City Manager's Budget Message
Fiscal Year 2020-21
(The budget presentation has been adapted for OpenGov Stories platform. The charts and tables have changed but the narratives are the same.)
In response to the rapid spread of novel coronavirus (COVID-19), the Town of Colma held a special City Council meeting on March 18, 2020 to declare a local emergency, offer 160 hours of pandemic paid-time off to Town employees, and adopt the FY 2020-21 budget. The actions taken on March 18, 2020 was in coordination with other agencies within San Mateo County.
The adopted FY 2020-21 budget consisted of rolling over the operating budget from FY 2019-20 and ratifying the capital budget as planned for FY 2020-21 in the 2019-2024 Five-Year Capital Improvement Plan. This action allowed staff to shift focus from creating a budget and all the annual projections to looking at the financial condition and present a quarterly projection as a result of COVID-19 and Shelter-in-Place (SIP) orders.
Adopted Budget – All Funds
In the Adopted Budget, total revenues in all funds are projected to be $19.8 million. Total expenditures for all funds are projected at $21.0 million, comprised of approximately $18.4 million in Operating Expenditures, $0.3 million in Debt Service payments and approximately $2.3 million in Capital Improvement Projects (CIP).
Revenues – All Funds
Total budgeted revenues are $19.8 million, with $17.8 million in General Fund, $1.09 million in Enterprise Funds, and 0.86 million for all other funds.
These revenue budgets are the projection for FY 2019-20 before the COVID-19 pandemic. On May 13, 2020, the City Council reviewed the first revenue projection since the shelter-in-place (SIP) order in March. For full disclosure, the projection and analysis from the May 13, 2020 City Council meeting can be found below, under Economic Overview.
As shown above, a majority of the Town’s operation is supported by sales tax and cardroom tax revenues, at $15,650,000; sales tax and cardroom tax revenues represent 79 percent of total revenues. The next largest category is the Enterprise Funds at $1,087,700. Most of these funds are from the pass-through sewer chargers. Capital Fund revenues of $353,192 are primarily from grant reimbursements from a project completed in early FY 2019-20. As the FY 2019-20 budget was rolled over without adjustment, the Town will amend the FY 2020-21 budget in late-Fall or early-Winter to reflect projected grant funding in FY 2020 21.
Expenditures – All Funds
Total budgeted expenditures are $21,027,627 with $18,398,738 in Operating Expenditures, $297,369 in Debt Service and $2,331,520 in Capital Improvement Projects (CIP).
The operating budget ($18,398,738) includes staffing and services based on the FY 2019-20 operating plan. As part of the annual budget process, department’s will assess their operating plans for the new year and provide new budget projections. As a result of COVID-19 and the SIP order, departments will be providing their operating plans as part of the quarterly projection, and a budget amendment will be made in late-Fall or early-Winter to reflect the FY 2020-21 operating plan.
The annual debt service payment is the same each year with different distributions between interest and principal payments.
The capital improvement projects ($2,331,520) includes the following projects per the 2019-2024 Five Year Capital Improvement Plan adopted by the City Council on March 13, 2019.
FY 2020-21 Revenues and Expenditures Budget (Pie-Charts)
The revenues pie-chart (above) is embedded from OpenGov allowing user to click and manipulate the view.
Please click on "Reset" to bring the chart back to the originally intended view.
The expenditure pie-chart (above) is embedded from OpenGov allowing user to click and manipulate the view.
Please click on "Reset" to bring the chart back to the originally intended view.
FY 2020-21 Capital Project Listing
(Per 2019-2021 Five-Year Capital Improvement Plan)
Economic Overview – COVID-19 Focused
The spread of COVID-19 has significantly impacted the global economy. For California, the cases are still on the rise and businesses activities are still significantly altered. This includes no indoor dining and entertainment, no large group gatherings, and schools and sporting arenas have been closed since March.
In San Mateo County, we were one of six counties to issue the first SIP orders and extended it beyond the State’s requirements. While the State of California moved to Stage 2 and 3 of the Reopening Plan, San Mateo County stayed cautiously a few steps behind. This is good for public health but has been hard on businesses and residents.
(The COVID-19 Cases chart (right) is as of July 13, 2020)
(The S&P 500 and Unemployment Rate charts (below) are as of June 30, 2020)
In the 2008 Housing Crisis and the prior recessions, the drop in the financial market was more gradual and the impact was isolated. Likely, the growth in unemployment was gradual, in comparison to the COVID-19 crisis.
