|
Getting your Trinity Audio player ready...
|
The Pleasanton City Council is set Tuesday to review staff’s 2023-24 financial report, which shows that the city’s conservative budget coming into last year underestimated how much revenue it would bring in and overestimated much it would spend from its general fund.
While the newly released 2023-24 unaudited budget actuals show a better outcome compared to the approved budget, city officials call out that revenues were actually down slightly from the prior year’s total and despite tightening the belt where they could, expenses still rose by nearly $9 million year-over-year – and projections for the future years look rough.
“The net positive financial results were mainly due to higher than budgeted hotel and business license tax, revenue recognized from the implementation of new accounting standards, the use of rainy day and general fund program reserves, and cost reduction measures such as freezing positions, deferring purchases of vehicles and equipment and reducing contract services,” city finance director Susan Hsieh told the Weekly on Saturday morning.
“As we’ve said, the city has been committed to cutting costs and we’ve demonstrated that in these significant near-term cuts; however, this is simply not sustainable in delivering all the programs and services that are currently provided to the community such that additional reductions will directly impact our residents and businesses,” Hsieh added.
The release of the 2023-24 budget actuals, which reflect the city’s final financial results for the fiscal year that ended June 30, came out this week in the wake of the defeat of the half-cent sales tax increase — and the timing of the report became a point of contention during the Measure PP campaign.
One resident in particular — Doug Miller, chairperson on the No on PP committee — spoke at multiple past council meetings and demanded the city release its unaudited actual budget results for this past year so that residents could know more about the state of Pleasanton’s finances before voting on a measure to raise taxes in order to balance the budget in the future.
City officials contended that the budget actuals are always presented to the council in the November to December timeframe and that the 2024 timing was in no way impacted by the Measure PP election.
According to the staff report, even if the city’s amended budget from June 2023 was more conservative than what the actual numbers turned out to be after the year played out, “The city budgets revenues and expenditures conservatively to ensure resources are available to cover expenditures, as a significant portion of the city’s General Fund revenue is not received until the third and fourth quarters of the fiscal year, such as business license tax, property tax and sales tax.”
“In addition to financial results, rating agencies favorably view proactive long-term financial planning and conservative budgeting practices,” the staff report also states.
Every year, the city presents its year-end financial report to the City Council for approval, which adds up the actual numbers for the city’s operating budget compared to the amended budget that the council approved.
The numbers being presented to the council on Tuesday are unaudited because the city is still working on its annual comprehensive financial report. According to the staff report, the final steps in completing the full report should take place in December or January.
But Miller and other critics said that the city needed to show the public its unaudited numbers as soon as possible, before the Nov. 5 election, so that residents could have a better understanding of just how bad the budget in order to justify increasing the city’s sales tax in order to prevent future budget cuts that could affect crucial services.
One of the No on PP campaign’s arguments was that the actual tax revenue results in the final budget for 2023-24 would prove higher than overly conservative estimates from the city.
Despite the final budget showing better numbers than what the city originally projected in the amended budget, city staff continue to anticipate tough fiscal challenges ahead – and the story, they say, lies in the comparison to the prior year’s results.
“It’s important for the community to understand that the City is required to achieve a balanced budget every year, but to do so in the context of a budget deficit means that many critical funding needs are omitted from the budget due to lack of funding,” City Manager Gerry Beaudin told the Weekly on Saturday
The amended budget at the beginning of the 2023-24 fiscal year projected $146.4 million in general fund revenues and just under $148 million in expenditures – that compares the 2022-23 year-end actuals of $152.7 million in revenue and $133.5 million in expenditures.
The 2023-24 general fund actuals recorded $151.7 million in revenue (about $5.3 million, or 3.6% higher than the amended budget) and $142.5 million in expenditures (about $5.5 million, or 3.7% less than the amended budget).
But when compared to actuals from the year before, the 2023-24 actuals show revenues almost flat – actually 0.7% down – and expenditures went up by roughly 6.7%.
“The purpose of the year-end report is to provide the council and the community an overview of the city’s financial results and condition,” Hsieh said. “As outlined in detail in the report to the City Council, property tax revenue was 0.1% higher than budgeted, while sales tax revenue was 2.3% lower than budgeted. At the same time, expense growth outpaced revenue as projected.”
