Westminster City Council/Successor Agency to the Westminster Redevelopment Agency
SUBJECT
Title
Fiscal Year 2024-25 Proposed Budget.
End
From: Christine Cordon, City Manager
Requested by: Administration
Prepared by: Erin Backs, Finance Director
____________________________________________________________
RECOMMENDED ACTION
Recommendation
Provide direction only. No action.
BACKGROUND
The budget document provides the foundation for our work plan for the next fiscal year and more importantly provides the community with information related to the priorities of the City Council in the upcoming year as outlined in the Strategic Plan. The proposed Fiscal Year (FY) 2024-25 operating and capital projects budget document presents our best assumptions for revenue and expenditures for the remainder of the current fiscal year and for the next fiscal year.
The City Council has made Achieving Financial Stability one of the City’s Strategic objectives. As part of that objective, the City Council placed Measure E on the March 2024 ballot, asking the residents of Westminster if to consider a half-cent transaction use tax to sustain Westminster’s long-term financial stability and prevent future cuts to services. The Measure was approved by the voters and collections will begin July 1, 2024, generating $8 million annually.
During the current year, staff has worked hard to show the community that we are prudent stewards of local funds and continue to strive to do more with less. Some FY 2023-24 highlights that emphasize the priorities in the community are as follows:
Administration
• Closed 50 out of 57 claims with no loss to the City.
• Successfully negotiated and agreed on MOUs/Compensation Plan for a 3-year period for four units.
• Recruited 61 positions.
• Received GFOA Certificate of Achievement for Excellence in Financial Reporting for FY 2021-22.
• Received GFOA Distinguished Budget Presentation Award for FY 2023-24.
• Received $97,983 through the Extended Water and Wastewater Arrearage Program through the State of California to assist water customers with outstanding balances related to Covid.
• Completed utility billing conversion to Munis including a more extensive online water account access portal where customers can check balances, pay bills, download bills, and view consumption history.
• Launched “Westminster Build,” an online development services platform.
Community Services
• Hosted numerous City-led special events including Movies and Music, Fall Festival (expanded to a weekend long festival), Halloween Spooktacular Trunk or Treat and Movie Night, Santa on the Go, Tree Lighting Ceremony, American Vietnam War Veterans Day Event, Black April Commemoration, Bunny Hop and Earth Day activities.
• Successfully led the 2024 Tet Parade.
• Managed 24 approved special event permits including Movie Nights at Bolsa Chica Park, Blessed Sacrament's Annual Festival, Asian Garden Mall Night Market, ceremonial events at Sid Goldstein Freedom Park and several large events at Westminster Mall.
• Successfully operated the Splash Pad in summer 2023 with 27 private party rentals.
• Processed 62 facility rentals with over 7,000 guests.
• Registered over 5,909 participants in 463 recreation classes, programs and activities.
• Reserved over 6,500 hours of field use.
• Through the Family Resource Center (WFRC), in-person services to 1392 individuals from 1052 family clients, including counseling, case management, parenting classes and special activities.
• The WFRC expanded services to include monthly community workshops including disaster prep, domestic violence awareness, health and wellness classes, tenant rights and financial planning.
• WFRC continued to offer low-cost medical services, monthly citizenship and legal clinics, employment and job search assistance and food distributions.
• Graduated 24 students through the Project SHUE program.
• Senior Center provided 25 social events with lunch for the older adult community.
• Senior Center provided 4 afternoon dances.
• Hosted 82 educational classes and presentations for the older adult community.
• Provided food distribution to 125 low-income families each month.
• Senior Center partnered on two occasions with LA Quinta High School AVID students for nutritional program support.
• Senior Center partnered with Westminster High School Workability program on 8 events for volunteer opportunities with nutrition programs.
• Hosted 2 intergenerational events with meals on wheels.
• Senior Center hosted an intergenerational ping pong tournament with the Westminster Youth Committee.
• Hosted 4 teen tech help workshops for older adults.
• Entered into a partnership with the Assistance League to provide a breakfast program for older adults.
• Hosted 12 free sessions for 1-1 appointments for older adults with HICAP and community legal aid.
• WOW transportation provided over 7,500 one-way trips for senior Westminster residents.
• Senior Center provided goody bags to all Home Delivered Meals clients during summer and at Christmas.
