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SR-5B/5C CMO SEM sg f \cmanager\stafrprts\97 -98$$ Council Meetmg January 14, 1997 5 B ~Rfllf Santa MOnica, CA TO Mayor and City Council FROM City Staff SUBJECT Recommendation to Receive Public Input and Hold DIScussion on Budget Priorities for 1997-98 Introduction This report describes the fiscal climate In which the 1997/98 City budget will be formulated and proVides a snapshot of key multi-year work objectives that will command resources durmg the coming fiscal year It recommends that the City Council take Input from the public and hold diSCUSSion on budget priorities Economic and Fiscal Climate The economy Within which the FY 1997/98 budget will be shaped appears to be healthy Nationally, forecasters project continued moderate economic expansion ThiS trend marks the Sixth year of such expansion, approachmg the record 1961-69 period A recession In the next few years IS possible but not probable The State's economy IS expected to expand for the next year or two more rapidly than the national economy, and moderate and sustainable regional economic growth IS also projected 1 5B/ Be JAN 2 1 __ . Since 1992-93, the City's economy has grown more rapIdly than has the region's, State's or nation's There are mdlcatlons that this rapid growth IS transltlomng to a more sustainable long-term growth pattern The City ended 1995-96 In a strong financial position which, should be sustained In the current fiscal year Therefore, modest enhancement to the current operatmg expenditure levels should be possible m 1997/98 without compromlsmg the projected balance of expenditures wIth revenues There are, however, considerable uncertamtles ahead + Local governments are Just beglnmng to understand the full Impact of Proposition 218 While It appears that the Immediate Impact on the City IS manageable, legislative and court actions to clanfy the proposition's provIsions may change this assessment + The ultimate Impact of federal welfare reform on State and local government IS not clear at this Juncture, however considerable fiscal pressure will likely be placed on the Los Angeles County budget which IS already projected to be In a deficit position for 1997- 98 + Pressure to balance the federal budget and reduce the defiCit may result In further reductions to domestic discretionary program funds allocated to mUnicipalities +The State stili has a long-term structural budget Imbalance which may adversely 2 Impact revenues available to cities . Federal/State reimbursement for several earthquake recovery projects of Importance to the City may not be forthcoming .The financial needs of the Pier and Beach Fund which continue to be supported by the General Fund could exceed current estimates . DeCISions regarding the timing and financing method for the Public Safety BUilding may slgmficantly Impact ongoing expenditure levels Multi-Year Work Oblectlves Significant resources are devoted annually to the ongoing delIvery of City services In prepanng for Fiscal Year 1997/98, each department will develop individual work plans and expenditure requests that sustain service delivery In addition, staff Will maintain focus on five key areas Identified by the CounCil and commumty as particular pnorltles Youth and Families, Public Safety, EnVironment, Technology and Telecommumcatlons and Commumty Appearance EnVironment 3 For 1996/97 the goals were to create and Implement Sustainable Development GUidelines, expand the purchase of environmentally preferable goods and services and develop a community forest program Considerations for the gUidelines have been Issued In draft form for comment by stakeholders and the project IS scheduled for completion by December of 1997 An Interdepartmental workmg group has established purchaSing poliCies for a number of types of goods and services ThiS work Will contmue, enhanced by Improved tracking of procurements With acquIsition of a new finanCial management system In 1997/98 The community forestry project has been delayed dUring recrUitment of a Community Forester, With selectIon to be completed thiS month Additional areas of concentration In 1997-98 Will mclude deSign and construction start for the Dry Weather Runoff Reclamation FaCility adjacent the Santa MOnica Pier, an educational campaign to promote sustainable practices CitYWide and development of appropriate responses to deregulated energy services Technology and Telecommunications The process of creating a strategic telecommUnications plan IS underway, the Library has developed poliCies and staff capability to prOVide Internet access to the publiC and Installation of terminals IS underway A technology internship program was Initiated last summer, With the City emplOYing a Santa MOnica Mallbu School Dlstnct teacher Additional opportunities for Dlstnct and Santa Monica College students and teachers are bemg developed In public, private and non-profit agencies Internet linkages for City departments 4 have been expanded In 1997/98 the telecommunications plan will be completed, the mternshlp program will be expanded, GIS applications will be added and additIonal emphasIs will be placed on servIce to Internal and external customers Community Appearance Interdepartmental efforts Invest In Improvements that enhance the functIon, appeal and lifespan of the City's public spaces and facIlities Accomplishments In 1996/97 Included coordmatlon of master plannmg projects (City Yards, TransportatIon faCility, Mam Library, Recreation and Parks and Airport ReSidual Land), institution of a peer review