Public Hearing Fiscal Year 2017 Recommended Operating Budget

Public Hearing: Fiscal Year 2017 Recommended Operating Budget City Council Meeting, May 9, 2016 Item 7

FY 2017 Recommended Budget Summary Including Affiliated Agencies and CIP in millions FY 2015 Actual FY 2016 Adopted FY 2017 Recommended All Funds $953. 9 $746. 6 $760. 7 General Fund $213. 4 $219. 5 $236. 8 Full Time Equivalent (FTE) Positions FY 2015 Actual All Funds General Fund FY 2016 Adopted FY 2017 Recommended 2, 171. 41 2, 168. 51 2, 211. 97 946. 36 964. 98 995. 91 2

FY 2017 Recommended Budget Summary Appropriations – All Funds (General Fund Highlighted) Other Expenses; $35, 9; 4% CIP; $71, 7; 8% in millions Affiliated Agencies; $65, 6; 8% Transfers Out; $54, 3; 6% Non-CIP Capital; $5, 6; 1% Debt Service; $6, 9; 1% Internal Services Charges; $25, 1; 3% Salaries; $151, 0; 17% Other; $236, 8; 27% Services & Supplies; $225, 5; 26% Services & Supplies; $37, 9; 4% Internal Services Charges; $20, 1; 2% Transfers Out; $27, 5; 3% Non-CIP Capital; $0, 3; 0% Salaries; $137, 0; 16% 3

FY 2017 Budget Goals/Priorities • Maintain a balanced budget, particularly in the General Fund • Develop and implement a strategy to address future fiscal years > Current projections indicate expenditures will exceed revenues in the General Fund > Ensure the ability to offer competitive pay and benefits to attract and retain quality staff > Maintain sufficient reserves to address downturns in the economy > Create capacity to fund key projects and initiatives 4

Economic Trends 5

Current Economic Trends 6

Current Economic Trends • U. S. Economy – 2. 1% growth in 2015, est. 2 -3% 2016 • Jobs – unemployment rate 5% nationally > Pasadena - 4. 9%, LA County – 5. 5%, State – 5. 4% • Risk of recession in next 12 months – 21% (WSJ survey) • California – Job Growth and Personal Incomes > Growing but slowing – Jobs 3% in 2015, 2. 4% in 2016, Incomes 4. 5% in 2015, 3. 6% in 2016 • California State Budget > Balanced provided no recession > Estimated reserves $11. 5 billion > FY 17 budget is $168 billion 7

Current Economic Trends Pasadena • Assessed value up 5. 48% ($24. 23 B vs $22. 97 B) in 2015 vs 2014 compared to prior year • Property tax revenue up 0. 67% through March 2015 > Home sales slowing slightly 0. 4% but median prices up 5. 0% • Sales tax revenues up through March 2. 5% ($25. 90 M vs $25. 27 M) > still below pre-recession level • Transient Occupancy Tax (TOT) up 13% through March • 3, 189 Building Permits in calendar 2015 • Numerous projects underway 8

General Fund Revenues FY 2017 Other Revenue $ 9, 5 Fines and Forfeitures $ 7, 0 Operating Transfers In $ 20, 5 Property Tax $ 56, 7 Taxes $156. 9 Sales Tax $ 35, 5 Utility User Taxes $ 30, 4 Charges for Services $ 23, 0 Intergovernmental $ 17, 5 Other Taxes $ 17, 2 TOT $ 14, 6 Franchise Taxes $ 2, 5 Licenses and Permits $ 3, 5 9

10 20 19 18 st st ca re Fo ca re t ge al al al $30 FY FY FY Fo ud B ct u A al al ct u A A al al al $40 17 16 15 14 13 12 11 ct u A $60 FY FY 10 09 08 $10 FY FY FY Millions General Fund Major Revenues $70 Property Tax $50 Sales Utility User $20 Transient Occupancy Tax $0

