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 $40.9 million is submitted for Council’s consideration. The proposed expenditures totaling $40.9 million, include the General Fund operating budget ($26.3 million), debt service ($528,044), pension mitigation and unfunded liability ($3.0 million), capital budget ($10.9 million), and workers compensation ($90,000). The proposed revenues totaling $30.9 million include property taxes ($8.5 million), sales tax ($9.6 million), transient occupancy tax ($6.8 million), and other revenue ($6.0 million). The FY 23-24 Recommended Budget requires the use of $9.9 million in prior years’ savings ("fund balance") specifically to fund deferred Capital projects.

The City anticipates a nominal increase in revenues for FY 23-24. Additionally, 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 in funding for maintaining 96.23 full-time equivalent (FTE) positions comprised to support daily citywide operations, Council prioritized projects, and capital projects.

• 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: facilities ($4.4 million), streets/sidewalks ($3.0 million), fleet ($1.1 million), drainage ($665,000), green infrastructure ($553,100), CIP contingency ($500,000), environment ($483,000), libraries ($100,000), IT/Planning ($50,000).

• $528,000 for debt service payments on the City’s three existing bonds and $90,000 for workers compensation claim administration, potential claims and costs associated with the implementation of preventive measures.

Staff provided a brief overview of the budget as part of the May 2, 2023 Council meeting. At the May 16, 2023 budget workshop, staff will present a detailed review of the budget as well as present responses to any questions that staff have received. Staff will receive direction from Council on the budget and 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 FY 23-24 Recommended Budget totals $40.9 million. There is no fiscal impact associated with receiving a presentation on the FY 23-24 Recommended Budget. However, direction provided by Council may have an impact on the budget and planned expenditures for the upcoming fiscal year.

Council received a presentation regarding the Five-Year Financial Forecast and Five-Year CIP on March 21, 2023. Council received a presentation regarding the FY 23-24 Recommended Budget, inclusive of the Capital budget, on May 2, 2023.