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Home My WebLink About _ 9.10(b)--City of Redding Mid-Year Budget ReviewC IT Y OF REMDINO�" AN CITY OF REDDING REPORT TO THE CITY COUNCIL MEETING DATE: March 18, 2025 FROM: Greg Robinett, Director of ITEM NO. 9.10(b) Finance/City Treasurer ***APPROVED BY*** `t`.4"y 0 r t, t7 lor" 'rt1a22ce t, ity I'Te surc`r K12/2025 }" , ppn�,",a: grobineW&Ryofredding.org btippin@cityofredding.org UBJECT: 9.10(b)--Consider City of Redding Mid -Year Budget Review and Associated F esolution Recommendation Accept the City of Redding's Fiscal Year 2024-25 Mid -Year Budget Report; and adopt Resolution approving and adopting the 70th Amendment to City Budget Resolution No. 2023- 060 increasing appropriations by $3,579,340 for Fiscal Year 2024-25. Fiscal Impact The recommended changes to the General Fund will not further impact the City's General Fund reserve. The City Council (Council) maintains a policy requiring a ten percent reserve. Currently the General Fund Ten -Year Plan has a structural issue that is being addressed as part of the biennial budget development for fiscal year 2025-26 and fiscal year 2026-27. Alternative Action The Council could choose to reject the report and provide staff with alternate direction. Background/Analysis The City of Redding (City) has expended $46,823,343 from the General Fund through December 31, 2024. This level of expenditure represents 39.6 percent of total appropriations, and is $8,365,990 or 15.16 percent below staff's cash flow estimate of $55,189,333 through December 31, 2024. Below is a breakdown by department of Expense compared to budget: Report to Redding City Council March 13, 2025 Re: 9.1 0(b) - -City of Redding Mid -Year Budget Review Page 2 Actual Budget Variance Variance % General Government 3,338,579 4,475,526 1,136,947 25.40% Non Dept, Mid town, Debt Service & Animal Re 2,198,841 1,705,537 (493,304) -28.92% Development Services 1,975,176 3,092,627 1,117,451 36.13% PW 6,938,738 4,430,104 (2,508,634) -56.63% Police 17,013,457 22,778,263 5,764,806 25.31% Fire 11,755,326 14,197,662 2,442,336 17.20% Parks 3,603,226 4,509,614 906,388 20.10% Total 46,823,343 55,189,333 8,365,990 15.1.6% General Fund revenue as of December 31, 2024, totals $58,348,659 which is $770,799 or 1.34 percent above staff s cash flow projection of $57,577,860. Staff is not recommending any changes to projected revenues at this time. Actual Budget Variance Variance % Operating Revenues $ - $ - $ - 100.00% Tax Revenues $40,979,801 $42,605,809 $(1,626,008) -3.82% Licenses & Permits $ 1,346,313 $ 1,476,979 $ (130,666) -8.85% Fines & Penalties $ 1,323,402 $ 538,965 $ 784,437 145.55% PILOT & Transfers $ 7,959,951 $ 6,970,324 $ 989,627 14.20% Revenue from Other Government Agencies $ 1,407,525 $ 1,964,787 $ (557,262) -28.36% Total Other Revenues $ 1,415,309 $ 1,453,361 $ (38,052) -2.62% Charges for Current Services $ 3,571,215 $ 2,139,592 $ 1,431,623 66.91% Property Rental & Investment Income $ 345,144 $ 428,043 $ (82,899) -19.37% Total $58,348,659 $57,577,860 $ 770,799 1.34% Below is a breakdown of the tax revenues through December 31, 2024. Tax revenues are the primary revenue source which fund General Fund operations. Actual Budget Variance Variance % Property Taxes 1,080,550 2,625,359 (1,544,809) -58.84% Sales Tax 15,209,494 16,099,178 (889,684) -5.53% TOT 4,099,420 4,409,854 (310,434) -7.04% Cannabis 736,451 835,500 (99,049) -11.86% Other Taxes 1,028,080 1 1,305,000 1 (276,920) -21.22% Total 22,1.53,996 1 25,274,891 1 (3,120,895) -1.2.35% Property Taxes are primarily received in January and May. Below is a breakdown of the tax revenues through January 31, 2025. Actual Budget Variance Variance % Property Taxes 16,740,211 16,185,876 554,335 3.42% Sales Tax 17,563,519 18,688,577 (1,125,058) -6.02% TOT 4,550,612 4,876,606 (325,994) -6.68% Cannabis 963,326 1 1,332,250 1 (368,924) -27.69% Other Taxes 1,162,133 1 1,522,500 1 (360,367) -23.67% Total 40,979,801 1 42,605,809 1 (1,626,008) -3.82% Report to Redding City Council March 13, 2025 Re: 9.1 0(b) - -City of Redding Mid -Year Budget Review Page 3 General Fund Reserves After completion of the annual