales triggering property reassessments and Proposition 8 value
recaptures.
Three main factors influence the annual change in property tax revenue:
• Inflation (Based on the California Consumer Price Index – CCPI): Properties
not reduced by Proposition 8 are subject to a maximum CCPI increase of 2%
annually. For FY 2024-25, the County Assessor will apply a 2% increase, resulting
in a $262 million increase in real property value within Rancho Palos Verdes.
• Transfer of Ownership: Sales of properties between January and December
2023 contribute to the property tax revenue calculation, adding $348 million to the
City’s overall property value.
• Proposition 8 Recapture: Properties experiencing a decrease in value due to
market downturns can have their tax assessment based on current market prices
under Proposition 8. As values recover, these properties may see assessed value
increases exceeding the 2% CPI limit. However, based on the recent climate in the
housing market, some homeowners may be eligible for Proposition 8 reductions
due to recent median price changes. Any significant impacts from this potential
decline in value will be monitored and reported accordingly.
These factors, along with other considerations in property tax calculation, contribute to an
expected 3.7% increase in overall property value. This, combined with property tax
transfer revenue from property sales, revenue from property tax instead of vehicle license
fees, and other minor revenue sources, informs the projection for FY 2024 -25. However,
a slight decline is projected at year-end compared to FY 2023-23 budgeted revenues.
This decline is due to the shortfall in property transfer taxes, which are often challenging
to project and sensitive to the overall sales volume in the housing market.
Property Taxes
FY 22-23 Actual Revenue: $16,355,675
FY 23-24 Year-end Estimate: $17,132,100
FY 24-25 Proposed Budget: $17,545,000
FY 24-25 Net Change to YE Estimate: +$412,900 (2.4%)
5
Transient Occupancy Tax (TOT)
TOT, the second-largest revenue source in the General Fund, mainly derives from
Terranea Resort, contributing $6.4 million, or 98%, of the proposed $6.6 million in FY
2024-25. The remaining portion comes from miscellaneous hotel tax revenues. In total,
the current projection reflects a decrease of $0.3, or 5%, over the FY 2023 -24 revised
budget. This decline follows the peak in TOT revenues observed in FY 2022 -23, where
actual revenues were the highest on record. Nonetheless, FY 2024-25 proposed
revenues are expected to rise past FY 2023-24 year-end estimates by $55,000, or 0.8%,
aligning with a more cautious forecast as the economy slows. Staff’s forecast also
considers historic actuals and recent trends, along with projections provided by Terranea.
Transient Occupancy Tax
FY 22-23 Actual Revenue: $6,853,001
FY 23-24 Year-end Estimate: $6,525,000
FY 24-25 Proposed Budget: $6,580,000
FY 24-25 Net Change to YE Estimate: +$55,000 (0.8%)
Sales and Use Tax
Sales Tax revenues are forecasted to near almost $2.9 million in FY 2024 -25, indicating
a minor decrease of approximately $5,800, or 0.2%, from the prior year's revised budget.
Revenue estimates are primarily based upon data provided by the City’s sales tax
consultant, HdL. Adjustments to the year-end estimates and next year’s budget are
provided as economic data becomes available and shifts accordingly. Despite a declining
growth rate, prices remain elevated because of inflation, thus creating a larger taxable
base for this category. To maintain a conservative outlook, proposed revenues are
expected to exceed FY 2023-24 year-end estimates by about $22,000, or 0.8%.
Sales and Use Tax
FY 22-23 Actual Revenue: $2,961,915
FY 23-24 Year-end Estimate: $2,828,000
FY 24-25 Proposed Budget: $2,850,000
FY 24-25 Net Change to YE Estimate: +$22,000 (0.8%)
Permits and Fees
Permits and Fees revenues, driven primarily by activity levels within the Community
Development Department, are projected to total nearly $3.2 million in FY 2024 -25,
marking a $55,000, or 1.7%, increase over the revised budget. Similarly, proposed
revenues are projected to increase by approximately $29,000, or 0.9%, over FY 2023 -24
year-end estimates. Additionally, Staff will bring the Master Fee Schedule to the City
Council on May 7, 2024, for possible consideration of adjustments in permit fees based
on the Consumer Price Index (CPI). If an increase is approved, budget figures will be
6
updated to reflect any material changes and incorporated into the FY 2024 -25 Preliminary
Budget.
Permits and Fees
FY 22-23 Actual Revenue: $3,643,419
FY 23-24 Year-end Estimate: $3,197,400
FY 24-25 Proposed Budget: $3,226,500
FY 24-25 Net Change to YE Estimate: -$29,100 (0.9%)
Franchise Tax
The City receives payments from franchisees for the use of municipal rights-of-way from
vendors such as EDCO, Cox, and Southern California Gas Company. Staff analyzes
historical data and reviews industry trends as the basis for annual assumptions. To date,
franchise tax revenue is estimated to rise slightly above the FY 2023-24 revised budget,
reaching $2.2 million in FY 2024-25, with a $50,000, or 2.3%, increase compared to both
the revised budget and year-end estimates. Staff will monitor the trend in revenues and
provide updates as they become available.
Franchise Taxes
FY 22-23 Actual Revenue: $2,359,276
FY 23-24 Year-end Estimate: $2,200,000
FY 24-25 Proposed Budget: $2,250,000
FY 24-25 Net Change to YE Estimate: +$50,000 (2.3%)
Utility User Tax (UUT)
UUT revenue is dependent on external factors, including weather conditions,
consumption of utilities, natural gas prices, and rate increases. Staff uses historical data
and estimates from the Bureau of Labor Statistics for CPI to establish baseline
assumptions. FY 2024-25 proposed revenues are currently projected to grow by $63,000,
or 2.5%, higher than the FY 2023 -24 revised budget, totaling $2.5 million. Energy rates
are volatile in nature and are budgeted below year -end estimates by $40,000, or 1.5%,
based on the current trends in energy prices, particularly with water and natural gas.