process to ensure deSign quality, coordination of urban deSign projects (downtown, Sunset ParklMld- City traffic control measures, tranSit center and PICO streetscape), and ImplementatIon of the graphIC Identity and slgnage program In 1997/98, work effort Will emphaSize unrfymg urban deSign elements CitYWide and Improving maintenance of public faCIlities Commumty Safety A JOInt effort InvolVing police, hOUSing, human services, zonmg and maintenance staff has 5 developed a model program to engage residents, business people and City staff In enhancIng neighborhood safety A pilot program IS anticipated this Spring The expenence gained In that effort will shape the 1997/98 program, extending the program to additional neighborhoods Youth and Families Implementation of the CREST program, an age appropnate approach to after school program for children youth and families, undertaken In cooperation with the Santa MOnica Mallbu Unified School Dlstnct IS the pnmary accomplishment of this Interdepartmental effort In addition, school day physical education has been enhanced, a middle school teen camp operated this summer, a planning grant for arts education Will kick off shortly and weekend staffing has been Instituted at Virginia Avenue Park A holiday season rollerbladlng program was developed cooperatively with parents and the Boys and Girls Club In 1997/98, the Crest program Will be refined, homework assistance efforts at IIbranes, Virginia Avenue Park and PAL Will be coordinated and the feasibility of a children's technology center Will be evaluated An assessment of the Impact of welfare reform Will be made to determine appropnate community responses CaDltallmorovement Proaram FollOWing a hiatus dunng the receSSion, the City has steadily Increased the Investment In 6 capital projects since 1995/96 Key priorities In the current and coming fiscal years will be to accomplish deferred bUildIng maintenance, replace vehicles and sustain the vehicle maintenance fund, institute a computer replacement fund and reconstruct streets and sewers Over $200 million In unmet capital needs have been Identified and a responsible level of Investment Will be recommended for 1997/98 Public Safetv BUlldlna General obligation bond funding for a new public safety bUilding was narrowly rejected by City voters In the November election Staff IS currently Identrfylng dJfferent ways In which the prOject may be financed A review of obligated and unobligated reserves IS underway to Identify any funds In hand which might be applied to reduce the amount of annual debt service for bonds At the same time, the functional requirements and bUilding deSign are being reevaluated to determine If there are Significant opportunities for cost reductron With thiS Information In hand, staff Will evaluate whether certificates of partiCipation Issued by the City, lease/purchase With a private developer, or a return to the voters With a reformulated ballot measure should be recommended to CounCil Communltv Grants Santa MOnica has taken a strategic approach to assessing and meeting the human service needs of the community, uSing City grants to leverage state, federal and pnvate support for key programs A separate report prOVides recommendations for the 1997/98 Community Development program and recommends a Similar approach for the funding of 7 arts and cultural programs In the coming year. Recommendation It IS recommended that the City Council take public Input and hold diScussion regarding pnorltles for the 1997/98 budget Prepared by John Jallh, City Manager Susan McCarthy, AssIstant City Manager Mike Dennis, Finance Director Attachment Background on City Budget Structure 8 Background On City Budget Structure To further assist the Council and the public In assessing next fiscal year's budget pnontles, the followmg IS a brief deSCription of the City's budget structure Included are a serres of pie charts shOWing the largest funds In the Adopted FY 1996-97 Budget, as well as the major revenue and expenditure components of the General Fund For budget purposes, the financial operations of the CIty are orgamzed Into thirty separate funds The largest IS the General Fund which constitutes about 54% of total revenues For ease of diSCUSSion, these funds can be grouped Into three major categories Enterpnse and Internal Service Funds operate much like pnvate busmesses where the services prOVided are financed pnmanly from fees Examples are the Water Fund, Solid Waste Management Fund, and the City's self-msurance funds SpeCial Revenue Funds are used to keep track of expenditures that can legally only be made for speCifiC purposes and where the revenues come from specialized sources Examples are the Community Development Block Grant Fund and the Beach Fund The General Fund Involves revenues and expenditures associated with proViding basIc City services, such as Police, Fire, and Library About 67% of the General Fund IS financed from tax revenues such as the Sales Tax, Property Taxes, the Utility Users Tax, the Business License Tax, the Transient Occupancy (or Bed) Tax from hotels and motels, and the Parking FacIlities Tax Remaining revenues come pnmanly from other governmental agencies, vanous fines and cost-offsetting fees and charges U) Q) (.) - :::s o tJ) (1)r-- ::sO') Cc:a (1)0') >0') (1)~ 0:::> -gu. ... en c."C o C "C :::s <(u. .... - 0- ~<C CO E E :::s tJJ .::&. to U 0 "'C m# c :::l -.:t u.. :::R 0 to <<>1"-- Ql II) "'C >'0 U:::R II) c Q) c c 0 o ::J ell V "'C :::l 5('1') c u.. .?;>lJ.. ::J - - - to u.. 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