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“ESTABLISHING A SOLID FINANCIAL FOUNDATION WHILE PRUDENTLY

PLANNING FOR THE FUTURE”

CITY OF MENIFEEBUDGET ADOPTION

FISCAL YEAR 2013/2014

JUNE 18, 20137PM

IMPROVING THE QUALITY OF LIFE OF MENIFEE RESIDENTS

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OVERVIEW

•ROBERT JOHNSON, INTERIM CITY MANAGER•BUDGET: TEAM APPROACH• THE BUILDING OF A COMPREHENSIVE

MUNICIPAL BUDGET•BUDGET HIGHLIGHTS• BALANCED BUDGET, PERSONNEL, EXPENSES

IMPROVING THE QUALITY OF LIFE OF MENIFEE RESIDENTS

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THE BIG PICTURE•STAFF IS CONTINUING TO DO MORE WITH LESS•WHAT DOES THIS MEAN?•$4M LOST TO VEHICLE LICENSE FEE REDUCTION – THIS FIGURE CONTINUES TO RISE AS OUR POPULATION RISES ($50 P/CAPITA)•THIS YEAR WILL BE $4,114,600, OR THE COST OF: •17 POLICE OFFICER POSITIONS, CONSTRUCTING A NEW FIRE STATION, CONSTRUCTING 2 NEW PARKS, COMPLETING A PROJECT LIKE THE NEWPORT ROAD WIDENING OR THE MENIFEE ROAD MISSING LINK

•INCREASED SALES TAX NOT BRIDGING THE GAP, BUT KEEPING PACE

•SALES TAX IS OUR BEST OPPORTUNITY TO INCREASE REVENUE•NEW RESTAURANTS, RETAIL OUTLETS, ENTERTAINMENT VENUES

IMPROVING THE QUALITY OF LIFE OF MENIFEE RESIDENTS

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THE BIG PICTURE•STAFF IS CONTINUING TO DO MORE WITH LESS – CONT…•WHAT DOES THIS MEAN?•MENIFEE’S CURRENT POPULATION (5/1/13) IS 82,292 WITH A CURRENT FULL TIME STAFFING LEVEL OF 36•80,593 (2012) SERVED WITH 36 FULL TIME STAFF•77,000 (2011) SERVED WITH 28 FULL TIME STAFF

•NO NEW STAFFING POSITIONS BEING REQUESTED AT THIS TIME

•NO STAFFING INCREASES IN POLICE AND FIRE, BUT INCREASES TO THE CONTRACT RATE DUE TO NEGOTIATED COMPENSATION RATES

•CITY STAFF IS DOING A GREAT JOB, CONTINUES TO PRODUCE A HIGH VOLUME OF WORK AND MORALE HAS DRAMATICALLY IMPROVED

IMPROVING THE QUALITY OF LIFE OF MENIFEE RESIDENTS

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BUDGET: TEAM APPROACH

•STAFF IS PRESENTING A COMPREHENSIVE MUNICIPAL BUDGET THAT PROVIDES FOR & PLANS FOR THE FUTURE

•REVENUE GENERATION IS A NECESSARY KEY COMPONENT FOR MENIFEE NOW & IN THE FUTURE

•BRINGING BACK LONG TERM FINANCIAL PLAN AT A FUTURE DATE

IMPROVING THE QUALITY OF LIFE OF MENIFEE RESIDENTS

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REVENUE BREAKDOWN

IMPROVING THE QUALITY OF LIFE OF MENIFEE RESIDENTS

MENIFEE’S CURRENT REVENUE STREAMS DO NOT SUPPORT ENHANCEMENT OF CITY SERVICES

AS THE CITY CONTINUES TO COMPLETE ITS SEPARATION FROM THE COUNTY, IT DOES NOT YET HAVE FULL ACCESS TO THE FUNDING SOURCES “TYPICAL” CITIES DO

MENIFEE’S TOTAL & PER CAPITA SALES TAX GENERATION IS DRAMATICALLY LOWER THAN OTHER CITIES IN THE REGION

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CITY OF MENIFEEBUDGET WORKSHOP

