HomeMy WebLinkAboutReso 52-21 Readopting Revenue PolicyRESOLUTION NO. 52-21
RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF MORRO BAY, CALIFORNIA,
RESCINDING RESOLUTION NO. 19-19 AND
RE-ESTABLISHING THE CITY OF MORRO BAY'S REVENUE POLICY
THE CITY COUNCIL
City of Morro Bay, California
WHEREAS, the City of Morro Bay wishes to establish Accounting and Financial Reporting
policies to direct staff and provide transparency to the Council and Community; and
WHEREAS, those Accounting and Financial policies include a policy regarding Revenue
Management; and
WHEREAS, on March 26, 2019, the City Council adopted Resolution No. 19-19
establishing the City of Morro Bay's Revenue and Expenditure policies; and
WHEREAS, staff recommends the City Council rescind Resolution No. 19-19 and adopt
separate resolutions for each of its financial policies; and
WHEREAS, the proposed Revenue Policy demonstrates the City's commitment to fiscal
responsibility and prudent management and is consistent with Government Accounting Standards;
and
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Morro Bay,
California: Resolution No. 19-19 is hereby rescinded and the "Revenue Policy," as set forth in
Exhibit A, attached hereto and incorporated herein, is hereby approved and hereby established as
City policy.
PASSED AND ADOPTED by the City Council of the City of Morro Bay at a regular meeting
thereof held on the 22nd day of June, 2021 by the following vote:
AYES: Headding, Addis, Barton, Davis, Heller
NOES@ None
ABSENT: None
G, Mayor
ATTEST:
NA ANSON, City Clerk
EXHIBIT "A"
CITY OF MORRO BAY
REVENUE POLICY
Policy Statement
The City of Morro Bay (City) is a full -service City, providing essential services to over 10,000
residents related to public safety, planning, building, public works and recreation. In addition, the
City has a vibrant tourism industry attracting thousands of visitors annually, all of whom utilize city
services in some fashion. As such, it is prudent for the City to establish sound revenue
management policies that conform with generally accepted accounting principles and state
regulations.
Purpose
The purpose of this policy is to describe the City's key revenue management policies with respect
to general revenue management, use of one-time revenues, and use of new revenue sources, so
as to guide City staff and City Council in determining recommended use of City revenues.
General Revenue Management
Diversified and Stable Base The City will seek to maintain a diversified and stable revenue base
to protect it from short-term fluctuations in any one revenue source.
Long -Range Focus. To emphasize and facilitate long-range financial planning, the City will
maintain current projections of revenues for the succeeding ten years.
Current Revenues for Current Uses. The City will make all current expenditures with current
revenues, avoiding procedures that balance current budgets by postponing needed expenditures
accruing future revenues, or rolling over short-term debt.
Interfund Transfers and Loans. In order to achieve important public policy goals, the City has
established various special revenue, capital project, internal service and enterprise funds to
account for revenues whose use should be restricted to certain activities. Accordingly, each fund
exists as a separate financing entity from other funds, with its own, expenditures and fund equity
Any transfers between funds for operating purposes are clearly set forth in the adopted budget and
can only be made by the Director of Finance in accordance with the adopted budget These
operating transfers, under which financial resources are transferred from one fund to another, are
distinctly different from interfund borrowings, which are usually made for temporary cash flow
reasons, and are not intended to result in a transfer of financial resources by the end of the fiscal
year.
The Council recognizes that accounting principles for state and local governments discourage the
'earmarking" of General Fund revenues, and accordingly the practice of designating General Fund
revenues for specific programs should be minimized in the City's management of its fiscal affairs
Approval of the following revenue distribution policies does not prevent the Council from directing
General Fund resources to other functions and programs as necessary.
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One -Time Revenues
Once the General Fund Budget is brought into structural balance, one-time resources such as
proceeds from asset sales, debt refinancing, one-time grants, revenue spikes, budget savings and
similar non -recurring revenue shall not be used for current or new one-time operating expenses.