Public Works
• Installed 39 new ADU water services.
• Repaired 40 service leaks and 3 water main breaks.
• Exercised 300 water valves and serviced 35 fire hydrants.
• Pumped 100% well water and saved approximately $300,000 in import water costs.
• Repaired 3,461 potholes citywide.
• Removed 3,109 graffiti locations.
• Picked up 523 abandoned items in the public right of way.
• Replaced 17 damaged sidewalk locations and installed 9 pedestrian wheelchair ramps.
• Planted 12 new trees in public right of way and parks.
• Completed the construction of Westminster Boulevard Improvement Project from Goldenwest Street to Hoover Street.
• Completed the construction of Edwards Street Improvement from Westminster Boulevard to Trask Avenue.
• Completed the construction of the Garden Grove Complete Street/Edwards/Trask Trail Improvements.
• Completed the design of Garden Grove Boulevard Street Improvement Project from Edwards Street to Beach Boulevard. Anticipate construction in July 2024.
• Completed the design of Magnolia Street Improvement Project, from Heil Street to Edinger Avenue. Anticipate construction in September 2024.
• Completed the construction of CDBG Overlay Project which included 3 residential street segments.
• Completed the design of CDBG Citywide Overlay Project which included 10 residential street segments.
• Completed the design of Citywide Slurry Seal Project which included 63 residential street segment.
• Completed the Traffic Signal Installation and Median Improvements at Brookhurst Street and Greenstone Lane.
• Completed new playground installation at Sigler Park and Liberty Park.
• A new playground installation at Newcastle Park Playground Renovation Project is underway.
• Completed the design of Tony Lam Park Playground Renovation Project. Anticipate construction in October 2024.
• Completed the design of Mendez Historic Trail Improvement Project. Anticipate construction in September 2024.
• Completed the installation of the Cherry Outdoor Dining Patio at Westminster Boulevard and Cherry Street.
• The design for ARPA-funded Playground Projects at Bolsa Chica, Westminster Village, Russell Paris, College, and Bowling Green Parks is in progress.
• The design for ARPA-funded Baseball Field Improvement Project at Westminster and Buckingham Parks is in progress.
• The design for ARPA-funded Community Garden Project on Cherry Street is in progress.
• The design for ARPA-funded HVAC/Roofing Project for the City Hall, Council Chamber, Senior Center, and Community Services buildings is in progress.
• The design for ARPA-funded Blakey Park Renovation Project is in progress.
Police
• Leadership: Hosted a new promotion on-boarding supervisor/ management training.
• Be-Well started responding to assist Westminster in July.
• Over a dozen traffic operations and DUI checkpoints conducted by our traffic division.
• Hosted Safety Day at Sigler Park.
• Hosted a Coffee with a K9 event.
• Participated in National Walk to School day.
• Hosted a National Prescription Drug Take Back event.
• Hosted a Community Crime Prevention Workshop.
• Hosted our local Hotel Association for a crime update/prevention workshop.
• Police made 2,406 arrests since July 1, 2023.
• Hosted quarterly Probation Officer Training.
• Homeless Liaison Unit added two more Officers to the unit.
• Numerous Homeless Outreach Events were conducted.
• Several Homeless sweeps were conducted to focus on illegal encampments.
• Code Enforcement/CPU conducted weekly Street Vendor Operations.
• Facilitated National Night Out 2023.
• Held a Community Academy and graduated 13 attendees.
• Hired 13 new Police Officers, 3 Dispatchers and 7 Professional Staff employees.
• Hired a new Emergency Manager who is facilitating training and compliance throughout all city departments regarding emergency operations.
• WPD Detectives hosted a Free Crime Prevention Workshop for residents and the business community.
• Patrol handled approximately 89,810 calls for service.
• Dispatch handled a total of 125,282 calls (incoming/outgoing).
• Created 2023 Annual Report (currently in draft form).
• Doubled the amount FLOCK cameras from 4 to 8 mounted throughout the city.
• Catalytic Converter Etching Event conducted at City Yard.
• Kept our community informed on Police & City matters via social media.
• Processed over 14,591 police reports for internal and court purposes.
• Processed over 1,695 public records requests for insurance agencies, attorneys, general public requests, and criminal discovery requests.
• Processed over 4,500 court packages and evidence discovery requests for criminal filing with the Orange County District Attorney’s Office.