FISCAL YEAR 2013/14TERRI WILLOUGHBY, FINANCE DIRECTOR

JUNE 4, 2013

IMPROVING THE QUALITY OF LIFE OF MENIFEE RESIDENTS

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BUDGET PURPOSE

•BUDGET IS A FINANCIAL PLAN OF EXPENDITURES•COUNCIL SETS GOALS AND POLICY•BUDGET ALLOCATES RESOURCES TO FOLLOW AND MEET THESE GOALS•BUDGET PROVIDES A MANAGEMENT TOOL FOR STAFF TO CARRY OUT COUNCIL POLICY

IMPROVING THE QUALITY OF LIFE OF MENIFEE RESIDENTS

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BUDGET BASICS

•BUDGET: AN ANNUAL FINANCIAL PLAN THAT IDENTIFIES REVENUES, TYPES AND LEVELS OF SERVICES TO BE PROVIDED AND THE AMOUNT OF FUNDS THAT CAN BE SPENT.•BALANCED BUDGET: A BUDGET IN WHICH PLANNED OPERATING EXPENDITURES DO NOT EXCEED OPERATING REVENUES.•FUND: AN INDEPENDENT FISCAL AND ACCOUNTING ENTITY.

IMPROVING THE QUALITY OF LIFE OF MENIFEE RESIDENTS

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TAX DOLLARS AT WORK

IMPROVING THE QUALITY OF LIFE OF MENIFEE RESIDENTS

FOR EVERY $1.00 CANDY BAR SOLD WITHIN THE CITY OF

MENIFEE

A PENNY OF THE SALES TAX FLOWS TO THE CITY OF MENIFEE

IF 32 MILLION CANDY BARS ARE SOLD THIS YEAR WITHIN THE CITY

OF MENIFEE

THE CITY COULD PURCHASE A $320,000 FIRE TRUCK WITH THE RESULTING SALES

TAX REVENUE

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BUDGET OVERVIEW

IMPROVING THE QUALITY OF LIFE OF MENIFEE RESIDENTS

REVENUE (+) EXPENDITURES (-)

= PROPOSED BUDGET

&

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BUDGET PROCESS

IMPROVING THE QUALITY OF LIFE OF MENIFEE RESIDENTS

ASSESSMENT(FEBRUARY)

PERFORMANCE MEASURES

CURRENT YEAR MID-YEAR REPORT

POLICY & STRATEGY(MARCH)

• BUDGET PRIORITIES• BUDGET KICKOFF

MEETING

DEVELOPMENT(APRIL)

• DEPARTMENT BUDGETS

• DEPARTMENT MEETINGS

REVIEW(MAY)

• CIP FIXED ASSETS• PREPARE PROPOSED

BUDGET

BUDGET ADOPTION(JUNE)

• CITY COUNCIL BUDGET

WORKSHOP(S)• COUNCIL MEETINGS

BUDGET MANAGEMENT(YEAR ROUND)

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BUDGET SUMMARY

IMPROVING THE QUALITY OF LIFE OF MENIFEE RESIDENTS

60%

12%

8%

20%

Breakdown of City Budget

General Fund

Gas Tax

County Service Areas

Other Funds

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THE FOUR PILLARS

1

NO TAX INCREASES

2

BUILD RESERVES

3

NO ADDED STAFF

POSITIONS

4NO

MATERIAL REDUCTIO

N OF SERVICES

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BUDGET SUMMARY

IMPROVING THE QUALITY OF LIFE OF MENIFEE RESIDENTS

• CITY OF MENIFEE IS FISCALLY SOUND, DESPITE LOSS OF VLF REVENUES• GROWTH IN OTHER REVENUES• SPENDING PRUDENTLY, MAKING CAREFUL

FINANCIAL DECISIONS AND EXPANDING AS RESOURCES ALLOW• DOING MORE WITH LESS

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BUDGET HIGHLIGHTS: FY 2013/14

• GENERAL FUND BUDGET DOES NOT INCLUDE VEHICLE LICENSE REVENUE LOST DUE TO THE PASSAGE OF SENATE BILL 89 AS PART OF THE STATE’S BUDGET