UUT
FY 22-23 Actual Revenue: $2,876,956
FY 23-24 Year-end Estimate: $2,585,000
FY 24-25 Proposed Budget: $2,545,000
FY 24-25 Net Change to YE Estimate: -$40,000 (-1.5%)
7
Other Taxes and Miscellaneous Revenues
Other Revenue, encompassing various sources like the golf tax, business license tax,
interest earnings, and one-time revenue, is expected to grow by 13%, or $0.5 million, over
the FY 2023-24 revised budget. Compared to year-end estimates, the FY 2024-25
proposed revenues are projected to increase by $0.1 million, or 2.9%. Revenue growth
for this category is also attributed to persistent inflation and a return to traditional revenue
levels from recreation programs and rental/lease activities. FY 2024-25 proposed
revenues total just over $4.2 million and will be monitored accordingly.
Other Taxes and Miscellaneous Revenues
FY 22-23 Actual Revenue: $3,678,952
FY 23-24 Year-end Estimate: $4,110,000
FY 24-25 Proposed Budget: $4,227,200
FY 24-25 Net Change to YE Estimate: +$117,200 (2.9%)
Per Rancho Palos Verdes Municipal Code (RPVMC) Section 3.40.140, a legislative
review of the Golf Tax is mandated every four years before adopting the budget for the
subsequent fiscal year. The City Council set the Golf Tax rate at 10% for FY 2023 -24 on
April 6, 2023. The ordinance stipulates that the City Council must assess if any
adjustments to the golf tax rate are warranted based on the City's needs or if repeal is
appropriate. The estimated FY 2024-25 Golf Tax revenue stands at $0.7 million and will
be utilized to support ongoing operations. The next review will take place during the FY
2027-28 budget cycle.
Table 2: FY 2024-25 Proposed General Fund Revenues
8
FY 2022-23 FY 2023-24 FY 2023-24 FY 2024-25 Variance to YE Revenue Source Estimate Actuals Revised Budget YE Estimate P roposed Budget
Property Tax $ 16 ,355 ,675 $ 17 ,149 ,500 $ 17 ,132 ,100 $ 17 ,545 ,000 $4 12 ,900 1 2.4%
Tra nsie nt Occ upa ncy Tax 6 ,853 ,001 6 ,927 ,900 6 ,525 ,000 6 ,580 ,000 $ 55 ,000 0.8%
Sa les T ax 2 ,961 ,9 15 2 ,855 ,800 2 ,828 ,000 2 ,850 ,000 $ 22 ,000 0.8%
Pe rmit s & Fees 3,643,4 19 3 ,17 1,500 3 ,197 ,400 3 ,226 ,500 $ 29 ,100 0.9 %
Franc hi se Tax 2 ,359 ,276 2 ,200,000 2 ,200 ,000 2 ,250 ,000 $ 50,000 2.3 %
Ut ility Use rs Tax 2 ,876 ,956 2 ,482 ,200 2 ,585 ,000 2 ,545 ,000 $ (40,000) -1.5 %
othe r T axes & Mi sc. Reve nu es 3,678,952 3,724 ,900 4 ,110,000 4 ,227 ,200 $117 ,200 2.9 %
Subtotal 38 ,729 ,195 38 ,511 ,800 38 ,577 ,500 39 ,223 ,700 $646 ,200 1.7%
Tra nsfe rs In 300,000 270,000 270 ,000 250 ,000 $ (20,000) -7.4 %
Total Revenues $ 39 ,029,195 $ 38 ,781 ,800 $ 38 ,847 ,500 $ 39 ,473 ,700 $626 ,200 1.6%
Summary – Revenues
In summary, the FY 2024-25 proposed revenue budget totals $39.5 million, including
transfers, and indicates an increase of nearly $0.6 million, or 1.6%, over year -end
estimates and roughly $0.7 million, or 1.8% over the revised budget. Property Tax
remains the largest revenue source in the General Fund, representing 45% of proposed
revenue, excluding transfers. TOT retains its position as the second -largest revenue
source, comprising 17% of the General Fund. Charts 1 and 2 below illustrate the amounts
and allocations of the major revenue sources in the General Fund.
Chart 1: FY 2024-25 Proposed General Fund Revenues (Including Transfers)
Chart 2: FY 2024-25 Proposed General Fund Revenues (excluding transfers)
9
$20
$18
$14 -
VI $12 -
2 g $10
..I
:E $8
$6
$4
$2
$0
FY22 -23 Actuals □ FY23 -24 Rev . Budget □ FY23 -24 Year -End □ FY24 -25 Proposed
~~~~ D D □ DOD □□□ ODD D D □
Property Tax TOT Sa les Tax
Sales Tax
$2,850,000 ___ ~~--
7%
17%
Property Tax
$17,545,000
45%
Permits & Fees Franchise Tax UUT Other Revenues
Permits & Fees
$3,226,500
8%
Other
$9,022,200
23%
------
UUT
$2,545,000
6%
I
Franchise Tax
$2,250,000
6%
--------.__ ____ __. Other Tax and Misc.
$4,227,200
11%
According to the details presented above, the current UUT rate of 3% remains a key
source of revenues of over $2.5 million for the General Fund. Therefore, Staff seeks the
City Council’s affirmation of maintaining the same tax rates for FY 2024-25. If approved,
the total projected General Fund’s revenues for FY 2024-25 is $39.5 million, including
transfers.
FY 2024-25 General Fund Expenditure Assumptions
Overview – Expenditures
The development of FY 2024-25 budget assumptions sustains current service levels while
addressing anticipated operational changes and needs. This includes expenditures
related to City Council Goals, personnel requirements, transfers-out based on City
Council Policy No. 41 Reserve Policy, regulatory changes, cont ractual obligations such
as CPI increases, and one-time costs for new projects and or programs.
The major increases from expenditure categories attributed to the Los Angeles County
Sheriff for public safety services, as well as adjustments in salaries and benefits from
labor agreements, and the newly formed American Federation of State, County and
Municipal Employees District Council 36 (AFSCME DC36), and the organizational
changes resulting from the Classification and Compensation Study approved by the City
Council at its March 19, 2024 meeting. The purpose of the newly established MOU and
the study is to address the workforce compensation based on the level and scope of work
performed by Staff, internal equity, and ensuring that the City’s workforce maintains a
competitive edge by recruiting and retaining qualified employees based on comparable
cities. With these steps along with additional recruitment efforts, Staff projects that FY
2024-25 may experience the lowest employee vacancy rate compared to the last three
fiscal years.
