HomeMy WebLinkAboutMinutes - February 23, 2015 - CC, Special MeetingCITY OF AZUSA
MINUTES OF THE SPECIAL
MEETING OF THE CITY COUNCIL
' MONDAY, FEBRUARY 23, 2015 - 7:00 P.M.
The City Council, of the City of Azusa, met in Special Session at the above date and time in the Azusa Light &
Water Conference Room, located at 729 N. Azusa Avenue, Azusa, CA 91702.
A copy of the Notice of said Special Meeting was delivered to the Mayor and Councilmembers on February 19, 2015,
between 4:00 P.M. and 5:00 P.M., by Senior Office Specialist Bautista and e-mailed by Deputy City Clerk Hernandez.
Mayor Pro -tem Gonzales called the meeting to order at 7:00 P.M. Call to Order
ROLL CALL: Roll call was taken by City Clerk Comejo. Roll Call
PRESENT: COUNCILMEMBERS: GONZALES, CARRILLO, MACIAS, ALVAREZ Present
ABSENT: COUNCILMEMBERS: ROCHA
ALSO PRESENT Also Present
Elected Officials: City Clerk Comejo,
Staff Members: City Manager Butzlaff, City Attorney Martinez, City Attorney Ferre, Finance Director
Paragas, Police Chief Gonzalez, Utilities Director Morrow, Recreation and Family Services Director
Jacobs, Information Services/Library Director Graf, Interim Human Resources Director St. Peter,
'Interim Public Works Director/City Engineer Bobadilla, Police Captain Chavez, City Librarian Strege,
Senior Management Analyst Yang, Administrative Technician Juarez.
PUBLIC PARTICIPATION Public
Participation
Mr. Art Morales, addressed the meeting asking if any items could be addressed at special meetings; City
Attorney Ferre responded that at regular meetings any items that are within the City's jurisdiction can be A. Morales
addressed; however at special meetings, items are limited to only those posted on the agenda; Mr. Comments
Morales then asked what was the fiscal outlay for water replacement for the current fiscal year, and
suggested to have a watch tower at the entrance of the Canyon to monitor for fires.
CONSENT CALENDAR Consent
Calendar
Moved by Councilmember Carrillo, seconded by Councilmember Macias to approve a request for
proposals (RFP) scope of services and authorize staff to issue RFP to solicit proposals from Financial RFP Financial
Advisors to consider options to refund: (i) Water Parity Revenue Bonds Series 2006; (ii) Rosedale Advisors
Community Facilities District 2007 Special Tax Bond; and (iii) the former Redevelopment Agency Tax
Allocation Bond 2005 Series A, and to authorize staff to solicit proposals, containing scopes of services
similar to those approved for most recent utilities, community facilities district and former
Redevelopment Agency Debt Refundings, for other professional services (i.e. bond counsel and/or
underwriter) necessary to refund: (i) Water Parity Revenue Bonds Series 2006; (ii) Rosedale Community
Facilities District 2007 Special Tax Bond; and (iii) the former Redevelopment Agency Tax Allocation
'Bond 2005 Series A if Financial Advisors' reports indicate potential Net Present Value Savings of 5% or
more, by the following vote of the Council:
YES: COUNCILMEMBERS: GONZALES, CARRILLO, MACIAS, ALVAREZ
NOES: COUNCILMEMBERS: NONE
ABSENT: COUNCILMEMBERS: ROCHA
Sched Items
SCHEDULED ITEMS
FISCAL YEAR (FY) 2014-15 GENERAL FUND MID -YEAR BUDGET REVIEW AND FY14-15
ADJUSTMENTS. Adjustments
City Manager Butzlaff presented the item stating that it was a mid -year budget review, which has been
typically presented earlier in the year to allow for the necessary adjustments; the General Fund was not
doing as well as projected due to various circumstances.
Finance Director Paragas gave the following presentation on the status of the 2014-15 General Fund:
FY 2014-15 GENERAL FUND
Summary of Revenues
- The adopted Total Budget Revenue was $35,650,455
- Property Tax 23.6%.
- Non Property Tax 23.5%, included Franchise Fees,
from the Material Recovery Facility (MRF).
- Sales Tax 15.6%.
- Utility User Tax 9.6%.