General Fund – Fund Balance Policy Target $47 M $237 M $212 M 11

General Fund Forecast General Fund Expense vs Revenue 290 000 270 000 250 000 230 000 210 000 Total Revenues Total Expenditures 190 000 170 000 12 ca Fo st FY re 21 cas t Fo re ca st st re ca 20 FY FY 19 Fo et re dg Fo 18 FY FY 17 Bu ct ed al 16 Pr oj e tu al Ac FY FY 15 Ac tu al FY 14 Ac tu al FY 13 Ac tu FY 12 Ac 11 FY tu al al tu al FY 10 Ac tu al FY 09 Ac tu al Ac tu FY 08 Ac 07 FY FY 06 Ac tu al 150 000

General Fund Personnel Costs & FTEs 160 000 Dollars (in thousands) 140 000 150 771 129 954 135 225 132 089 134 541 138 678 126 625 122 757 125 739 129 617 120 000 100 000 80 000 60 000 2, 298 2, 307 2, 239 2, 173 2, 060 2, 186 2, 122 2, 171 2, 169 2, 212 1, 089 1, 099 1, 050 991 966 949 937 946 965 996 2008 2009 2010 2011 2014 2015 2016 2017 40 000 20 000 0 Total Compensation 2012 2013 Fiscal Years Budgeted FTE Count 13 Budgeted FTE Count - GF

General Fund Personnel Increases Salary 3, 787, 042 Cal. PERS 2, 815, 622 Benefits (Medical, Dental & Leave Time) 2, 530, 236 Workers Compensation 1, 957, 640 Other 1, 002, 460 Change from FY 16 to FY 17 Budget $ 14 12, 093, 000

Millions Cal. PERS Pension – All Funds 15

Workers Compensation – All Funds $16 $14 Millions $12 $10 $8 $6 $4 $2 $0 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 Actual Actual Budget 16 FY 17 FY 18 FY 19 FY 20 Forecast

General Fund Forecast 17

General Fund Forecast 18

General Fund Forecast • Expenses rising faster than Revenues > Five year average annual growth projections > Expenses 3. 6% > Revenues 2. 1% • Return to structural deficit • Results in a draw on fund balance • Fund Balance has not yet reached prerecession level • Little to no capacity to fund new programs or initiatives 19

General Fund Forecast 60 50 Millions 40 30 20 10 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Emergency Contingency 20 Unassigned

Recommended Approach • Adopt largely status quo Fiscal Year 2017 Operating Budget Ø Enhancements totaling $1. 3 m in General Fund and $8. 2 m overall have been included • During the course of Fiscal Year 2017 focus on: Ø Funding priorities Ø Determining the right size of City operations - should changes in service line up be considered? Ø Develop plans to manage any transition • Consider potential new or enhanced revenues Ø Ensure Cost of Service based fees recover appropriate amounts Ø Redirect new Transient Occupancy Tax to General Fund 21

How Does Pasadena Compare? FY 16 Operating Budgets – General Fund Only Population Total FTEs Glendale 199, 182 1, 566 Total GF FTEs 882 Per Capita Burbank 106, 084 1, 401 950 Per Capita Pasadena 141, 510 2, 169 965 Per Capita General Fund Contribution* Police ($) Fire ($) Libraries ($) 70, 301, 071 56, 079, 460 8, 488, 833 353 282 43 50, 440, 579 31, 085, 200 6, 409, 061 475 293 60 65, 705, 000 41, 963, 000 11, 563, 000** 464 297 82 * Glendale Fire includes other funds rolled into General Fund in Burbank and Pasadena **Excludes Library Special Tax revenue of $2. 5 million, if included per capita is $99 22

Transient Occupancy Tax 14 000 13 000 12 000 11 000 10 000 9 000 8 000 2017 2018 2019 2020 PCOC Bonded Debt Service Scenario 2 - 5 New Hotels PCOC Allocation Initial Pro-Forma - 2006 23 2021 2022 2023

FY 2017 Recommended Operating Budget • Joint City Council – Finance Committee meetings • 3 p. m. City Council Chambers > > May 16 th, June 6 th June 13 th June 20 th • Continued Public Hearing each Monday at 7 p. m. 24

FY 2017 Operating Budget Questions 25

FY 2017 Operating Budget 26