MAY 31, 2005 ADOPTION OF THE CITY BUDGET AND EMPLOYEE SALARY RANGES FOR FISCAL YEAR 2005-2006 MAY 31, 2005 ADOPTION OF THE CITY BUDGET AND EMPLOYEE SALARY RANGES FOR FISCAL YEAR 2005-2006

TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL

FROM: CITY MANAGER

DATE: MAY 31, 2005

SUBJECT: ADOPTION OF THE CITY BUDGET AND EMPLOYEE SALARY RANGES FOR FISCAL YEAR 2005-2006

RECOMMENDATION

After conducting a public hearing on the proposed Two-Year City Budget: 1) Adopt Resolution No. 2005-__; approving the City Budget for Fiscal Year 2005-2006; 2) Adopt Resolution No. 2005-__; establishing salary and hourly ranges for competitive and management employee job classifications; 3) Review the Utility Users Tax analysis and determine the Utility Users Tax is necessary, and the current rate of 3% be maintained; and, 4) Review the Golf Tax analysis and determine the Golf Tax is necessary, and the current rate of 10% be maintained.

BACKGROUND

As part of the two-year budget preparation process for FY 05-06 and FY 06-07, the City Council conducted two Budget Policy Issues Workshops: February 26, 2005 and March 12, 2005.

The draft Two Year City Budget document for FY 05-06 and FY 06-07 is now being presented to the Council at a public hearing for review. If Council adopts the proposed budget resolution this evening, it will only be adopting the City Budget for FY 05-06. When the final budget document is printed, it will indicate that the first fiscal year (FY 05-06) has been "adopted" and the second fiscal year (FY 06-07) is "proposed."

DISCUSSION

The proposed budget reflects a continuation of the programs currently supported by the City. The budget proposes only one new program: The Water Quality and Flood Protection Program. The initial sixteen months of this program (FY 04-05 and FY 05-06) is funded by a $2 million transfer from General Fund Reserves to the Water Quality and Flood Protection Enterprise Fund, approved by the City Council on March 15, 2005. In addition to the monies transferred to the Enterprise Fund, the Council also authorized the expenditure of $605,000 of General Fund Reserves for interim drainage improvements at various locations throughout the City. This expenditure appears in the FY 05-06 budget in the Capital Improvement Fund.

The FY06 budget also includes a $150,000 project to construct a bluff-top safety fence at the Point Vicente Interpretive Center and at Upper Abalone Cove Beach Park. The Council directed that funds for this $150,000 project be transferred from the General Fund Reserve to the Capital Improvement Fund at their meeting on March 12, 2005.

The attached budget is balanced, that is, projected revenues and expenditures are equal, with the exception of the $605,000 interim drainage improvement projects and the $150,000 safety fence project previously authorized by the City Council utilizing General Fund Reserves.

The proposed budget leaves the City with estimated June 30, 2006 General Fund Reserves of slightly over $10.4 million.  Our 5-Year Financial Model shows a reduction in the Reserve of $3.86 million over the next five years (FY06 through FY10) in order to fully fund existing programs and a residential pavement overlay program of about $1.5 million annually. The Five Year Financial Model does not include a storm drain program (other than that approved on March 15, 2005) or a sewer maintenance program.

  1. Unfunded Discretionary Capital Improvement Projects

At the April 12, 2005 Budget Policy Workshop, the City Council directed the City manager to prioritize the "unfunded" capital improvement projects identified by the Departments. A list of those projects, with the City Manager’s priority and comments appears below. Adding any of these projects to the budget will reduce the General Fund Reserve.

PROPOSED ITEM

COST

PRIORITY

COMMENTS

Resurface Civic Center Parking Lot

$30,000

1

If the parking lot deteriorates further it may have to be reconstructed.

Planning Department Conference Room Expansion/Modify Counter

$16,500

2

This modification will allow for better efficiency in the Department.

Eastview Park Shade Structure

$16,000

3

There is currently no shade in the park.

Community Room Entrance Canopy

$6,250

4

This entrance to City Hall provides access to the often-used Community Room. In bad weather there is no shelter for people trying to enter the building.

Portable Generator & Park Site Electrical Modifications

$60,000

5

Currently there is no back up power for our alternate EOC.

Planning Department Archive Room Conversion to Offices

$10,000

6

Files must first be laserfisched in order to make this space available for offices.

Planning Department Kitchen Floor Replacement

$3,000

7

The floor is in poor shape and no longer serviceable.