audit, staff is recommending a change to the cash balance as of July 1, 2024. Staff is recommending maintaining the current cash balance of $13.3 million. Cash is impacted by revenues, expenses, and changes to certain balance sheet activity which require cash. Ten -Year Plan The Ten -Year plan attached reflects the changes approved by the Council since the adoption of the budget and the recommended adjustments in this staff report. Additionally, the Ten -Year plan has been updated to reflect the most recent actuarial valuations received this year from Ca1PERS. As a result of these changes and the effects of having an adopted budget with a structural deficit the year in which the General Fund Ten -Year Plan falls below the ten percent reserve has moved to FY 25-26. As a result of this staff is working on addressing the impacts of this structural issue and will bring a plan that solves the financial issue back to the Council during the FY 2025-27 Biennial Budget process. General Fund Overtime The City's General Fund overtime expense totals $3,975,561 through December 31, 2024. This is $2,071,866 above staffs cash flow estimate of $1,903,695. The expenditures year-to-date compared to the year-to-date budget are listed below, of which, the four largest overtime budgets are Fire, Police, Parks, and Streets: • The Fire Department had overtime expenses through December 31, 2024, of $2,911,837 compared to a total overtime budget of $1,117,195; • The Police Department had overtime expenses through December 31, 2024, of $940,714 compared to a total overtime budget of $744,500; • The Community Services Department had overtime expenses through December 31, 2024, of $73,857 compared to a total overtime budget of $0; • The Public Works Department had overtime expenses through December 31, 2024, of $35,000 compared to a total overtime budget of $44,044; and • All other General Fund Departments had overtime expenses through December 31, 2023, of $5,110 compared to an overtime budget of $7,000. Although some of the aforementioned expenses are either over budget or nearly over budget, there are no additional budget requests at this time. Each department has adequate savings in areas such as personnel charges and/or additional cross charges to other City departments, to offset the excess costs. Budget Requests The following is a list of budget requests broken down by Fund type with details following by Fund. Report to Redding City Council March 13, 2025 Re: 9.10(b)--City of Redding Mid -Year Budget Review Page 4 General Fund Department FY 2024-25 Streets 126,000.00 Total 126, 000.00 There is one request at this time for the General Fund budget modifications. This request is for the Streets department and is for traffic controller replacements that will be installed prior to December 2025. This will be funded through the use of gas taxes made available to the City. Entetptise Funds Department FY 2024-25 Airports 37,500.00 Electric 1,515,000.00 Solid Waste 89,840.00 Wastewater 375,000.00 Total 2,017,340.00 Redding Regional Airport is requesting $37,500. This includes $18,000 for Aircraft Rescue and Fire Fighting vehicle tire replacement, $7,500 for access control security camera node replacement and $12,000 for fair market value appraisals of airport property to meet regulatory requirements. Redding Electric Utility is requesting budget modifications of $1,515,00. This includes $55,000 related to cybersecurity insurance for the power plant, $150,000 for mechanical maintenance and electrical testing at the power plant and Whiskeytown turbine, $105,000 for ARCOS software, $135,000 for fire mitigation costs, $70,000 related to substation equipment, $110,000 for increase in meter installations and replacements, $90,000 for equipment needed in the meter -shop, $63,000 related to the Pacific Gas and Electric Security Pipeline Fencing project, $300,000 for updates at the Waldon Substation, and $437,000 related to Redding Electric Utility customer service call center, mail charges and bank service fees. Solid Waste is requesting $89,840 which includes $60,000 related to legal services and $29,840 for the Abernathy Lift