FY14-15
General Fund
Summary
TEFRA from Azusa pacific University, fees Revenues
Summary of Budget Expenditures
- Public Safety 63.6%, included Fires Services, which is common in other cities where safety
consist of half of the General Funds.
- Miscellaneous 9.5%, consisted of City wide expenses such as retiree benefits, Public Agency
Retirement System (PARS) for Golden Hand Shakes, $100,000 for Area D, Ms. Brenda
Hunemiller who has an office in City Hall, and in order for the City to waive fees for her services,
Azusa Finance Department provides payroll services for her department.
Two adjustments were made to the adopted General Budget: (1) the General Fund borrowed $4
million from the Water Fund, $700, was transferred to the Risk or Liability Fund to pay settlement
claims, insurance liabilities and workers compensation claims; the $700,000 was a deficit that
occurred over a period of 2 years; (2) a transfer was made to the Grants Fund, creating the adjusted
surplus of $130,260.
Economic Trend Factors
- Increase in property values allowed property tax revenue to increased by 7.8% compared to 2013,
the assessed value of the whole City was 95% of the highest value in 2009.
- Slight increase in sales tax due to COSTCO, ELS and Chick-fil-A.
- Azusa's unemployment was 8.1% as of December 2014 compared to 9.5% in December 2013;
California was 7% compared to 8.3% last year.
- Historic low interest rates still exist, in December 2013 rates were 0.264%, and slightly higher in
December 2014 0.267%.
- Continuing issues related to the dissolution of the former Redevelopment Agency (RDA), due to
the potential sales of properties have been halted by the State, as no sales or property taxes are
being generated, staff requested an asset transfer review from the State Controller on those
properties and their final report was still pending, there were preliminary reports which showed
that the City was able to keep some of the properties; once the final results have been released,
staff will have more information on the pending properties.
- Development activity; 154 homes were built from July to December 2014, 150 were from the
Rosedale Development.
- Budget personnel; salaries and personnel costs have increased an approximate $400,000, including
Public Employees Retirement System (PERS).
- The Los Angeles County (L.A. Co.) offered Cost of Leaving Adjustments (COLA) to their
employees, hence that cost was added to the City's Fire Service Contract increasing it to $275
Thousand.
Revenue/Expenditure Trend
FY2010-11 and FY2011-12 had a combined deficit of $4 million, as a result of the deficits,
personnel made concessions, there were layoffs and some employees took early retirements, created
a combined surplus in FY2012-13 and FY2013-14, of $3.1 million; excluding the one time revenues
in those two years, the surplus was $2.1 million; the surplus was also attributed to the increase in
building and mechanical permits, and engineering work that increased to approximately $1 million;
franchise fees went up, and the calculations of the Azusa Light & Water (AL&W) penalty fees were
adjusted according to the policy; these extra revenues helped meet the additional current and future
expenses; it is projected that FY2015-16 will reflect a surplus of $120,000.
Revenue Comparisons FY 2013-14 vs. FY 2014-15 at December 31
Services advanced lightly; cost reimbursement increased due to the Successor Agency
Reimbursement for administrative allocation; licensing and permits went up to $89,425;
miscellaneous revenue decreased by $477,875 due to a one-time reimbursement of a bond that the
Department of Finance (DOF) had previously rejected; property tax increased to $865,085, which
included franchise fees, ownership transfer taxes, sales tax, utility users tax that resulted from the 4%
increase to residential and 8% to commercial.
02/23/2015 PAGE TWO
Summary
Expenditures
Economic Trend
Factors
Revenue/
Expenditure
Trend
Revenue
Comparison
FYI 3-14 vs
FY14-15
Expenditure Comparisons FY 2013-14 vs FY 2014-15 at December 31 Expenditure
Insurance went up slightly; an increase in maintenance due to a long-time expense by the Police Comparisons
Department Joint Powers Agreement for Regional Communications Network; the increase by the FYI 3-14 vs
L.A. Co. Fire Services. FY14-15
PROPOSED MID -YEAR ADJUSTMENTS Proposed
Adjustments
Revenue Matters
Most revenues were on track: permit fees were tracking high at 62% of budget, which showed the Revenue
increased activity in the City; host fees were 42% of budget; animal licenses revenue was not being Matters
tracked, it was being netted out with the actual cost with the L.A. Co., staff proposed to make a
' correction on the budget to track those revenues; utility user tax was at 54% above budget, it can be
correlated to the electric revenues; a one-time revenue related to a reimbursement from L.A. Co. for
maintenance costs.
