Receive the Fiscal Year 2023-2024 Recommended Budget

Receive the Fiscal Year 2023-2024 Recommended Budget.

In accordance with Carmel Municipal Code Section 3.06.020, prior to the beginning of each fiscal year, the City Administrator shall prepare and submit to the City Council a proposed operating and capital budget for the forthcoming fiscal year.  The proposed budget, referred to as the Fiscal Year 2023-2024 (FY 23-24) Recommended Budget of $40.8 million is submitted for Council’s consideration. The proposed expenditures totaling $40.8 million, include the General Fund operating budget ($26.3 million), debt service ($528,000), pension mitigation and unfunded liability ($3.0 million), capital budget ($10.9 million), and workers compensation ($90,000). The proposed revenues totaling $30.5 million include property taxes ($8.5 million), sales tax ($9.6 million), transient occupancy tax ($6.8 million), and other revenue ($5.6 million). The FY 23-24 Recommended Budget requires the use of $10.3 million in prior years’ savings ("fund balance") in order to balance, unless additional reductions are made.

The total fund balance is estimated to end the FY 22/23 at $21 million which includes all restricted, reserves and unassigned funds.  City Council has the authority to tap into the unassigned fund balance ($13.2M).

The next item for City Council’s review and approval is the CIP carryover projects and new FY 23/24 CIP projects.  If City Council approves the CIP carryover projects and new CIP projects, the unassigned fund balance will be drawn down and the new unassigned balance will be $2.8 million.  (Attachment 1)

As the economy continues to rebound from the economic impacts associated with the coronavirus pandemic, the City anticipates an increase in revenues for FY 23-24.  Conversely, the City also expects its expenditures to grow in FY 23-24, primarily related to increased staffing, pension costs, general operating costs, and a robust Capital Improvement Plan. Highlights of the budget include:  

• Salary and benefit costs of approximately $15.1 million with minimal changes to FTE over prior FY (96.23 FTE total).

• Pension costs of approximately $3.0 million, which includes $2.0 million for the City’s annual unfunded accrued liability (“UAL”) payment to CalPERS and $1.0 million investment into the City’s established Section 115 Trust.

• Services and supplies costs of approximately $11.2 million to fund contractual services, fuel and vehicle maintenance, supplies and materials, utilities, fire services, insurance premiums, Sunset Center, staff training, marketing and other operational costs.

• $10.9 million for capital projects and vehicle and equipment purchases in the following categories: public safety ($3.7 million), streets/sidewalks ($3.6 million), facilities ($1.4 million), drainage ($665,000), green infrastructure ($407,100), environment ($629,000), IT/Planning ($103,000), and CIP Contingency ($500,000).

• $528,000 for debt service payments and $90,000 for workers compensation claim administration, potential claims and costs associated with the implementation of preventive measures.

Staff will provide a brief overview of the budget as part of the May 2, 2023 Council meeting. In addition, a budget workshop is scheduled for May 16, 2023. Staff will present a detailed review of the budget during the forthcoming workshop, present responses to any questions that staff may receive in advance of the meeting, and receive preliminary direction from Council on the budget. This direction will be incorporated into the FY 23-24 Recommended Budget, which will be considered for adoption by Council on June 6, 2023.  The FY23-24 Recommended Budget, as well as an updated five-year financial forecast, will be issued under separate cover on Friday, April 28, 2023.

There is no fiscal impact associated with receiving the FY 23-24 Recommended Budget. Forthcoming direction by Council may change the planned expenditures in Fiscal Year 23-24.

Council received a presentation regarding the Five-Year Financial Forecast and Five-Year CIP on April 5, 2023.