Even with money saved in 2023-24, the staff report stated that it is still not enough to address future projected deficits that could range anywhere from $13 million every year to $22 million if a recession hits.
“The city faces significant fiscal challenges in both the operating and capital budgets,” according to the report. “Limited available resources from 2023/24 will not be able to address these funding gaps. These fiscal challenges must be continuously addressed going forward, starting with the 2025/26 – 2026/27 biennial budget development process.”
In addition to reviewing the unaudited budget information, staff will also be recommending a series of one-time adjustments totaling $7.9 million to be allocated from the general fund to various funds that “either have negative or inadequate fund balances” as a result of the 2023-24 actuals.
That also includes rebuilding the rainy day fund reserve and restoring reserves in the city’s insurance and repair and replacement funds.
The City Council meeting is scheduled to begin at 7 p.m. Tuesday (Nov. 19). The full agenda can be accessed here.
In other business
* The council will be voting on upgrading Beaudin’s employee agreement to include 12 months of severance pay — up from the six months stated in his current contract.
Beaudin, who received a positive evaluation from the council during the summer, is not being recommended for a raise due to the city’s fiscal constraints. But the staff report signed by outgoing Mayor Karla Brown states that “adjustments to management staff classifications, including the city manager, will require near-term evaluation to keep pace with the market.”
Pleasanton’s city manager has an annual salary that is 7% less than the average pay among his peers in comparable Bay Area cities, including a lower rate than Livermore’s Marianna Marysheva and first-year Dublin City Manager Colleen Tribby – whose contracts also include a 12-month severance stipulation.
If approved Tuesday, Beaudin’s contract will be amended to provide an extra six months of severance so that should a future City Council terminate the contract without criminal cause, his salary, medical and dental insurance will be covered for a year.
“These terms of the City Manager’s employment contract are recommended to be updated in the agreement to be consistent with the best practices represented in the survey data of the 16 comparison cities,” Brown’s staff report states.
According to Tuesday’s agenda, the council will be voting on this item during the consent calendar, which are items considered routine in nature and typically approved by a single vote unless pulled for separate individual discussion.
* Staff will be presenting the year-end report for the unaudited results of the fiscal year 2023-24 capital improvement program (CIP). The report will go over the status of the CIP budget as of June 30 and will summarize any expenditures and amendments approved by the council through June 30 as well as the recommended projects to carry forward from last year to the 2024-25 fiscal year.
* Staff will be presenting several draft impact fee nexus studies and will ask the council to provide input on capital facilities fee, transportation impact fee, commercial linkage fee, affordable housing fee, and sewer and water connection fee amounts.
* The council will be looking to accept the final Water System Management Plan, a near-, mid- and long-term capital improvement program that will be broken down into multiple projects over the next 20 years and that will cost the city $289 million overall.
Editor’s note: This story was updated on Nov. 16 to incorporate comments received from the City Manager’s Office after the original publication the afternoon before.
So let me understand this; the proposal is to modify the City Manager contract such that he/she would receive 12 months of pay and benefits if terminated without cause. Isn’t that worth today about $500,000? is the City Council seriously going to approve this in light of how they keep telling us we have a structural deficet? Was nothing learned from the election just completed?
That sounds about right @justwondering. Being terminated without cause should provide a minimum of 12 months severance. This seems quite fair given the low salaries Pleasanton affords its employees particularly when comparing salaries to neighboring cities. It’s truly disappointing that we as a “community of character” continue to bring down our city employees.
What’s worse @justwondering is that this item is on consent calendar and being voted on by a lame duck council. That in itself is shameful and a slap in the face to all residents. Postponing it till new council is seated would be the proper thing to do.
Low salaries? The CM makes nearly a half a million dollars per year in total compensation. Nevermind a generous pension. Didn’t he go on and on against when it was time to discuss police officers and not even getting them to the median of comparable salaries despite agreed upon past practice? Give me a break? Tone deaf!
“Community of Character”.
Who is bringing down city employees? No one in this thread! Quite the opposite. Being a good steward of the public’s money is good for ALL city employees not just the one at the top.