Overall, the FY 2024-25 proposed General Fund expenditure budget, excluding transfers-
out, is almost $35.3 million, reflecting a $0.9 million or 3% increase over the FY 2023-24
revised budget. Compared to FY 2023-24 year-end estimates, this represents a $2 million
or 6% increase. Transfers-out are estimated at $4.2 million, indicating a decrease of $0.4
million or 9% from the revised budget, or a decrease of almost $0.2 million or 4% from
year-end estimates.
In total, as shown in Chart 3 on the next page, the proposed General Fund expenditure
budget is almost $39.4 million which includes almost $14.6 million of personnel, $20.6
million of non-personnel, and approximately $4.2 million of transfers-out. This reflects an
increase of $0.4 million or 1% from the FY 2023-24 revised budget or an increase of $1.8
million or almost 5%, compared to current year-end estimates.
CONTINUED NEXT PAGE
10
Chart 3: FY 2024-25 Proposed General Fund Expenditures (including transfers)
Analysis – Expenditures
The following is a detailed analysis of the budget assumptions guiding the preparation of
General Fund proposed expenditures for FY 2024-25. The analysis compares proposed
expenditures with the FY 2023-24 revised budget rather than year-end estimates. Year-
end estimates were excluded from the analysis as they do not account for unfilled or
vacant positions and incomplete projects or programs by year-end.
Personnel Costs
Personnel costs account for the salaries and benefits for City employees, including full -
time, part-time, and stipend for the City Council and Planning Commissioners. Overall,
based on the assumptions, the personnel budget is estimated at almost $14.6 million or
37% of the budget, after transfers out. This is an increase of $1.5 million or 11% over FY
2023-24 revised budget, which is highlighted below.
Personnel Costs
FY 23-24 Revised Budget: $13,214,300
FY 23-24 Year-end Estimate: $13,013,900
FY 24-25 Proposed Budget: $14,630,600
FY 24-25 Net Change to FY 23-24 Revised Budget: +$1,416,300 or 11%
11
Salaries
On September 7, 2021, a professional services agreement (PSA) with PSPC was
awarded to conduct a comprehensive classification and compensation study and
organizational review for all full-time and part-time City-employed personnel. It involved
examining positions, classifications, and compensation to ensure internal equity and
competitiveness in recruiting and retaining qualified staff and aligned with ongoing labor
negotiations. Consultation occurred with the City Council and labor units throughout the
process, leading to the City Council’s approval of the proposed resolutions for changes
in classifications and pay schedules on March 19, 2024. The changes were approved to
be effective retroactively from July 1, 2023. The estimated fiscal impact in FY 2024-25 is
estimated at approximately $180,000. As such, the information presented includes these
changes.
Additionally, on September 19, 2023, the City adopted a Memorandum of
Understanding (MOU) between the City and the American Federation of State, County
and Municipal Employees District Council 36 (AFSCME DC36) for the part-time
employees. The estimated fiscal impact in FY 2024-25 for this MOU is approximately
$321,000, which is also included in the budget assumptions.
The following are highlights from the preliminary personnel budget of approximately $11
million in General Fund for FY 2024-25:
• Includes all existing and approved competitive, confidential, and management
positions, and stipends for the City Council and Planning Commission.
• 50% funding for the Associated Planner position aligned with the recruitment
schedule.
• $8.3 million or 57% of the personnel budget for approximately 74 full-time
positions, with 12 positions currently vacant but expected to be filled by FY 2024-
25. The full-time positions account for an increase of almost $630,000 or 8%
compared to FY 2023-24. This is mainly due to vacant positions being partially
funded in the prior years based on the recruitment schedule. Staff anticipates FY
2024-25 reaching the highest number of employee vacant positions being filled
particularly in the Public Works and Community Development Departments.
• $1.8 million or 12% of personnel budget for approximately 68 part-time positions
or 33 full-time equivalents. This category increased by approximately $0.3 million
or 245 from the prior year’s budget. Approximately $1.4 million or 73% of this
budget is allocated in the Recreation and Parks Department. The newly adopted
AFSCME MOU has increased pay and benefits, which has helped the City to fill
vacant positions. The Department’s current staffing levels have nearly returned to
pre-pandemic levels, and park sites, special events and programs are close to fully
staffed. In addition, the Ladera Linda Community Park opened in February 2024.
The newly constructed park has resulted in an increase in staffing levels of
12
approximately $80,000 when compared to the pre-construction, prior year’s
staffing model. The Ladera Linda Community Park staffing hours had traditionally
been limited when compared to other park sites, with Staff departing at 5 p.m.
regardless of the time of year. Knowing this would limit Staff’s ability to secure the
park grounds effectively and appropriately, in August 2019, the City Council
adopted new park hours that extended Ladera Linda hours of operation and
required the Department to increase Staff’s presence and added security per the
Conditions of Approval. Previously, the Ladera Linda Park was staffed by one part-
time staff member per shift, while the new building increased staffing to two part-
time staff members per shift. This is comparable to staffing levels at Hesse Park
and PVIC.
• $178,000 or 1% is allocated for overtime for all full-time and part-time positions.
• $608,000 or 4% of accounts for COLA and merit increase for all full-time
employees, including competitive positions, part-time positions, confidential
positions, and management positions. Per the City’s Memorandum of
Understanding with RPVEA, COLA is estimated at 3%, which is the maximum
percentage based as measured by CPI-U reported by the U.S. Bureau of Labor
Statistics for the Los Angeles-Long Beach-Anaheim, California metropolitan area
covering the prior twelve-month period March to March each year. The CPI-U for
February is 3.4%, and the CPI-U for March will be released in mid-April.
Additionally, the budget assumption for merit increase is estimated at an average
of 4.5%. The merit increase is based on employee’s performance evaluation
ranging from 1% to 6% per the City’s MOU with RPVEA.