Ladera Linda Shade Structure

$16,000

8

This structure would make the park more appealing to users.

Sewer Line Segment Replacement

$432,000

9

Funds may be required if the County identifies problems.

Office/Storage for Channel 33

$75,000

10

Storage space may become available when the PVIC project is completed late this year.

Conceptual Trails Plan

$22,100

11

Funding is available in the FY05 budget.

Planning Department Laserfische

$20,000

N

This item has been withdrawn by the Planning Department.

Planning Department Window Replacements

$5,000

N

This item has been withdrawn by the Planning Department.

Trail Link Between PVIC and Ocean Front Estates

$20,000

N

Outside funding sources may be available.

Sewer Cleaning & Video Inspection

$220,000

N

The County is committed to a video inspection program on a ten-year cycle.

In addition to the capital improvement projects listed above, the Equestrian Committee has prepared a list of suggested equestrian-related public improvements to improve equestrian trail access on the east side of the City. The list of five items is attached for Council’s consideration and is listed in order of priority; however, no cost estimates have been developed at this time for the proposed improvements. If the City Council wishes to pursue any of these projects or recommendations, they should direct staff to prepare cost estimates for specific items.

2. Recommended Merit Pool and Salary Range Adjustments

The City typically uses the March Consumer Price Index (CPI) to determine the annual employee merit pool and to adjust the salary ranges for each of the City’s job classifications. This year, the March 2005 CPI was 4.01%.

Staff recommends that the salary ranges for each City job classification be adjusted based on the March 2005 CPI (see attached draft resolution). In addition, the attached resolution continues the monthly car allowance for Department Heads and the Assistant City Manager established by the Council in 1999. Generally, adjustments to the City’s salary ranges and hourly rates do not result in employees receiving automatic increases. However, because the City has filled several positions over the last year at the bottom of the current ranges, the salaries of five full-time employees and twelve part-time employees would fall below the range after the new schedule goes into effect on July 1, 2005. In order to bring these employees within their new ranges, staff has included approximately $2,200 in the revised budget document. With the exception of these few adjustments, the existing method of employee compensation, whereby the amount of any salary adjustment is based on an employee's annual performance evaluation, will remain in place.

  1. Revenues Generated by Increased Planning Fees

On February 15, 2005, the City Council adopted Staff's recommendation to increase planning application fees 15%, as part of a City-wide fee increase.  At that time Staff also noted that the fees would be increased an additional 15% one year later in February 2006.  The Finance Department estimated that there would be a $55,000 increase in planning revenue (based on FY 03-04 planning revenue) as a result of the overall 30% fee increase.

At the March 12, 2005 Budget Policy Issues Workshop, the City Council agreed, in concept, to fund the creation of a new Planning Technician position in the Planning, Building and Code Enforcement Department as part of the FY 05-06 budget.  The cost of the new Planning Technician position has been budgeted at $60,273 (median salary plus benefits).  Although the Council agreed to create the new Planning Technician position, a question was raised as to how much more above the proposed fee increase (15% in 2005 and 15% in 2006) would planning fees have to be raised to offset the cost of the new position.  According to the Finance Department, to offset the cost of the budgeted planning technician, we would need to increase planning fees approximately 25% on top of the 15% increase proposed for February 2006.  This rate assumes that volume will not be impacted by the fee increase.

4. Compliance With Legislative Review Requirements

Utility Users Tax Legislative Review

Municipal Code Section 3.30.190 requires the City Manager submit to the City Council an analysis of the revenues derived from the Utility User Tax (UUT) annually. Based on the needs of the City, the City Council shall determine if any modifications to the tax rate is necessary or if the UUT is unnecessary. The review required by this section shall be completed by the City Council prior to the adoption of each year’s annual budget. Prior UUT analyses have been included in the annual Five-Year Financial Model staff reports and Mid-Year Financial Reports.

The proposed UUT revenue budget for FY05-06 is $1,827,900 (12.4% of total General fund revenue). The proposed General fund budget for FY05-06 includes sources of $14,927,550 and uses of $15,684,381, thereby reducing estimated General fund reserves by $756,831 to $10,422,960 at June 30, 2006. Based upon the needs of the City’s General fund, the current UUT rate of 3% continues to be a necessary General fund revenue source. Staff recommends the City Council review this analysis and determine the UUT is necessary, and the current rate of 3% be maintained.

