City of Rialto Midyear Changes Budget-Fiscal Year 2012/2013 The mid-year review process is intended to address significant variances that are found and to make budget adjustment recommendations to Council. These recommendations are based on the results of staff analysis of revenues and expenditures for the first six months of the year, as well as, based on new information which was not available during the budget process. Key elements in the budget process that keep the budget document useful include: 1) the initial development of estimated revenues and appropriations; 2) interim monitoring; 3) one-time adjustments (i.e. grants, projects); 4) mid-year review; and 5) necessary modifications of budget appropriations and estimated revenues. Council Presentation – February 26, 2013

General Fund FY 12/13 Original General Fund Budget Revenues $49,369,147 - Expenditures to be $55,114,894 Deficit (5,745,747) Budgeted revenues: 51,819,160 Budgeted expenditures: 62,940,552

Council Approved Budget Adjustment From Budget adoption to 12/31/12 Summary of General Fund Council Actions through 12-31-12 Revenues Adopted Budget $49,369,147 Prior Year Carry-forward 394,811 INOB 2,836,000 Other (Ambulance fees, Grant Related Council Actions, etc.) 803,880 Revised Revenue Budget through 12/31/12 $53,403,838 Expenditures $55,114,894 1,098,995 2,756,000 Council Actions 1,262,554 Revised Expenditure Budget through 12/31/12 $60,232,443 Surplus/(Deficit) through 12/31/12 (6,828,605) Major Council Actions in FY11/12: Fire Station 202 New Fire Engine Purchase Nine (9) new vehicles for PD Grant Awards Centennial Projects/ Celebration CPI increase for sewer rates from July 2003 to July 2011 Water/ Sewer rate increases Change in PERS for employer/employee paid deduction

Proposed Midyear Changes Summary Of Proposed General Fund Midyear Changes Revenues Revised Budget through 12/31/2012 $53,403,838 One-Time impact of RSA payment 2,256,000 VLF Increase 319,000 UUT Increase (water/sewer) 160,000 Other Misc. 446,565 Sales Tax Loss (130,000) Proposed Revenue Budget at 06/30/2013 $56,455,403 Expenditures ($60,232,443) Police Salary Savings (13 Vacancies) 1,300,000 Fire Salary Savings (2 Vacancies) 165,000 Remaining Net Changes 148,695 Proposed Expenditure Budget at 06/30/2013 ($58,618,748) Surplus/(Deficit) at 06/30/2013 ($2,163,345)

Reserve Summary General Reserve Analysis Reserve Balance at 6/30/2012 Less - Non-spendable ($5M Receivable from Water Fund, $3.958M receivable from the Airport Advance) (9.0M) ADD - $5M from Concession Agreement RUA Lease Catch-up Payment 5.0M Spendable Balance $37.5M Less – Reserved (Not Available for Operational Contingency Reserves) (5.0M) Reserve Balance reserved for Contingencies $32.5M Less current year Deficit (2.2M) Projected 6/30/2013 Contingency Balance $30.3M Less Working Capital Reserve Minimum 13.0M Operational Contingency Reserve at 6/30/2013 $17.3M

Midyear Adjustments – Special Revenue Funds Special Revenue funds show a increase in $3.4M mostly due to Development Impact Fees being received. Special Revenue funds also saw a reduction in expenditures of $2.78M primarily due to Housing Authority related expenses Special Revenue funds show a decrease in revenues of $1.67M mostly due to the development impact fees not being received as planned. Fund balances from Special Revenue funds are restricted and can be spent only for the specific purposes stipulated by external resource providers such as grants and development impact fees funds. Restrictions for using these types of funds may be changed or lifted only with the consent of the resource providers.

Midyear Adjustments – Enterprise Funds Utility Billing – Reconciled to reflect the final effect of the CA

Midyear Adjustments – Internal Service Funds Development Services & Engineering (Fund 710) estimates an increase to revenues in the amount of $474K primarily due to increased permit activity

New Job Descriptions Emergency Dispatcher Lead Police Records Assistant Lead

Future Budget Challenges CalPERS recently implemented a rate increase and plan on a $1.2M increase in FY13/14 Slow revenue growth- revenue growth expected at 2-3% per year while expenditure growth 10-15% Capital Project neglect Unexpected sales tax impacts UUT sunset date June 30, 2013 (Impact – $11.2M or 21%) CalPERS recently changed their actuarial assumptions resulting in rate increases that took effect as of July 2011. They also announced additional increases in the future years. These increases were delayed in the last two fiscal years to provide time to agencies to prepare for the impact. It is estimated that the increase will be significant in Fiscal Year 2012/13. Overtime costs in the Fire Department estimated overtime for the Fire Department is nearly $2.5 million.  With the current staffing levels and the continued use of the constant staffing model, the amount needed for overtime is expected to increase. However, if the City is awarded the SAFER grant that would help fund the positions of 8-9 Fire Fighter/Paramedic then overtime costs should reduce. Over the past few years, the City has continued to cut the Capital Projects budget in order to support operations. Eventually resources will need to be expended to replace aging facilities and equipment, or even greater costs will be incurred with maintenance and repairs. In addition to the General Fund losing $1.6M in annual Support from the General Fund as a result of the demise of the Redevelopment Agency on February 1, 2012, the City is also losing its ability to finance large capital and economic development projects. Utility Tax Sunset in June 30,2013 – In 2008, the voters of Rialto extended the Utility Users Tax (UUT) until June 2013. This revenue represents $11.2M or 21% of the general fund total revenues. Staff recommends that Council elect to place the renewal of the Utility Users Tax on the March 2013 special election ballot. If the UUT is not extended before the June 2013 deadline the General Fund deficit will grow to nearly $20M or 1/3 of the General Fund expenditures and immediate corrective action will need to take place. The immediate action will include the reduction of staff and programs citywide

Recommendation Consider Resolutions approving the 2012/13 Budget Adjustment for the City, Rialto Utility Authority and the Successor Agency formally known as the Rialto Redevelopment Agency Consider the Resolution approving new Job Descriptions