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11. Public Comment— None PUBLIC HEARINGS AND OTHER MATTERS 12. Consider adoption of a resolution accepting the 2012/13FY Year-End Financial Report for the Operating Budget and amend the 2012/13FY Operating Budget Director of Finance Wagner presented the 2012/13FY Year-End Financial Report for the Operating Budget, which includes the General Fund, Water Enterprise Fund, Sewer Enterprise Fund, Golf Course Operations Fund and Repair and Replacement Fund. She reviewed the General Fund, which began the year with a fund balance of $25.3 million. Revenues totaled $92.3 million versus the $91.3 million that was projected. Transfers, which included a payoff of the Golf Course bonds, totaled $15.4 million versus the $15.6 that was projected. Expenditures were projected to be $88.9 million and actually came in approximately $690,000 less at roughly $88.2 million. After adjustments, the projected ending fund balance of $12.1 million totals a little over $14 million. She briefly reviewed revenues, with the most notable discrepancies being in the areas of property tax ($116,000 less than projected), sales tax ($102,000 greater than projected), hotel/motel tax ($430,000 greater than projected), development services (nearly $300,000 less than projected), and interest income. Expenditure adjustments are largely attributable to the area of materials, supplies and services which is offset somewhat by a request from staff for an additional $560,000 in worker's compensation funding for the fire department based on 2012/13 activity. Staff is proposing that the City Council allocate $1 million of the approximately $1.9 million in year-end excess funds to the PERS Stabilization Fund. The action would result in a total of$3 million allocated to the fund to offset the negative amortization of the unfunded pension liability and almost accomplishes the goal of reducing the liability by at least 10% over 5 years. She noted that staff has not yet received annual reports from CaIPERS but will prepare an analysis and update for the Council on where exactly the city stands with regard to its unfunded liability. Staff is also proposing that the remaining excess be allocated for use for the 2013/14 Management Employees Performance Adjustments ($255,000) and transfer to the General Fund Reserve to repay the payoff of the golf course bonds and increase the 10% Reserve for Economic Uncertainty proportional to increased revenues. She presented a brief comparison of General Fund performance to previous years. The highest revenue and budget year occurred in 2007/08FY when revenues totaled $93.9 million. 2012/13 FY revenues of $92.3 million are down $1.6 million from this peak, though considerably improved from the drastic decrease to $85 million in 2008/09FY. The majority of this loss relates to sales tax revenues which, while improved, are still down almost $2 million from the 2007/08FY. Overall, hotel/motel tax and development user fee revenues are slightly up from this peak while sales tax, interest income, recreation fees and other revenues are still slightly down. Vice-Mayor Cook-Kallio asked and Ms. Wagner confirmed that there has been no adjustment to development user fee rates. She noted that while fees are still down in several areas over the benchmark period of 2007/08FY, the comparison does indicate a sense of recovery and a fairly healthy increase over what the city experienced even 3 to 4 years before. Ms. Wagner confirmed. She explained that the city has recovered in all areas except for sales tax and interest income revenues. Recreation fee and other revenues typically vary from year to year based on programming and one time actions. Mayor Thorne noted that CaIPERS has made a number of significant changes in its calculation methods and, as he understands it, the $1 million the city has been regularly setting aside into the PERS stabilization fund will most likely now be incorporated into the annual PERS liability. City Council Minutes Page 3 of 6 November 19, 2013