City of Culver City, California
City Council Agenda Item Report
RECOMMENDATION:
Staff recommends the City Council discuss and consider introducing an Ordinance
amending Chapter 3.07, Finance and Revenue, of the Culver City Municipal Code to
add a new subchapter 3.07.400, et seq., entitled “Budget Restrictions,” relating to the
adoption of balanced City budgets and the use of reserve funds.
BACKGROUND/DISCUSSION:
On December 4, 2008, the City Council directed staff to bring back an ordinance that
would require the City to adopt a balanced budget. Staff has completed drafting this
Ordinance, which is being presented tonight for consideration. The general provisions
of the attached Ordinance are as follows:
• Section 3.07.400 would be added to the Culver City Municipal Code requiring
that General Fund budgeted ongoing expenditures shall not exceed budgeted
ongoing revenues for each budget year.
• Section 3.07.405 specifies that for each budget year, for the General Fund, the
projected ending reserves shall not be less than thirty (30%) percent of
budgeted operating expenditures.
• Section 3.07.410 provides the ability to use reserves for financial emergencies. If
a financial emergency is declared by a four-fifths vote of the City Council, the
City’s required reserves may be used to offset (in whole or in part) an expected
operating shortfall in the budget for a single year, but the projected emergency
reserves may not fall below twenty-five (25%) percent. Additionally, the City
must implement measures to restore the projected ending reserves to thirty
(30%) percent by the end of the immediately following budget year.
Meeting Date: 02/09/09 Item Number: A-4
AGENDA ITEM: Introduction of an Ordinance Amending Chapter 3.07, Finance
and Revenue, of the Culver City Municipal Code to Add a New Subchapter
3.07.400, et seq., Entitled “Budget Restrictions,” Relating to Regulating the
Adoption of Balanced City Budgets and the Use of Reserve Funds
Contact Person/Dept.: Jeff Muir, Chief
Financial Officer
Phone Number: 310-253-6016
Fiscal Impact: Yes [X] No [] General Fund: Yes [X] No []
Public Hearing: [] Action Item: [X] Attachments: [X]
Public Notification:
Master E-Mail Notification List (2/4/09)
Department Approval:
Jeff Muir (02/04/08)
City Attorney Approval:
Carol Schwab (by H. Baker) (02/03/09)
Chief Financial Officer Approval:
Jeff Muir (by N. Kimball) (02/04/08)
City Manager Approval:
Jerry B. Fulwood (02/04/09) City of Culver City, California
City Council Agenda Item Report
• Section 3.07.415 provides that ending reserves in excess of thirty (30%) percent
may be appropriated only for one-time, non-recurring expenditures that will not
increase future operating costs. It also provides that any other use of these
excess reserves may be approved by a four-fifths (4/5) vote of the City Council.
The City is facing very difficult financial times in the coming years, and difficult
decisions will need to be made. The currently approved financial policies also
includes language that the City will adopt a budget where ongoing expenditures do not
exceed ongoing revenues, and that reserves in excess of the thirty (30%) percent
requirement may only be used for one-time expenditures. The proposed ordinance
provides a more formal structure for ensuring the adoption of balanced budgets than
the City’s current financial policies, while still providing the City Council some flexibility
with a four-fifths (4/5) vote.
FISCAL ANALYSIS:
This Ordinance will require the City to adopt a balanced budget, where ongoing
revenues meet or exceed ongoing expenditures. This will assist the long-term
financial viability of the General Fund, but may require difficult decisions to get there.
ATTACHMENTS:
1. Proposed Ordinance
MOTION:
That the City Council:
