BURBANK REDEVELOPMENT AGENCY
Tuesday, November 18, 2003
AGENDA
CITY COUNCIL CHAMBER - 275 EAST OLIVE AVENUE
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6:30 P.M.
INVOCATION: Chaplain Sally Kinarthy, Providence Saint Joseph Medical Center.
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 CITY COUNCIL:
1. REVIEW OF THE FISCAL YEAR 2003-04 STATE BUDGET, THE GENERAL FUND�S FINANCIAL STATUS AS OF SEPTEMBER 30, 2003 AND THE FIVE-YEAR FINANCIAL FORECAST:
The purpose of this report is to provide the Council with a review of the impact of the Fiscal Year (FY) 2003-04 State budget and the City�s General Fund financial status as of September 30, 2003.
Review and Impact of the State Budget Crisis
On August 2, 2003, outgoing Governor Davis signed the FY 2003-04 State budget after many months of a budget stalemate. The troubling news is that the budget has a structural imbalance of $8 billion and the State�s credit rating is at an all-time low just above junk bond status. With the recent election of Governor-Elect Schwarzenegger, one can suspect changes in one form or another to be made. However, thus far, the State continues to balance its budget problems on the back of local government.
The potential net loss of the Vehicle License Fee (VLF) will be one of the biggest State impacts to the City�s General Fund. The State budget includes the VLF fee increase from the current effective rate of .65 percent to 2 percent beginning October 1, 2003. There will be no backfill payment from the State during the approximately 90-day period between the final General Fund backfill and the VLF rate increase, therefore Burbank will only receive revenues based on the .65 percent VLF rate during this time. The net loss to Burbank will be approximately $1.2 million. Due to the uncertainty of repayment, the receipt of these funds has not
been included in the Five-Year Financial Forecast. In addition, the Governor-Elect has vowed to repeal the VLF increase, which would ultimately translate into an annual revenue loss of $4 million for the City.
The State budget also requires a one-time transfer to the Educational Revenue Augmentation Fund (ERAF) in the amount of $135 million from Redevelopment Agencies. Staff estimates that the one-time ERAF payment for Burbank will be $1,343,094.
General Fund�s Financial Status
FY 2003-04 Recurring Perspective � General Fund Reserves
For the first quarter of the FY 2003-04, the General Fund received $16,980,756 in revenue, which represents approximately 15 percent of the original estimated revenue. In comparison, the City also received 15 percent of the estimated revenue within the first quarter of FY 2002-03.
General Fund Appropriations Perspective
Overall, the General Fund (including the original appropriation and appropriation adjustments) has expended approximately 25 percent of recurring appropriations as of September 30, 2003. In comparison, on September 30, 2002, General Fund expenditures represented 24 percent of recurring appropriations for FY 2002-03.
Due to FY 2002-03 year-end expenditure and revenue results along with State budget actions, certain revenue adjustments and appropriations are necessary to fund the City�s working capital reserve for the FY 2002-03; the Magnolia Park project; potential restructuring costs related to Supplemental Employee Retirement Plans (SERPS); and, a budget stabilization account. The following is a recap of the updated FY 2003-04 General Fund budget.
Recurring Revenues (net of UUT & In Lieu set aside) $108,248,526
Plus � Use of Set-aside UUT & In-lieu 1,763,629
Total Recurring Revenues 110,012,155
Less:
Recurring Appropriations (109,796,800 )
Potential Impact of MOUs (2,087,687)
Plus savings from Frozen Positions 1,872,332
Recurring Balance $ 0
Undesignated Fund Balance, July 1, 2003 $3,797,464
Plus:
Non-Recurring BAF Revenues 121,970
Use of Set-aside UUT & In-lieu 147,447
Total Available Non-Recurring Sources 4,066,881
Less:
Budgeted One-time Items 319,600
Increase to Working Capital Reserves � FY 2002-03 543,000
Increase to Working Capital Reserves � FY 2003-04 280,000
Increase to Emergency Reserves � FY 2003-04 93,000
Compensated Absences 600,000
Restructuring Costs Related to (SERPS) 500,000
Magnolia Park 125,000
Amount Set-aside in Budget Stabilization Fund 1,573,230
Total Non-Recurring Uses 4,033,830
Estimated Available Fund Balance, June 30, 2004 $ 33,051
Five-Year Financial Forecast
The intended purpose of the Financial Forecast is to gain an understanding of the long-term financial trends. This long-term perspective will allow the City to make informed financial decisions today, while fully understanding the future financial impacts of these decisions.
The current Financial Forecast predicts challenging budgets over the next several fiscal years. The State continues to have an $8 billion structural budget deficit with no discernable plans to resolve it. The Financial Forecast does not anticipate future State actions that will withdraw additional local government revenues. Burbank�s situation is no different than any other city in California, and in many cases throughout the nation. Obviously, the City�s finances are struggling and all levels of government are experiencing the effects. Staff is in the process of preparing plans to assist in the balancing of future fiscal year budgets.
Recommendation:
1. Adoption of proposed Redevelopment Agency resolution entitled:
A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF BURBANK AMENDING THE FISCAL YEAR 2003-2004 BUDGET BY APPROPRIATING FUNDS IN THE AMOUNT OF $1,343,094.00 FROM THE UNAPPROPRIATED FUND BALANCE FOR A ONE-TIME EDUCATIONAL REVENUE AUGMENTATION FUND PAYMENT FROM THE REDEVELOPMENT AGENCY.
2. Adoption of proposed Council resolution entitled:
(4/5 vote required)
A RESOLUTION OF THE COUNCIL OF THE CITY OF BURBANK AMENDING THE FISCAL YEAR 2003-2004 BUDGET BY APPROPRIATING FUNDS IN THE AMOUNT OF $125,000.00 FROM GENERAL FUND SAVINGS FOR THE MAGNOLIA PARK STREETSCAPE IMPROVEMENTS.
3. Adoption of proposed Council resolution entitled:
(4/5 vote required)
A RESOLUTION OF THE COUNCIL OF THE CITY OF BURBANK AMENDING THE FISCAL YEAR 2003-2004 BUDGET BY APPROPRIATING FUNDS IN THE AMOUNT OF $2,741,230.00 FROM FY 2002-2003 FOR THE PURPOSE OF MAKING ADJUSTMENTS IN THE FISCAL YEAR 2003-04 BUDGET.
CONSENT CALENDAR: (Item 2)
The following item may be enacted by one motion. There will be no separate discussion on this item unless a Commissioner 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.
The City Treasurer's report on investment and reinvestment of temporarily idle funds for the quarter ending September 30, 2003.
Recommendation:
Note and file.
END OF CONSENT CALENDAR
RECESS to continue the Housing Authority, Parking Authority, Youth Endowment Services Fund Board and City Council meetings.
ADJOURNMENT.