Mid -Year Revenue Request Adjustments
Items requested to be increased or reduced:
Precise Plans, Tentative Maps and all permits went up
Court fines tracked low
Host Fee for the MRF were not tracking
Total adjustments
Increase in revenue
Reduce by $30,000
Reduce by $90,000
Increase in revenues by $429,300
A one-time fee reimbursement of $148,000 from L.A. Co. for the maintenance of the San Gabriel River
Mountains Interpretive Center and the San Gabriel Bike Path Extension Project; there will be a one-time
reimbursements for the SB90 State Mandated Requirements annual request process from which the City
is yet to receive $38,000 for FY2014-15.
Expenditure Matters
Mid -Year
Adjustments
Most expenditures are on track; utility charges are at 59% of budget; there were salary savings from Expenditure
positions that were unfilled for several months, but they were in the process of being filled, one Matters
specific position will not be budgeted for; the ongoing unions negotiations were not factored in the
budget, as the City continues to negotiate with 3 bargaining groups.
Mid -Year Expenditure Adjustments
' Staff requested a reduction in salaries for the Assistant to the Community Development Director Mid -Year
position, as that position will not be filled at this time; there were salary savings for the City Expenditure
Manager and the Information Technology Analyst positions for the time that they were vacant; Adjustments
Vacation pay -out accruals to previous employees totaled to $61,150, and staff requested for
additional $70,000 to meet these costs; Humane Services revenues were not offsetting the expenses,
as revenues were being reported under expenses, revenues will be tracked to capture true revenue
received; staff requested a reduction to the expenditures in the amount of $64,950.
Proposed Adjusted Balance
The proposed adjusted balance will reflect a surplus of $624,510 for the FY 2014-15 Adjusted
Balance
FINANCIAL FORECAST
Financial
Forecast
Influencing Factors
The forecast included the Pension Reform by the State Public Employees Retirement System
Influencing
(PERS) rates that were adjusted for smoothing out the State's liabilities to be funded within the next
Factors
20-30 years, and to adjust their rates to offset the cost of longevity as retirees are living longer,
retiree payouts forecast included 2-5 retirees who filed retirement papers, it did not include Police
Officers who are eligible to retire and who have not filed papers, the estimated amount for these
potential retirees was approximately $600,000; the Price Club Agreement expired in October 2014,
there will be no more payback and the City will be acquiring $500,000 in sales tax, approximately
$200,000 was budgeted in FY14-15 to remit the final payment to Priceclub; the impacts of the
Affordable Care Act were difficult to predict, the Act states that if the City does not offer affordable
health care to part-time employees who are considered full-time, and they go out and obtain a more
'
affordable one, the City can get penalized $200 annually per employee, there is a criteria that needs
to be met on the percentage of employees to whom the City offers health care, and the City may
have meet that criteria, the total penalties could range from $0 to $30,000 a year, once the Act has
been fully implemented, staff will be able to get further clarification.
Financial Forecast Financial
Staff's financial surplus forecasts were: FY15-16/$551,665, FY16-17/$381,640 and FY17-18/ Forecast
$433,660, projections did not factor in retirees pay -outs or future labor negotiations. Overall the City
continues heading in the right direction, there are developments taking place, cuts were made as
needed, City Council and City Departments stood ground to work throughout the difficult times;
02/23/2015 PAGE TH3LEE
influencing outside factors such as the Department of Finance (DOF), State Controller, PERS and
the Governor's decisions, will play a role on these forecasts; staff has worked hard on their own to
balance the budget, and are waiting for the effects of these outside factors.
Council and staff held the following discussion/question-answer session:
Councilmember Alvarez asked what was the percentage amount of COLA increase by the L.A. Co. Fire
Department to its employees; Finance Director Paragas responded that it was 2% for 6 months and
another 2% the following 6 months.
Councilmember Macias asked how the revenue and expenditure trends came into play; Finance Director
Paragas responded that those were not tracking; he further asked where did the City stand on the
Community Improvement Projects (CII') budget; Interim Public Works Director/City Engineer Bobadilla
responded that department heads were submitting their requests for CB's, and he did anticipate major
changes from last year; City Manager Butzalff stated that if staff is able to find additional funds through
grants or opportunities with other agencies or governmental entities, additional projects will be posted.