• BALANCED BUDGET WITH CONTINUED EMPHASIS ON ENHANCING SERVICE LEVELS AS RESOURCES ALLOW

• CAPITAL IMPROVEMENT PLAN INCLUDES $6.0 MILLION IN NEW PROJECTS FOR FISCAL YEAR 13/14

IMPROVING THE QUALITY OF LIFE OF MENIFEE RESIDENTS

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GENERAL FUND:OPERATING REVENUES VS. EXPENDITURES

IMPROVING THE QUALITY OF LIFE OF MENIFEE RESIDENTS

2011/12 (Actual)

2012/13 (Adopted)

2013/14 (Proposed)

$18,500,000 $19,000,000 $19,500,000 $20,000,000 $20,500,000 $21,000,000 $21,500,000 $22,000,000 $22,500,000 $23,000,000 $23,500,000

REVENUESEXP.

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GENERAL FUND: REVENUE SOURCES

IMPROVING THE QUALITY OF LIFE OF MENIFEE RESIDENTS

36%

18%16%

10%

11%

4%

5%FY 11/12

Property Taxes

Sales Tax

MVLF

Bldg/Plng/Eng Fees

Franchise Fees

County Augmentation

Misc. Other Revenue

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GENERAL FUND: REVENUE SOURCES

IMPROVING THE QUALITY OF LIFE OF MENIFEE RESIDENTS

43%

24%

10%

13%

4%6%

FY 13/14-Estimated Revenues

Property TaxesSales TaxMVLFBldg/Plng/Eng FeesFranchise FeesCounty AugmentationMisc. Other Revenue

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GENERAL FUND TAX REVENUE:FY 10/11 TO FY 13/14

IMPROVING THE QUALITY OF LIFE OF MENIFEE RESIDENTS

FY 10/11-Actuals

FY 11/12-Actuals

FY 12/13-Revised

FY 13/14-Proposed

-

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

Sales TaxProp Tax

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GENERAL FUND OPERATING EXPENDITURES

IMPROVING THE QUALITY OF LIFE OF MENIFEE RESIDENTS

DEPARTMENT BUDGET AMOUNT % OF BUDGET

POLICE $9,023,727 40%

FIRE 7,205,915 32%

ADMINISTRATION 1,959,925 9%

PUBLIC WORKS/ENGINEERING 1,212,760 5%

BUILDING & SAFETY 1,205,717 5%

COMMUNITY DEVELOPMENT 945,684

4%

ECONOMIC DEVELOPMENT 544,027

2%

COMMUNITY SERVICES 379,248 2%

CITY COUNCIL 156,056 1%

TOTAL BUDGET: $22,633,059 100%

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GENERAL FUND: EXPENDITURES BY TYPE

IMPROVING THE QUALITY OF LIFE OF MENIFEE RESIDENTS

19%

78%

3%

Salaries & BenefitsSupplies & ServicesCapital

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GENERAL FUND: EXPENDITURES BY DEPARTMENT

IMPROVING THE QUALITY OF LIFE OF MENIFEE RESIDENTS

72%

9%

4%5%

5% 2% 2% 1%

BudgetPublic SafetyAdminCommunity DevelopmentBuilding & SafetyPublic Works/EngineeringEconomic DevelopmentCommunity ServicesCity Council

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NEW POSITIONS: FY 13/14

IMPROVING THE QUALITY OF LIFE OF MENIFEE RESIDENTS

• NO NEW POSITIONS ARE BEING REQUESTED AT THIS TIME• AS THE CITY’S FISCAL POSITION IMPROVES,

POSITIONS MAY BE STRATEGICALLY ADDED AND WILL BE BROUGHT FORWARD FOR COUNCIL APPROVAL

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GENERAL FUND CAPITAL/ONE-TIME REQUESTS

