Title
Second Reading and Action on Ordinance 21-002, an Ordinance Authorizing Supplemental Appropriation #1 to the 2021 Budget - Parts 1 and 2.
Body
Summary:
Part 1 will increase non-profit funding by $41,014 from 2020 unspent funds per Resolution 20-111.
Part 2 will increase funding by $264,013 to implement the 2021 Labor Union Contract allocating the negotiated wage adjustment to the respective city departments’ budgets and reallocate 2021 budget appropriations to fund the new Public Works Department per Ordinance 20-022.
Background:
Part 1
Annually, the City Council commits a portion of the budget for outside agency funding. The 2021 budget contains $1.4 million for outside agencies; $225,486 of 2021 funds are committed to non-profits through the new United Way funding process. All social service requests for city funds were received through the United Way process.
Part 2
At the time the 2021 Budget was prepared and presented to the City Council, there was uncertainty of what the COIVID-19 impact would be on the city’s sales tax revenue. Following the conservative budgeting principles, city leadership was proactively managing operational budgets to a (-8%) year over year tax revenue decrease. Under this scenario, but acknowledging that things could divert from it, negotiations with the collective bargaining units were based on four potential scenarios driven by full 2020 year over year sales tax revenue performance:
1) (-8%) decrease or lower
2) 2% better than expected; or (-6%) decrease
3) 3% better than expected; or (-5%) decrease
4) 4% better than expected or higher; or (-4%) decrease or lower
The city reorganization, with the establishment of the Public Works Department, to develop a more cohesive department with coordinated efforts of services for the community was approved through Ordinance 20-022 late last year. The new department contains the divisions of Engineering, Solid Waste, and Streets. The proposed budget reallocation does not add any new full-time equivalents nor has incremental budget impacted the General Fund. The proposed action will create the Public Works Department and allocate its respective funding within the City’s 2021 Budget.
Fiscal Impact:
Part1
Increases the non-profit outside agency funding by $41,014. The Governance and Ends Policy states City Council may allocate up to 4% of the annual General Fund expenditures to subsidize community needs and programs. The City’s current and projected financial health and stability is a key deciding factor in determining its ability to provide funds to outside organizations. The original 2021 funding meets the 4%, additional funds would over extend this policy. Due to COVID-19, there is an unprecedented need for additional funds. The proposed increase is due to a one-time revenue source and should not create an ongoing dependency or expectation of continued level of support. This change brings the total 2021 city funding for social service agencies to $266,500.
Part2
The implementation of scenario four contractual stipulations results in an incremental expense of $264,013 to the respective City’s General, Special, and Enterprise Funds. This compares to $330,000 or a 2.25% increase implemented in 2020. Most of this increase will not be compounded as realized with a traditional COLA.
The reallocation of funds to the new Public Works has no incremental budget impact to the General Fund.
The city incremental payroll expense will be funded with 2020 surplus funds of 6.2% better than expected 1st Penny revenues (-1.7%) vs (-8%) which, at this point, is estimated to be around $430,000.
Recommendation
Recommendation:
Staff recommends approval.
Body2
Attachments:
Memo
Ordinance
Ordinance 20-022
Resolution 20-111
2020 Sales Tax Receipts