• WPD was awarded a grant from the California Department of Alcohol Beverage Control which has supported multiple undercover operations throughout the city.
Fire
• OCFA handled 178,370 emergency calls in 2023, 3,000 more incidents than in 2022 and 30,000 more than in 2021 - a 20% increase in just three years.
• Our Emergency Command Center received over 228,000 911 calls in 2023, dispatching responses in 56 seconds, well under the 1:04 national guideline.
• Westminster is staffed with three paramedic engine companies and a battalion chief. A fourth engine, Engine 25, is stationed in Midway City and supported Westminster with over 1,000 responses in 2023.
• Westminster’s contract costs are for the three engines and chief; it is not charged for all the OCFA specialty programs but receives them any time needed for city emergencies. This includes specialties like our technical rescue units, hazmat team, and incident management team.
• Units in Westminster ran 9,026 emergency calls, a 14% increase over the past three years, including 142 fires, 604 traffic collisions, and 2,933 critical need medical emergencies.
• OCFA fire inspectors and firefighters conducted 1,200 fire safety building inspections.
• OCFA staff supported Westminster development services with numerous projects, including the Westminster Mall redevelopment.
• OCFA staff and firefighters participated in 47 city events, including the Tet Parade, Movies and Music, 65th Anniversary Fall Festival, Trunk or Treat & Halloween Movie Night, Santa on the Go, Tree Lighting.
• OCFA Cadet Post 64 hosted at Fire Station 64 has over 35 cadets, many of whom are Westminster residents.
• OCFA firefighters supported Westminster High School with “Stop the Bleed” training for over 150 faculty and staff.
• Emergency Ambulance assumed transport services in 2023, and the city continues receiving all revenues from the ambulance program.
• OCFA has actively received 10’s of millions of dollars in grant funding to minimize costs for cash contract cities like Westminster.
• In March, the agency hosted its largest and most successful Open House in history, with more than 5,400 community members in attendance.
• OCFA Social Media increased its followers by 20%, garnered 1.7 million total engagements and 31 million impressions. @OCFADivision1 coming soon!
• In 2023, the OCFA garnered $292.3M worth of earned media coverage.
• The OCFA Outreach Program contacted over 600 residents nationwide for DEI interest in the fire service.
• OCFA hosted the 4th Annual Girls Empowerment Camp, a camp dedicated to introducing the fire service to high school aged women.
• Launched the agency’s first #OCFAWomenInFire year-round Social Media Campaign.
• OCFA conducted two recruit academies with 50 candidates each, two engineer academies, two captain academies, and one battalion chief academy in 2023.
• OCFA training section hosts quarterly training for the fire crews and provides 25 career development courses, including promotional leadership classes and academies.
• OCFA continues to be recognized as a cutting-edge agency, constantly at the forefront of fire services, especially in emerging technology. Chief Fennessy was named a “Top 25 Doers, Dreamers & Drivers” by Governing Technology.
• OCFA led the way with the FIRIS program, which provided real-time airborne intelligence to incident commanders via aircraft and a supercomputer at UC San Diego. The model is now becoming a national standard. OCFA is currently leading the country in technology for tracking firefighters at emergency incidents, whether fighting fires in a building or on a hillside.
• After a four-year process, the OCFA purchased and outfitted to new Sikorsky S70 FIREHAWKS that will join agency’s two Bell 412EP helicopters and empower OCFA Air Operations to perform day/night aerial fire suppression, remote rescues, and other all-hazard missions at a far safer and capable level.
Budget Layout
The city budget is broken down into three main sections. The total sources and uses schedule behind the summaries tab shows revenue, expenditures, and balances for all funds on one page. Each fund is further detailed on individual schedules located behind the fund statements tab. Within each fund are programs. The programs are categorized by department and are located behind the department tabs. The budget is broken down further by objects. Objects are more specific and provide the most detail included in the document. Also included in the budget are recommended capital projects for the upcoming year. Capital improvement project (CIP) requests totaling $12.5 million are found behind the capital improvements tab.
All schedules show FY 2022-23 actuals, FY 2023-24 revised budget, FY 2023-24 estimated year-end actual, and the proposed FY 2024-25 budget. The proposed budget doesn’t include any service level increases but does include contracted increases for current services and all service additions added by the City Council during FY 2023-24.