• $236,000 or 1% of personnel budget for new positions identified from the
classification and compensation study:
o Human Resources Specialist (part-time)
o Information Technology Specialist (part-time)
o Recreation Program Coordinator (full-time)
• $216,300 or 1% of personnel budget for the Public Safety Program:
o Public Safety Manager (part-time)
o Public Safety Liaison (part-time)
o (3) Public Safety Liaison (part-time – previously funded from Recreation and
Parks)
• In the past few years, several vacant positions have been frozen and underfilled
and are excluded from the current budget. While most positions have now been
filled, the following positions continue to remain frozen in the budget assumptions
for FY 2024-25:
• Executive Assistant in the City Manager’s Office
• GIS Coordinator in the Community Development Department
13
• Accounting Supervisor in the Finance Department (underfilled by Senior
Accountant)
Management will continue to reassess the department’s needs in the coming fiscal year,
and any changes will be reported to the City Council for approval during the annual
budget workshops.
As described above, Staff seeks the City Council affirmation on the salaries budget
assumptions of $ 11,012,100 which include the estimated rates for all existing and
approved competitive, confidential, and management positions, part-time positions,
COLA, and merits. Staff also seeks affirmation to partially fund Associate Planner at 50%
aligned with the recruitment schedule. Moreover, Staff seeks affirmation to continue to
freeze the GIS Coordinator position (Community Development), continue to freeze the
Executive Assistant (City Administration), and underfill Accounting Supervisor with Senior
Accountant (Finance).
Benefits
The projected benefits for the FY 2024 -25 Proposed Budget amount are around $3.6
million, reflecting a decrease of approximately $0.1 million or 3% over the FY 2023-24
revised budget. Key budget assumptions for developing the benefits include:
• $1.9 million or 13% of personnel budget allocated for health, dental, vision,
worker’s compensation, Medicare, retirement health savings, and ancillary
benefits.
• $2.2 million earmarked for the CalPERS normal rate payment and the CalPERS
Unfunded Accrued Liability (UAL) payment. This payment covers the City’s normal
costs for current employees across Tiers 1, 2, and 3. The increase of $0.2 million
or 9% over the previous year is driven by the City's unfunded liability for current
and retired employees across all Tiers.
• Per the City’s Pension Guideline, the Employee Pension Service (EPS) Fund will
relieve the General Fund of UAL payments exceeding $900,000. Thus, $0.4 million
will be funded from the EPS Fund to offset increases in the benefits category.
Staff seeks the City Council’s affirmation on the budget assumptions $3,618,500 for
benefits as defined above. Also, in accordance with the City Council -adopted Pension
Guidelines, Staff seeks City Council affirmation with the utilization of the Employee
Pension Service Fund to relieve the General Fund of not to exceed $0.4 million for the
CalPERS annual payment of the unfunded liability in FY 202 4-25.
Non-Personnel Costs
The non-personnel category includes the Los Angeles County Sheriff contract, legal
services, professional and technical services, repairs and maintenance, supplies, training
14
and conferences, utilities, and miscellaneous/other expenses. This category represents
$20.6 million, or 52% of the proposed budget, after transfers out. As illustrated below, the
FY 2024-25 proposed budget includes a decrease of $0.5 million or 3% over the FY 2023-
24 revised budget.
Non-Personnel Costs
FY 23-24 Revised Budget: $21,164,100
FY 23-24 Year-end Estimate: $20,233,400
FY 24-25 Proposed Budget: $20,579,550
FY 24-25 Net Change to FY 23-24 Revised Budget: -$584,550 or -3%
Below are major highlights of the budget assumptions used to develop the non-personnel
budget. The amounts listed and the percentage to budget per category are based on the
proposed budget, after transfers-out.
Public Safety
Los Angeles Sheriff Department Contract:
• Accounts for $8.1 million or 21% of the proposed budget.
• Includes a contract increase of $0.4 million or 5% over FY 2023-24.
• Current contract is in the process; therefore, Staff will update the City Council once
more information becomes available.
Special Programs
• Special Programs for $158,000, including School Resource Officers for outreach
and education at Peninsula schools, Neighborhood Public Safety Grant Program
providing reimbursements to neighborhoods for the installation of safety -
enhancing tools and technologies, administration for the parking citations program,
and Everbridge emergency notification software.
• Supplemental Program for $70,000 for funding for additional miscellaneous
supplemental (overtime) patrol around the City by the Sheriff’s Department as
needed or as requested, including crime suppression, specialized traffic patrols,
and fireworks suppression.
Public Safety Program (in-house)
• Introduced in FY 2023-24, this program is anticipated to start before June 30, 2024.
• Includes $124,400 of non-personnel expenditures including supplies, rents and
leases, equipment, and training.
• Includes $40,000 of one-time costs for a vehicle purchase.
Legal Services
• Accounts for $975,000 or 2% of the proposed budget.
• Includes an estimated increase of $0.03 million or 3% over FY 2023-24.
15
• Includes general legal services, code enforcement, litigation, labor negotiation,
and legal services related to public records act requests.
Professional and Technical Services
• Accounts for almost $4.7 million or 12% of the proposed budget.
• The proposed budget is lower than the current budget by approximately $0.3
million or 6% due to one-time costs that were allocated in FY 2023-24 and no
longer needed to budget the amounts in FY 2024-25.
• The major items included in this category are as follows:
i. $562,000 (City Administration) for services including managed IT,
RPVtv, lobbying, business system support, software implementation,
audio/video support services.
ii. $1 million (Community Development) for services including building and
safety plan checks, geological, animal control, view restoration,
abatement, environmental planning, GIS, peafowl program, planning,
and miscellaneous code enforcement related services. A portion of
these expenditures are offset by revenues collected through permits.
iii. $125,000 (Finance) for audit services, budget book automation, financial
reports services.
iv. $440,000 (Recreation and Parks) for special events and contract
payments for recreation class instructors. A portion of these
expenditures are offset by revenues collected from classes.
v. $1.2 million (Public Works) for permits review, school traffic control for
flagging, engineering, NPDES consulting, inspections, plan reviews. A
portion of these expenditures are offset by revenues collected through
permits.
vi. $90,000 (Non-Department) for grant writing, emergency preparedness,
and miscellaneous audit and financial services.
