Town Manager's Budget Message

Last year we had cautious optimism as we presented and managed an expenditure plan based on conservative revenue projections given the uncertainty about the anticipated economic recovery from the COVID pandemic. Yountville and the Napa Valley has seen a strong economic recovery with a record setting rebound in transient occupancy tax collections and a strong return in sales tax revenue largely fueled by our restaurant sector. Revenue collection for Fiscal Year (FY) 2021/2022 will exceed budget estimates collectively by over $2.5 million creating significant unassigned fund balance as we end this fiscal year.

If there was a theme to our FY 2022/2023 budget it would likely be that of “resumption of planned service levels and expenditures” to that on par with 2019 before the pandemic hit. This year our budget includes the resumption of planned internal fund transfers and discretionary trust contributions which were halted during pandemic uncertainty. We are resuming our investment in employee training and development and providing our employees with a 7% COLA after they agreed not to take a COLA last year to see how our financial situation evolved.

Our town organization continues to pivot, evaluate, and refine many of our COVID practices to see which make sense to continue as we move forward. We continue to invest in technology and software to support a virtual Town Hall where many transactions occur online or by phone; using our investment in cloud technology to support remote work capabilities and improved online systems; and our continued implementation of OpenGov processes to offer online building permits and TOT payments this summer. The Town Council has approved implementation of the Washington Street Activation Zone as a continued economic recovery tool to assist local business with increased outdoor seating, “to go” curbside parking and temporary retail activations. Our proposed budget provides funding support to keep our increased upkeep of parks facilities experienced during the pandemic and the resumption of in-person parks and recreation programming along with a level of Zoom based programming to meet resident needs; and the list continues. I remain incredibly proud of the resiliency and creative ideas from our Town of Yountville employee team. Job well done.

The Town experienced a 25% staff turnover during the pandemic period. Recently we have welcomed a new Town Clerk, Public Works Director, Planning and Building Director, Assistant Planners, Utility Operators, Management Fellow, and Management Analyst-Deputy Clerk to our team. At the Town Council’s request, this budget includes two additional staff positions, one to assist in responding to the increasing level of code compliance efforts required across multiple departments and the other in the information technology (IT) environment.

As the past several budget cycles have shown, the Town of Yountville has a unique General Fund revenue stream compared to typical California communities. The Town’s revenue stream is heavily dependent on tourism revenue. During the past two years of the pandemic the Town experienced a $5.9 million revenue loss amongst TOT, sales taxes, and permits and fee revenue. In a typical year 70% of our General Fund budget is derived from tourism related activities including Transient Occupancy Tax (TOT) and restaurant and tasting room sales tax collections paid principally by visitors to our town. We are fortunate to report the economic foundation for FY 2022/2023 looks more like that of the pre-pandemic 2019 period with 73% of our revenue expected to be derived from tourism related activities.

As we begin FY 2022/2023 there is cautious optimism as to continued level of record room rates but with reduced occupancy rates and a question of how long these rates will be sustainable. Therefore, we remain conservative with TOT projections of $7.5 million. This projection provides a realistic level of optimism and represents a return to pre-pandemic levels. As TOT is our most significant funding source it is important not to over or underestimate the expected amount. However, we have exercised prudence and built our expenditure plan around this funding level.

With the recent increase in residential home values and sale of the Vintage Estate property there will be an adjustment in property tax revenue to $2.14 million which is the highest level we have seen and surpasses last year’s $2.01 million. As we prepare this year’s budget, locally generated property tax revenue WILL BE sufficient to pay for the $1.9 million plus in costs for contracted public safety expenses for law enforcement, fire and emergency medical services which are the most basic of local government services. This has not always been the case in prior years.

Notable Components of this year’s budget include:

With the exception of the Water Utilty Enterprise Fund, the proposed $20.2 million “all funds” budget is balanced! It is funded by projected revenues and does not require use of any reserve funds. While the Wastewater Fund is in improved financial shape because of the 5-Year Rate Study adopted in 2018, the Water Operating Fund continues to navigate the negative effects of higher than anticipated costs of water purchase from the State/Veterans Home. The Town has begun a new 5-Year Rate Study to implement for a target date of late 2022.

