DISCUSSION
General Fund Revenues
The General Fund revenues are estimated to total $155.0 million in FY 2021-22 and $145.3 million in FY 2022-23. A total of $24.0 million of proceeds from the American Rescue Plan Act (ARPA) allocation was included in the FY 2021-22 estimate. While the City’s sales and property taxes remain stable, hotel tax revenues are projected to remain below FY 2018-19 levels. Over the past two fiscal years, the City has lost approximately $28.0 million in revenue from hotel taxes. Hotel taxes are expected to rebound after FY 2022-23 as the tourism industry recovers from the pandemic.
Sales tax revenue, which are provided by the City’s consultant, HDL and includes revenue from Measure O, are projected at $46.2 million and $48.1 million in FY 2021-22 and FY 2022-23, respectively. Property taxes have not been largely impacted by the pandemic and remain stable at $54.0 million and $55.6 million for the next two years.
The City’s other general fund sources, such as various fee-based services, citations, franchise fees, business license, interest income, reimbursements, and American Rescue Plan Act funds, total $44.4 million for FY 2021-22 and $20.3 million for FY 2022-23. In addition, the City has received $24.0 million from the ARPA allocation in FY 2020-21; however, due to the timing and uncertainty of the provision on allowable uses, this money was not programmed in FY 2020-21. Instead, the one-time federal funds will be carried over into FY 2021-22 which will enable the City to continue its effort on responding to the pandemic and its negative impact on our community, as well as provide the opportunity to program much needed infrastructure funding for streets and public facilities. Table 1.1 below summarizes the City's General Fund revenues.
Table 1.1 - General Fund Revenue
General Fund Expenditures
The proposed General Fund budget is balanced and totals $176.1 million for FY 2021-22 and $145.6 for FY 2022-23. The budget includes funding for all salaries and benefits, contracts, commodities, other expenditures, such as contributions to internal service funds and debt service payments, transfers to other funds, and capital improvement. Table 1.2 summarizes General Fund expenditures by expense category.
Table 1.2 General Fund Expenditures
Funding increases for various projects and services included in the proposed biennial budget are highlighted as follows and in accordance with City Council priorities:
- Restoration of 17 full-time positions, including the addition of a full-time code enforcement officer
- Contractual funding for Be Well, which provides mobile mental health services
- Additional graffiti abatement services
- Street sign replacement program
- Traffic and parking enforcement
- Reinvestment in information technology
- Park reseeding
- Pavement Management Plan acceleration program
- Public Facilities and Infrastructure
Capital Improvement Plan
The Capital Improvement Plan (CIP) for the biennial budget includes funding for arterial and residential street rehabilitation, public facilities/infrastructure, traffic mitigation, storm drain, parks, water, and sewer. These projects are primarily funded with gas taxes, development impact fees, grants, and enterprise funds. In addition, FY 2021-22 includes $17.5 million for funding for the Pavement Management Plan Acceleration Program to address the City’s pavement condition and $17.5 million for public facilities. The funding for these two initiatives were made feasible with the infusion of the ARPA allocation. The total CIP budget for FY 2021-23 is estimated at $66.5 million and $30.7 for FY 2022-23.
Other Funds
Water: The Water Enterprise Fund’s proposed budget for FY 2021-22 total $51.0 million and 45.0 million for FY 2022-23. The budget includes capital improvement funding and additional commodity water charges as a result of new PFOA/PFOS regulations.
Housing Authority: The Housing Authority’s proposed budget for FY 2021-22 is $45.3 million and $44.9 million for FY 2022-23. The budget includes funding from the Department of Housing and Urban Development for the Mainstream Vouchers Program and Emergency Housing Voucher Program, providing a combined total of 192 additional rental subsidy vouchers.
Special Assessment Districts: The biennial budget includes funding received through assessments for the Street Lighting District, Downtown Assessment District, and the Garden Grove Tourism District. Revenue and expenses for all assessments is $4.9 million per year.
Grants: The City receives local, state, and federal funding for various programs and are spent according to the specific requirements of each grant. Grants provide funding for public safety, capital improvements for street rehabilitation and parks, environmental programs, community services, neighborhood improvement, home improvement loans, and homelessness prevention. The total budget for all grant funds is approximately $6.9 million in FY 2021-22 and $11.6 for FY 2022-23.
Other Governmental Funds: The proposed biennial includes budget appropriations for other funds, such as gas taxes, development impact fees, red light enforcement fund, economic development, asset forfeiture, and self-supporting recreation. The specific budget appropriation for each fund is listed in the attached resolution.