The expenditure objects for the city are grouped together by type and categorized as follows:
• Salaries and Benefits
o Salaries & Personnel Costs - Costs associated with employee compensation and benefits and retiree medical payments.
o Employee related administration, insurance, and claims costs
• Operations and Maintenance
o Operating costs including contractual, legal, supplies, training, vehicle use, uniforms, postage, printing, utility costs including gas, electric, phone and water, licensing fees.
o Equity Taxes - Water ground pumping costs
o Other Uses - Bad debt expense
• Capital Outlay/Other
o Expenditure relating to improvement projects and the purchase of equipment.
o Depreciation - Accounting method used to allocate the cost of a tangible or physical asset over its useful life or life expectancy.
• Debt Service
o Interest & Fiscal Charges - Interest charges on outstanding balance of debt issuances.
o Principal Retirement - Payments applied to outstanding debt balance.
• Administrative Charges/Transfers
o Admin Offsets/Credits - Overhead charge spread between city funds.
o Operating Transfers - Transfers between city funds
Total Budget
The total city budget of $147.3 million includes 33 funds, and funding for 256 full-time positions. The total FY 2024-25 budget including all funds is summarized in the following table.
|
|
Beginning Balance |
Revenue |
Transfers In |
Total Sources |
Operating Expenditure |
Transfers Out |
Total Uses |
Ending Balance |
|
General Fund |
34,669,676 |
87,456,422 |
- |
122,126,098 |
87,308,859 |
1,525,000 |
88,833,859 |
33,292,239 |
|
Special Revenue Funds |
22,447,592 |
13,531,856 |
- |
35,979,448 |
7,579,275 |
6,656,052 |
14,235,327 |
21,744,121 |
|
Capital Project Funds |
26,299,053 |
124,000 |
8,501,052 |
34,924,105 |
9,766,052 |
- |
9,766,052 |
25,158,053 |
|
Enterprise Funds |
17,329,791 |
21,398,500 |
4,006,066 |
42,734,357 |
22,749,177 |
3,981,066 |
26,730,243 |
16,004,114 |
|
Fiduciary Funds |
1,395,601 |
5,866,572 |
- |
7,262,173 |
5,866,572 |
- |
5,866,572 |
1,395,601 |
|
Internal Service Funds |
(722,232) |
14,606,134 |
- |
13,883,902 |
13,992,551 |
345,000 |
14,337,551 |
(453,649) |
|
Total All Funds |
101,419,481 |
142,983,484 |
12,507,118 |
256,910,083 |
147,262,486 |
12,507,118 |
159,769,604 |
97,140,479 |
Revenue for all funds is projected to total $143 million and budgeted expenditures total $147.3 million. The largest categories of expenditures in the city are in the general fund followed by the enterprise (water) funds, internal service funds, and capital projects. Ending balances for all funds are projected to total $97.1 million.
Legal costs are an important component of the total budget. The FY 2024-25 budget includes an allocation of $2.5 million to legal fees. The breakdown of this category by program for the proposed budget, current year and 3 years of history can be found in attachment 3.
General Fund
The general fund is the primary operating fund of the City. All general tax receipts and fee revenue not allocated by law, Council policy or contractual agreement to other funds are accounted for in the general fund. General fund expenditures include operations traditionally associated with activities which are not required to be accounted for or paid by another fund.
The general fund budget for FY 2024-25 is projected to use $1.4 million of reserves to be balanced. Revenues are projected at $87.5 million and expenditures, including transfers out, are projected at $88.8 million. The use of reserve funds has drastically improved over the prior year adjusted budget of $7.2 million use of reserves. The additional revenue generated from the Measure E transaction use tax made it possible for revenue to cover operating costs. Reserves are being used to fund the $1.5 million in capital improvements funded through the general fund.
Westminster has struggled with budget shortfalls and loss of revenue from state takeaways for over 30 years. The city finances heavily relied on redevelopment funds to maintain basic service and staffing levels and provide business development assistance, low-moderate income housing and community-based programs. When the state eliminated redevelopment agencies, the city lost over $30 million in property tax annually with $12 million directly benefiting the general fund. When faced with massive cuts, the City Council approved the placement of a one-cent transaction use tax measure on the ballot and the voters approved Measure SS in November 2016. Measure SS was a limited term solution that ended December 31, 2022. On August 12, 2022, the City Council voted to put the continuation measure on the ballot and Measure Y was approved by the voters in November 2022. Measure Y collections started April 1, 2023. In March of 2024, the voters were once again faced with a choice to fund service levels through the approval of an additional ½ cent transaction tax which will be remitted to the city starting in July 2024.
