2017-18 City Council March 20, 2018 1 Tonights Objectives - PowerPoint PPT Presentation

Midyear Budget Update 2017-18 City Council March 20, 2018 1

Tonight’s Objectives Presentation  Receive update on General Fund financial projections  Review Pension/OPEB funding status  Discuss Midyear budget amendment request Action  Consider resolution to amend 2017-18 budget 2

General Fund Highlights  Strong revenue growth improves City’s financial position Transfer tax continues to deliver revenue for now • Caution: 10% of budget dependent upon real estate sales •  Minimal midyear operating expenditure requests Focused on new programs and equipment replacement •  Changing CalPERS/OPEB assumptions shadow long-term forecast Deficits return in 5-Year projection • New CalPERS/OPEB funding policy is reducing risk • 3

General Fund Revenues $100,000,0 $100 ,000,000 00 $90,000,00 $90, 000,000 $80,000,00 $80, 000,000 $70,000,00 $70, 000,000 Prop roper erty ty T Taxes xes $60 $60,000 000,00 ,000 Othe ther T Taxes xes $50, $50,000,00 000,000 $40,000,00 $40, 000,000 Proper roperty ty T Trans ansfer er T Tax ax $30, $30,000,00 000,000 Inter-f nter-fund und $20, $20,000,00 000,000 Progra rogram Rev m Reven enues ues $10 $10,000 000,00 ,000 $0 $0 2015-16 2015 -16 2016 2016-17 -17 2017 2017-18 -18 2018 2018-19 -19 2019-20 2019 -20 2020 2020-21 -21 2021-22 2021 -22 Actual Act ual Actual Act ual Projec rojection tion Projec rojection tion Projec rojection tion Projec rojection tion Projec rojection tion  2017-18 Midyear adds +$7 million vs. original budget  2017-18 includes $4 Million transfer tax on 3 properties  Total 2017-18 General Fund revenues $99 Million + 4

General Fund Revenues City of Alameda Property Tax Assessed Property Values 5.8% 6.3% 14,000,000,000 5.9%  2017-18 Assessed Valuation 12,000,000,000 +5.8% Annual City-wide growth 10,000,000,000 8,000,000,000 6,000,000,000  Successor Agency revenue exceed requirements 4,000,000,000 Additional Residual Tax Increment to City 2,000,000,000 - 2013-14 2014-15 2015-16 2016-17 2017-18  2017-18 Budget (Property, Residual TI, MVLF) Original Budget $36,134,000 Budget Increase +1,650,000 Midyear $37,784,000 5

General Fund Revenues Sales Tax Source: HDL 2017-18 Budget $9,650,000 Budget Increase +300,000 2017-18 Midyear $9,950,000  Prior Year 2016-17 included extra one-time Triple Flip unwind  2017-18 Midyear Projection 1% less than prior year 6

Sales Tax Revenue  30+% of annual sales tax revenue is concentrated with 5 companies 7

General Fund Revenues Transfer Tax  Real Estate Sales generate significant tax revenue Highly volatile source for baseline salary/operating costs •  $4 million year-to-date 2017-18 from 3 parcels Unusual and non-reoccurring source •  2017-18 Midyear projection Original Budget $ 8,750,000 Budget Increase 5,250,000 Midyear $14,000,000 8

Proposed Midyear Budget Amendment General Fund Revenues Property and Related Tax $1,650,000 Transfer Tax 5,250,000 Sales Tax 300,000 Franchise Fees -200,000 * $7,000,000 * Franchise fee reduction due to updated Solid Waste calculation 9

General Fund Expenditures $110,000,000 Police olice $100,000,000 Fire Fir $90,000,000 Public Wor ublic Works ks $80,000,000 Rec ecrea eation ion & & P Par arks ks $70,000,000 Librar Lib ary $60,000,000 Int nter erfun und C d Con ontribu ibution ions $50,000,000 Adm dminis inistrat ation ion $40,000,000 Pens ension/ ion/OP OPEB R Res eser erve $30,000,000 $20,000,000 $10,000,000 $0 $0 2015-16 2016-17 2017-18 2018-19 Actual Actual Midyear Budget  2017-18 Midyear adds +382,000 operating expenditures (Equipment, Cannabis)  2017-18 Midyear updates budget for Pension/OPEB reserve policy payments 10  2017-18 General Fund operating expenditures $94 million; with pension reserve $111 million

CalPERS Pension Funding Status June 2016 CalPERS Actuary Report Before New Pension/OPEB Funding Policy 58% 450,000,000.00 400,000,000.00 65% Unfunded 350,000,000.00 70% Accrued 300,000,000.00 79% Liability 250,000,000.00 Plan 200,000,000.00 Assets 150,000,000.00 100,000,000.00 50,000,000.00 - Safety Safety Misc Misc 2011 2016 2011 2016 Total General Fund June 2016 Safety Miscellaneous $ 674,105,716 $ 496,939,419 Accrued Liability $ 405,671,933 $ 268,433,783 423,972,440 299,145,855 Plan Assets 234,841,250 189,131,190 11 Unfunded 170,830,683 79,302,593 250,133,276 197,793,565 General Fund % of Total 79%