IMPROVING THE QUALITY OF LIFE OF MENIFEE RESIDENTS

DEPARTMENT REQUEST AMOUNT

ADMINISTRATIVE SERVICES

ADDITIONAL SOFTWARE & HARDWARE, COMMUNITY DEVELOPMENT SOFTWARE $327,000

COMMUNITY DEVELOPMENT GENERAL PLAN MODIFICATIONS 200,000

CODE ENFORCEMENT

GRAFFITI TRACKER CAMERAS, LAPTOP REPLACEMENTS AND HANDHELD RADIOS 42,250

POLICEHANDHELD RADAR & HOLDER, SOFTWARE & ACCESSORIES 20,890

CITY CLERK AGENDA MANAGEMENT SOFTWARE 15,000

OFFICE OF EMERGENCY MANAGEMENT

EMERGENCY OPERATIONS SUPPLIES & EQUIPMENT 8,650

PUBLIC WORKS FILE CABINETS/DESK ACCESSORIES 5,000

FIRE FIRE STATION FURNITURE 5,000

OTHER MISC. EQUIPMENT AND FURNITURE 6,300TOTAL CAPITAL AND ONE-TIME EXPENDITURES $630,090

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FUNDING CAPITAL/ONE-TIME REQUESTS

The City pays for Capital and One-Time items from its savings account, or fund balance. To put this in perspective, it is similar to how an individual buys a car.

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FUNDING CAPITAL/ONE-TIME REQUESTS Purchasing a car?

Option A: LoanOption B: Savings

An individual would typically not buy a car from their paycheck, but instead would either use savings or take out a loan. The City is using savings, or fund balance for Capital/One-Time Requests.

OR• Interest payments?• Recurring payments?

• Use of savings?• One lump-sum payment?

GENERAL FUND BALANCE – HISTORY

IMPROVING THE QUALITY OF LIFE OF MENIFEE RESIDENTS

Fiscal Year:

Revenues & Other

ResourcesExpenditures:

Difference:

(Change in Fund Balance)

2008-09 18,801,830 13,116,062 5,685,7682009-10 21,809,864 20,485,098 1,324,7662010-11 24,235,777 21,214,209 3,021,5682011-12 20,229,808 21,023,478 <793,670

>Total: $85,077,27

9$75,838,847 $9,238,4

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ASSIGNED-FIRE SAFETY ($21,532)(AMR REVENUES)

ASSIGNED-INSURANCE

($15,000)(3 X SIR)

GENERAL FUND BALANCE – PROPOSED FY 13/14

GENERAL FUNDUNASSIGNED

AVAILABLE

TOTAL= $8.7 MILLION-38% OF OPERATING EXPENDITURES

$36,532 $2.4 M

EMERGENCY CONTINGENCY

COMMITTED BYCITY COUNCIL –(28%

OF OPERATING EXPENDITURES)

$6.3 M

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OTHER FUNDS: FY 13/14• THE CITY HAS SEVERAL OTHER TYPES OF FUNDS:• SPECIAL REVENUE FUNDS SPECIAL REVENUE FUNDS ARE USED TO ACCOUNT FOR

THE PROCEEDS OF SPECIFIC REVENUE SOURCES THAT ARE RESTRICTED TO EXPENDITURES FOR SPECIFIC PURPOSES. THE CITY HAS THE FOLLOWING SPECIAL REVENUE FUNDS: GAS TAX, MEASURE A, SUPPLEMENTAL LAW ENFORCEMENT SERVICES, AIR QUALITY MANAGEMENT DISTRICT, COMMUNITY DEVELOPMENT BLOCK GRANT, COMMUNITY SERVICE DISTRICT FUNDS (2012-1 AND 2012-2) AND DEVELOPMENT IMPACT FEES.

IMPROVING THE QUALITY OF LIFE OF MENIFEE RESIDENTS

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OTHER FUNDS: FY 13/14• CAPITAL PROJECT FUNDS CAPITAL PROJECTS FUNDS ARE USED TO ACCOUNT FOR

THE FINANCIAL RESOURCES TO BE USED FOR THE ACQUISITION AND CONSTRUCTION OF MAJOR CAPITAL FACILITIES. THE CITY’S CAPITAL PROJECTS FUNDS INCLUDE THE CITY CAPITAL PROJECTS FUND, LLMD 89-1, MENIFEE VALLEY AND SCOTT ROAD ROAD AND BRIDGE BENEFIT DISTRICTS, AND COUNTY SERVICE AREA FUNDS.

