BURBANK REDEVELOPMENT AGENCY

Tuesday, February 15, 2005

AGENDA

CITY COUNCIL CHAMBER - 275 EAST OLIVE AVENUE

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6:30 P.M.

INVOCATION:                      

The Courts have concluded that sectarian prayer as part of City Council meetings is not permitted under the Constitution.

FLAG SALUTE:

ROLL CALL:

JOINT MEETING WITH THE CITY COUNCIL:

1.      REVIEW OF THE CITY�S FINANCIAL STATUS AS OF DECEMBER 31, 2004, APPROVAL OF MID-YEAR ADJUSTMENTS TO THE FISCAL YEAR 2004-05 BUDGET AND PREVIEW OF THE FISCAL YEAR 2005-06 BUDGET:

The purpose of this report is to provide the Council with a review of the City�s financial status as of December 31, 2004, and to request Council approval of mid-year adjustments to the Fiscal Year (FY) 2004-05 approved budget.  The report will also provide relevant detail as it pertains to the development of the City�s FY 2005-06 Budget.

The following provides a summary of FY 2004-05 which includes the impact of re-estimated revenues and the proposed mid-year adjustments.

For the first six months of the fiscal year, the General Fund received $44,439,005 in revenue, which represents 38.5 percent of the adjusted estimated revenues.  For perspective, last year�s six-month report showed the City receiving 41.2 percent of its estimated revenues, or $44,807,473.  The percentage of revenue collected declined due to the cashflow impact of State budget issues such as the �triple flip,� the Vehicle License Fee (VLF), and the Educational Revenue Augmentation Fund (ERAF) III payment to the State.  Overall, the City�s revised recurring revenue estimates for FY 2004-05 have been increased by $2,192,510 over original estimates as a result of major increases in the following categories: Sales Tax; Transient Occupancy Tax; Building Permits/License Fees; and, Transient Parking Tax.  Although on a percent increase basis Property Tax only increased 1.4 percent over the original projections, this increase equates to nearly $300,000 in revenue.  The increases were offset in part due to declines in Service Charges and In Lieu Tax revenue.

With the exception of the requested mid-year adjustments, 49.1 percent of the appropriations have been expended as of December 31, 2004.  For perspective, the mid-year expenditures for FY 2003-04 represented 48.6 percent of the recurring appropriations, or .5 percent lower than this fiscal year.  It should be kept in mind that maintaining the less than 50 percent expenditure level was more difficult this fiscal year than last, since discretionary departmental budgets were reduced by two to four percent from last fiscal year.

In summary, the requested mid-year adjustments for the General Fund will have a total impact of $5,355,303 (net of revenue is $5,288,436) less $3 million funded by Utility Users Tax (UUT) and In Lieu Set-Aside account for the Central Library ramp-up. Also, included in this figure is $1 million for the new infrastructure reserve fund.  There will also be an impact to the Non-General Funds of $2,181,752 (net of revenue is $1,313,752).  The total fiscal impact Citywide is $7,537,055 (net of revenue is $6,602,188).

The City is heading into FY 2005-06 with a projected year-end available fund balance of $2,222,410.  More importantly, due to continued increased costs for the Public Employee Retirement System (PERS), projected increases in negotiated salaries and benefits, and the anticipated State Budget impacts (FY 2005-06 is year two of a two-year agreement with the State allowing it to divert revenue), the City continues to face serious budget challenges over the next several fiscal years.

The Governor released his FY 2005-06 proposed State budget on January 10, 2005.  As mandated in the passage of Proposition 1A in November 2004, local governments� Property Tax, Sales Tax and VLF were not further impacted beyond FY 2004-05 levels.  Also, under the agreement reached between the State Legislature and local government, there were no changes in the ERAF.  Local government will once again contribute $1.3 billion in ERAF shifts to help solve the State budget.  Burbank�s ERAF contribution for FY 2005-06 is expected to remain at FY 2004-05 levels ($1,850,941) and Burbank�s Redevelopment Agency�s contribution remains at $2,477,336.  Starting FY 2006-07, there will be no further contributions from local government to the State, unless a fiscal emergency exists, wherein the State may borrow money from local governments.