1. Discuss and consider the proposed Ordinance; and
2. Introduce the proposed Ordinance;
or
3. Provide alternate direction to staff as deemed appropriate.
MEETING DATE: 02/09/09
AGENDA ITEM: Introduction of an Ordinance Amending Chapter 3.07,
Finance and Revenue, of the Culver City Municipal
Code to Add a New Subchapter 3.07.400, et seq.,
Entitled “Budget Restrictions,” Relating to Regulating
the Adoption of Balanced City Budgets and the Use of
Reserve Funds
ATTACHMENTS
Pages
1. Ordinance 1-4
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ORDINANCE NO. 2009-
AN ORDINANCE OF THE CITY OF CULVER CITY,
CALIFORNIA, AMENDING CHAPTER 3.07, FINANCE AND
REVENUE, OF THE CULVER CITY MUNICIPAL CODE, TO
ADD A NEW SUBCHAPTER 3.07.400, et seq., ENTITLED
“BUDGET RESTRICTIONS,” RELATING TO THE ADOPTION
OF BALANCED CITY BUDGETS AND THE USE OF RESERVE
FUNDS
WHEREAS, the City of Culver City is committed to operating in a financially
responsible manner; and,
WHEREAS, it is critical for the City to maintain a structural balance and avoid
operating deficits in order to preserve its General Fund reserves, maintain favorable ratings
with the bond rating agencies and ensure its long-term ability to provide necessary services;
and,
WHEREAS, structural balance is achieved when budgeted ongoing revenues
meet or exceed budgeted ongoing expenditures; and,
WHEREAS, the City is projecting an operating deficit in Fiscal Year 2009/2010
and beyond; and,
WHEREAS, unfunded liabilities and mandates threaten the City’s ability to
maintain a structural balance; and,
WHEREAS, the City desires to avoid drawing down on its General Fund
reserves in order to balance its budgets; and,
WHEREAS, the City Council has already adopted a policy of maintaining a
General Fund reserve equal to at least thirty (30%) percent of appropriated ongoing
expenditures; and,
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WHEREAS, it is the intent of this ordinance to restrict the adoption of budgets
that rely on the use of General Fund reserves to achieve balanced budgets.
NOW, THEREFORE, the City Council of the City of Culver City, California,
DOES HEREBY ORDAIN as follows:
SECTION 1. Chapter 3.07, Finance and Revenue, of the Culver City Municipal
Code is hereby amended to add a new subchapter 3.07.400, et seq. entitled “Budget
Restrictions,” to read as follows:
BUDGET RESTRICTIONS
§ 3.07.400 Balanced budget requirement
§ 3.07.405 Required reserves
§ 3.07.410 Use of required reserves for financial emergencies
§ 3.07.415 Use of amounts in excess of required reserves
§ 3.07.400 BALANCED BUDGET REQUIREMENT.
For each budget year, budgeted General Fund ongoing expenditures
shall not exceed budgeted ongoing revenues.
§ 3.07.405 REQUIRED RESERVES.
For each budget year, the City’s projected ending General Fund
reserves shall not be less than thirty (30%) percent of budgeted operating
expenditures.
§ 3.07.410 USE OF REQUIRED RESERVES FOR FINANCIAL
EMERGENCIES.
During a financial emergency, as declared by the City Manager and
approved by four-fifths (4/5) vote of the City Council, the City’s General
Fund reserves may be used to balance the budget for a single budget year,
provided that the projected ending General Fund reserves not fall below
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twenty-five (25%) percent of budgeted operating expenditures. The City shall
implement measures to restore the projected ending General Fund reserves to
thirty (30%) percent of budgeted operating expenditures by the budget year
occurring immediately after the budget year in which any such financial
emergency was declared by the City Council.
§ 3.07.415 USE OF AMOUNTS IN EXCESS OF REQUIRED RESERVES.
Projected ending General Fund reserves in excess of thirty (30%)
percent of budgeted operating expenditures may be appropriated only for one-
time, non-recurring expenditures that will not increase future operating
expenditures. Any other use of those General Fund reserves exceeding thirty
(30%) percent of budgeted operating expenditures shall require approval by a
four-fifths (4/5) vote of the City Council.
SECTION 2. Pursuant to Section 619 of the Culver City City Charter, this
ordinance shall take effect thirty (30) days after its adoption. Pursuant to Sections 616
and 621 of the Culver City City Charter, prior to the expiration of fifteen (15) days after
the adoption of this ordinance, the City Clerk shall cause this ordinance, or a summary
thereof, to be published in the Culver City News and shall post this ordinance or a
summary thereof in at least three (3) places within the City.
APPROVED and ADOPTED this day of , 2009
D. SCOTT MALSIN, Mayor
City of Culver City, California
ATTEST: APPROVED AS TO FORM:
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MARTIN R. COLE, CAROL A. SCHWAB,
City Clerk City Attorney