REPORT TO COUNCIL
SUBJECT
Title
Review of the Proposed FY 2018/19 & FY 2019/20 Biennial Capital Improvement Program Budget
Report
BACKGROUND
City Charter Section 1302 Budget - Submission to City Council requires that at least thirty-five days prior to the beginning of each fiscal year, or at such prior date thereto determined by the City Council, the City Manager shall submit to the City Council the proposed budget.
In January 2018, the City Council held a Council Operational and Strategic Priority Setting Retreat (Council Priority Setting), in which the City Council Strategic Pillars were identified and discussed. The pillars that have a direct Capital Improvement Program (CIP) impact are “Enhance Community Sports and Recreational Assets” and “Deliver and Enhance High Quality Efficient Services and Infrastructure”. In addition, the City Council approved the 2018/19 Budget Principles at the Council Retreat.
The Budget Principles that directly relate to the CIP Budget are as follows:
• Consider budget decisions with long-term implications taken into account using data from the Ten-Year Financial Plan.
• Focus on projects and services that benefit the community as a whole.
• Use one-time unrestricted revenues (e.g., annual General Fund surplus) for one-time uses such as increasing reserves, funding capital or Information Technology projects, paying off debt, and/or paying off unfunded pension or other post-employment benefits liabilities.
• Inform and communicate clearly and broadly to residents, businesses and employees of the City’s fiscal position and schedule budget hearings to attract active participation in the City Council’s budget deliberations.
These were the guiding priorities and principles that departments were directed to follow during the budget preparation and which were incorporated into the proposed CIP budget.
As was proposed by staff and approved by the City Council at the Council Priority Setting, this budget moves the City to a two-year rotating cycle (Operating Budget will be in 2019/20) which will allow staff to continue to focus on fiscally aligning and incorporating the City Council priorities to resource investments. The combination of two-year operating and capital budgets align to Council’s strategic pillars in that it allows for a better understanding of today’s fiscal actions over the long term instead of budgeting year-to-year on a short term basis.
DISCUSSION
The Proposed CIP Budget is a planning document covering a five-year period that includes project descriptions and funding requirements for projects planned for completion during the five-year time period. Changes to existing projects as well as the addition of new projects may occur during the five-year planning period as new needs are identified that require attention and the allocation of resources.
The Proposed CIP Budget totals $215.9 million for FY 2018/19 & FY 2019/20 and a total of $509.9 million (before 2017/18 carryforwards) over the five-year period. Staff is estimating that there will be an additional $136.3 million carried forward from 2017/18 for projects that are in process but not yet completed at year-end.
The table below summarizes the FY 2018/19 & FY 2019/20 Capital Budget:
|
Fund Group |
FY 2018/19* |
FY 2019/20 |
Two-Year Total |
|
General Government Funds |
$11.7 million |
$9.1 million |
$20.8 million |
|
Street & Highway Funds |
$9.8 million |
$16.5 million |
$26.3 million |
|
Enterprise Funds |
$62.0 million |
$106.8 million |
$168.8 million |
|
Annual Total |
$83.5 million |
$132.4 million |
$215.9 million |
*Does not include prior year carryforwards
The Proposed CIP Budget is made up of 201 active projects (includes 33 new projects). The budget focuses on completing projects approved in prior capital budget cycles and placing the highest priority on projects that address any safety issues and serious deferred maintenance needs that can no longer be delayed. The program addresses the various long-term capital needs such as improving water, wastewater, and electric infrastructure, and parks and recreation improvements. The budget includes $5.7 million (FY 2018/19: $3.4 M, FY 2019/20: $2.3 M) in city-wide information technology projects such as computer and network equipment replacement, CAD upgrade, and video conferencing for the Fire department. In addition, $11.3 million is budgeted over the two year planning period to fund the Annual Street Maintenance and Rehabilitation Program.
FISCAL IMPACT
The Proposed CIP budget includes $83.5 million in FY 2018/19, $132.4 million in FY 2019/20, and an estimated carryforward of $136.3 million from FY 2017/18. The five-year total, including estimated carryforwards, equals $646.2 million. The Budget is scheduled for adoption on June 26, 2018.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environment Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(a)(4) in that it is a fiscal activity that does not involve any commitment to any specific project which may result in a potential significant impact on the environment.
COORDINATION
This report has been coordinated with the City Attorney’s Office.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov <mailto:clerk@santaclaraca.gov> or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
Review and provide input on the FY 2018/19 & FY 2019/20 Biennial Capital Improvement Program Budget.
Staff
Reviewed by: Angela Kraetsch, Director of Finance
Approved by: Deanna J. Santana, City Manager
ATTACHMENTS
1. FY 2018/19 & FY 2019/20 Proposed Biennial Capital Improvement Program Budget