Projected fund balances for FY 2024-25 are based on current year projections. The FY 2023-24 General Fund revenues are trending above budgeted projections by $1.4 million. This is primarily a result of higher charges for services primarily due to development fees and ambulance billing charges. General fund expenditures are projected to be under budget by $2.5 million. The estimated decrease is due to continuing efforts by all departments to contain costs and the high number of vacancies the city is experiencing in all departments. The budget was adopted with a use of reserves of $6.9 million and the adjustment budget shows a $7.2 million use of reserves. Current projections use $3.3 million of reserves.
The salary savings from the 27 current vacant positions will continue until these vacancies are filled. One of the City’s Strategic Goals is to Attract, Develop and Retain Well Qualified Staff Members and the City is working hard to fill these vacancies and achieve this goal through the objectives identified through the strategic planning process. In addition, staff is working on creating job descriptions which are more accessible and easier to read in attempts to appeal to a broader audience.
The following table shows revenue, expenditures and reserve balances for the FY 2023-24 year-end estimate, FY 2024-25 proposed budget plus five additional years of projections. Total operating costs are covered by revenue in FY 2024-25. The use of reserves is to fund $1.5 million in capital projects. As new revenue sources are identified and implemented this use of reserve will diminish.
|
General Fund |
2023-24 Estimate |
2024-25 Proposed |
2025-26 Projected |
2026-27 Projected |
2027-28 Projected |
2028-29 Projected |
2029-30 Projected |
|
Revenue |
77,461,161 |
87,456,422 |
90,068,089 |
92,777,432 |
95,581,929 |
98,485,199 |
101,491,011 |
|
Expenditures |
80,734,754 |
88,833,859 |
91,611,490 |
95,011,493 |
98,168,468 |
102,416,677 |
105,678,464 |
|
(Use) Reserves |
(3,273,593) |
(1,377,437) |
(1,543,401) |
(2,234,061) |
(2,586,539) |
(3,931,477) |
(4,187,453) |
|
Reserve Balance |
34,669,676 |
33,292,239 |
31,748,838 |
29,514,776 |
26,928,237 |
22,996,760 |
18,809,307 |
The following lists the differences between the adopted FY 2023-24 budget and the proposed FY 2024-25 budget.
Revenue projections increased $11.4 million with the largest changes as follows:
• Property Tax increased $1.2 million
• Transaction Use tax increased $6 million - full year of Measure Y and Measure E
• Charges for service increased $1.7 million
• Utility Users Tax increase $820 thousand
Expenditures increased $5.6 million primarily related to the following increases:
• PERS retirement costs increased $650 thousand
• Part time/minimum wages increased $138 thousand
• OCFA 4.5% contracted increase $620 thousand
• Liability Fund cost increase $2 million
• Salary and benefit increased per MOU $700 thousand
Transfers out total $25 thousand to the water fund in FY 2024-25 for the Lifeline program. A $1.5 million transfer out for capital projects is included in FY 2024-25. The proposed budget shows an estimated ending fund balance/reserve of $33.3 million (unassigned fund balance at $18.2 million) in FY 2024-25 after the use of $1.4 million of reserves to balance the budget.
At the time of budget preparation, 27 or 13% of the 256 funded full-time positions were vacant. The supplemental requests (attachment 2) include 10 new full-time, one new part-time position, one position reclass and additional assistance through contractual services. The total cost of all supplemental requests is $1.2 million. These requests are not included in the budget.
Since establishment in 2017, the city has contributed salary savings in the amount of $250 thousand to both of our pension and Other Post-Employment Benefits (OPEB) Section 115 Trust accounts. Staff is recommending this practice continue with FY 2023-24 salary savings. This would bring the projected use of reserves for FY 2023-24 to $3.5 million and the total general fund ending reserve balance to $34.4 million. Section 115 Trusts for future pension and OPEB costs have been established and management is recommending funding an additional $406 thousand to be paid from savings accomplished by prepaying our unfunded PERS liability in FY 2024-25. This can also be postponed or eliminated to help offset general fund shortages.