• The following is a summary of projected one-time costs of $571,000.
i. $166,000 (City Administration) for election costs for open City Council
positions.
ii. $155,000 (Community Development) for the State Mandated Safety
Element Local Hazard. This is a state-mandated component of the
General Plan. Per the State’s General Plan Guidelines, “The goal of the
Safety Element is to reduce the potential short - and long-term risk of
death, injuries, property damage, and economic and social dislocation
resulting from fires, floods, droughts, earthquakes, landslides, climate
change, and other hazards.” The Safety Element corresponds with the
Local Hazard Mitigation Plan (LHMP) and are typically updated together.
Per Senate Bill 1035 (2018), the Safety Element must be updated not
less than once every 8 years. The last update was in 2018. In order to
16
accommodate the 8-year cycle and the time required to prepare the
update, initiation of this update is planned for FY 2024-25.
iii. $100,000 (Community Development) for the storefront improvement
project (Western Avenue). This program corresponds to the proposed
new City Council Quality of Life Goal for a Storefront Improvement
Program on Western Avenue. This would be a pilot program for City
Council to determine if they want to continue into future years. The intent
of this economic development program is to assist businesses, including
along the Western Avenue corridor, in improving their storefront facades
to attract more business. This is proposed as a 50% matching grant for
qualified businesses and property owners to complete storefront
improvements. The expectation is that this program will trigger business
attraction, retention, and expansion opportunities. Resulting economic
improvement impacts to businesses which would result in additional
sales tax revenue for the City.
iv. $50,000 (Public Works) Regional Program Settlement Fees. The
Regional Stormwater Program Settlement Fee is the City’s contribution
to the five Settlement Offers that the City received for regional violations
regarding stormwater quality standards at Machado Lake for the
Nutrients and Toxics Total Maximum Daily Loads (TMDLs). Future
contribution requirements are contingent upon the completion of
stormwater related projects within the region.
v. $90,000 (City Clerk, Community Development, Public Works
Departments) for document digitization conversion. This is for the
scanning of historical documents including landslide documents as well
as (closed) attorney litigation files, department records and as-built
drawings, and geology files. This project will enable staff to search for
historical documents using our Laserfiche portal more efficiently, once
all the documents are scanned. This project will also help with dealing
with limited storage space as once scanned files are vetted and deemed
as good as the original, the hardcopy files will be destroyed or archived
based on retention requirements. This will help free up valuable storage
space.
vi. $60,000 (Non-Department) for emergency contingency as needed for
the coming fiscal year.
Repairs and Maintenance
• Accounts for $3.4 million or 9% of the proposed budget.
• The proposed budget decreased by approximately by $0.4 million or 9% from the
prior year’s revised budget due to one-time costs that were allocated in FY 2023-
24 and no longer needed to budget the amounts in FY 2024 -25.
17
• The major items included in this category are as follows:
i. $533,000 (City Administration) information technology services such as
software licensing, systems for financials, human resources, permits,
website hosting and support, GIS, and subscriptions.
ii. $770,000 (Public Works) for landscape maintenance at City parks.
iii. $685,000 (Public Works) for fuel modification (hand trimming) and fuel
modification (fire grazers – goat grazing).
iv. $530,000 (Public Works and Recreation and Parks Departments) for on-
going building maintenance such as custodial services, building
security, park and gate security, graffiti abatement, heating, ventilation,
air conditioning, pest control, trail clearing of excess vegetation,
painting, sign repairs, electrical, as needed.
v. $295,000 (Public Works) for landscape maintenance at City trails and
open spaces.
vi. $150,000 (Public Works) for tree trimming for view restoration.
vii. $100,000 (Non-Department) for an emergency contingency as needed
for the coming fiscal year.
Supplies, Utilities, Training, and Conference, Miscellaneous Expense
The remaining non-personnel costs are supplies, training and conference, and
miscellaneous expenses, which represent $3.5 million or 9% of the proposed budget.
There is an increase of $0.1 million or 4% mainly due to required operational expenses
and one-time costs.
• Some of the major items under the miscellaneous category are:
i. $705,000 for the City’s insurance premium payments for general
liabilities, property damages, and pollution.
ii. $239,000 for equipment replacement charges. These are charges to the
departments based on an equipment replacement schedule. The
accumulation of the charges is recorded in the City’s internal service
fund for future use. This amount also includes $60,000 to be set aside
for the ALPR cameras in the next five years.
iii. $928,400 for utilities which includes gas, water, electricity.
iv. $308,000 for training, conference, and meetings.
v. $725,000 for small equipment, tools, supplies for technology, custodial,
parks, recreation programs, administration, uniforms.
• One-time costs for this category include:
i. $44,000 is a combination of election supplies costs, emergency
preparedness, and small equipment for parks.
ii. $40,000 for a vehicle purchase for the new Public Safety Program.
Staff seeks City Council affirmation for non-personnel budget assumptions of
$20,579,550 for the annual operating expenditures described above including one -time
expenditures and contingency budget for emergency repairs.
18
Transfers Out
Transfers Out from General Fund are interfund transfers such as transfers to the CIP,
and other funds to cover annual maintenance charges, maintain endowment
requirements, and support operations, as described below.
Transfer Out to CIP
The transfer out of General Fund revenue to the CIP Fund has been a factor of the City’s
public safety contract with the Los Angeles County Sheriff’s Department (LASD) since FY
2017-18. In FY 2017-18, with the goal to continue enhancing public safety services for
the residents of Rancho Palos Verdes, the City Council approved reducing the TOT
transfers to the CIP Fund by the cumulative annual increases in the public safety contract.
As a result, ongoing increases to the public safety contract reduce transfers to CIP.
For FY 2024-25, Staff estimates to receive approximately $6.4 million in TOT revenue
from the Terranea Resort. Based on this estimate, the TOT transfer to the CIP Fund is
approximately $3.9 million, or 10%, of the proposed budget. This reflects the net amount
after applying the cumulative annual increases (since FY 2017-18) of almost $2.5 million
in the public safety contract. Based on costs provided by the LASD, the estimated
increase in FY 2024-25 is roughly $270,000, or 3%, over the FY 2023-24 revised budget.