Councilmember Carrillo asked if permit fees were for new construction or upgrades, and as the current
developments decline, at what point will those lower revenues be projected. Finance Director Paragas
responded that such permits are for both, construction permits for the Rosedale project and townhomes
being built in other parts of the City, and improvement permits as homeowner now make improvements
to their homes instead of trading, as it is more cost effective; the correlation between building, plumbing
and electrical permits, are all escalating, staff anticipates that it may track lower once Rosedale has been
completed, unless new developments come in to the City. City Manager Butzalff stated that as far as the
current developments diminishing, Mr. Bill Holman, from Rosedale Land Partners II, LLC, estimated
that there would be approximately 100 permits pulled out next year, which reflects a decline of 51 from
the current year, there are 350 additional homes that can be built, they are not sure if they can all be
approved, but for sure 100 will be pursued next fiscal year, and as they get closer to the 350 built, a
sharp drop-out will be reflected; by the time the drop-out occurs, staff is optimistic that the City will be
positioned in the Downtown Area with some of the projects that the Council hopes to see, which might
make up for some of the Rosedale Development.
Councilmember Macias asked if transfer tax fees that are at 42% of budget, were due to Waste
Management MRF capacity; Finance Director Paragas responded that it was believed that the Puente
Hills Landfill was going to close down, but their railroad recycling continues to operate for the Orange
County area, and because of these continued operations, Waste Management is not acquiring all of the
'predicted recyclables; Puente Hills Landfill's operation is scheduled to expire within 2 years, but they
are considering to extend those operations; City Manager Butzlaff stated that the MRF capacity
predication may change, but not by much as Southern California is experiencing a decline of waste going
into landfills, due to all of the recycling that is being pulled out, staff may ask Waste Management to
revise their projections, so that it does not affect the projected income to the City.
Councilmember Macias asked what the City's financial ratings were last year, and what are the raters
interested on in order to determine their ratings. Finance Director Paragas responded that the ratings are
done once a year from each group; Moody's credit ratings for the City were kept at the same level, as
they have been monitoring the progress that the City has made in the last two years, they will look at the
City's finances in another 6 months; there is anticipation for surpluses for the next two years, they are
aware that the fiscal issues have been addressed, and the development activities are going well; it is
anticipated that the City's rates will go up, which means that the interest rates will improve. City
Manager Butzlaff stated that if Measure A regarding Transient Occupancy Tax (TOT), which is on the
March 3, 2015, Municipal Election, passes it will help improve the rates, as it will be an indicator to
them that there is more progress.
Discussion
PREVIEW OF FY 2015-16 GENERAL FUND
Review FY
2015-16
Guiding Principles
General Fund
Staff continues to go by Council's guiding principles; staff's goals is to show the cost of revenues
year to year, no new program expenditures, continue to freeze noncritical General Fund positions,
' and keep the maintenance of essential services.
Influencing Factors
Price Club Agreement; current employee contract obligations for FY15-16; Fire Service Contract
Influencing
potential increase; Impact from State Actions, such as minimum wage to increase to $10.00/hr in
Factors
July 2015, which will impact the City's part-time salaries, and the PERS rate increases; pending
employee negotiations; unfunded equipment (fleet) replacement fund, that currently operate on an
as -you -go basis, which is a concern for staff when budgeting.
Preliminary Economic Indicators
Inflation indicators continues to be low; investment interest rates continue to be low; Local Agency
Preliminary
Investment Fund (LAIF) rate went down to 0.262% for January 2015, which is lower than it was in
Economic
Indicators
02/23/2015 PAGE FOUR
December 2014; unemployment is decreasing, a sign indicating that the economy is improving;
volatility in energy prices, gas prices have been low on fuel, and oil expenses are under budget,
because gas prices have been low for the past 5 years; 100 Rosedale homes are projected to be
completed on the next 6 months, down from 150 last year; housing prices continue to increase; home
values were up 8.9% in December 2014, and Zillow.com data projects an increase of 2.3% for next
year; staff will continue to practice creative budget practices to help improve the City's ratings.
