City of Pinole FY 2024/25 General Fund Baseline Budget Overview

City of Pinole Fiscal Year (FY) 2024/25 General Fund Baseline Budget Finance Subcommittee Meeting April 18, 2024

Staff Recommendation Finance Subcommittee to receive a report on the FY 2024/25 General Fund baseline budget and provide recommendations, if any. FY 2024/25 GF Baseline Budget 2

Topics Budget Development Process General Fund Baseline Budget Next Steps FY 2024/25 GF Baseline Budget 3

Budget Development Process Finance Department and City Manager consider department requests for changes to the baseline budget and prepare a Preliminary Proposed budget for the City Council s consideration Departments submit requests for changes from the baseline budget to address proposed special projects or increased service levels Finance Department creates a baseline budget for FY 2024/25 by taking the ongoing revenues and expenditures included in the current FY 2023/24 budget and factoring in known or assumed changes, which department confirm, to ongoing revenues and expenditures for FY 2024/25 Finance Department will use the current FY 2023/24 budget, which incorporates any mid-year changes approved by the City Council, as the starting point FY 2024/25 GF Baseline Budget 4

Structurally Balanced Budget Policy Policy applies to General Fund operating budgets Create a proposed General Fund operating budget that is structurally balanced To ensure the sustainability of service and expenditure levels by requiring that ongoing General Fund operating expenditures be funded by ongoing operating revenues FY 2024/25 GF Baseline Budget 5

Baseline Budget Components Recurring revenues are those that the City can reasonably expect to continue to receive on an annual basis over the next 5 to 10 years, such as: Tax revenues (property, sales, utility users , franchise, etc.) Fines Interest income Licenses and permits Charges for services Recurring expenditures are ongoing costs that relates to an ongoing City services or activities, such as: Salaries Benefits Utilities Maintenance Mandated agreements FY 2024/25 GF Baseline Budget 6

Non-Recurring Budget Items Excluded from baseline budget Non-recurring revenues are typically one-time receipts, such as: One-time sale of property Grant awards Non-recurring expenditures are costs that related to activities that are not ongoing, such as: Council-directed initiatives Staff recommended budget additions for special projects Capital improvement projects FY 2024/25 GF Baseline Budget 7

General Fund Baseline Budget Highlights City s baseline budget position is not balanced at this point as ongoing expenditures exceed ongoing revenues Baseline budget revenues and expenditures are consistent with the prior forecast as there are no major changes to assumptions Status quo staffing and service levels Major revenues continue to be stable but growing at a slower rate than expenditures FY 2024/25 GF Baseline Budget 8

FY 2024/25 General Fund Baseline Budget FY 2023/24 Baseline FY 2024/25 Baseline $ Change % Change SOURCES: PROPERTY TAX SALES TAX (General, Measure S 2006 & 2014) UTILITY USERS TAX FRANCHISE TAX INTERGOVERNMENTAL TAX TRANSIENT OCCUPANCY TAX BUSINESS LICENSE CHARGES FOR SERVICES OTHER REVENUES $5,678,211 9,443,023 2,185,485 794,658 2,319,918 453,200 450,014 1,693,539 635,578 23,653,626 2,245,480 $25,899,106 $6,168,067 9,698,436 2,240,000 860,000 2,402,673 460,000 460,000 1,774,307 852,160 24,915,643 2,425,000 $27,340,643 $489,856 255,413 54,515 65,342 82,755 6,800 9,986 80,768 216,582 1,648,769 179,520 $1,828,289 9% 3% 2% 8% 4% 2% 2% 5% 34% 7% 8% 7% FY 2024/25 GF Baseline Budget Total Revenues TRANSFERS IN Total Sources 9

FY 2024/25 General Fund Baseline Budget FY 2023/24 Baseline FY 2024/25 Baseline $ Change % Change USES: SALARIES & WAGES BENEFITS PROFESSIONAL SERVICES OTHER OPERATING MATERIALS AND SUPPLIES INTERDEPARTMENTAL CHARGES ASSET/CAPITAL OUTLAY DEBT SERVICE $9,722,569 6,328,446 8,257,544 292,711 183,200 (944,990) 275,774 611,107 24,726,361 1,459,255 $26,185,616 $10,286,254 7,682,665 8,768,527 322,711 185,033 (923,260) 278,440 611,107 27,211,476 1,459,255 $28,670,731 $563,685 1,354,219 510,983 30,000 1,833 21,730 2,666 6% 21% 6% 10% 1% -2% 1% 0% 10% 0% 9% - FY 2024/25 GF Baseline Budget Total Expenditures 2,485,115 TRANSFERS OUT - Total Uses $2,485,115 Net Surplus/(Deficit) (286,510) (1,330,088) 10