Table 3: FY 2024-25 Transfers Out to CIP
It is important to note that upon completion of the annual financial audits, in accordance
with the City Council Reserve Policy No. 41, in addition to the $889,500 recommendation
for the Ladera Linda payment, Staff submits an additional recommendation to transfer a
portion of the unallocated fund balance to the CIP Fund. This is intended to replenish the
CIP fund from the public safety reductions made during the start of the budget process.
In total, the City Council has approved approximately $4.2 million of transfers from
General Fund to CIP Fund since FY 2020-21.
FY 2024-25 TOT Estimates (Terranea)6,430,000$
Less Public Safety Increases:
FY 2017-2018: (893,000)
FY 2018-2019: (200,500)
FY 2019-2020: (260,800)
FY 2020-2021: (101,000)
FY 2021-2022: (102,900)
FY 2022-2023: (103,700)
FY 2023-2024: (616,000)
FY 2024-2025: (269,600)
(2,547,500)
FY 2024-25 Proposed Budget - Transfer to CIP (TOT) 3,882,500$
19
Other Miscellaneous Transfers Out
The transfers out for Sub-region One and the Improvement Authority are intended to
cover annual maintenance charges and to maintain endowment requirements. Additional
transfers out to the Habitat Restoration and Abalone Cove Sewer funds are also needed
to maintain adequate required reserves and support operations. Since the estimated
interest earnings within the funds are not enough to cover the costs incurred, the General
Fund will need to transfer funds of $60,000 to subsidize Sub-region One, $15,000 to
Improvement Authority for Portuguese Bend, $150,000 to Habitat Restoration, and
$70,000 to Abalone Cove Sewer.
Staff seeks City Council affirmation for transfers-out budget assumptions of $4,177,500
to the following funds: CIP, Habitat Restoration, Sub -region One, Improvement Authority
for Portuguese Bend, and Abalone Cove Sewer.
Overall, the proposed General Fund expenditure budget is almost $39.4, including
transfers-out. This reflects an increase of $0.4 million or 1% from the FY 2023-24 revised
budget or higher by $1.8 million or almost 5%, compared to current year-end estimates.
This is illustrated in Table 4 below and the following Chart 4 shows the General Fund
expenditures by department and their respective contribution in percentage (%) terms to
the City’s overall total expenditures.
Table 4: FY 2024-25 Proposed General Fund Expenditures – by Category
CONTINUED NEXT PAGE
Expenditure Category FY 2022-23
Actuals
FY 2023-24
Revised
Budget
FY 2023-24
Year-End
Estimates
FY 2024-25
Proposed
(Prelim)
Variance to FY 2023-24
Revised Budget
Salaries/Benefits 10,731,718 13,214,300 13,013,800 14,630,600 1,416,300 11%
Sheriff Contract 7,060,240 7,872,000 7,742,750 8,141,600 269,600 3%
Legal Services 935,777 950,000 950,000 975,000 25,000 3%
Professional/Tech 3,300,998 4,969,438 4,675,300 4,620,500 (348,938) -7%
Repairs/Maint 2,152,651 3,733,007 3,519,100 3,378,600 (354,407) -9%
Supplies 571,496 696,312 671,100 725,000 28,688 4%
Training/Conference/Meetings 183,810 302,443 230,970 308,200 5,757 2%
Other
Capital Outlay 1,344,548 61,000 7,000 66,000 5,000 8%
Utilities 736,267 995,800 856,300 928,400 (67,400) -7%
General Liabilities Premium 697,967 675,000 700,000 705,000 30,000 4%
Equipment Replacement Charges 292,200 246,900 246,900 201,100 (45,800) -19%
Misc 833,101 662,200 633,980 530,150 (132,050) -20%
Subtotal $28,840,773 $34,378,400 $33,247,200 $35,210,150 $831,750 2%
Transfers-Out 7,701,122 4,566,000 4,366,000 4,177,500 (388,500) -9%
Grand Total $36,541,895 $38,944,400 $37,613,200 $39,387,650 $443,250 1%
20
Chart 4: FY 2024-25 Proposed General Fund Expenditures – by Department
Staff will continue to monitor the local California economy and any material changes to
the budget assumptions will be updated and reported to the City Council in future budget
meetings and accordingly, the financial model will be updated and reported for review by
the City Council in June.
Recurring vs. One-time Revenues and Expenditures
Pursuant to City Council Policy No. 45, Balanced Operating Budget, the City Council shall
adopt a structurally balanced operating budget that will support financial sustainability for
the City’s future. The annual budget for recurring expenditures shall not exceed recurring
revenues and ongoing program expenditures are not funded with one -time revenue
sources. By maintaining a structurally balanced budget, the City continues to maintain
City reserves at their desired levels.
The budget assumptions for FY 2024-25 include recurring revenues of $39.2 million and
ongoing program expenditures of $34.7 million. Aside from the regulatory increases and
general operating expenditures, $0.5 million of one-time expenditures has been added.
After capturing the regulatory increases and new ongoing programs, the FY 202 4-25
Proposed Budget positively exceeds the requirement pursuant to the City Council Policy
No. 45, Balanced Operating Budget. The City has a structurally balanced operating
budget with a surplus of $4.5 million. After including one-time revenues and expenditures,
the surplus is approximately $0.4 million. Overall, as shown in Table 5 below, after
including all operating expenditures, one-time expenditures, and transfers, the General
Fund is projected to end the year with a surplus of $0.1 million.
21
Recreation & Parks
$4,707,400
Community
Development
$4,403,000
11%
12%
Public Works
$8,048,200
20%
Public Safety
$8,970,800
Transfers-Out
$4,177,500
11%
Finance
$1,574,500
4%
...
'
N n-Departame al
$2,141,000
' ...
' 5% ' ...
' ... .__ ____ _
City Administration
$4,270,150
11%
City Council
$120,100
0%
Legal Services
$975,000
3%
Table 5: FY 2023-24 Recurring vs. One-Time Revenues and Expenditures
FY 2024-25 General Fund - Estimated Fund Balance
Overall, based on the assumptions, Staff projects the fund balance for the General Fund
on June 30, 2025, will be almost $34.6 million, net of transfers out. The fund balance is
projected to increase by $1.5 million or almost 5% from the FY 2023-24 revised budget.
