Title
a. Receive a financial condition report for the Housing and Community Development Department and Department of Public Works, Facilities, & Parks (collectively, the former Resource Management Agency) for Fiscal Year (FY) 2020-21; and
b. Provide direction to staff.
Report
RECOMMENDATION:
It is recommended that the Budget Committee:
a. Receive a financial condition report for the Housing and Community Development Department and Department of Public Works, Facilities, & Parks (collectively, the former Resource Management Agency) for Fiscal Year (FY) 2020-21; and
b. Provide direction to staff.
SUMMARY/DISCUSSION:
The Resource Management Agency (RMA) dissolved on November 30, 2020, and in its place, two new departments were formed: the Housing and Community Development Department (HCD) and the Community Services Department (CSD), the latter was updated to be called the Department of Public Works, Facilities, & Parks (PWFP). It was decided that the Fiscal Year (FY) 2020-21 RMA Adopted Budget (adopted June 23, 2020), including all subsequent Board of Supervisor-approved modifications, will remain intact through June 30, 2021. No changes to the accounting structure will occur until FY 2021-22. Accordingly, HCD/PWFP will continue to manage the RMA General Fund budget to the bottom line and not individually by department or functional unit.
HCD/PWFP is presenting today a financial condition report for FY 2020-21 that details the impact of COVID-19 on revenue as well as potential increased costs to implement Citygate’s recommendations approved by the Board of Supervisors. Staff projects a shortfall in General Fund revenue of $2.5 million, offset slightly by a reduction in costs of $0.3 million, resulting in a net loss of $2.2 million. The net loss of $2.2 million is expected to be further reduced to $1.8 million from CARES revenue of $0.4 million, that will be treated as additional General Fund Contribution (GFC). Attachment A provides detailed revenue and budget projections and the overall projected net loss for FY 2020-21, along with three proposed options to address the budgetary shortfall.
The Budget Committee is asked to receive the financial condition report and provide direction to HCD/PWFP on the preferred option (either from the three presented or one proffered by the Committee) to bring to the Board of Supervisors for consideration and approval.
OTHER AGENCY INVOLVEMENT:
HCD/PWFP consulted with the County Administrative Office Budget & Analysis Division in the preparation of this report.
FINANCING:
A revenue shortfall of $2.5 million, a reduction in costs of $0.3 million, and an increase in GFC from Cares Act funding of $0.4 million are projected for FY 2020-21, resulting in a net loss of $1.8 million. To address this gap, the departments are providing three (3) possible options for the Budget Committee’s consideration. Two of the options involve unprecedented midyear staff layoffs; the third option proposes the use of Cannabis Tax Assignment revenue to offset the loss. The Cannabis Tax Assignment balance is currently $8.6 million. If $1.8 million is designated to address the HCD and PWFP budget shortfall, the Cannabis Tax Assignment remaining balance will be $6.8 million.
Prepared by: Jessica Cordiero-Martinez, Finance Manager II (831)755-4824
Approved by: Shawne Ellerbee, Assistant Director of Public Works, Facilities, & Parks
Approved by: Carl P. Holm, AICP, Housing Community Development Director
Approved by: Randell Ishii, MS, PE, TE, PTOE, Director of Public Works, Facilities, & Parks
Attachment:
Attachment A- HCD and PWFP FY 2020-21 Financial Condition Report