Receive a presentation on the Fiscal Year 2020-2021 Recommended Budget and provide direction to staff

Receive a presentation on the Fiscal Year 2020-2021 Recommended Budget and provide direction to staff.

The City Council held a special meeting on May 12, 2020 regarding the budget for the upcoming fiscal year.  Due to the economic impact associated with COVID-19, revenues for Fiscal Year 2020-20201 (“FY 20-21”) are anticipated to be $5.6 million, or 24%, less than the Fiscal Year 2019-2020 Adopted Budget.  This results in a structural deficit whereby proposed operating costs exceed anticipated revenue.  Consequently, FY 20-21 expenses are recommended to be curtailed in order to mitigate the loss of revenue, including eliminating funding for capital projects and vehicle and equipment replacement; defunding vacant positions; reducing the City’s existing workforce and decreasing other operational expenses.  

With these proposed reductions, the anticipated expenditures for the upcoming fiscal year total $19.7 million.  Revenues are estimated at $18.7 million and, absent further operational reductions, require the use of approximately $1.0 million of prior year’s savings, or fund balance, in order to balance the FY 20-21 budget. 

Staff will provide a brief presentation on the FY 20-21 Recommended Budget on June  2, 2020 and distribute a budget document (“the budget book”) by June 2, 2020.  In order to allow sufficient time for Council deliberation and public comment, it is recommended that the FY 20-21 budget adoption hearing be scheduled for June 9, 2020.

As currently recommended by the City Administrator, the FY 20-21 budget requires the use of approximately $1 million of General Fund savings, or fund balance.  Fund balance includes a minimum amount of required savings, referred to as a “reserve”, as well as additional savings amassed over time. The reserve requirement is stipulated within the Carmel Municipal Code and requires 10% of the General Fund Operating Budget to be set aside as a reserve.  After anticipating a transfer of approximately $2 million in fund balance from the Hostelry Fund at fiscal year-end to compensate for the loss of FY 19-20 budgeted transient occupancy tax revenue, the General Fund is anticipated to be $7.7 million on June 30, 2020, inclusive of the current $2.2 million designated as a reserve.

Council held a special meeting (budget workshop) on May 12, 2020.