After applying the City Council Reserve Policy of 50% of the operating budget, transfers-
out of $889,500 for the Ladera Linda loan payment, and $400,000 for the pension fund,
the estimated unallocated fund balance is $15.7 million, an increase of approximately
$0.5 million or 3% from the revised budget.
A calculation of the estimated FY 2024-25 Fund Balance is illustrated in Table 6.
Table 6: FY 2024-25 General Fund – Fund Balance Summary
CONTINUED NEXT PAGE
General Fund Recurring One-Time Total
Operating Revenues 39,193,700 30,000 39,223,700
Less: Operating Expenditures 34,666,150 544,000 35,210,150
Structural Surplus/(Deficit)4,527,550 (514,000) 4,013,550
Transfers-In - 250,000 250,000
Less: Transfers-Out 4,177,500 - 4,177,500
Surplus/(Deficit)350,050 (264,000) 86,050
General Fund
FY 2023-24
Revised
Budget
FY 2023-24
Year-End
Estimates
FY 2024-25
Prelim
Proposed
Beginning Fund Balance 33,260,494 33,260,494 34,494,794 1,234,300 4%
Add: Revenues 38,511,800 38,577,500 39,223,700 711,900 2%
Add: Transfers-In 270,000 270,000 250,000 (20,000)-7%
Total Revenues 38,781,800 38,847,500 39,473,700 691,900 2%
Less: Expenditures (34,378,400) (33,247,200) (35,210,150) 831,750 2%
Less: Transfers to CIP (TOT ) (4,421,000) (4,121,000) (3,882,500) (538,500)-12%
Less: Other Transfers-Out (145,000) (245,000) (295,000) 150,000 -103%
Total Expenditures (38,944,400) (37,613,200) (39,387,650) 443,250 1%
Projected Ending Fund Balance 06/30/2025 33,097,894 34,494,794 34,580,844 1,482,950 4.5%
City Council Restricted Fund Balance
Less: Additional Transfers - CIP Ladera (PY Surplus) (889,500) (889,500) (889,500) -
Less: Transfers to EPS Fund (PY Surplus) (291,300) (291,300) (400,000) 108,700 37%
50% Reserve Policy (16,756,750) (16,623,600) (17,605,075) 981,475 6%
Projected Unallocated Fund Balance - 06/30/25 15,160,344 16,690,394 15,686,269 525,925 3.2%
Increase/(Decrease)
from FY 2023-24 Revised
Budget
22
City Council Policy Reserve Policy No. 41
Pursuant to City Council Policy Reserve Policy No. 41, the City Council may allocate all
or a percentage of the prior year’s General Fund unrestricted excess reserve of $15.7
million during the budget adoption process. This amount is the net of the 50% Reserve
Policy of $17.6 million. As such, same as the prior years, Staff recommends transferring
$889,500 to the CIP fund. This amount is equivalent to the anticipated annual interest
expense payment for the Ladera Community Park Project.
Staff seeks City Council affirmation on the transfer of $889,500 to the CIP Fund.
On February 2, 2021, the City Council approved the CalPERS Pension Plan Guidelines
which provides a financial plan to address the City’s outstanding pension liability and
CalPERS’ continuous change in valuation methodology. Based on the City Council’s
discretion, the goal is to transfer funds to the Employee Pension Service (EPS) Fund of
at least 10% but no more than 25% of the annual General Fund unallocated fund balance
(revenues minus expenditures, including transfers). As a result, the accumulated funds in
the EPS Fund would then relieve the General Fund of payment more than $900,000 of
the City’s UAL.
Since the inception of the pension guidelines, the EPS Fund has an estimated fund
balance of approximately $0.8 million ending FY 2022 -23. Based on the estimated year-
end results of FY 2022-23, the City’s unallocated fund balance is $2.7 million. Therefore ,
Staff is proposing the same amount in prior years of $400,000 from the General Fund to
EPS Fund in FY 2023-24.
Staff seeks City Council affirmation on the transfer of $400,000 to the Employee Pension
Service Fund in accordance with the adopted Pension Guidelines.
The City Council may also allocate the remaining $1.4 million to fund, but not limited to:
• Operating projects supporting the City Council Goals for FY 202 4-25
• Increasing the transfers to the CIP Fund
ADDITIONAL INFORMATION:
Financial Model
The City’s Financial Model, overseen by the Finance Department, is a critical tool utilized
in the annual budget process, aligning with City Council Policy No.18. This 10-year model
integrates historical and current data with economic assumptions to forecast long -term
revenues, expenditures, and fund balances. It serves as a foundation for decision -
making, providing insights into the fiscal impact of various alternatives.
23
The model undergoes regular updates and enhancements, with a comprehensive
overview presented each budget cycle in June using draft budget figures. Any
improvements or analyses recommended by the City Council are incorporated.
Preliminary assumptions, detailed in the table below, help guide forecasting for the FY
2024-25 Proposed Budget and beyond. Staff continually monitors key indicators, with
material updates included in the financial model staff report presented in June.
Table 7. Economic Model Input Factors
The chart below provides a comparison between the 2024 and the preliminary 2025
model, before transfers. General Fund revenues and expenditures increased on average
by approximately $0.9 million and $1.5 million, respectively. The annual percent change
between models works out to an average of 2% for revenues and 4% for expenditures
based on updated assumptions. New estimates rise slightly above the previous trend.
