Resolution 2024-047 Adopting the Fiscal Year 2024-2025 Annual Operating and Capital 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 2024-2025 (FY 24-25) Recommended Budget of $43.5 million is submitted for Council’s consideration. The proposed expenditures totaling $43.5 million, include the General Fund operating budget ($28.3 million), debt service ($519,100), pension unfunded liability ($2.4 million), capital budget ($12.2 million), and workers compensation ($127,000). The proposed revenues totaling $31.4 million include property taxes ($8.6 million), sales tax ($9.8 million), transient occupancy tax ($7.5 million), and other revenue ($5.5 million). The FY 24-25 Recommended Budget requires the use of $12.1 million in prior years’ savings ("unassigned fund balance") specifically to fund deferred Capital projects.

The total fund balance is estimated to end the FY 23-24 at $37.3 million which includes all restricted, reserves and unassigned funds. City Council has the authority to tap into the unassigned fund balance which currently sits at approximately $15M.

As the economy remains unpredictable, the City remains cautious and anticipates only a conservative increase in revenues for FY 24-25. Conversely, the City also expects its expenditures to grow in FY 24-25, primarily related to pension costs, general operating costs, and a robust Capital Improvement Plan. Highlights of the budget include:

•  Salary and benefit costs of approximately $16 million with the addition of 1.02 Full Time Equivalent (FTE) employees over the prior FY (97.25 FTE total).

• Pension costs of approximately $2.4 million, which includes $2.0 million for the City’s annual unfunded accrued liability (“UAL”) payment to CalPERS.  Additionally, the City will restrict $1 million by once again transferring funds into the City’s established Section 115 Trust.

•  Services and supplies costs of approximately $12.4 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.

• $12.2 million for capital projects and vehicle and equipment purchases in the following categories: public safety ($3.4 million), streets/sidewalks ($4.0 million), facilities ($1.1 million), drainage ($1.6 million), green infrastructure ($100,000), environment ($1.1M), IT/Planning ($300,000), fleet ($150,000), libraries ($100,000) and CIP Contingency ($400,000).

• $519,100 for debt service payments and $127,000 for workers compensation claim administration, potential claims and costs associated with the implementation of preventive measures.

Staff provided an overview of the budget as part of the May 7, 2024 Council meeting. At the May 21, 2024 budget workshop, staff presented a detailed review of the budget and received direction from Council to remove three CIP projects from FY24-25 and postpone for consideration in FY25-26.  Those projects were the Doolittle Bridge and Pathway Realignment, Junipero Bypass Drainage Project, and Park Branch Library Windows and Dry Rot. Additionally, the Recommended Budget Book has been revised to reflect updates to the Capital Improvement Plan narratives and Table 2: FY 24-25 Recommended Capital Projects and Funding Source. 

Also attached to this staff report are the questions received for both the operating budget and CIP throughout the entire budget process with corresponding answers.