The City projects a recurring budget deficit position over the next several years due to the significant increase in recurring costs, especially the PERS rates, and negotiated salaries and benefits.  As a result, the General Fund budget parameters for this year are once again strict.

For FY 2005-06, departments have been requested to present discretionary appropriation reductions of 1 percent.  An item worth mentioning is that in past years, revenue increases, either through fee increases or through volume, could be used towards a department�s reduction.  However, the Executive Team will be carefully scrutinizing using revenue as part of any allowed reductions and will review all cost reductions.  It is the intent of the Executive Team to use the PERS Stabilization Fund to balance the FY 2004-05 recurring budget.

While the City is in the process of contemplating an upcoming difficult budget process, it is important to keep in mind that the City�s forecast for the next several fiscal years only gets worse, primarily caused by projected increased PERS rates and negotiated salaries and benefits.

Although staff plans to provide the Council with a more descriptive five-year forecast throughout the upcoming FY 2005-06 budget process, the following chart will serve to highlight the difficult challenge that the City will be facing over the next several years.  Clearly, the structural imbalance between recurring revenues and expenditures needs to be addressed.

Recommendation:

1.  Adoption of proposed City Council resolution entitled:

(4/5 vote required)

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BURBANK AMENDING THE BUDGET OF FISCAL YEAR 2004-2005 FOR THE PURPOSE OF MID-YEAR ADJUSTMENTS.

2.   Adoption of proposed Redevelopment Agency resolution entitled:

               A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF BURBANK FOR FISCAL YEAR 2004-2005 FOR THE PURPOSE OF MID-YEAR ADJUSTMENTS.

JOINT MEETING WITH THE CITY COUNCIL, HOUSING AUTHORITY, PARKING AUTHORITY AND YOUTH ENDOWMENT SERVICES FUND BOARD:

2.      2005 INVESTMENT POLICY:

Staff is requesting that the City Council, Redevelopment Agency Board, Housing Authority, Parking Authority and Youth Endowment Services Fund Board approve the 2005 Investment Policy.

The 2005 Investment Policy for the Investment Pool is comprised of the City, Redevelopment Agency, Parking Authority, Youth Endowment Services Fund and separately the Housing Authority.

The recommended changes are:

1. Decreasing the liquidity requirement needed monthly from $67 million to $62 million which is 2 1/2 (roughly 60 days) of the annual appropriations (less purchased power).  This will be monitored and reviewed quarterly by the Treasurer�s investment advisory committees.

2. Adding Gavin Lee, Wachovia Securities, to the list of qualified brokers from which the City may purchase investments and deleting Ken Herman, First Tennessee Bank (retired), Kirk Walske, Bank of America Securities (never involved with the City�s portfolio) and Ron Gross, Vining Sparks (not active in servicing the City�s needs).

Recommendation:

Staff recommends that the City Council, Redevelopment Agency Board, Housing Authority, Parking Authority and Youth Endowment Services Fund Board approve the 2005 Investment Policy.

CONSENT CALENDAR: (Item 3)

The following item may be enacted by one motion.  There will be no separate discussion on this  item unless a Council Member so requests, in which event the item will be removed from the consent calendar and considered in its normal sequence on the agenda. A roll call vote is required for the consent calendar.

3.      TREASURER�S REPORT:

The City Treasurer's report on investment and reinvestment of temporarily idle funds for the fourth quarter ending December 31, 2004.

Recommendation:

Note and file.

END OF CONSENT CALENDAR          

RECESS to continue the Housing Authority, Parking Authority, Youth Endowment Services Fund Board and the City Council meetings.

ADJOURNMENT.