An Informal Informational Meeting ("Shirtsleeve" Session) of the Lodi City Council was held Tuesday, June 11, 2002 commencing at 7:04 a.m.

Present: Council Members – Hitchcock, Howard, Nakanishi, and Mayor Pennino

Absent: Council Members – Land

Also Present: Deputy City Manager Keeter, City Attorney Hays, and City Clerk Blackston

City Clerk Blackston reviewed the weekly calendar (filed).

C-1 "Budget – Fund Balance"

Deputy City Manager Keeter explained that this meeting will be a culmination of all the budget Shirtsleeve Sessions that have occurred thus far and takes into consideration the policies that have been discussed, as well as significant expenditure and capital requests that have been presented. She likened it to the City’s "check book," as it takes into account the expenditures, revenues, other sources in and out, and the bottom line.

Ms. Keeter reviewed the 2001-03 Financial Plan and Summary Report (filed) and presented the following information:

• Changes in fund balance to the General Fund: Projection of $20 million in tax revenue for fiscal year 2002-03. Of overall tax revenues, property tax is estimated at 15% and sales tax at 45%. Lodi’s fourth quarter sales tax increased 15% from the previous year. The Transient Occupancy Tax represents 2% of the overall tax revenues and is projected to be $429,000 next year. The tax revenue figure does not include the Electric Utility Market Cost Adjustment (MCA) transfer. It does include the $3.5 million Vehicle In-Lieu tax revenue.

Mayor Pro Tempore Hitchcock asked what rationale was used for not including the MCA.

Ms. Keeter believed that it was Council’s decision not to include it in the next budget year, i.e., not to transfer that portion of the rate from Electric Utility to the General Fund.

• Service fees and charges include fingerprinting, police records fees, vehicle towing, hazmat drug cleanup, other police fees, animal shelter fees, Parks and Recreation revenues, revenue from Lodi Lake Park, engineering, planning, and encroachment fees.
   

• New significant expenditure requests for year two of the two-year budget include:

• Increase in the Fire Department budget by $3,300 for the tiller truck annual maintenance and certification; $8,600 for maintenance and operation of Fire Station #4;
   

• Public Works signal maintenance services $36 million;
   

• Parks and Recreation Department: Grape Festival ground lease increase of $6,000; hiring a part-time site supervisor for the Armory building $16,000; design and printing for enhanced tabloid $14,000;
   

• $3,000 for new Arts program assistance, full-time position;
   

• Additional funds for fireworks;
   

• City Clerk’s Office: $2,000 tuition reimbursement; Conference of Mayors annual dues $3,250; Transient Occupancy Tax (also known as Hotel-Motel Occupancy Tax) measure election cost $9,000; and an additional $4,000 for Council Candidate’s Statement of Qualifications election fee; and
   

• $5,600 for Veterans Memorial Plaza maintenance.

• The following significant expenditure requests were tentatively approved in the budget last year and have now been included in 2002-03:

• Three new Firefighters;

• Administrative Clerk (Confidential) for the City Clerk’s Office; and

• Accountant to assist with GASB34 and the budget process;

• The following contributions have been included:

• $47,000 for the Downtown Lodi Business Partnership (DLBP);

• $25,000 for the Chamber of Commerce; and

• $130,000 for Lodi Conference and Visitors Bureau.

Council Member Nakanishi recalled that the DLBP also requested that the City pay collection fees.

Ms. Keeter reported that it has not been incorporated into the budget as there had been no clear direction from Council to do so.

• The expenditures overall on the General Fund side represent a 4.8% increase over current year numbers.

Mayor Pro Tempore Hitchcock noted that Revenue from Others increased by $1 million.

Ms. Paiste explained that the increase was due to a one-time Public Employees Retirement System (PERS) surplus of $700,000 from the super funding of the Miscellaneous Group.

• Other Sources and Uses – Operating Transfers In: $5 million is expected to be transferred back into the General Fund.
   

• Other Sources and Uses – Operating Transfers Out: Out of the $2.8 million, is the $1.5 million that Council directed staff to set aside. This comes out of the General Fund and goes back into the Capital Outlay Fund.
   

• Other Sources and Uses: It is estimated that there will be carryover from the current year.

Mayor Pro Tempore Hitchcock requested a report listing a breakdown of what the Other Sources and Uses are.

• A 25% increase was budgeted for medical insurance rates.
   

• A 14.15% reserve is projected for the General Fund, fund balance.

In reply to Council Member Nakanishi, Ms. Keeter provided the following fund balance percentage history: 1996-97 – 9.9%, 1997-98 – 8.9%, 1998-99 –10.3%, 1999-00 –13.8%, and 2000-01 – 12.75%.

• The fund balance for the Library is projected to increase by 2% on the revenue side. On the Capital side there is a $1.9 million line item (source undetermined) that includes computer system upgrade, heating, ventilation and air conditioning (HVAC) repair, and minor remodeling. The unreserved fund balance increased by $160,000.
   

• Police Special Revenue Fund: $4 million from the State for the public safety building is included in the budget under Revenues from Others.
   

• $43.5 million worth of General Fund Capital projects are anticipated, and of that amount, the funding source for $23 million is underdetermined. The City has debt capacity for $19 million.

Discussion ensued regarding budgeting for $43 million in projects in 2002-03, when construction may not take place for several years. In addition the need to show a correlation to debt service and to have overall consistent budgeting practices was emphasized.

• Other Sources and Uses, Operating Transfers: The General Fund contributes $1.5 million into the Capital Outlay fund and the balance of $300,000 is from Electric Utility. In the Operating Transfers Out there is $425,000 that comes out of Capital and into the Vehicle Maintenance Fund, and $1.2 million that goes into debt service.
   

• The Water fund balance has increased due to rate adjustments. Council had directed staff to designate the revenue increases for water and wastewater infrastructure, which has been done.
   

• A $2.5 million line item under Other Sources and Uses has been placed in the budget for design for the sewer treatment plant upgrade. The source has yet to be determined.
   

• The Electric fund revenues have increased $4 million from 2001-02 to the next fiscal year, due to the MCA. The additional revenue in MCA went from $256,000 in 2000-01 to $5 million in 2001-02.

In reply to Council Member Nakanishi, Ms. Paiste reported that the proceeds ($24 million) of the Certificate of Participation are with the trustee.

• $490,000 from Other Sources and Uses was transferred into the Benefits Fund from the Self Insurance Fund. It is expected that the Risk Manager will be arranging for an actuarial in the near future, which would help staff determine what the fund balance goal should be for the Self Insurance Fund.

Mayor Pro Tempore Hitchcock hoped that whatever the actuarial studies produce, the City takes their recommendation. She recalled that the last time it was done the City did not follow their recommendation and ended up $750,000 short.

• The General Fund shows an ending balance of $4.4 million, with a fund balance of $44 million for All Funds Combined including General Fund and Enterprise funds.

None.

No action was taken by the City Council. The meeting was adjourned at 8:20 a.m.

ATTEST:

Susan J. Blackston
City Clerk