CalPERS Payment Schedule Normal Cost and Unfunded Liability General Fund June 2016 Actuary Report, Prior to New Pension Funding Policy $30,000,000 $25,000,000 $7,562,000 $7,808,000 Normal Cost for Current $7,344,000 Employee Services $7,113,000 $20,000,000 $6,918,000 $6,154,000 $15,000,000 $5,727,208 Unfunded Liability for Past $11,349,482 $13,376,000 $14,891,000$16,765,000 $18,383,000 $19,522,000 $20,511,000 Employee Services $10,000,000 $5,000,000 $0 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 12

General Fund Pension/OPEB Funding Policy Policy  50% of prior year Available Fund Balance in excess of 25% of Operating Expenditures committed to Pension/OPEB Reserve  Contribute surplus from closed pension plans 1079/1082 as plans wind down 2017-18 Budget/June 2017 Reserve Disbursement OriginalOriginal Budget Projection $11,143,000 Midyear increase per policy 5,217,068 Total June 2017 Pension/OPEB Reserves 16,380,068 2017-18 Operating Projections June 2018 Estimated Pension Reserve $6.8 million 13 Estimate will be updated after 2017-18 audit for 2018-19 Implementation

General Fund Annual CalPERS Payments Unfunded Liability For Past Service Cost June 2016 Actuary Report  Without action, payments double $22,500,000 in 5 years  Proactive funding $20,000,000 policy is providing 18-19 budget relief $17,500,000  $1 million+ annual CalPERS savings $15,000,000  $25 million: Total UAL Costs (General Fund) 15 Year savings PERS Costs after $6.3M Pay Down (Dec 2017) $12,500,000 from combined PERS Costs after $4.4M Pay Down (March 2018) 17-18 $16 million Total Costs Assuming $2M Pay Down Every Year CalPERS and 115 $10,000,000 Trust investment 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048

Proposed Midyear Budget Amendment General Fund Expenditures Community Development $203,000 Cannabis, Council referrals, North Housing MOU EOC Building Operations 75,000 Fire Equipment - rescue, communications 80,000 Parks – light Pole covers/theft prevention 24,000 358,000 Pension/OPEB Reserve Contribution 5,217,068 $5,599,068 15

General Fund 2017-18 Midyear Projection Original Previous Midyear Midyear Budget Adjustments Adjustments Proposal Revenues $ 92,026,000 $ - $ 7,000,000 $ 99,026,000 Expenditures Operations 92,206,000 2,083,869 382,000 94,671,869 Prior Year Pension/OPEB Reserve 11,143,000 5,217,068 16,360,068 103,349,000 2,083,869 5,599,068 111,031,937 Net Annual Activity Operations (180,000) (2,083,869) 6,618,000 4,354,131 With Pension/OPEB Reserve (11,323,000) (2,083,869) 1,400,932 (12,005,937) 13

General Fund Net Annual Activity $120,000,000 Revenues $110,000,000 Revenues with Full $100,000,000 Transfer Tax Expenditures $90,000,000 Expenditures with $80,000,000 Pension/OPEB Reserve $70,000,000 2015-16 2016-17 2017-18 2018-19 Actual Actual Midyear Projection  2017-18 includes one-time transfer tax revenue and Pension/OPEB contributions 17  On-going revenue/expenditure gap closes for 2017-18 and 2018-19

General Fund 5-Year Forecast Revenues $110,000,000 Revenues with Full $100,000,000 Transfer Tax $8 Million $90,000,000 Annual Gap Expenditures $80,000,000 $70,000,000 Expenditures with 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 Pension/OPEB Actual Actual Midyear Projection Projection Projection Projection Reserve  Revenue projections have been updated with Midyear trends 18  Expenditures same as presented in 2017-2018 budget

Proposed Midyear Budget Amendment Other Funds/Programs Base Reuse Lease Revenues $548,000 Alameda Point Expenditures $312,000 Solar Street Lights, Building Demolition, Fire Inspections, Natural Gas billing correction Library System Electricity/Billing Correction $ 18,000 $ 25,000 HVAC Capital Outlay 19

Proposed Midyear Budget Amendment Other Funds/Programs FISC Lease Revenue Catellus DDA Reimbursements $615,000 Capital Project Expenditures $800,000 Construction of service road to access Estuary Park from Mitchell Avenue Recreation Capital Projects $83,149 Re-allocate unused project appropriation from Encinal Boat Ramp to Estuary Park projects 20

Proposed Midyear Budget Amendment Internal Service Funds Equipment Replacement Fire Truck Engine Emergency Rebuild $100,000 Unemployment Insurance Claims payments $70,000 Follows two low claim years; consistent with prior trend 21