Chart 5. 2024 Model vs 2025 Model Forecast Comparison (excluding transfers)
FISCAL YEAR END 2024E 2025B 2026F 2027F 2028F 2029F 2030F 2031F 2032F 2033F
REVENUES
PROPERTY TAX 4.0% 4.2% 4.2% 4.3% 4.0% 4.0% 4.0% 4.0%
TRANSIENT OCCUPANCY TAXES 0.5% 1.0% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5%
SALES TAX 1.5% 2.0% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5%
FRANCHISE TAX 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5%
UTILITY USERS TAX 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
PERMIT REVENUES 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5%
INVESTMENT INTEREST 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
EXPENDITURES
CONSUMER PRICE INDEX 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
NON-PERSONNEL EXPENDITURES 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0%
PERSONNEL EXPENDITURES 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
HEALTH INSURANCE 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0%
PERS NORMAL COSTS 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5%
SHERIFF CONTRACT 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0%
FORECAST ASSUMPTIONS - 2025 FINANCIAL MODEL
FY 2023-24 YE Est.
and FY 2024-25
Budget prepared
outside of model
FY 2023-24 YE Est.
and FY 2024-25
Budget prepared
outside of model
24
60.0
50.0
40.0
"' 30.0 z
0
::l
~ 20.0
10.0
0 .0
2024E 2025B 2026F 2027F 2028 F 2029F 2030F 2031F 2032F 2033F
-2025 Model (Rev) 38.6 39.2 40.3 41.5 42.7 44.0 45.3 46.7 48.1 49.6
-2025 Model (E xp) 33.2 35.2 36.0 37.3 38.4 39.8 41.0 42.5 43.8 45.4
-~-2024 Model (Rev) 38.4 3 9.1 40.0 41.0 42.0 43.0 44.0 45.1 46.2
---2024 Model (Exp) 33.5 33.6 34.8 36.0 37.2 38.5 39.8 41.2 42.7
The second pair of charts below focus on the preliminary 2025 model, providing a 10 -
year outlook including transfers in and out of the General Fund. A comprehensive report
and detailed overview of the latest financial model will be presented by staff in June.
Chart 6. 2025 Model - General Fund 10-Year Forecast (Excluding Transfers)
Chart 7. 2025 Model - General Fund 10-Year Forecast (Including Transfers)
It should be noted that the transfers-out in FY 2024-25 and beyond do not include the
additional transfers to the CIP Fund for the annual debt payment for the Ladera Linda
Community Park or the EPS Fund, which has been done in the past. Generally, these
transfers are not part of the annual operating transfers, instead, the transfers are based
on the City Council’s approval using the prior year’s unallocated fund balance in
accordance with the City Council Reserve Policy and the City’s Pension Guidelines.
25
50.0
45.0
40.0
35.0
30.0
25.0
20.0
15.0
10.0
2024E
~Revenues 38.6
-Expenditures 33.2
55.0
50.0
45.0
2025B
39.2
35.2
40.0 === tp
V, 35.0 z
0
:3
~ 30.0
25.0
20.0
15.0
10.0
2024[ 2025B
~Revenues 38.8 39.5
~Expenditures 37.6 39.4
2026F
40.3
36.0
LV
2026F
40.6
40.0
2027F
41.5
37.3
II==
2027F
41.7
41.1
2028F
42.7
38.4
2028F
43.0
41.9
2029F
44.0
39.8
2029F
44.3
43.1
2030F
45.3
41.0
2030F
45.6
44.0
2031F
46.7
42.5
2031F
47.0
45.2
2032F
48.1
43.8
2032F
48.4
46.1
2033F
49.6
45.4
2033F
49.8
47.4
Finance Advisory Committee
On April 4, 2024, Staff presented the FY 2024-25 General Fund budget assumptions and
the fund balance summary. At this meeting, FAC received and accepted the report.
CIP Workshop
On April 29, 2024, the City Council will conduct its budget workshop on the Capital
Improvement Program (CIP). At this workshop, staff will present the status of FY 202 3-
24 capital projects, propose new capital projects, and the five -year CIP for discussion.
Any direction provided by the City Council will be incorporated in the Preliminary Budget
to be presented on June 4, 2024.
Portuguese Bend Landslide
The City’s primary focus remains on the ongoing emergency within the greater
Portuguese Bend Landslide Complex. On March 19, 2024, the City Council approved the
plans for emergency work of approximately $8 million (engineer’s estimate) in the
Portuguese Bend Landslide consisting of installing two emergency hydraugers with
arrays and associated work and directed Staff to return with a construction contract for
City Council consideration at its next meeting which will be April 16, 2024, meeting. The
City Council also directed Staff to explore assisting the Abalone Cove Landslide
Abatement District and the Klondike Canyon Landslide Abatement District with in -kind
services and financial assistance of approximately $3 million in the form of a loan for
landslide mitigation measures prepared by a licensed geotechnical engineering company
and return to the next meeting for the City Council’s consideration. While Staff continues
to explore other grant funding sources, the additional appropriations will be requested on
April 16, 2024, to initiate the project immediately. Any potential grant sources received in
the future will be allocated to replenish the CIP Fund.
Public Notification
The City posted on social media and issued a listserv message announcing tonight’s
public workshop. To date, no public correspondence has been received. Any public
correspondence received after the transmittal of this staff report will be provided to the
City Council as late correspondence at the workshop.
CONCLUSION:
The anticipated FY 2024-25 General Fund revenues, with transfers, are projected to
approach $39.5 million. This forecast indicates a $0.7 million, or 1.8%, increase over the
FY 2023-24 revised budget and a $0.6 million, or 1.6%, increase over year-end estimates.
Property tax remains the primary revenue source, making up 45% of proposed revenue,
excluding transfers, while TOT retains its position as the second-largest revenue source,
comprising 17% of the General Fund. The proposed budget recognizes industry-specific
trends amidst ongoing economic uncertainty and maintains a conservative stance, with
continuous monitoring expected throughout the budget cycle.
26
The proposed FY 2024-25 General Fund expenditure budget amounts to $39.4 million,
including approximately $14.6 million of personnel expenses, $20.6 million of non-
personnel expenses, and roughly $4.2 million of transfers-out, reflecting an increase of
$0.4 million or 1% from the FY 2023 -24 revised budget or an increase of $1.8 million or
almost 5%, compared to current year-end estimates.
Lastly, based on the assumptions, Staff projects the General Fund's balance on June 30,
2025, to be around $34.6 million, net of transfers out, reflecting a $1.5 million or 4%
increase from the FY 2023-24 revised budget. After applying the City Council Reserve
Policy and necessary transfers-out, the estimated unrestricted excess reserve would be
$15.7 million, up by approximately $0.5 million or 3% from the revised budget.
27