Golf Tax Legislative Review

As described in the City’s Municipal Code (section 3.40.140) a legislative review of Golf Tax is required every four years. The Golf Tax ordinance directs that based on the needs of the City, the City Council shall determine if any modifications to the rate is necessary or if the tax should be repealed; and that the review shall be completed by the City Council prior to the adoption of the budget prepared for the next fiscal year. The City began receiving Golf Tax in December 2001 and is required to perform the legislative review prior to adoption of the FY05-06 budget. Prior discussions of Golf Tax have been included in the annual Five-Year Financial Model staff reports and Mid-Year Financial Reports.

The City’s General fund currently only receives Golf Tax from Trump National Golf Course, which closed in August 2004 to construct golf course improvements. The proposed Golf Tax revenue budget for FY05-06 is $195,500 based upon the anticipated re-opening of Trump National Golf Course in September 2005. Actual Golf Tax revenue received to date follows:

As noted above, the proposed General fund budget for FY05-06 includes a reduction of estimated General fund reserves in the amount of $756,831 during FY05-06. Based upon the needs of the City’s General fund, the current Golf Tax rate of 10% continues to be a necessary General fund revenue source. Staff recommends the City Council review this analysis and determine the Golf Tax is necessary, and the current rate of 10% be maintained.

Transient Occupancy Tax Legislative Review

The City’s Municipal Code does not require a legislative review of the City’s Transient Occupancy Tax (Municipal Code chapter 3.16).

CONCLUSION

Based on the direction provided at the February 26th and March 12th Budget Workshops, staff has prepared the draft budget document and a budget resolution for the Council’s consideration. Staff has also prepared a resolution to adjust the City’s salary ranges and hourly rates based on the CPI over the last twelve-month period. The City Budget for FY 05-06 is now being presented to the Council at a public hearing for review and adoption. In conjunction with the Budget, staff is also asking Council to review the City’s Utility Users Tax and Golf Tax, determine if these two taxes are still necessary and if they should be maintained at their current rates. If the Council desires to make any additional changes to the City Budget, they can be read into the record during tonight’s budget hearing.

Respectfully Submitted:

Les Evans

City Manager

Attachments:

RESOLUTION NO. 2005-___

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO PALOS VERDES APPROVING A BUDGET APPROPRIATION AND ADOPTING THE OPERATING AND CAPITAL IMPROVEMENT BUDGET FOR FISCAL YEAR 2005-2006.

WHEREAS, on May 31, 2005, the City Council conducted an advertised Public Hearing to receive public input regarding the proposed budget for FY05-06;

BE IT, THEREFORE, RESOLVED BY THE CITY COUNCIL OF THE CITY OF RANCHO PALOS VERDES:

Section 1: That an Appropriation-Expenditure Budgeting Program showing budgetary categories by department is hereby adopted. The adopted budget, by fund, is per the attached Exhibit A with a total Estimated Ending Unreserved Fund Balance of $21,857,552 as of June 30, 2006, exclusive of the City’s Redevelopment Agency and Improvement Authority.

A. The City Manager is authorized to transfer certain Budget Appropriation Balances within functions and/or programs when he deems it necessary to do so in accordance with Chapter 3.32 of the Rancho Palos Verdes Municipal Code.

B. Council approval will be required for any significant changes involving increased or decreased service levels.

C. The Finance Director shall be responsible for constant monitoring of the budget and shall establish and implement appropriate control mechanisms necessary for said purpose, after approval of the City Manager.

Section 2: The FY05-06 Revenue Budget is hereby adopted, establishing the following revenue and internal service fund contribution levels:

General Fund $14,725,750

Capital Improvement Projects Fund 9,600

Utility Undergrounding Fund 6,000

Roadway Beautification Fund 1,900

Street Maintenance Fund 820,900

Landscape/Street Lighting (1972 Act) Fund 328,400

El Prado Lighting District Fund 1,300

Community Development Block Grant Fund 221,800

Street Lighting (1911 Act) Fund 403,200

Beautification Fund 242,450

Waste Reduction Fund 96,100

Air Quality Management Fund 53,100

Street Improvement/Transit (Proposition C) Fund 512,900

Transit (Proposition A) Fund 616,000

Public Safety Grants Fund 100,400

Habitat Restoration Fund 1,900

Subregion One Maintenance Fund 20,200

Parks/Building Maintenance (Measure A) Fund 42,500

Abalone Cove Sewer District Fund 40,300

Park Development (Quimby) Fund 12,800

Affordable Housing In-Lieu Fund 49,500

Development Impact Mitigation (EET) Fund 201,800

Water Quality and Flood Protection Fund 24,000

Operating & Capital Fund Total $ 18,532,800

Internal Service Funds Contributions & Revenue:

