City Budget: Piedmont in 'Modestly Good Shape'

Piedmont City Council members will begin the public process of perusing, altering and, eventually, approving a 2012-2013 municipal budget at a workshop session Saturday.

The budget workshop will begin at 9 a.m. in the Piedmont Police Department's Emergency Operations Center, 403 Highland Ave. The workshop is open to the public, although seating is limited. It will not be broadcast on KCOM-TV or available on video. The proposed budget is available for download (as several separate documents) at the City of Piedmont website.

The workshop is the first of three council meetings where the 2012-2013 budget will take center stage. Public hearings will be held at the city council meetings of June 4 and June 18. The council is expected to adopt a final budget on June 18.

Overview

"All things considered, Piedmont is currently in modestly good shape and certainly in a more privileged position than other California municipalities," City Administrator Geoffrey Grote says in his overview of the proposed budget.

However, he cautions, "The proposed budget for FY [fiscal year] 12-13 projects positive operating net income of $669,075. However, the FY 12-13 is projected to transfer $900,000 for capital needs which results in a deficit net income of $230,925. At the end of FY 11-12, we expect a general fund balance of approximately $3 million, and at the end of FY 12-13, we expect a balance of $2.8 million."

Some excerpts from Grote's budget message:

• "We are anticipating a positive operational net income of $669,075. This is the result of the ongoing relatively good performance of the Real Estate Property Transfer Tax, with estimated revenues of $2,600,000 for FY 12-13, though the estimated revenue for FY 11-12 will be slightly lower, at $2,500,000."

• "The proposed budget includes $900,000 in General Fund monies for the maintenance of existing facilities and equipment replacement. When one adds these funds to the $350,000 anticipated from Measure B for streets, sidewalks, curbs, & gutters, we have taken a significant step toward fulfilling the MTRC [Municipal Tax Review Committee] recommendation that maintaining existing infrastructure and equipment be funded in the aggregate at $1,300,000. In addition, this budget inaugurates the MTRC conclusion that costs for replacing existing equipment and facilities should be budgeted for on an annual basis."

• "While it is worth noting that our revenues will continue to fully cover expenditures, assuming the continued presence of the Municipal Services Tax, care must be taken over the next five years to control increases in expenditures. There are certainly clouds on the horizon that may cause expenditures to outstrip the predicted increases in revenues. Initiatives are being taken to control PERS and retiree medical costs, which was a central tenant [sic] of the MTRC report ..."

Five Year Projections

Some excerpts from "Items of Note" in Grote's discussion of five-year budget projections:

• "Funds set aside for capital expenditures are forecast at annual contributions of $900,000 per year, beginning in FY 12/13 and continuing through FY 16-17. This is a significant increase in capital funding compared to the previous three years."

• "The City of Piedmont currently has 94 full time employees of which 40 may retire in the next five to ten years. This is a significant turnover factor that must be addressed in the coming years."

• "The sewer fund's defeated ballot measure in February of 2012 means that anticipated rehabilitation projects have been put on hold and will be re-considered by the Council in the light that the sewer fund balance is expected to dip below $1 million in reserves next year and will be in deficit by FY 14-15 unless additional funding is acquired." 

• "The real possibility of the sewer fund going broke in the near future presents an additional danger to the welfare of the general fund ..."

• "There is a possibility of realizing some savings in pension payments to CALPERS [California Public Employees' Retirement System]. We are looking into the possibility of re-financing a portion of our CALPERS obligation through the issuance of pension bonds. The City of Piedmont has an $8.5 million pension obligation, as of June 30, 2012, for prior service cost. We are currently paying this obligation to CALPERS at an interest rate of 7.5%. We can possibly re-finance at a rate of approximately 3.5% by selling pensionj obligation bonds ..."

• "Most importantly, the major issue facing us in the near future is the municipal services parcel tax election that will take place in November of 2012. Our five year revenue and expenditure forecasts indicate that, without the passage of this important ballot measure, the City of Piedmont will have a deficit general fund balance by FY 14-15. In order to avoid this potential deficit, service levels must be cut and cut significantly."

Personnel Costs

From Grote's overview:

"Personnel related costs are more than 70% of the city's FY 12-13 budget. Additions to personnel took place in FY 11-12 when the newly formed aquatics division hired a full time pool manager position and part time life guard and clerical postions.

"The key aspects of the personnel budget for FY 12-13 are the following:

• "Salaries will remain frozen.

• "Employees will share, at a more significant level, in retirement and health care costs.

• "Three new paramedics  were hired in the Fire department in FY 11-12 and their costs are included in the FY 12-013 budget."

Do you have specific questions about the proposed city budget? Ask them in the comments section below and Piedmont Patch will try to get the answers.