Station construction contract. Wastewater is requesting $375,000 for increases to maintenance and component parts cost and increases in chemical and delivery costs. Internal Service Funds Department FY 2024-25 Information Technologies 36,000.00 Risk - Liability/Insurance 890,000.00 Risk - Workers Com ensatioi 510,000.00 Total 1,436,000.00 Information Technologies is requesting $36,000 for communication expenses related to additional phone licenses. Risk Liability is requesting $890,000 due to increases in insurance premiums. Risk Workers Compensation is requesting $510,000 due to increases in insurance liability rates. Report to Redding City Council March 13, 2025 Re: 9.10(b)--City of Redding Mid -Year Budget Review Page 5 Environmental Review This is not a project defined under the California Environmental Quality Act, and no further action is required. Council Priority/City Manager Goals • Budget and Financial Management — "Achieve balanced and stable Ten -Year Financial Plans for all funds." • Communication and Transparency — "Improve the quality of communication with the public and City employees to enhance knowledge and increase transparency to improve public trust." Attachments ^Resolution Ten Year Plan 23-24 & 24-25 Dec 2024 Resolution No. 2024 - A RESOLUTION OF THE CITY OF REDDING APPROVING AND ADOPTING THE 70th AMENDMENT TO CITY BUDGET RESOLUTION NO. 2023-60 INCREASING APPROPRIATIONS BY $3,579,340 FOR FISCAL YEAR 2024-25. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF REDDING THAT Budget Resolution No. 2023-60 be and is hereby amended as follows: Fiscal Year Ended 2025 Fund Division 101 1621 201 7101. 211 8021 211 8035 211 8041 21.1 8051. 211 8079 211 8091 211 8095 231 6305 251 6501 251 6507 311 3101 361 3605 381 3801 383 3831 Description Streets - General and Administrative Redding Regional Airport REU - Power Production REU - Line REU - Vegetation Management REU - Substations REU - Metering REU - Capital REU - Capital / General System Improvements Wastewater Clear Creek Treatment Plant Solid Waste Administration Transfer Station Information Technologies Utility Customer Services Risk Liability & Insurance Risk Worker's Compensation THAT account titles and numbers requiring adjustments by this Resolution are as follows: Fiscal Year Ended 2025 Decrease (Increase) Fund Balance 101 2910000 Beginning Balance 201 2910000 Beginning Balance 211 2910000 Beginning Balance 231 2910000 Beginning Balance 251 2910000 Beginning Balance 311 2910000 Beginning Balance 361 2910000 Beginning Balance 381 2910000 Beginning Balance 383 2910000 Beginning Balance Expenditures 101 1621 5220003 Maintenance Material - Traffic 201 7101 5037512 Appraisals & Title Reports 201 7101 5085001 Vehicle Tires & Tubes 201 7101 720001.4 Improvements - Other 211 8021 8515051 Steam Turbine, Condensate, and Cooling Tower 211 8021 8545051 Hydroelectric Turbine 211 8021 8924831 Property Insurance General 21.1 8035 8921.301 Administrative & General - PC Equipment & Software 211 8041 8593141 Vegetation Management Overhead Contracts 211 8051 8570041 Transmission Maintenance 230 Equipment Contract Increase 126,000 37,500 205,000 105,000 135,000 70,000 200,000 63,000 300,000 375,000 60,000 29,840 36,000 437,000 890,000 51.0,000 Use of Funds Decrease Source of Funds 1.26,000 37,500 1,078,000 375,000 89,840 36,000 437,000 890,000 51.0,000 Use of Funds Source of Funds 126,000 12,000 18,000 7,500 120,000 30,000 55,000 105,000 135,000 40,000 51 st AMENDMENT TO CITYB UDGET RESOL UTION NO. 2023 -060 Page 1 of 2 Resolution No. 2024 - Fiscal Year Ended 2025 (Continued) Expenditures (Continued) 211 8051 8598801 PCB Testing 1 Material Disposal 211 8079 8921.051 Administrative & General Materials & Supplies 211 8079 8921301 Administrative & General - PC Equipment & Software 211 8091 7200006 Fencing, Signage, etc. 211 8095 7800016 REU - Transformers 231 6305 5037501 Professional. Services & Consulting 231 6305 5092504 Wastewater Maintenance & Repairs 231 6305 5125001 Operating Materials & Supplies 251 6501 5037505 Legal Services 251 6507 7800042 Wastewater - Structures & Improvements 311 3101 5110001 Communication Expense 361 3605 501.0001 