• DEBT SERVICE FUNDS DEBT SERVICE FUNDS ARE USED TO TRACK REVENUES

AND EXPENDITURES RELATED TO THE REPAYMENT OF PRINCIPAL AND INTEREST COSTS ASSOCIATED WITH BORROWING MONEY FOR LONG-TERM OBLIGATIONS, IN THIS CASE THE CITY’S OBLIGATION ASSOCIATED WITH THE TOTAL ROAD IMPROVEMENT PROGRAM FINANCING COMPLETED IN MAY 2012. IMPROVING THE QUALITY OF LIFE OF MENIFEE

RESIDENTS

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OTHER FUNDS: FY 13/14

IMPROVING THE QUALITY OF LIFE OF MENIFEE RESIDENTS

FUND

BEGINNING FUND BALANCE-PROJECTED

REVENUES/TRANSFERS EXPENDITURES

ENDING FUND BALANCE-PROJECTED

GAS TAX $2,273,792 $2,768,741 $4,874,010 $168,523MEASURE A 2,391,463 1,274,638 1,476,716 2,189,385SLESF 0 129,740 129,740 0AQMD 216,749 80,750 100,025 197,474CDBG 0 369,748 369,748 0CFD FUNDS 323,000 785,000 543,578 564,422DIF 10,441,071 1,878,878 202,410 12,117,539CAPITAL PROJECTS 2,195,760 70,000 2,226,834 38,926LLMD 89-1-C 18,000 31,520 39,568 9,952RBBD 1,860,599 363,500 1,432,670 791,429CSAS 1,401,445 2,063,700 3,071,245 393,900DEBT SERVICE 0 1,303,000 1,303,000 0TOTAL $21,121,879 $11,119,215 $15,769,544 $16,471,550

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CAPITAL IMPROVEMENT PROGRAM

NEW PROJECTS FOR FISCAL YEAR 13/14:(FIRST YEAR OF FIVE YEAR PROGRAM FUNDED)

NEWPORT ROAD WIDENING$3,000,000

HOLLAND ROAD OVERCROSSING 1,400,000

BRADLEY ROAD BRIDGE 980,000

MCCALL INTERCHANGE 500,000

CDBG FUNDED – SENIOR CENTER 84,112CDBG FUNDED-LAZY CREEK 36,048TOTAL: $6,000,160

IMPROVING THE QUALITY OF LIFE OF MENIFEE RESIDENTS

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ACTION PLAN: FY 13/14• MODERATE RECOVERY UNDERWAY• MAINTAIN PRUDENT SPENDING PLAN-

EXPANDING ONLY AS RESOURCES ALLOW• INCREASE EXISTING REVENUE SOURCES• DEVELOP ADDITIONAL REVENUE SOURCES

TO INCREASE DIVERSITY OF REVENUE

IMPROVING THE QUALITY OF LIFE OF MENIFEE RESIDENTS

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ACTION PLAN: FY 13/14

• SCALE BACK OF EXPANSION PLANS DUE TO LOSS OF VEHICLE LICENSE FEE REVENUE• CONTINUE TO WORK WITH NEWLY

INCORPORATED CITIES TO SEEK RESTORATION OF VLF REVENUES• CONTINUE VIGOROUS ECONOMIC

DEVELOPMENT PLAN• SEEK NEW REVENUE SOURCES

IMPROVING THE QUALITY OF LIFE OF MENIFEE RESIDENTS

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EXPECTED BUSINESS OPENINGS

IMPROVING THE QUALITY OF LIFE OF MENIFEE RESIDENTS

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CONCLUSION

• NO ACTION NEEDED ON BUDGET AT THIS TIME

• BUDGET WILL BE PRESENTED FOR FINAL ADOPTION AT THE CITY COUNCIL MEETING ON JUNE 18, 2013

• DRAFT BUDGET WILL BE AVAILABLE ON CITY’S WEBSITE

IMPROVING THE QUALITY OF LIFE OF MENIFEE RESIDENTS