By: Anita W. Harris
At the Signal Hill City Council meeting on April 11, city staff presented the council with the independently audited comprehensive annual financial report (CAFR) for the fiscal year ending June 2016.
“The audit confirmed that revenues exceeded projections, expenditures were lower than budgeted and the City’s finances remain sound,” said City Manager Charlie Honeycutt.
Honeycutt explained that the fiscal year ended with $3.85 million in revenues over expenditures and that staff recommends about half the funds be allocated to new library construction, with the remaining allocated to a software purchase, pension reserves and capital-improvement reserves.
Acting Finance Director Scott Williams further specified that revenues have been in excess of expenditures for the past two fiscal years because of appropriate budgeting. “Another [reason] is the discipline and, frankly, the accountability on the part of City departments [ensuring] there’s not unnecessary spending going on,” he said.
Williams presented a pie chart showing the distribution of City revenues, illustrating that sales and use tax represents about 75 percent of that revenue, followed by property taxes at about 8 percent of the total. While the City receives 6.9 percent of property taxes paid by residents, the amount of that revenue has increased recently due to improving property values.
On the expenditures side, Williams presented charts showing that safety and infrastructure account for most of the spending.
Specifically, police department expenses represent about 45 percent of total expenditure, followed by general government and public works, each at about 20 percent. Community services and development account for another 12 percent.
“These are good ratios. When we look at the city as a whole […] this is a very good distribution of spending as a percentage of the general fund as a whole,” Williams said.
Williams elaborated on the City’s long-term obligations of pensions and medical liability for City employees of about $29.5 million, stating that the City is funding those plans well compared to other cities. He noted that, on average, pension plans in other cities are about 70 percent funded, whereas Signal Hill pension plans are funded anywhere from 75 to 95 percent. “These are very good ratios of funding for pensions,” he said. The City is managing these liabilities by offering multiple tiers of coverage to its employees, thereby offsetting some of the burden carried by the City.
Mayor Edward Wilson later commented that it is important for the City to consider pension liability. “At some point people are going to retire and [the pension] should be there, and if we don’t address it now, then it won’t be there when people need it,” he said.
Williams presented a table listing the City’s committed reserve funds, representing about half of the $34.8 million total reserve. Of these committed reserves, the largest were for economic uncertainty at $5.1 million, or 36 percent of committed reserves, and budgeting and land acquisition representing 25 percent. Capital improvements and retirement liability reserves each represent about 10 percent of the committed total. “That’s exactly where we want to be as an organization,” Williams said.
Overall, Williams noted that the City’s general fund is funded at just over 80 percent, which he stated was significant. “This is unique to cities,” he said.
In addressing how to allocate the 2015-2016 fiscal year’s $3.85 million in unspent revenues, Councilmember Lori Woods asked about the staff recommendation of $500,000 toward a software purchase. Williams explained that this was to upgrade the enterprise resource planning system (ERP), a comprehensive citywide resource tracking and planning tool. “It’s all-inclusive in terms of both human resources as well as planning, financial reporting, budgeting, even things like contract tracking,” he said.
Wilson elaborated on the ERP, noting how it has helped improve the City’s efficiency. “In the past […] it was a manual process trying to coordinate and gather all that information and then put it in the financial statements,” he said. “So, the ERP program allows all of that […] to be integrated.”
Wilson also requested that the audit report be completed earlier going forward rather than several months after the fiscal year has ended. “Timeliness is actually important as well,” he said.
The council moved to receive and file the audited financial report and to carry over reserve balances to the current 2016-2017 fiscal year.
Honeycutt stated that the City is actively seeking residents to serve on two open positions, one on the Planning, Parks and Recreation Commission and the other on the Civil Service Commission.
“We are also seeking applications for the vacant city clerk position,” he added, noting that a resident would be able to apply for both city clerk and a commission position if candidate interviews for each can be scheduled on different dates, which the council agreed to do.
In addition, Honeycutt noted that there was also an opening for a resident to serve on the Sustainable City Committee. Councilmember Robert Copeland affirmed his positive experience serving on that committee. Wilson commented on its importance to the City, and Councilmember Larry Forester further noted its importance to the state.
“It’s a very valuable committee for the state,” he said. “Because that’s where we’re going, with sustainable community strategies, reducing the carbon footprint, looking at […] transportation, things like that.”
Since positions have to be filled before June 1, the council voted to make appointments at the May 23 council meeting.
Deputy Director of Public Works Grissel Chavez-Arredondo reported that the City had received five bids to resurface 23rd Street between Orange and Walnut avenues. Staff recommended awarding the contract to EBS General Engineering, Inc., for a cost of $91,285, with work to be completed between May 1 and May 31. The council authorized the City manager to award the contract in a form approved by the city attorney.
As successor agency to the Signal Hill Redevelopment Agency, the council considered transfer of ownership to the City of a 6,750 square-foot public parking lot at the corner of St. Louis and Willow streets. Economic Development Manager Elise McCaleb explained that the property had been acquired in 2011 and the passage of CA Senate Bill 107 in 2015 has now allowed this transfer.
The council voted to approve the transfer, with a caveat that the successor agency oversight committee would have to approve it as well.
The next meeting of the Signal Hill City Council will take place Tuesday, April 25, at 7pm in the council chamber at 2175 Cherry Ave.