Variable Charge Mail 361 3605 5040001 Specialized Services & Technical 361 3605 5087501 Bank Service Fees 381 3801 5205001 Insurance Premiums 383 3831 5205001 Insurance Premiums THAT the purpose is to increase appropriations by $3,579,340 for fiscal year 2024-25 Use of Funds Source of Funds 30,000 110,000 90,000 63,000 300,000 75,000 25,000 275,000 60,000 29,840 36,000 92,000 205,000 140,000 890,000 510,000 $ 3,579,340 I HEREBY CERTIFY that the foregoing Resolution was introduced and adopted at a regular meeting of the City Council for the City of Redding on the 18th day of March, 2025 and was duly adopted at said meeting by the following vote: AYES: COUNCIL MEMBERS: NOES: COUNCIL MEMBERS: ABSENT: COUNCIL MEMBERS: ABSTAIN: COUNCIL MEMBERS: ATTEST: SHARLENE TIPTON, City Clerk JACK MUNNS, Mayor IEll 7►5% 99M61TANX $ 3,579,340 CHRISTIAN CURTIS, City Attorney 51stAMENDMENT TO CITYBUDGETRESOLUTIONNO. 2023 -060 Page 2 of 2 City of Redding General Fund Ten Year Plan (in thousands) Fiscal Year Ending 2024 & 2025 Adopted September 17, 2024 Fiscal Year Amended Amended 23-24 24-25 2025-26 2026-27 2027-28 2028-29 Beginning Cash Balance 21,000 13,307 7,990 2,671 (1,562) (6,519) Revenues 97,238 98,906 101,381 103,101 1o6,167 109,323 Net Transfers 77237 7,019 7,529 7,955 8,194 8,440 Total Revenues 104,474 105,924 1o8,911 111,057 114,361 117,762 Personnel Costs (75,070) (79,059) (83,649) (84,435) (87,552) (90,105) Operating Costs (29,900) (25,239) (23,099) (23,814) (24,551) (25,311) Capital Outlay (7,107) (7,000) (7,210) (7,427) (7,650) (7,879) Debt Service (2,118) (1,957) (1,965) (1,318) (1,314) (1,313) Savings 2,028 2,015 1,694 1,703 1,749 1,796 Net Expenditures (112,167) (111,241) (114,230) (115,290) (119,318) (122,813) Ending Cash Balance 13,307 7,990 2,671 (1,562) (6,519) (11,569) Projections toward Council Objectives Ending Cash as Percentage of Expenditures 11.9% 7.2% 2.3% -1.4% -5.5% -9.4% Projected Personnel Percentage 65.7% 69.8% 72.2% 72.2% 72.3% 72.3% Projected Cash Balance Projected Revenues Projected Net Transfers Total Projected Revenues Projected Personnel Costs Projected Operating Costs Projected Operating Costs Projected Debt Service Projected Savings Net Projected Expenditures City of Redding General Fund Ten Year Plan (in thousands) Fiscal Year Ending 2024 & 2025 Adopted September 17, 2024 Fiscal Year 2029-30 2030-31 2031-32 2032-33 2033-34 (11,569) (16,447) (20,58o) (23,i87) (24,832) 112,578 115,938 119,412 123,012 126,735 87693 8,954 9,222 9,499 9,784 121,271 124,891 128,634 132,511 1367519 (92,476) (94,356) (95,542) (97,393) (98,819) (26,094) (26,902) (27,734) (28,592) (29,476) (8,115) (8,359) (8,6io) (8,868) (9,134) (1,310) (1,309) (1,311) (1,315) (1,132) 1,848 1,901 1,955 2,011 2,o69 (126,148) (129,025) (131,241) (134,156) (136,491) Projected Ending Cash (16,447) (20,58o) (23,187) (24,832) (24,804) Projections toward Council Objectives Ending Cash as Percentage of Expenditures -13.0% -16.o%-r7.7% -18.5% -18.2% Projected Personnel Percentage 72.2% 72.1% 71.7% 71.5% 71.3% Actual 6/30124 Actual 9130124 Acktal213112 Projected 6 Budget * Actual Revenues Expenses I:T MIS F m-- I STOW "It, 11370M LI S(2,000,000) Sales T ae,Property Tax "transient Occupancy Cannabis Tax "a. Otter Faxes Bulling Related Revenue from er Fees Gov ert �wrw Sales tax Property tax - Transient Occupancy Tax Cannabis _ Otter Tayes,; FYE 2023 a FYE 2024 � FYE 2025 201 2019 2020 2021 222 2023 224 22 , �� Sa Les Tax Actin -PrGperty Tax Actual = .- TOT Actual � ��,fr� nn is Actual lam 634) , 5 T Police Fire Public Works evl 7 rr Services Community i Services General Govemment �s� -Traffic Controller 7 000 Professional, Sry ces related t tab costs Increased Etectrit Budget Requests Cyber Security Insurance " t maintenance & electricat testing Ptant & Whiskeytowni Turbine 1Software Substation a dent Meter installation replacements $901000Meter-shopequipment Etectrit Budget Requests Pipeline Fencing project 3 Updates $437',000,,.- Customer Service cat[ center, mail charges & bank service M 2 t Value Appraisalst property 1 pf ne Fire Fighting vehicle es {$7,500 - Reptacement of access controt & security` nodes -ice prerr'nums