General Fund Revenue remain volatile as TOT and sales tax projections of $7,500,00 ($5,250,000 last year) and $1,640,000 ($1,270,000 last year) are conservative estimates based on a resumption of level prior to the pandemic and continued economic recovery. If the recovery is interrupted these revenue estimates would be reduced.

• General Fund Expenditures ($10.4M) remain within available revenue stream ($12.6M).
• No use of Revenue Stabilization Reserve or Emergency Reserve Fund is anticipated or included.
• Proposed budget reflects a return to pre-pandemic levels of services.
• At the Town Council’s request, an increase of two employees; one to focus on Code Compliance and one from a transition from contracted support to in-house Information Technology (IT) position bringing the total permanent employee count to 34 Full-Time employees.
• Public Safety costs increased by 3.14% for Law Enforcement costs to $1.23M and Fire is projected to cost $984,022 prior to the County Fire Property Tax Credit Offset.
• Employee bargaining units and management employees will receive a 7% COLA after not taking a COLA salary increase or bonuses last fiscal year.
• Includes resumption of funding of the OPEB internal payroll rate at 5% to fund OPEB trust fund. OPEB trust fund balance is $5.4M as of April 30, 2022. With the unassigned fund balance at the end of the Fiscal Year this could be a target for allocation.
• Includes resumption of funding for discretionary funding to PERS UAAL trust fund also at a 5% internal payroll rate. The trust fund balance is $2.6M as of April 30, 2022. With the unassigned fund balance at the end of the Fiscal Year this could be a target for allocation.
• Includes resumption of annual transfers to Fund 81 and 82 for Fleet and Facilities Reserve Funds.
• Continues implementation of technology applications including Laserfiche for records management, PrimeGov for paperless agenda management and live meeting broadcast, and OpenGov for budgeting and online permitting and the transparency portal.
• Continues to use Measure T and SB1 funds to maintain our streets which are at a PCI rating of 78 which is the highest in all of Napa County. Focus this year is on grinding and overlay, as well as asphalt repair work in preparation for future micro surfacing.
• All Reserve Fund balance targets are met or exceeded. With the unassigned fund balance at end of year the Council could choose to make increased contributions to these funds and evaluate if adjusting funding targets is warranted.
• Prepares for implementation of a new 5-Year Utility Rate structure beginning in January 2023.
• Continued need to monitor fiscal health of the Water Fund because of significant increases in cost of water purchased from the State/Veterans Home and repayment of loan to Drought Reserve Fund to pay for the Washington Park Emergency Water line replacement project.
• Monitor any possible Federal infrastructure grant programs to determine if the Town has applicable projects.

Pandemic and other natural events aside, Yountville truly remains a unique and vibrant community which offers our residents and visitors a truly exceptional wine country lifestyle with small town charm. Our dedicated town staff team works hard to implement the goals established by the Mayor and Town Council. This budget continues to reflect and incorporate the Town Council Strategic Plan framework and its six Critical Success Factors: Exceptional Town Services and Staff, Engaged Residents, Responsible Fiscal Policy, Quality of Life, Premier Destination and Visionary Leadership.

This October is my 15th year anniversary as Yountville Town Manager. It continues to remain an honor and privilege to work with our lean and talented Town of Yountville employee team who are committed to providing the Yountville community with a high level of local municipal services.

I also want to acknowledge the leadership and support of our Mayor and Town Council as we move forward to the “new normal” after these past few pandemic years. Without your continued support, commitment, questioning and challenge, our town staff team would not be as well positioned to deliver the high quality of services for our community that we do.

I also want to acknowledge the contributions of our Finance Department team and Management Team who have worked to refine our use of OpenGov technology as a part of the budget process.

Budget development is truly a team effort, and it is appropriate to acknowledge and thank the Town staff who are most directly involved in the drafting and preparation of this budget, including:

Julie Baldia, Deputy Director Human Resources, and Information Technology

Kyle Batista, Financial Analyst

Beatriz Beccera, Management Fellow

John Ferons, Public Works Director

Eddy Gomez, Town Clerk

Larry Handcock, Municipal Operations Manager

Samantha Holland, Parks & Recreation Director

Celia King, Finance Director

Kirsty Shelton, Planning & Building Director

Jacob Solis, Engineering Technician

Rosalba Ramirez, Deputy Public Works Director

Erica Teagarden, Finance/Public Works Management Analyst

Respectfully submitted,