Where does General Fund dollars come from? Transfer In, 2,425,000 , 9% Other Revenues, 852,160 , 3% Property Tax, 6,168,067 , 23% Charges for Services, 1,774,307 , 6% Business License, 460,000 , 2% Transient Occupancy Tax, 460,000 , 2% Intergovernmental Tax, 2,402,673 , 9% FY 2024/25 GF Baseline Budget Franchise Tax, 860,000 , 3% Utility Users' Tax, 2,240,000 , 8% Sales Tax, 9,698,436 , 35% 11

Property Tax Ad valorem (value-based) tax imposed on real property and tangible personal property; the fixed statutory rate is 1% of assessed valuation of which Pinole receives approximately 19% Property tax revenue is received from the basic 1% property tax and the Redevelopment Property Tax Trust Fund (RPTTF) The FY 2024/25 baseline budget assumes a net 9% increase mainly due to an increase in the residual RPTTF revenue resulting from the retirement of former Redevelopment debt FY 2023/24 Baseline FY 2024/25 Baseline FY 2024/25 GF Baseline Budget $ Change % Change SOURCE: PROPERTY TAX Basic 1% (includes unsecured, supplemental, and transfer tax) PROPERTY TAX - RPTTF $3,278,749 $3,401,689 2,399,462 $5,678,211 $122,940 366,916 $489,856 4% 15% 9% 2,766,378 $6,168,067 TOTAL 12

Sales Tax The overall sales tax rate on purchases made in Pinole is 9.75%. City receives the statewide standard 1% (referred to as the Bradley Burns sales tax) plus 0.5% due to Measure S 2006 and 0.5% due to Measure S 2014. The FY 2024/25 baseline budget assumes a 3% increase in the City s sales tax revenue, consistent with projections provided by HdL, the City s sales tax consultant. FY 2023/24 Baseline FY 2024/25 Baseline $ Change % Change FY 2024/25 GF Baseline Budget SOURCE: SALES TAX $9,443,023 $9,698,436 $255,413 3% 13

Utility Users Tax (UUT) The UUT is an 8% tax levied on the consumption of telecommunications, gas, and electricity Higher growth rates in the gas and electricity segments The FY 2024/25 baseline budget assumes an 2% increase based on historical trends FY 2023/24 Baseline FY 2024/25 Baseline $ Change % Change SOURCE: UTILITY USERS TAX $2,185,485 $2,240,000 $54,515 2% FY 2024/25 GF Baseline Budget 14

Franchise Tax The franchise tax is levied on public utilities and corporations that supply gas, electricity, cable television, and refuse The fees paid the various entities are delineated in franchise agreements The FY 2024/25 baseline budget assumes a 8% increase based on historical trends FY 2023/24 Baseline FY 2024/25 Baseline $ Change % Change SOURCE: FRANCHISE TAX FY 2024/25 GF Baseline Budget $794,658 $860,000 $65,342 8% 15

Intergovernmental Taxes Intergovernmental taxes include the Motor Vehicle In-Lieu Fee (VLF) is levied, collected, and apportioned by the State; it is a tax on the ownership of registered motor vehicles The FY 2024/25 baseline budget assumes an 4% increase consistent with projections provided by HdL, the City s property tax consultant FY 2023/24 Baseline FY 2024/25 Baseline $ Change % Change SOURCE: INTERGOVERNMENTAL TAX $2,319,918 $2,402,673 $82,755 4% FY 2024/25 GF Baseline Budget 16

Transient Occupancy Tax (TOT) A 10% TOT is levied on short-term (30 days or less) lodging The FY 2024/25 baseline budget assumes a 2% increase based on historical trends FY 2023/24 Baseline FY 2024/25 Baseline $ Change % Change SOURCE: TRANSIENT OCCUPANCY TAX $453,200 $460,000 $6,800 2% FY 2024/25 GF Baseline Budget 17

Business License Tax The business license tax is assessed on all businesses doing business within City limits The FY 2024/25 baseline budget assumes a 2% increase based on historical trends FY 2023/24 Baseline FY 2024/25 Baseline $ Change % Change SOURCE: BUSINESS LICENSE TAX $ 450,014 $460,000 $9,986 2% FY 2024/25 GF Baseline Budget 18

Charges for Services Charges for services include public safety charges which are received for dispatch services provided to Hercules and San Pablo through a cost-sharing agreement The FY 2024/25 baseline budget assumes a 5% increase based on the new agreement effective 7/1/23 FY 2023/24 Baseline FY 2024/25 Baseline $ Change % Change SOURCE: CHARGES FOR SERVICES $1,,693,539 $1,774,307 $80,768 5% FY 2024/25 GF Baseline Budget 19

Other Revenue Other revenue includes all other revenue sources, including fees, permits, interest income, reimbursements, and miscellaneous revenue The FY 2024/25 baseline budget assumes an 34% increase mainly due to several fee increases based on the user fee study FY 2023/24 Baseline FY 2024/25 Baseline $ Change % Change SOURCE: OTHER REVENUES $635,578 $852,160 $216,582 34% FY 2024/25 GF Baseline Budget 20

