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HomeMy WebLinkAbout09/11/1992 B A K E R S F I E L D Kevin McDermott, Chair Patricia J. DeMond Ken Peterson Staff: John W. Stinson AGENDA BUDGET AND FINANCE COMMITTEE Friday, September 11, 1992 12:00 Noon City Manager's Conference Room 1. State Budget Update (John Stinson) 2. Set Next Meeting BAKERSFIELD MEMORANDUM TO' HONORABLE MAYOR AND CITY COUNCIL ~ // September 11, 1992 FROM' JOHN W. STINSON, ASSISTANT TO THg~ITY GER SUBJECT: STATE BUDGET IMPACTS As you are aware, the State has finally adopted a 1992-93 budget. This budget continues the trend of utilizing local government revenues to deal with state- wide budget problems. The impact of these State budget decisions compound the existing losses of the past two years. In 1990-91, the State authorized the County to implement property tax administration fees, which amount to $415,000, and Jail Booking Fees of $273,415, respectively, for 1992-93. In addition, in 1991-92, the State funded trial courts by reducing vehicle code fines by $341,555 and 1/2 of the cigarette tax in 1991-92, and the remaining 1/2 in 1992-93, totalling $370,995. These additional expenditures and reductions in revenue result in an ongoing loss of over 1.4 million dollars annually to the City. In response to the more recent State budget actions, I am providing the following information: · The estimated impacts of the 1992-93 State budget actions total $2,051,000. This includes a permanent loss of Property Tax ($1,555,000); Cigarette Taxes ($190,000); Trailer Coach In-Lieu Taxes ($80,000); and Redevelopment Tax Increment ($226,000). The Ci-garette tax loss is noted above and was included in the adopted 1992-93 City budget. · The ongoing impact of State budget cuts now exceeds 3.2 million dollars annually. This loss has direct impacts on our ability to provide police, fire and other basic public services. · There is an additional one-time loss of property tax ($310,000) which is offset by increased motor vehicle license fee revenue and, therefore, has no net impact. · The net 1992-93 revenue loss to the City is $1,861,000. In order to respond to these reductions in revenue, the following changes in the 1992-93 budget are being recommended: · The revenue estimates for this fiscal year have been reevaluated using current information. This has resulted in changes in the anticipated fund balance, increases in estimated revenues from building and planning activity, and adjustments to various revenues. These changes reduce the HONORABLE MAYOR AND CITY COUNCIL September 11, 1992 Page -2- net 1992-93 budget revenue loss to $956,000. This amount includes the loss of Redevelopment Funds. · State actions provide for the use of 1992-93 PERS actuarial rates in place of 1991-92 rates. The City used the 1991-92 rates in the budget, as directed by PERS, due to the Governor assuming actuarial responsibility. This change in State policy will reduce existing appropriations by $646,000. · It is recommended that, due to the potential one-time nature of some expenditure reductions, the hiring freeze be continued throughout the 1992-93 fiscal year. A freeze of certain vacant positions for a portion or the remainder of the fiscal year, with the end result being a reduction in fifteen positions through attrition, should be implemented. It is expected that department heads may make specific requests to fill high priority positions for continued delivery of service, particularly in the area of public safety. However, these requests will have to be offset with permanent budget savings. · The remaining $310,000 will be reduced by deferring one Gas Tax Funded Capital Project and transferring $170,000 to the Public Works Department General Fund operating budget. Operating reductions in the Community Development Block Grant will fund a transfer of $30,000 to the Public Works operating budget for Curb Cuts, to comply with the Americans with Disabilities Act. The remaining $110,000 will come from operating budget reductions from various departments. · It is assumed that, due to the inability of the Redevelopment Agency to make the $226,000 payment required by the State, there will be a transfer from the General Fund to the Redevelopment Fund, which the Agency will be obligated to pay back in future years. · Throughout this process, it will be important to maintain open lines of communication between all parties affected by these changes. Methods will be implemented to communicate these decisions to the City Council, department heads and City employee groups. JWS.AT.alb cc: Department Heads City Employee Groups