As shown on the charts below, the financial market fell immediately when COVID-19 spread into the United States and, similarly, unemployment rates spiked higher than the peak of the housing crisis. These are indicators that we are still experiencing the recession and not out of the woods yet. Since this recession is driven by the spread of COVID-19, we cannot predict how long the recovery period will be and what will life be like on the other side of the curve.
Some topics of concern include:
- How long will the current COVID-19 wave last?
- Can businesses reopen without a proven vaccine and keep the spread of COVID-19 down?
- Can schools and daycare facilities reopen safely so workers can return to a safe work environment?
- How many businesses can survive the prolonged shutdown, or limited services?
- How will consumer behavior change once the SIP orders are lifted?
- Will they continue to buy supplies and order food online?
- Will there be a second wave of COVID-19?
Impacts on Town’s General Fund Revenues
With the SIP orders since mid-March 2020, the Town projected a revenue shortfall of $2.88 million in FY 2019-20 and an additional $1.79 million in FY 2020-21. This projection was based on available information through April 2020.
Based on revenues received through March 2020, it seems the Town is on track to meet its revenue budget goal of $17.80 million. As shown in the chart to the right, the Town received $11.18 million of the total General Fund Revenues Budget of $17.80 million, or 63%. Since the Town usually receives 2 months of cardroom tax revenues in June and up to 3 months of sales tax revenues in June, it seems the Town will receive more revenues than budgeted.
In a matter of 2 weeks, San Mateo County went from its first confirmed case of COVID-19 to executing the Shelter in Place order for all cities within the County. With the SIP order, the Town’s cardroom was closed and auto sales were halted. The financial impact of these two closures was roughly $800,000 per month. Below are the projections that were presented to the City Council on May 13, 2020.
The FY 2020-21 Projection assumes that the economy will be in full shutdown mode through June 2020 and in a modified shutdown until January 2021. As of May 13, 2020, the Town anticipates a revenue shortfall of $2,878,400 in FY 2019-20 and an additional $1,790,826 revenue shortfall in FY 2020-21. The Town will be monitoring the revenue streams on a quarterly basis and propose operational changes to minimize the operating deficit, and to preserve the Town’s General Fund reserve balances.
Impacts on Town’s General Fund Expenditures
Similar to the Town’s revenue, as of March 2020, the Town seemed to be on track to meet its operational goal while staying within budget. By March 2020, the Town spent $11.54 million or 68% of its total General Fund budget of $16.97 million (excluding transfers).
The spread of COVID-19 and the resulting SIP orders, naturally reduced the Town expenditures as the Town canceled recreation camps, after-school programs, and community events for the year; residential and commercial improvements slowed, and Town Staff were placed on alternate schedules or encouraged to work from home. At the same time, the demand on Town resources increased in the areas of police enforcement, public works maintenance, community support, and public engagement.
With two-thirds of its General Fund operating budget spent by March 31, 2020, the Town was challenged to reduce its spending for April through June, while maintaining essential services. Through a combination of cost-cutting measures presented to the City Council on May 13, 2020, the Town was able to find $1.30 million of savings in FY 2019-20 operations and another $2.13 million in FY 2020-21 operations.
Future Impacts on Town’s Financial Health
As of right now, the Town expects COVID-19 will continue to adversely impact the Town’s operations. Additionally, the Town is expecting the unfunded pension liability to increase due to the bearish market. The impact of the increases in unfunded pension liability will be budgeted beginning in FY 2022-23.
The Town is also staying connected with major businesses in Town to understand the economic condition. This will help the Town better prepare and assist the community as COVID-19 progresses.
MAJOR ACHIEVEMENTS IN FY 2019-20
Prior to COVID-19, the Town had the following achievements:
- Completed the 2020-2022 Strategic Plan. The Plan intended to move the organization forward towards a more transparent and inclusive organization, with an emphasis on technology and community involvement;
- Completed the Serramonte Boulevard/Collins Avenue Master Plan;
- Opening of Veteran’s Village Housing and assisted in furnishing each unit – through coordination with local businesses and non-profit organizations;
- Selected Police Officers and Dispatchers celebrated Christmas with a veteran who was on his own during Christmas 2020. They also donated food and a TV to the said veteran;
- Closed out the 2010 ADA transition plan and incorporated ADA compliance as part of normal operating and capital procedures;
- Trained and certified 10 residents and volunteers as the Town’s CERT team;
- Hosted successful Town Picnic and Holiday Event
- Held the second year of Cinema at the Cemetery; and
- Held our second annual Business recognition luncheon.
