Mid-Cycle Budget Shows $17.1 Million Year End Surplus
Irvine’s mid-cycle budget is coming up for review to the Finance Commission tonight. Notable is the exclusion of mention of the one time $56 million in COVID funds that was given to Irvine and has yet to be spent or distributed. Here are some of the highlights of the mid-cycle budget review (item 3).
Projected Revenue Increases
The mid-cycle budget is notable due to increased revenues based upon current and projected economic outlooks. The city finds itself with an approximate $17.1 million year end surplus driven primarily by pent-up demand and higher consumer spending levels. There’s a conservative estimate as well, that the 2022-2023 will see a $5.5 million dollar increase in revenues.
These revenues increases are anticipated to come from the following categories:
Property Tax is the City’s highest revenue category and was the least affected by the pandemic. The strong housing market has led to increases in overall sales and market value, which has helped increase the City’s assessed valuations. For the mid-cycle review, property tax is proposed to be increased by $1.1 million.
Recovery of Sales Tax began in FY 2021-22 and has exceeded expectations. Pent Up demand and higher consumer spending has led to increased sales tax revenue in casual dining, restaurants, and automobile sales. In the mid-cycle review, sales tax is proposed to be increased by $3.3 million.
Hotel Tax revenue was the most affected by the pandemic. The City is experiencing a larger number of leisure travel during its recovery. Hotel tax is proposed to increase by $822,683 in the mid-cycle review.
Program and Service Fees were also affected during the pandemic due to social distancing and State and County mandates. The proposed budget includes additional classes for the tennis and disability services programs, which contain offsetting revenues, increasing program and services fees by $260,000.
Proposed 2022-23 General Fund Expenditure Adjustments
Salaries & Benefits are proposed to increase by $2.5 million with the addition of 27 new positions funded only by the General Fund. The new positions will be in addition to the City’s existing 1,319 full-time equivalencies (FTEs), which includes full-time, part-time, and non hourly positions.
Among the new positions, notable are the increase in:
- Public Safety which is adding 5 new positions.
- Community Services is proposing to add 16 new positions, mostly exchanges of part-time positions for full-time positions.
- Public Works & Transportation is proposing to add 3 new positions.
Great Park
The Great Park Operating Fund accounts for administrative, operating, maintenance, and programing. As the Great Park budget returns for a FY 2022-23 mid-cycle review, revisions have been proposed to reflect modified operations. These proposed revisions are reflective of changes from the Great Park two-year budget.
Great Park revenues are estimated and revised to include an additional $37.8 million to reflect the secondary maintenance revenue. This includes the clean-up payments of $7.1 million for FY 2020-21, $12.5 million for FY 2021-22, and a disbursement of $18.2 million for FY 2022-23 to cover approved maintenance related expenditures.
Capital Improvement Program (CIP)
The City conducted a survey of funding needs for existing and new Capital Improvement Program (CIP) projects for FY 2022-23. Based on the findings, staff is requesting $3,651,000 in additional Special Fund funding for various CIP projects. The majority of this funding is requested due to rising construction costs.
Notable are three new projects totaling $675,000:
Synthetic Turf Installation – Establish a new CIP project to install new and rehabilitate existing synthetic turf at the Great Park to include soccer fields four through seven and the baseball stadium foul ball area. (Funded through the Great Park Fund)
Jeffrey Extension – Establish a new CIP project for a North Irvine Transportation Mitigation (NITM) project to improve circulation throughout the northeastern part of the City. (Funded through North Irvine Transportation Mitigation Program Fund)
Traffic Signal System Rehabilitation – Establish a new CIP project to install traffic signal infrastructure improvements at select signalized intersections. (Funded through Measure M2 Fairshare Fund)
Landscaping, Lighting and Park Maintenance (LLPM)
The City’s Landscape, Lighting and Park Maintenance Assessment District provides funding to maintain and improve Citywide street lighting, community parks and neighborhood parks that offer a special benefit to surrounding properties. The cost to operate the District is estimated to be $23.7 million for FY 2022-23. The total special assessment of $11.7 million represents 49.4 percent of total operating costs to maintain the District.
Road Maintenance and Rehabilitation Account (RMRA)
The City is eligible to receive an estimated $6,190,210 in FY 2022-23 for roadway maintenance from the State Senate Bill (SB) 1, Road Maintenance and Rehabilitation Account (RMRA) Program. This new gas tax revenue is assisting the City in funding preventative street maintenance that otherwise would be completed with other limited City funding sources and is included in the adopted budget. Staff has identified the following three pavement rehabilitation/slurry seal projects in FY 2022-23 for consideration by the City Council:
- Annual Slurry Seal/Local Street Rehabilitation
- Trabuco Pavement Rehabilitation (Jeffrey to Sand Canyon)
- Walnut Ave Pavement Rehabilitation (Harvard to Culver)
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