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REVIEW AND DISCUSS MEASURE A PROPOSED BUDGET FOR FISCAL YEAR 2024-25
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RECOMMENDATION
Review and discuss the City Manager’s Fiscal Year (FY) 2024-25 Proposed Annual Budget for the use of Measure A proceeds and make recommendations to the City Council.
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Summary
The FY 2024-25 Annual Budget assumes Measure A revenues of approximately $47.1 million. The proposed Budget includes Police Department expenditures of approximately $36.2 million and the Office of Violence Prevention expenditures of $1.7 million from Measure A revenues. The proposed Budget projects sales tax revenues will continue to grow in FY 2023-24 and start to flatten in FY 2024-25. Police Department and Office of Violence Prevention (OVP) expenditures are coming in at just under the FY 2023-24 Adopted Budget.
Background
The Measure A Citizens’ Advisory Committee may make recommendations to City Council regarding the Proposed Budget for Measures A and B before adoption pursuant to the Measure A Ordinance, and the Committee’s Charter and Bylaws.
Ordinance 2013-7-09-1601
“The City Council shall appoint a seven-member Citizens’ Advisory Committee, which shall meet at least annually to review the expenditure of revenues generated by the tax imposed by this Ordinance and to make recommendations to the City Council regarding those expenditures.”
City of Stockton Transactions and Use Tax Ordinance Citizens’ Advisory Committee Charter
“2.2.4-Budget Recommendation. The City will propose a budget for the use of Measure A proceeds to the Committee with sufficient time for it to formulate a recommendation to the City Council before it deliberates on that same Budget in the annual budget adoption process.
(a) The Committee shall present to the City Council, in public session, their recommendation on the proposed Budget.”
Measure A Advisory Committee By-Laws
Section 7 (Informational Materials): “At least quarterly, financial reports - including proposed Budgets and Actuals with detailed supporting schedules will be sent to each Committee member. The reports will show revenue generated by Measure A, detailed line-item expenditures as presented in the Annual Budget relative to Measure B (public safety).”
Section 8b (meetings): “the Committee will meet to review budgets for Measure A revenues and Measure B (public safety) expenditures before the City Council’s public sessions on the upcoming annual budget.”
Section 9 (Authorized Activities): “The City will propose a budget for the Measure A sales tax revenues and related uses of funds for the upcoming fiscal year which will be presented to the Committee members before City Council consideration and approval of the City’s Annual Budget. The Committee will consider the Proposed Budget in accordance with all City rules, regulations and policies and may make recommendations regarding the Proposed Budget for Measures A and B to the City Council in a public session.”
Present Situation
The City Manager released the FY 2024-25 Proposed Annual Budget to City Council and the public on May 15, 2024. The City Council will hold two public budget study session meetings on June 5 and 6, 2024. The Budget assumes Measure A revenues of approximately $47.1 million. The Measure A funded portion of the proposed Police Department budget is approximately $35.2 million, while the Measure A funded piece of the Office of Violence Prevention is $1.7 million. The total proposed Police Department budget is $186 million and the total OVP budget is $2.5 million.
Measure A revenues are estimated to be $47.1 million in FY 2024-25 or $462,000 more than projected revenues of $46.6 million in FY 2023-24. The projected year-end estimate is less than 1% greater than FY 2023-24 budgeted year-end revenues of $46.3 million.
Measure A now funds 60 sworn positions, 31 non-sworn Police positions, and 15 Office of Violence Prevention positions, and the Police Department budget includes a vacancy savings assumption of 6.3%.
Of the 120 original sworn positions which were funded by Measure A, 60 vacant positions have been reprogrammed to provide significant recruitment, retention, and wellness incentives and benefits to the remaining positions as a strategic measure to use Measure A’s funding to retain existing and recruit additional officers. The estimated cost associated with these efforts is $12.3 million and are included in the proposed Budget.
Measure A is a general tax and a component of the City’s General Fund. The voter-approved Measure B is an advisory measure that recommends the City to spend at least 65% of Measure A revenues on law enforcement and crime prevention services such as the Marshall Plan. The balance of Measure A revenues can be spent on other services or contribute to the City’s long-term financial sustainability through Plan of Adjustment commitments and General Fund reserves.
In the FY 2024-25 Proposed Annual Budget, Marshall Plan expenses of $37.8 million are 80% of the projected annual Measure A revenues. This percentage is an increase from the 78% projected for FY 2023-24. Measure A funds not spent on the Marshall Plan in prior years contributed to other General Fund-supported services and bankruptcy recovery.
In light of the picture conveyed by the City’s Long-Range Financial Plan (L-RFP), the City has limited the expansion of new ongoing services, particularly those funded by the General Fund, to strategic areas. As can be seen below, increasing costs, particularly from the CalPERS retirement system, will begin to exceed General Fund revenues, including Measure A. The L-RFP model predicts the City’s General Fund balance to start decreasing in FY 2025-26 and will reach close to the minimum 5% reserve level in FY 2037-38. The 5% reserve level is the minimum acceptable level and a warning that cost-cutting measures may be necessary.
Measure A revenues have contributed to the City’s accumulation of General Fund reserves. The General Fund is projected to end FY 2024-25 with a total fund balance of $65.9 million, of which $54.7 million is required by City Council Reserve policy to be put toward the Working Capital Reserve as a proportion of the FY 2024-25 budgeted expenditures. The City will attempt to maintain its reserves to ensure long-term financial sustainability. These reserves will enable the City to maintain services during the current recessionary period and through the projected CalPERS cost increases, which are all assumed in the City’s L-RFP.
Measure A revenues allow the City to provide strategic service level increases and make essential one-time improvements. In the FY 2024-25 Annual Budget, $13.2 million in expenses are identified from General Fund dollars (page A-5). In FY 2023-24, the General Fund will make approximately $8.8 million in payments toward the remaining settlement agreement.
The full FY 2024-25 Proposed Annual Budget can be found on the City’s website at www.stocktonca.gov/budget <http://www.stocktonca.gov/budget>
The document includes the Measures A and B budget on page C-7 and more information on the Long-Range Financial Plan starting on page C-9.
Attachment A - Measures A and B FY 2024-25 Proposed Annual Budget
Attachment B - FY 2024-25 Proposed Annual Budget - Budget Message