The FY 2021/2022 Budget Season begins with a Kick-Off Study Session on March 3. The Budget Kick-Off provides an overview of the Town's Budget along with the 5-year projections for revenues and expenditures.
The Study Session begins at 4 pm. The Budget Kick-Off item is the 2nd item on the Agenda. The Staff Report provides an overview of the FY 2020/2021 Year-End Projections and an overview of the Town's Major Revenue and Expenditure items plus 5 Year Forecasts for both. The Budget Kick-Off is the first meeting of several during Budget Season. The FY 2020/2022 Budget Calendar includes the following meetings:
- March 3, Study Session - Budget Kick-Off
- April 7, Study Session - Operations Budget Review
- May 5, Study Session - Special Funds & Capital Projects Budget
- June 2, Study Session - Final Draft Budget & Special Revenues/Funds
- June 16, Regular Meeting - Budget Adoption
Overall, the Town's fiscal condition remains positive. Property Tax Revenue, the Town's foremost revenue source, decreased by 0.14% over the FY 2020/2021 Adoption Budget projection. Most of the Property Tax decrease was due to a countywide shortfall in Property Tax In Lieu of Vehicle License Fee (VLF) revenue. Overall, However, the decrease was offset by other increased revenues. General Revenues for FY 2020/2021 were budgeted at $16,388,282 and are projected to complete the year at $16,888,780. This does not include the Educational Revenue Augmentation Fund or "ERAF". ERAF is considered "one time" revenue each year and is not included in the Town's Operational Revenue projections. ERAF revenue received during FY 2020/2021 was $1.86 million. Expenditures for FY 2020/2021 were budgeted at $15,241,014 and are projected to complete the year at $15,321,864.
Major Revenues
As noted, Property Tax Revenue is the Town's foremost revenue source. It comprises approximately 70% of the Town's total General Fund Revenues. Building Permit Revenue is another major revenue source for the Town. Together, for FY 2021/2022, these revenues total approximately $14 million. Property Tax revenue is projected at $12.5 million and Building Permit revenue is projected at $1.5 million.
Total revenues (excluding ERAF) for FY 2021/2022 is projected at $17.2 million. The bulk of the remaining revenues come from Franchise Fees, Sales & Use Tax, Public Works and Planning Permits, and Business License Taxes.
It is anticipated that over 5 years, total annual revenue will increase by approximately 14% to $19.6 million.
ERAF is considered "one time" revenue that the Town specifically allocates each year to long term debt or one-time capital projects. ERAF revenue is not considered a revenue stream upon which Operational Expenses are dependent.
Major Operational Expenditures
The Town has made significant policy decisions over the years to reduce the Town's long-term liability and operational labor costs. These include cost-sharing agreements with employees that require employees to pay a portion of the Town's required pension costs in addition to their own. This arrangement will benefit the Town more significantly over time. In addition, the Town's cafeteria-style health benefit plan places limits on the Town's contribution amounts and the Town has eliminated employer-paid retiree healthcare. Salaries and benefits in FY 2021/2022 are projected at $8.9 million and are divided up amongst the 5 different departments - Administration, Finance, Building, Police, and Public Works. Legal and Planning services are fully contracted services. Other Operational Expenditures for FY 2021/2022 for the departments total $5,755,274. These services include building and Safety, software licensing, basic operational costs, maintenance services, park event services, tree maintenance, IT, legal services, planning services and animal control costs.
Capital Projects
One of the other areas of expenditure for the Town is Capital Projects. The most significant project in the Town's history, the Town Center Project, will complete in FY 2021/2022. Other projects around the Town include Park projects, streets, drainage, and bicycle-pedestrian improvements. Funding for capital projects comes from a variety of sources including the Town's General Fund, Measure A, Measure W, Measure M, Gas Tax, Channel Funds, and Transportation funds. The Town expends, on average, another $2m-$3m per year in capital projects and improvements.
Reserves
The Town also has a requirement to maintain its fiscal reserves. The Town has two (2) Reserve Funds - Emergency Reserves (15%) and Operational Reserves (20%). Emergency Reserves are emergency set aside funds that amount to 15% of the Town's Annual General Fund Operating Expenditures. Emergency Reserves are set aside for Council determined emergencies. Emergency Reserves typically hover in the range of $2.3 million. Beyond the Emergency Reserves, the Town sets aside 20% of its Annual General Fund Operating Expenditures for Operating Reserves. There is no defined use for the Operating Reserves but they can be used in the event of budget overruns or unanticipated expenditures. However, they can only be used with Council approval. Operating Reserves typically hover in the range of $3 million.
For more information on the Town's Budget process or to participate in the Budget meetings, connect to the first Budget Study Session on Wednesday at 4 pm. An agenda, with the Zoom details can be found here.