Equipment Replacement Fund $ 448,300

Building Replacement Fund 34,700

Employee Benefits Fund 1,355,600

Internal Service Fund Total $ 1,838,600

Section 3: The FY05-06 Budget is hereby adopted, establishing the following transfers into the following funds:

General Fund $ 201,800

Capital Improvement Projects Fund 2,185,049

Street Maintenance Fund 898,500

Habitat Restoration Fund 76,752

Abalone Cove Sewer District Fund 10,700

Equipment Replacement Fund 34,000

Building Replacement Fund 100,000

Total Transfers In $ 3,506,801

Section 4: The FY05-06 Budget is hereby adopted, establishing the following transfers from the following funds:

General Fund $ 2,566,001

Landscape/Street Lighting (1972 Act) Fund 285,000

Community Development Block Grant Fund 31,800

Waste Reduction Fund 50,000

Air Quality Management Fund 34,000

Street Improvement/Transit (Proposition C) Fund 460,500

Transit (Proposition A) Fund 15,500

Public Safety Grants Fund 100,000

Parks/Building Maintenance (Measure A) Fund 55,500

Total Transfers Out $ 3,598,301

Section 5: The FY05-06 Operating and Capital Improvement Budget Programs are hereby adopted, establishing the following allocations and directing the City Manager to amend the preliminary budget to reflect said amounts:

City Council $ 109,100

City Attorney 1,000,000

City Manager 726,700

Administrative Services/City Clerk 275,400

Community Outreach 93,500

RPV TV Channel 33 25,000

Personnel 86,300

Finance 804,800

Information Technology – Data 527,900

Information Technology – Voice 68,700

Public Safety - Sheriff 3,115,400

Public Safety - Special Programs 68,800

Public Safety - Animal Control 114,900

Public Safety - Emergency Preparedness 64,300

Public Works - Administration 496,700

Public Works – Traffic Management 275,400

Public Works – Storm Water Quality 200,100

Public Works - Building Maintenance 509,900

Public Works – Parks, Trails & Open Space Maintenance 677,400

Planning 1,097,800

Building & Safety 777,200

Code Enforcement 137,580

View Restoration 321,800

Natural Community Conservation Planning 65,400

Geology 228,100

Recreation - Administration 432,000

Recreational Facilities 326,200

Recreation – Special Events 25,600

Recreation - Point Vicente Interpretive Center 281,900

Recreation - REACH 107,300

Subtotal General Fund $ 13,041,180

Street Maintenance – Pavement $ 362,000

Street Maintenance – Non Pavement 1,363,800

Traffic Management (Traffic Signal Maintenance) 72,200

Subtotal Street Maintenance Fund $ 1,798,000

Capital Improvement Projects Fund $ 2,221,676

Landscape/Street Lighting (1972 Act) Fund 58,200

El Prado Lighting District Fund 900

Community Development Block Grant Fund 190,000

Street Lighting (1911 Act) Fund 369,400

Beautification Fund 231,300

Waste Reduction Fund 150,400

Air Quality Management Fund 8,000

Street Improvement/Transit (Proposition C) Fund 3,000

Transit (Proposition A) Fund 507,200

Habitat Restoration Fund 100,000

Subregion One Maintenance Fund 50,000

Abalone Cove Sewer District Fund 49,600

Water Quality and Flood Protection Fund 1,900,000

Subtotal Allocations $ 5,839,676

Internal Service Funds:

Equipment Replacement Fund $ 432,600

Building Replacement Fund 44,000

Employee Benefits Fund 1,350,800

Subtotal Internal Service Allocations $ 1,827,400

Total Allocations $ 22,506,256

PASSED, APPROVED and ADOPTED the 31st day of May 2005.

___________________________

ATTEST: MAYOR

_____________________

CITY CLERK

State of California )

County of Los Angeles )ss

City of Rancho Palos Verdes )

I, CAROLYNN PETRU, City Clerk of The City of Rancho Palos Verdes, hereby certify that the above Resolution No. 2005-__ was duly and regularly passed and adopted by the said City Council at regular meeting thereof held on May 31, 2005.

___________________________

CITY CLERK

RESOLUTION NO. 2005-

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO PALOS VERDES ADOPTING SALARY AND HOURLY RANGES FOR ALL COMPETITIVE AND MANAGEMENT EMPLOYEE JOB CLASSIFICATIONS, AND RESCINDING RESOLUTION NO. 2004-46.