Other Funds
While the budget process is largely focused on the general fund revenues and expenditures, it is important to note that the City's total budget of $147.3 million is made up of several different funding sources, such as the City's water utility, gas tax, Measure M, and various federal and state grants. The funding made available from these sources is highly restrictive and is dedicated to the completion of various infrastructure and capital improvements projects. This funding cannot be used for general city operations (except for specific administrative costs).
Special Revenue Funds (200-295) account for the proceeds of specific revenue sources that are legally restricted or otherwise assigned for specific purposes. Park dedication, gas tax, Measure M, CDBG, HOME, special police grants, and Family Resource Center are some of the main funds in this category. Special revenue sources total $13.5 million and expenditures total $14.2 for FY 2024-25. The American Rescue Plan Act (ARPA) funds were allocated by the City Council during FY 2022-23 at the October 24, 2022, November 8, 2022 and March 27, 2024 City Council meetings. Unspent ARPA project balances will be carried over to the FY 2024-25 budget.
Enterprise funds operate like a business that charges for a service. The water utility is budgeted for in this category. The City Council passed a water rate increase in February 2021 which included five years of rate adjustments, through January 2025. This has helped achieve financial stability in the Water Enterprise Funds (600, 601, and 602) and provides for funding of necessary improvements to the water system. Combined, water revenues total $21.4 million and expenditures total $22.7 million for the FY 2024- 25 budget.
The budget has five internal service funds that account for activities that provide an internal service to the city departments. Total revenue, primarily from department charges, is projected at $14.6 million and the expenditure budget is $14.3 million for FY 2024-25. The General Benefits Fund 740, and Liability Administration Fund 750 do not meet the minimum fund balance policy of a $500,000 unreserved balance. Liability charges were increased by $2 million, spread to all funds, to cover operating costs and start to build work toward the $500 thousand minimum fund balance. Charges for the liability fund cover the costs of legal fees, insurance and claims. As claims are eliminated the costs in the fund will be reduced. The General Benefits Fund has $10 million in cash however, $4.7 million of this fund is the 115 Trust reserved for pension benefits. The fund has a large reserve of $9.8 million in worker’s compensation claims payable which causes the negative balance. The projected unreserved ending balance of all funds is a negative $454 thousand. Charges will continue to be increased going forward to work toward meeting and maintaining minimum reserve levels. Any excess fund balance above the $500 thousand policy level could be transferred to the general fund.
Capital project funds account for the planning, design and construction of major capital improvements funded by federal, state and county grants, impact fees, and transfers. Once allocated, funds remain in the project account and the budget rolls to future years until the project has been completed. The Economic Development Fund is also included in this category and projects a positive fund balance of $9.0 million of this, $2.5 is available for projects.
Fiduciary funds account for resources held for the benefit of parties outside the government. The Successor Agency to the Westminster Redevelopment Agency is in this category. The SAWRA filed its Last and Final Recognized Obligations Payment Schedule and approval was received in April 2022. Expenditures in this fund relate to debt service and revenue is provided through the county property tax distribution to pay the obligations.
FISCAL IMPACT
The total proposed budget for all funds for FY 2024-25 is $143 million in revenue and $147.3 million in expenditures. Transfers between funds total $ 12. 5 million.
LEGAL REVIEW
The City Attorney’s Office has reviewed as to form.
CONCLUSION
This proposed budget document is the collaboration of all departments and represents the proposed spending plan for all City funds and programs for the next fiscal year. Staff is looking for direction from the City Council on the FY 2024-25 proposed budget and supplemental budget options. The general fund budget shows a use of reserve funds of $1.4 million. The City continues to work diligently to find ways to increase revenues to continue to the road to financial health for Westminster in the future. New revenue sources can take years to implement. Future budgets will continue to use reserves to be balanced. There are no short-term substantial revenue fixes to cover the negative spending in the general fund until long- term fixes can be implemented.
The budget document will be brought back to the City Council for adoption at the June 26, 2024 meeting.
ATTACHMENTS
1. FY 2024-25 Proposed Budget
2. Supplemental Requests
3. Attorney Costs
REVIEWED BY
Erin Backs, Finance Director
Christian Bettenhausen, City Attorney
Christine Cordon, City Manager