City Manager's Budget Message in Brief
The 2020-21 fiscal year will mark Montebello’s one hundred year anniversary of incorporation as a city. As we move into our second century, we are faced with a unique combination of opportunities and challenges. Montebello is on the right path – financially, organizationally and culturally. The past fiscal year witnessed many positive accomplishments, as Montebello looks towards a brighter and more financially secure future. But Fiscal Year 2019-20 provided numerous challenges, not least is the coronavirus pandemic and its lasting impacts as we being a new fiscal year.
I am pleased to present the Fiscal Year 2020-21 Proposed Operating and Capital budget – my first as Montebello’s City Manager. This budget – tempered by significant negative impacts on revenue due to the pandemic and related public health responses – moves the organization forward and provides the services and programs key to City Council’s priorities. Some of the recent accomplishments that positively impact the FY 2020-21 budget are:
• Passage of a three-quarter cent sales tax measure (Measure H), approved by 62% of Montebello’s voters
• Elimination of the City’s Unfunded Actuarial Liability by issuing $152.3 million in Pension Obligation Bonds
• Completion of a park and facilities needs assessment study
• Issuing $25 million in Local Return Fund bonds for the citywide “Paving the Way” program
• Upgrade of the City’s credit rating to “A+”
• Achieving agreement on labor contracts (Memorandum of Understanding) with all employee groups through December, 2021
• Completion of significant facility repair and upgrade projects, eliminating years of deferred maintenance on key City facilities
• Awarding of an energy conservation project contract to provide energy savings through lighting, HVAC and roof repairs and upgrades
• Significant progress made on the Taylor Ranch Park project
These and other accomplishments provide a clear indication that Montebello is making progress towards financial sustainability and fiscal stability. This budget makes significant progress in that direction – even under the economic constraints due to the pandemic as local retailers and businesses remain closed or with limited services. Much credit must be given to the City Council and the residents of Montebello for approving Measure H, the three-quarter cent sales tax measure. The additional $6.0 million in General Fund revenue projected for FY 2020-21 enabled management to build a budget that continues the progress made in the past year.
René Bobadilla, P.E.
General Fund Expenses
The General Fund budget, which provides funding for everyday services our residents enjoy – Police, Fire, community services, code enforcement, street and park maintenance – is projected to have a $19,600 surplus. General Fund proposed expenditures of $55,681,500 are just under forecasted revenue of 55,701,100. Put into perspective, the FY 2019-20 budget was adopted with a $2.840 million deficit – without the negative impacts to revenue of the coronavirus or the positive impacts to sales tax from Measure H.
General Fund Revenues
Total revenue in the General Fund is projected to be $55,701,100, a $4.355 million increase over FY 2019-20 adopted budget. The largest single increase is from the new Measure H sales tax – an additional $6.0 million in projected revenue for FY 2020-21. Other categories had increases or decreases vs. last year’s budget.
Two Largest Sources of Revenue: Sales Tax and Property Tax
Sales tax accounts for 32.7% of total General Fund revenue. The City receives sales tax from three main sources: Bradley Burns 1% (20.2%), Measure H ¾ percent sales tax (10.8%) and Monterey Park Marketplace sales tax sharing (1.7%). In total, Montebello is projected to receive $18.241 million in revenue from all three sources combined.
The second largest share of General Fund revenue is from property tax: $13,026,000, or 23.4% of revenue. The majority of property tax revenue comes from the “In-Lieu of VLF” source, which is a remnant of the “triple-flip” instituted in 2005 as part of the State’s effort to balance its budget. The state swapped vehicle license fee (VLF) revenue allocated to local agencies to help better fund K-12 education, and replaced that with property tax. The City is projected to receive $7.109 million from this source in FY 2020-21.