City Council
	Agenda Request
Agenda Of:	01-20-09	Agenda Request No:		VI-A
Initiated By:	Bryan Guinn Budget Manager	Responsible Department:		Fiscal Services
Presented By:	Jennifer Brown Assistant Director of Fiscal Services	Department Head:		Linda Symank Director of Fiscal Services
		Additional Department. Head (s):		N/A
Subject / Proceeding:	Amend Fiscal Year 2009 Budget First and Final consideration of Ordinance No. 1730
Exhibits:	FY08 Carryovers Ordinance No. 1730 Summary of Budget Revisions by Fund
Clearances			Approval
Legal:	joe morris, city attorney		Executive Director:	N/A
Purchasing:	N/A		Asst. City Manager:	N/A
Budget:	Bryan Guinn Budget Manager		City Manager:	Allen Bogard
Budget
Expenditure Required: $			N/A
Current Budget: $			N/A
Additional Funding: $			$ 5,570,394 in Revenues $6,885,947 in Expenditures
Recommended Action
First and Final Consideration of Ordinance No. 1730 amending the Fiscal Year 2009 Budget.
Executive Summary
The City Council adopted the Fiscal Year 2009 budget on September 16, 2008. Since that time there have been several events that present a need for City Council to approve an amended budget that reflects adjustments relating to carryovers from Fiscal Year 2008, hurricane Ike related expenditures and FEMA reimbursements, a recommendation to delay the utility rate increase that was included in the adopted budget, and additional revenues and expenditures related to the Houston Museum of Natural Science CIP project. Also, at the November 4, 2008 Council meeting, a budget adjustment was approved in the Solid Waste Fund for an H-GAC grant totaling $21,100. The attached ordinance amends the Fiscal Year 2009 budget to reflect the changes needed; each set of adjustments will be discussed separately with a summary of changes to the budget reflected as an exhibit below. Carryovers from FY2008 The City’s Fiscal Year ended September 30, 2008. At that time there were contracts, capital purchases, and other items that were approved and budgeted in FY08, but the actual expenditures were not made during the Fiscal Year. In order to accomplish these projects, the budget for these carryover items needs to be re-established in FY09. Un-audited numbers for FY08 show City funds ending on a positive note. The un-audited fund balance of the General Fund at September 30, 2008 of $21,179,475 is $4.7 million higher than the budgeted ending balance. This is due to expenditure savings, of which $3.6 million is non-personnel savings. The General Fund carryover request totals $623,350 in revenues and $1,919,463 in expenditures. The $623,350 is included as both expenditures and revenues for the lease-purchase of a fire engine, which was ordered in FY2008 and is anticipated for delivery in spring 2009. Major items in the carryover include: upgrades to audio-visual equipment in Council chamber and the Cane Room; IT projects including online parks reservation and implementation of Click2.Gov in the Planning Department; roof replacement at Fire Administration and Parks Maintenance; drainage and traffic engineering studies; mobile license plate recognition for police patrol vehicles; portable video surveillance cameras and evidence management software for the police department; replacement of a fire engine; and other non-recurring projects that were in progress but not complete at year-end. If the budget is adjusted for the recommended carryovers, there will be approximately $19.9 million in available funding in the General Fund. This is $6.9 million in excess of the policy requirements for the General Fund. The Utility Enterprise Fund has an available ending cash equivalent balance of $5,705,770, which is $1.78 million greater than the budgeted ending balance. This is due to revenues coming in over budget and savings on the expenditure side. The requested carryover amount totals $48,652. Cash equivalents after the carryover will be $5.66 million, which is greater than the minimum 25% specified by policy. The Surface Water Fund has an ending cash equivalent balance of $2,421,391, which is $1.5 million greater than the budgeted ending balance. A large portion of the savings is due to pay-as-you go CIP projects that are not fully underway. As the projects get underway, the savings will be utilized on the projects. The carryover request totals $128,000 and includes funds for the surface water supply agreement with Gulf Coast Water Authority and for legal services. There are also several pay as you go Capital Project carryovers that will draw on this available balance. The Sugar Land 4B Corporation has several items requested for carryover, including project funding for a broker marketing program, planning for the entertainment district, the Imperial historic documentary (half of which is funded with Hotel Tax funds), and a memory stick marketing project. Pursuant to the Corporation’s bylaws, City Council must also approve budget adjustments for the Corporation. Council is being asked to approve the Corporation’s budget amendment contingent on the board’s approval at their next meeting. Capital Projects are budgeted for the duration of the project and any funding for projects in progress at year-end automatically carryover so they are not included in the totals given. The CIP carryover impacts the Surface Water Fund, Airport Fund, and the development corporations, as they budget their pay as you go capital project funding within their operating budgets. Hurricane Ike Appropriation On September 16, 2008, City Council approved an amendment to the Fiscal Year 2008 budget for $3 million in revenues and expenditures for activities associated with the response and recovery from Hurricane Ike. A total of $1,428,267 in expenditures and revenues receivable were recognized in Fiscal Year 2008, leaving a balance of $1,571,733 that needs to carry forward for expenditures that were incurred in Fiscal Year 2009. There are a portion of these expenditures that may be reimbursable at 75% rather than 100% based on FEMA’s reimbursement schedule for various project types, but the City is receiving reimbursement for equipment usage that will offset some of the decrease as this equipment usage was a non-cash contribution from the City to the recovery efforts. As Ike is the first hurricane that Sugar Land has really had to recover from, the volume of debris to be removed after the storm exceeded the original estimates. An additional 60,000 cubic yards of debris was removed from the public rights of way, parks, Oyster Creek and common areas by TFR