1. City of La Palma The Path to Fiscal Sustainability: FY 2012-13 Budget Adjustments and Long-Term Response Discussion September 18, 2012

2. City Manager Introduction Report is a result of City Council direction given in August and provides: – More detail specifically regarding expenditure reductions and their service impacts – More information regarding a community engagement plan focused on longer term fiscal sustainability to begin this fiscal year Focus of the recommendations is on actions for this fiscal year – Longer term strategies will need to be different – Recommendations are first steps in a long process – Some recommendations are not sustainable in the longer term as additional options will be developed for the longer term and are not ready for current consideration 2

3. Path to Fiscal Sustainability 3/18 Start Finish July, 2012, Significant Sales Tax Loss August, 2012, Fiscal Response Plan Presented to City Council September, 2012, Initial Response Recommendations Proposed for City Council Action City has just started along the path towards fiscal sustainability… Much more work is needed before reaching the “Finish” line… Goal: Fiscal Sustainability

4. Fiscal Status: Overview Action required to recognize and respond to impact of losing a major sales tax generator – Must deal with immediate impacts to maintain balanced budget – Must create strategic response to reach fiscal sustainability Additional information and recommendations presented per City Council’s August 7 request, including service impacts Recommendations reflect City Council goal of avoiding use of reserves to maintain FY 2012-13 balanced budget 4

5. 5/18 Fiscal Status: Proposed Response Plan Next steps… – Proposed budget amendments for FY 2012-13 See Exhibit A to Staff Report – Update cost recovery plan Staff seeking direction – Review Utility Users Tax (UUT) – Discuss long-term response plan and communication strategies

6. 6/18 Summary of Current Fiscal Year Budget Challenges Updated FY 2012-13 Revenue Estimate: – $8,707,600 Estimated deficit with no changes to expenditures: – $936,600 Staff recommending budget amendments: – Reduce expenditures – Adjust revenue projections Goal for FY 2012-13: – No draw on General Fund reserves

7. Adopted FY 2012-13 Revenue Summary 7 $9,707,600 Adopted Revenue Budget

8. Adopted FY 2012-13 Expenditure Summary 8 $9,644,200 Adopted Expenditure Budget

9. 9/18 Proposed Budget Amendments CategoryAmount Staffing – Vacant Positions($157,300) Staffing – Additional Proposed Reductions($23,200) Maintenance and Operations($80,300) Operating Budget Reductions($260,800) Reduce Transfer to Capital Outlay Reserve($575,800) Property Tax Adjustment$100,000 These adjustments would close $936,600 gap for FY 2012-13

10. Proposed FY 2012-13 Budget Amendments 10 $936,600 in expenditure and transfer reductions and revenue adjustments

11. 11/18 Proposed Budget Amendments Hold open two vacant positions Reduce Police Reserve hours Eliminate paid internship program Reduce training, professional services, supplies across all departments Proposed reductions should have minimal/no impact to residents Additional reductions needed to reach fiscal sustainability will require reviewing and re- establishing spending priorities Impacts will be felt across entire organization

12. 12/18 Additional Near-Term Response Opportunities Update cost recovery plan – Last one completed FY 2009-10 identified $150,000 in additional fee revenue – Staff asking for direction to update cost recovery plan and return with results using FY 2011-12 data Review Utility Users Tax (UUT) rate – Set at 4% at May 15, 2012 City Council meeting – City Council could set at voter approved 5% rate effective January 1, 2013 Additional $95,000 in FY 2012-13 revenue

13. 13/18 Subsequent Fiscal Year Response Plan La Palma is not in an immediate financial crisis – Fortunate to have 100% plus in General Fund reserves – View next two fiscal years as “bridge” years Build strategic response to permanent loss of sales tax Must develop process for analyzing priorities in light of revenue loss – Goal is to reach fiscal sustainability

14. 14/18 Seeking Feedback / Setting Priorities Recommended next steps: – Continue outreach to City commissions/committees and volunteer groups – Schedule a community feedback event to solicit resident input on strategies/priorities – Establish outreach campaign including use of City’s website, Facebook page and other social media – Identify and meet with other stakeholders and local media – Schedule “brown bag” communication/update sessions with City employees – Investigate additional opportunities to gauge residents’ priorities (phone and/or web surveys, focus groups, etc.)

15. 15/18 Questions?

16. Overtime Usage in the General Fund 16/18 FY 2008-09 ACTUALS FY 2011-12 ACTUALS FY 2012-13 BUDGET 4-Year Average* Administration $ 4,916 $ 4,729 $ 5,400 $ 4,816 Community Development $ 2,202 $ 2,574 $ 2,400 $ 2,032 Finance $ 1,893 $ 2,760 $ 2,500 $ 2,391 Police $ 544,361 $ 387,164 $ 333,000 $ 412,393 Public Works $ 9,080 $ 1,434 $ 7,700 $ 6,610 Recreation & Community Services $ 15,999 $ 7,096 $ 16,800 $ 14,025 $ 578,451 $ 405,757 $ 367,800 $ 442,267 *Based on average of actual expenditures from FY 2008-09 through FY 2011-12

17. City of La Palma The Path to Fiscal Sustainability: FY 2012-13 Budget Adjustments and Long-Term Response Discussion September 18, 2012