WHEREAS, as part of the FY95-96 budget, the City Council directed staff to conduct certain compensation studies measuring compensation data from both the public and private sectors. The compensation studies indicated that most of the City's job classifications were below the market median; and,

WHEREAS, on March 1, 1996, the City Council adopted Resolution No. 96-21 amending the salary ranges for all full-time employees and establishing the merit pool compensation system; and,

WHEREAS, on July 15, 1997, following the adopting of the FY97-98 City budget, the City Council adopted Resolution No. 97-69 which adjusted the salary and hourly ranges by two (2) percent; and,

WHEREAS, on June 3, 1998, following the adopting of the FY98-99 City budget, the City Council adopted Resolution No. 98-48 which adjusted the salary and hourly ranges by one and a half (1.5) percent; and,

WHEREAS, in late 1998, staff conducted a salary survey modeled after the 1995 study using the same survey pool of public agencies and, when possible, the same comparable positions. Based on the results of the updated survey, staff determined that the salary ranges for 16 positions required adjustment in order to be within 5% of the market median so that all City's salary ranges continue to be competitive with the marketplace; and,

WHEREAS, with the adoption of the FY99-00 City budget, the City Council directed that the salary ranges for 16 job classifications be modified based on the 1998 salary survey. Further, the City Council directed that all City's salary and hourly salary ranges be adjusted two (2) percent based on the Consumer Price Index, so that all City's salary ranges continue to be competitive with the marketplace; and

WHEREAS, on June 1, 1999, following the adoption of the FY99-00 City budget, the City Council adopted Resolution No. 99-42, which modified the salary ranges for 16 job classifications based on the 1998 salary survey, adjusted the salary and hourly ranges by two (2) percent based on the Consumer Price Index and provided a monthly car allowance for certain job classifications; and,

WHEREAS, on June 6, 2000, following the adoption of the FY00-01 City Budget, the City Council adopted Resolution No. 2000-34 which adjusted the salary and hourly ranges by three and four tenths (3.4) percent based on the Consumer Price Index; and,

WHEREAS, on June 5, 2001, following the adoption of the FY01-02 City budget, the City Council adopted Resolution No. 2001-44, which adjusted the salary and hourly salary ranges by three and six tenths (3.6) percent based on the Consumer Price Index; and,

WHEREAS, on July 2, 2002, following the adoption of the FY02-03 City budget, the City Council adopted Resolution No. 2002-56, which established the salary and hourly ranges for selected classifications at the 75th percentile and by the Consumer Price Index of 2.8%; and,

WHEREAS, with the adoption of the FY03-04 City budget, the City Council directed that all City's salary and hourly salary ranges be adjusted three and nine tenths (3.9) percent based on the Consumer Price Index for the preceding twelve month period, so that all City's salary ranges continue to be competitive with the marketplace; and,

WHEREAS, with the adoption of the FY 04-05 City budget, the City Council directed that all City's salary and hourly salary ranges be adjusted one and eight tenths (1.8) percent based on the March 2004 Consumer Price Index for the preceding twelve month period, so that all City's salary ranges continue to be competitive with the marketplace; and,

WHEREAS, with the adoption of the FY 05-06 City budget, the City Council directed that all City's salary and hourly salary ranges be adjusted four (4) percent based on the March 2005 Consumer Price Index for the preceding twelve month period, so that all City's salary ranges continue to be competitive with the marketplace; and,

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF RANCHO PALOS VERDES DOES HEREBY FIND, DETERMINE AND RESOLVE AS FOLLOWS:

Section 1: The success of any plan in the public or private sector is dependent upon occasionally adjusting the salary ranges to be competitive with the marketplace.

Section 2: The salary and hourly ranges for City job classifications are adopted as outlined in the attached Exhibit "A."

Section 3: Resolution No. 2004-46 is hereby rescinded.

Section 4: A monthly car allowance for certain job classifications is adopted as outlined in the attached Exhibit "B."

PASSED, APPROVED and ADOPTED this 31st day of May 2005.

__________________________

MAYOR

ATTEST:

_____________________________

CITY CLERK

STATE OF CALIFORNIA )

COUNTY OF LOS ANGELES ) ss

CITY OF RANCHO PALOS VERDES )

I, CAROLYNN PETRU, City Clerk of the City of Rancho Palos Verdes, hereby certify that the above Resolution No. 2005- was duly and regularly passed and adopted by the said City Council at a regular meeting thereof held on May 31, 2005.

__________________________

CITY CLERK