Enterprises, the City’s debris removal contractor, and managed by Beck Disaster Recovery Services. While coordinating debris removal with the various HOAs within the City led to increased costs to the City, ultimately residents save money as HOAs are not eligible for reimbursement of these costs from FEMA and the City is eligible for 100% reimbursement on both of these contracts. The two contracts need an additional $2.7 million in funding appropriated, which will be offset by equivalent reimbursement revenue from FEMA. The amendments to the two contracts will be considered under a separate action item for City Council approval. In total, the General Fund budget is being amended by $4,271,733 in revenues and expenditures for Hurricane Ike, for a net impact of zero to the fund balance. Although it is anticipated that the expenditures will be equal to the reimbursement received by FEMA, should the final reimbursements not equal the expenditures incurred, the General Fund has a surplus of $3.4 million after carryovers over the required fund balance that can be utilized to absorb the difference. In the Utility Fund, the City was charged $30,000 by the Brazos River Authority for emergency operations at wastewater treatment plants caused by damage from hurricane Ike. These expenditures were for generators and minor repairs that were not part of the original budget amendment for hurricane Ike related expenditures. It is anticipated that these costs will be reimbursed by FEMA. The Utility Fund is being amended by $30,000 in revenues and expenditures to account for these costs. Budgeted Utility Revenues In 2007, the City completed a utility rate study that recommended an increase to the percentage of revenues recovered from monthly service charges in the utility fund. The study recommended that the City reach the target percentages of 35% of water and 40% of wastewater revenue requirements recovered from the service charges by a series of increases to the monthly service charges over a three year period, which would put us near the targeted levels by Fiscal Year 2009. The Fiscal Year 2009 budgeted revenues included this anticipated rate increase, which was planned to be effective March 1, 2009. In December, City Council approved an adjustment to the volume that is assigned to new residential customers for wastewater billing, which is used to calculate the volume charges for wastewater until each customer can establish their own winter average based on water volume from the February and March bills. The reduction from 9,600 gallons to 6,700 gallons, which is the 2008 citywide average usage, results in a decrease in revenues from wastewater volume charges that was included in the revenue budget. Since the budget was approved, the economy has taken a downturn causing some customers to have a tighter budget than usual. In addition, the City entered into a five year agreement for electricity beginning in January 2009 that will result in significant savings compared to budgeted electricity costs. Since the City will be realizing savings in electricity that are greater than the additional revenue that would have been generated from the rate increase from March to September, it is recommended that the implementation of the utility rate increase be delayed. The utility fund will be monitored throughout the year and any rate adjustments that may be needed in Fiscal Year 2010 will be recommended through the budget process. This proposal was reviewed with the finance/audit committee on January 8, 2009 and received a favorable response from committee members with a recommendation that the proposal be brought forth to the entire Council for consideration. The Utility Fund budget is being amended to reflect a reduction in revenues of $712,876, offset by a reduction in budgeted electricity expenses, for a net impact of zero to the budgeted ending balance. Museum of Natural Science Per the agreement between the City of Sugar Land and the Houston Museum of Natural Science (HMNS) for the improvement and lease of the Central State Farm Prison Building, the City agreed to incorporate several tenant-related improvements into the City’s construction contract. These improvements include items that are beyond the scope of the City’s renovation obligations but for which it is most cost effective to complete at the time of construction. As outlined in the agreement, which was approved by City Council on January 22, 2008 and amended on March 4, 2008, HMNS is required to pay the City $250,000 for the estimated construction costs of the incorporated improvements by January 31, 2009. The General CIP budget is being amended by $250,000 in both revenues and expenditures to account for the tenant-related improvements.
Exhibits

Significant items:

1. General Government: 50^th Anniversary planning; software projects including remote computer access, Click 2 Gov for Planning, and online reservations for Parks; City Hall build out; CAPP legal services.
2. Business & Intergovernmental: Remainder of grant from DuPont Corporation, used for lead-based paint mitigation via Ft. Bend Corps.
3. Support Services: HVAC modifications; roof replacement at Fire Administration and Parks Maintenance.
4. Community Development: Drainage and traffic engineering projects; weather station maintenance; development code update.
5. Police Department: SWAT training delayed due to hurricane Ike; interactive training system; TCLEOSE training funds; portable video surveillance; mobile license plate recognition; forensic video system; evidence management software.
6. Fire Department: computer and software; replacement fire engine.
7. Tourism Fund: Storage of historic Imperial Sugar artifacts; Imperial historic documentary; start-up funds for Sugar Land Historic Foundation project; Fort Bend countywide marketing effort.
8. CDBG Fund: Unspent funds from FY08 can be allocated towards eligible projects per annual action plan (includes funding for Mayfield Park Street Reconstruction).
9. Utility Fund: Sanitary sewer GIS enhancements; pretreatment program for North and South wastewater treatment plants.
10. Surface Water Fund: anticipated legal costs for water rights option; payment to Gulf Coast Water Authority for surface water supply agreement.
11. Solid Waste Fund: Solid Waste Implementation Grant from the Houston-Galveston Area Council approved November 4, 2008.
12. SL4B Fund: Broker and County marketing programs; memory stock project; Imperial historic documentary; funds for entertainment district.