Transfers In The transfer in comes from the Section 115 Pension Trust to offset the increase in pension costs in the General Fund FY 2023/24 Baseline FY 2024/25 Baseline $ Change % Change SOURCES: TRANSFERS IN $2,245,480 $2,425,000 $179,520 8% FY 2024/25 GF Baseline Budget 21

Where does General Fund dollars go? Transfers Out, 1,459,255 , 5% Debt Service, 611,107 , 2% Salaries & Wages, 10,286,254 , 34% Asset/Capital Outlay, 278,440 , 1% Interdepartmental Charges, (923,260), -3% Materials and Supplies, 185,033 , 0% Other Operating, 322,711 , 1% FY 2024/25 GF Baseline Budget Professional Services, 8,768,527 , 29% Benefits, 7,682,665 , 25% 22

Salaries and Wages Salaries and Wages based on the current staffing level of 115 full-time equivalents (FTEs); no additional positions The FY 2024/25 baseline budget assumes a 6% growth rate Cost of living adjustment of 4% Market equity adjustments for several classifications FY 2023/24 Baseline FY 2024/25 Baseline $ Change % Change USE: SALARIES & WAGES FY 2024/25 GF Baseline Budget $9,722,569 $10,286,254 $563,685 6% 23

Benefits Benefits includes retirement and fringe benefits (medical, dental, workers compensation, etc.) The FY 2024/25 baseline budget assumes a 21% growth rate CalPERS contribution increased 16% Health insurance increased 8% FY 2023/24 Baseline FY 2024/25 Baseline $ Change % Change USE: BENEFITS $6,328,446 $7,682,665 $1,354,219 21% FY 2024/25 GF Baseline Budget 24

Professional Services Professional services include consulting and administrative services, building and equipment maintenance, office expenses, and others Includes contracts with other governmental agencies: Contra Costa County Fire Protection District, and County animal and library services The FY 2024/25 baseline budget assumes a 6% growth rate primarily based on contractual obligations FY 2023/24 Baseline FY 2024/25 Baseline $ Change % Change USE: PROFESSIONAL SERVICES FY 2024/25 GF Baseline Budget $8,257,544 $8,768,527 $510,983 6% 25

Other Operating Other operating includes water, electricity & power, and cable utility services The FY 2024/25 baseline budget assumes a 10% growth rate based on historical trends FY 2023/24 Baseline FY 2024/25 Baseline $ Change % Change USE: OTHER OPERATING $292,711 $322,711 $30,000 10% FY 2024/25 GF Baseline Budget 26

Materials and Supplies Materials and supplies include fuel, maintenance supplies, and safety equipment The FY 2024/25 baseline budget assumes a 1% growth rate based on historical trends FY 2023/24 Baseline FY 2024/25 Baseline $ Change % Change USE: MATERIALS AND SUPPLIES $183,200 $185,033 $1,833 1% FY 2024/25 GF Baseline Budget 27

Interdepartmental Charges Interdepartmental charges include administrative charges and reimbursements for services provided by one City department to another, and general liability insurance The FY 2024/25 baseline budget assumes a -2% growth rate due to lower reimbursements to the General Fund from other funds FY 2023/24 Baseline FY 2024/25 Baseline $ Change % Change USE: INTERDEPARTMENTAL CHARGES $(944,990) $(923,260) $21,730 -2% FY 2024/25 GF Baseline Budget 28

Capital Outlay Capital outlay includes non-major asset acquisition and improvements, such as computer equipment and furniture The FY 2024/25 baseline budget assumes a 1% increase based on cost estimates FY 2023/24 Baseline FY 2024/25 Baseline $ Change % Change USE: ASSET/CAPITAL OUTLAY $275,744 $278,440 $2,666 1% FY 2024/25 GF Baseline Budget 29

Debt Service Debt service includes the payment of principal and interest on the 2006 pension obligation bonds, goes through FY 2035/36 The budget amount is based on the debt obligation schedule FY 2023/24 Baseline FY 2024/25 Baseline $ Change % Change USE: DEBT SERVICE $611,107 $611,107 $- 0% FY 2024/25 GF Baseline Budget 30

Transfers Out Transfers out include the transfer of funds from the General Fund to other funds, including Recreation and PCTV, to support operations The FY 2024/25 baseline budget assumes no growth consistent with past practice FY 2023/24 Baseline FY 2024/25 Baseline $ Change % Change USE: TRANSFERS OUT $1,459,955 $1,459,955 - 0% FY 2024/25 GF Baseline Budget 31

Summary Draft FY 2024/25 General Fund baseline budget is not balanced and reflects a shortfall of $1.3 million Staff working to balance the baseline budget which will require total reductions of 6% FY 2024/25 GF Baseline Budget 32

Next Steps Special City Council Meeting (Budget Workshop) on April 30th Present the baseline budget and CIP Receive Council Members requests for additions/deletions Preliminary Proposed Budget to be presented on May 21st FY 2024/25 GF Baseline Budget 33

Thank you Questions/Comments? FY 2024/25 GF Baseline Budget 34