Appropriate uses of one-time resources include replenishment of the Emergency Reserve if
n eeded, replenishment of internal service fund reserves if necessary, pay down of unfunded
liabilities, including CaIPERS and Other Post -Employment Benefits (OPEB), early retirement of
debt, capital expenditures and other non -recurring expenditures.
This policy is intended to ensure that the City maintains a structurally balanced budget and does
n ot use onetime resources to increase the base budget that cannot be sustained by ongoing
resources.
Definitions
One-time Resources: resources that the City cannot reasonably expect to receive
on an ongoing basis. The source is most likely one-time if any of the following apply:
a. Will not be available the next fiscal year.
b. Has a set ending date such as 12-18 months from date of receipt.
c. Results from a one-time spike.
e. Results from temporary expenditure savings.
One-time resources include bond or debt proceeds, bond -refinancing proceeds,
money from the sale of assets, one-time grant funds, budget surpluses, and fund
balance.
Use of New Discretionary Revenues
New, discretionary revenues will be treated as one-time revenues for a period of two years
(consecutive 24-month period), to establish that they will be permanent steady and reliable
o ngoing revenues which can be added to the City's base general fund budget. For the first two
years of a new, discretionary revenue all funds will be used according to the defined one-time
revenue uses in the section entitled "One -Time Revenues" above.
Once the General Fund budget is brought into structural balance, a minimum of 10 percent of all
n ew (ongoing) discretionary revenue will be devoted to capital projects including deferred
maintenance and infrastructure needs.
Allocation of discretionary revenues is intended to insure the designation of a proportionate and
o ngoing share of the annual budget for the needed care and construction of infrastructure.
1. This policy applies to the net increase of all discretionary General Fund recurring revenues (e.g.,
tax revenue, non -fee -based revenue [necessary for providing services]) due to a change in city
policy, law etc. An example would be cannabis tax revenue).
2. The designation of these funds in no way displaces or substitutes for the funds already being
budgeted for capital projects.
3. Examples of projects qualifying for funding under this provision include such projects as facility
repairs, roof repairs, street repairs, air conditioning repair or replacement, replacement of flooring,
elimination of mold, etc.
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User Fees and Charges
The City of Morro Bay recaptures, through fees, up to the full cost of providing specific services.
Regular and consistent review of all fees is necessary to ensure that the costs associated with
delivery of individual services have been appropriately identified, and that the City is fully
recovering those costs. It is the City's policy to set user fees at full cost recovery levels, except
where a greater public benefit is demonstrated to the satisfaction of the City Council, or when it is
not cost effective to do so.
The Morro Bay Municipal Code Chapter 3.34, Master Fee Schedule, stipulates how the City shall
move forward with amending the Master Fee Schedule. Relevant sections of that chapter are
included below for reference.
3.34.010 — Established
The city Master Fee Schedule is established, which shall set forth a consolidated listing of fees as
fixed and adopted by the city council, in accordance with all applicable provisions of state and city
laws.
3.34.020 — Fee revisions and reviews
Any fees included in the Master Fee Schedule may be reviewed and revised annually by the city
council. The city's cost of providing the services shall be computed and reflected in these fees. The
fees shall then be enumerated and the revised Master Fee Schedule adopted by resolution of the
city council
On July 14, 2015, the City Council established December as the desired index for Consumer Price
Index (CPI) and Engineering News Record (ENR) Construction Cost Index for the San Francisco
Oakland -San Jose area as the adjusting factor.
Increases to the fee schedule, based either on CPI or ENR increase or as a result of a fee study
and update, may be added to the base general fund budget, or other Internal Service Funds (ISF),
if used to fund ISF needs (i.e., technology and software needs), immediately following adoption.
Reporting and Oversight
The Departments are responsible for working with the Finance Department and City Manager in
identifying new revenue sources and bringing a proposed plan for allocation of new and one-time
revenue sources that conforms to this policy to the City Council for consideration and direction.
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