Proposed Budget Schedule FY 2015-16 Budget
Staff began to prepare for the FY15-16 budget; May 26, 2015, is the tentative study session with Schedule
Council, and final budget adoption by the City Council on June 15, 2015.
Councilmember Macias offered a Resolution entitled: Reso 2015-C10
FY14-15
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA APPROVING AND Budget
ADOPTING THE CITY OF AZUSA MID -YEAR, GENERAL FUND BUDGET ADJUSTMENTS Amendment
FOR THE 2014-15 FISCAL YEAR
Moved by Councilmember Macias, seconded by Councilmember Carrillo to waive further Reading and
adopt Resolution No. 2015-C10, by the following vote of the Council:
YES: COUNCILMEMBERS: GONZALES, CARRILLO, MACIAS, ALVAREZ
NOES: COUNCILMEMBERS: NONE
ABSENT: COUNCILMEMBERS: ROCHA
ADJOURNMENT Adjourn
Moved by Councilmember Carrillo, seconded by Mayor Pro -tem Gonzales and *unanimously carried to
adjourn the meeting.
TIME OF ADJOURNMENT: 7:50 P.M.
NEXT RESOLUTION NO. 2015-Cll.
* Indicates Mayor Rocha was excused absent.
Attached: Power Point Presentation by the Finance Director.
02/23/2015 PAGE FIVE
PRESENTATION OVERVIEW
• Review of FY 2014-15 General Fund
• Proposed Mid -Year Adjustments
• Financial Forecast
Preview of FY 2015-16 General Fund
1
REVIEW OF FY 2014-15 GENERAL FUND
• Summary of Revenues
• Summary of Expenditures
• Economic Trends and Factors
P Revenue/ Expenditure Trends
• Revenue/ Expenditure Comparisons
FY 2014-15 GF Budget Review
Summary of Revenues
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FY 2014-15 GF Budget Review
Adopted Net
Summary of
Expenditures
Budget Revisions
_Publicworla
34,000,585 -
1.6%
FY 14-15 Estimated Revenues
-W 6 Family 9M
Fund Balance (Loan)
&7%
PublicSs y
-Ad�
63.6%
1,649,670 -
3.9%
35,650,455 700.000
ECon & Comm DW
Sur Ius1 Defieit
729,210 1,050
5.6%
FY 14-15 Estimated Expenses
—Finance
30,601,795
3.2%
Transfers Out
4,918,400 700,000
. Human l4sDurca
35,521,245 698,950
1.0%
Total FY 1415 Uses
ubrary
FY 1415 Estimated
_'I" 2.916
Total Expenditures $35,520,195
FY 2014-15 GF Budget Review
General Fund FY 2014-15 Review
Current Balance
3
Adopted Net
Adjusted
Budget Revisions
Budget
34,000,585 -
34.000,585
FY 14-15 Estimated Revenues
Fund Balance (Loan)
- 700,000
700,000
Transfers In
1,649,670 -
1.649,670
35,650,455 700.000
36,350,455
Sur Ius1 Defieit
729,210 1,050
730,260
3
Adopted Net
Adjusted
Budget Revisions
Budget
34,000,585 -
34.000,585
FY 14-15 Estimated Revenues
Fund Balance (Loan)
- 700,000
700,000
Transfers In
1,649,670 -
1.649,670
35,650,455 700.000
36,350,455
Total FY 14-15 Sources
FY 14-15 Estimated Expenses
30,602,845 (1,050)
30,601,795
Transfers Out
4,918,400 700,000
5,618,400
35,521,245 698,950
36,220,195
Total FY 1415 Uses
FY 1415 Estimated
3
FY 2014-15 GF Budget Review
Economic Trends and Factors
• Increasing Property Values
• Slow, but Improving Economy
• Lower Unemployment Rates
Azusa Unemployment Rate - 8.1% December 2014
• Historic Low Interest Rates
• Contributing Issues Related to RDA Dissolution
• Development Activity
154 Homes Finalized - July to December 2014
FY 2014-15 GF Budget Review
Economic Trends and Factors (cont.)