- Birthday Parades for all Town residents by the Colma Police Department and Colma Fire District;
- Delivered food and other essentials to high-risk residents;
- Regular communications to community providing resources and assistance;
- Hosted two Town-Hall meetings with the public;
- Continued support for diversity and inclusiveness in Colma through flag raising ceremonies;
- Transitioned public meetings to Zoom successfully;
- Colma Police department coordinated with business community lending support during civil unrest;
- Coordinated with business community regularly communicating with them during SIP; and,
- Donated $15,000 to SMC Strong Business Relief.
In 2015, the Town of Colma issued a $5.3 million Certificates of Participation (COPs) to fund the Town Hall Campus Renovation. As shown in the chart below, this is within the California Code debt limit as stipulated by Government Code 43605 (15%). The FY 2020-21 Adopted Budget includes debt service payments and administrative cost of $297,369. Additionally, the Town has no intention in pursuing additional debt in the foreseeable future.
^ Total Legal Debt Margin represents total debt the Town may have based on California Government Code 43605. It does not reflect the
City Council's debt service policy, which leans toward conservatism.
Like many agencies in the State of California, the Town will need to keep unfunded liabilities and aging public infrastructure in our forefront. In addition, the Town’s reliance on sales tax revenues makes it vital for the Town to diversify its revenue sources, and to promote local businesses by attracting more visitors.
Unfunded Capital Needs
The FY 2020-21 Adopted Budget shows a total unfunded CIP project budget of $14.8 million. Based on the recent Serramonte Boulevard/Collins Avenue Master Plan study session, the cost to complete all the suggested improvements to this major corridor will cost the Town an additional $11.8 million to $17.9 million. Improvements to this corridor will improve safety, aesthetics, and can improve the Long-Term Economic Benefits to the Town. Staff will continue to look for ways to prioritize and phase in the unfunded projects. Searching for other funding sources, including grants, will also be critical.
Due to COVID-19, and its economic impact, it is unclear what the Town’s unfunded liabilities will be in the future. The unfunded liabilities will be updated and assessed after the CalPERS Actuarial Reports are available.
The Town has made progress in recent years in diversifying its revenue sources, including voter-approved 12 percent TOT Tax, newly adopted planning, building, and engineering permit review fees and charges, and changing the Town’s investment strategy to include Bank Certificate of Deposits. With 64.5 percent of the Town’s General Fund revenues from Sales Tax, it is essential that the Town continue to explore new revenue sources. This project is a priority program in the Strategic Plan and staff will continue to explore ways to diversify revenues.
ORGANIZATION OF THE BUDGET DOCUMENT
The FY 2020-21 Adopted Budget is an abbreviated budget, as it is a repeat of the prior years budget. The following sections were removed because these are currently a duplicate of last year’s budget.
- Colma Profile
- Revenue Detail
- Department Budget
- Financial Section
The following sections are modified:
- Budget Overview was expanded to include more information on the department level
- Capital Improvement Program section was condensed as part of the COVID-19 financial strategy, and is to suspend capital purchases and continue improvements through grant funded projects. Since the information presented in this adopted budget was already modified in May, the section is condensed to just a list of the capital projects and funding summary.
In closing, I’d like to thank the City Council for its policy leadership in a year full of changes. This document demonstrates how the difficult choices you made throughout the past several years are continuing to benefit the Town. It is a pleasure working with you to implement your vision for the Town of Colma and to provide a government our residents can be proud of.
Documents like this cannot be completed without teamwork from all involved. To that end, I would like to thank the Department Directors for their dedication to the overall effectiveness of the Town’s government and to the residents themselves. It is also important to acknowledge Administrative Services Director, Pak Lin, and Department Heads for collaborating and putting together a budget document that is precise, attractive, informative and award-winning!
Upon request, this publication will be made available in appropriate alternative formats to persons with disabilities, as required by the Americans with Disabilities Act of 1990. Any person with a disability, who requires a modification or accommodation to view the document, should direct such a request to Pak Lin, Administrative Services Director, at 650-997-8300 or email@example.com Please allow two business days for your request to be processed.