• Budgeted Personnel Costs over Prior Year
Salaries Increased by $214K
PERS Increase of $162K
• Fire Services - $275K Increase
IN
2014-15 GF Budget Review
Revenue/ Expenditure
Trends
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FY 2013-14
vs. FY 2014-15 at December 31
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Y2014-15 GFBudget Review
Revenue Comparison
Major Categories
FY 2013-14
vs. FY 2014-15 at December 31
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Major Categories FY 2013-14 vs. FY 2014-15 at December 31
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PROPOSED MID -YEAR ADJUSTMENTS
• Revenue Issues
• Revenue Adjustments
Expenditure Issues
• Expenditure Adjustments
• Proposed Adjusted Balance
1:i
Proposed Adjustments
Revenue Issues
Major Revenues on Track
• Permit Fees
Tracking at 62% of Budget
• Host Fees (MRF)
42% of Budget Received
Revenue Issues (cont.)
• Animal Licenses
Correct Classification
• Utility User Tax
Revenues at 54% of Budget
• One -Time Revenues
Reimbursement from L.A. County
7
Mid -Year Adiustment (REV
Proposed Revenue Adjustments:
-Fees-Precise Plans
$15,000
-Fees-Tentative Maps
15,000
-Fines-Court/Other
(30,000)
-Host Fees (MRF)
(90,000)
-Licenses-Animal
40,000
-Permits-Building
63,000
-Permits-Electric
20,000
-Permits-Plumbing
20,000
-Permits-Public Works (Engineering)
60,000
-Reimbursement-LA County'
148,300
•Reimbursement-SB90'
38,000
-Transfer Tax
30,000
-Utility User Tax
100,000
Total Proposed Revenue Adjustments
$429,300
'One -Imre
Proposed Adjustments
Expenditure Issues
• Most Expenditures are on Track
• Operating Costs
Salary Savings
Utilities
• Current Charges at 59% of Budget
• Impact of Employee Negotiations not
Factored into Budget
E
AdJustm nts
Mid -Year Adiustment (EXP)
Proposed Expenditure Adjustments:
-Salary Savings -Asst. Comm Dev Dir ($146,000)
-Salary Savings -City Manager'
(46,500)
-Salary Savings -IT Analyst"
(43,600)
-Vacation Pay -Out'
61,150
-Utilities
70,000
-Humane Services
40,000
Total Proposed Expenditure Adjustments ($64,950)
'One -Time
9
Financial
Influencing Factors
• Pension Reform
• Retiree Payouts
• Price Club Agreement
• Impacts of Affordable Care Act
FINANCIAL FORECAST
*W3,W
10
PREVIEW OF FY 2015-16
- Guiding Principles
- Influencing Factors
- Preliminary Economic Indicators
-Proposed Budget Schedule
Preview o/ FY 2015-16
Guiding Principles
- Match General Fund Costs to Revenues
- No New Program Expenditures
- Freeze Non -Critical General Fund Positions
- Maintenance of Essential Services
0
L=
ill
Preview of FY 201
FY 2015-16 Influencing Factors
• Price Club Agreement
• Current Employee Contract Obligations
• Fire Service Contract Increase
• Impacts from State Actions
Minimum Wage Increase
PERS Rate Increases
• Outcome of Employee Negotiations
• Unfunded Equipment (Fleet) Replacement Fund
of FY 2015-16
Preliminary Economic Indicators
Annual inflation rate through December 2014 for the LA
Area is 0.7%
Investment interest rates remain at historic lows (LAIF
rate at 0.267% for December 2014)
Los Angeles Regional Unemployment decreased to 7.5%
- Dec 2014 (8.8% at Dec 2013 as reported by BLS)
Volatility in Energy Prices
12
Preview of FY 2015-16
Preliminary Economic Indicators (cont.)
• 100 Rosedale Homes Projected for Completion next 6
months
Housing Prices
Azusa Home Values Up 8.9% over December of Prior Year
Projected Increase of 2.3% Next Year (Zillow.com)
L. A. County Home Values Up 7.1% over December of Prior Year
Projected Increase of 1.6% Next Year (Zillow.com)
L
Preview of FY 2015-16
FY 2015-16 Proposed Budget Schedule
• February 18
Budget materials distributed to Departments
• March 9
Final date for Personnel Request Submittals
• March 19
Departmental Budget requests returned to Finance
• April 13 to
Budget meetings with Depts It City Manager
April 30
• May 7
Preliminary Budget balanced by City Manager
• May 25
City Council Budget Study Session (tentative date)
• June 15
Final Budget adopted by City Council
L
13