Resolution No. 2022-005
RESOLUTION NO. 2022-05
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON
APPROVING MID-YEAR BUDGET APPROPRIATIONS AND AMENDING
THE ANNUAL OPERATING AND CAPITAL BUDGET FOR FISCAL YEAR
2021-2022
SECTION 1. Recitals.
A. On June 1, 2021, the City Council of the City of Vernon adopted Resolution No.
2021-13, approving the annual operating and capital budget for fiscal year 2021-2022.
B. Changes in anticipated expenditures of the City require a revision of the
appropriations for fiscal year 2021-2022 and amendment of the budget by the affirmative
vote of a majority of the members of the City Council.
C. There are sufficient funds in anticipated revenues and fund balance to cover the
proposed budget adjustments.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
VERNON AS FOLLOWS:
SECTION 2. The City Council of the City of Vernon hereby finds and determines
that the above recitals are true and correct.
SECTION 3. Pursuant to Chapter 8.5 of the Charter of the City of Vernon, a
majority of the members of the City Council hereby approves the mid-year budget
appropriations in the table below.
Department GL Account Vendor Description
Adjustment
Amount
City
Administration
011.1002.501010
Salaries -
Regular City of Vernon
Personnel changes
within department
67,000.00
City
Administration
011.1002.502020
Retirement City of Vernon
Personnel changes
within department 1,000.00
City
Administration
011.1002.502060
FICA Taxes City of Vernon
Personnel changes
within department 2,000.00
City Clerk
011.1003.596300
Election Costs Registrar-Recorder
Election Costs for two
special elections
30,000.00
Public Works
011.1040.501020
Salaries - O.T. City of Vernon
Overtime caused by
vacancies and leave of
absence in PW Admin
and Warehouse
departments
11,000.00
Resolution No. 2022-05
Page 2 of 4
_______________________
Department GL Account Vendor Description
Adjustment
Amount
Public Works
011.1041.201020
Salaries - O.T. City of Vernon
Overtime on weekends
for Code Enforcement
Officer due to
unpermitted nightclubs,
etc.
7,000.00
Public Works
011.1043.501020
Salaries - O.T. City of Vernon
Extraordinary OT
expenses due to
homeless
encampments/RR
cleanups
40,000.00
Public Works
011.1043.590000
Repairs &
Maintenance
Bear Electrical
Solutions
Extraordinary Traffic
Signal Repairs due to
unanticipated increases
in traffic collisions
80,000.00
Public Works
011.1043.590000
Repairs &
Maintenance Various
Emergency Sewer
Repairs 150,000.00
Public Works
011.1046.590000
Repairs &
Maintenance Various
Repair and maintenance
of City Vehicle Fleet
80,000.00
Public Works
011.1048.501020
Salaries - O.T. City of Vernon
Overtime due to requests
for repair and
extraordinary
maintenance greater
than anticipated
5,000.00
Public Works
011.1049.590000
Repairs &
Maintenance Priority Janitorial services
32,343.94
Public Works
011.1049.590000
Repairs &
Maintenance Commercial Door
Repairs and
maintenance of City
doors and garages
5,000.00
Public Works
011.1049.590000
Repairs &
Maintenance Western Allied
Repairs and
maintenance of HVAC
systems. Anticipated
repairs will increase total
spending in second half
of FY.
20,000.00
Public Works
011.1049.596200
Professional
Services - Other Various
Building Evaluation,
extraordinary
maintenance 40,000.00
Public Works
011.1049.900000
Capital Outlays Mega Renovation
Cost of materials were
higher than quoted
based on market value. 20,000.00
Health and
Environmental
Control
011.1060.595200
Professional
Services -
Technical
SESPE Consulting
Inc.
Requested to add
additional funding to the
contract the Dept
exceeded the anticipate
service requests from the
contractor 40,000.00
Resolution No. 2022-05
Page 3 of 4
_______________________
Department GL Account Vendor Description
Adjustment
Amount
Health and
Environmental
Control
011.1060.595200
Professional
Services -
Technical Ocean Blue
Payment for
environmental clean-up
services for hazardous
materials spills
30,000.00
General Fund
660,343.94
Water
020.1084.500140
Water Treatment
Waterline
Technologies, Fuller
Engineering
Increase needed due to
price increases as a
result of production
outages and labor
shortages 30,000.00
Electric
055.9000.595200
Professional
Services -
Technical
Morgan, Lewis &
Brockius, LLP Bicent PPA Outage
1,118,403.74
Electric
055.9000.760010
Bond Interest
Paid 2021 Series A Bonds
Interest on 2021 Bonds
less Refunded 2012A
Bond interest
1,655,989.00
Gas
056.5600.501020
Salaries - O.T. City of Vernon Emergency work
2,000.00
Gas
056.5600.596706
VPU Credit
Program
Unable to complete cost
of service study in FY
2021-22 to remove this
customer rebate
731,951.84
Fiber Optics
057.1057.590000
Repairs &
Maintenance Petrelli Electric Co.
Routine Repairs and
Maintenance
174,000.00
Fiber Optics
057.1057.596200
Professional
Services - Other
Millennium UPC,
LLC
Battery Testing - Upon
system audit batteries
needed service
maintenance contract
4,893.08
Fiber Optics
057.1057.900000
Capital Outlay Petrelli Electric Co.
System Enhancement,
Expansion, Upgrades,
and Construction
180,000.00
Vernon Public Utilities
3,897,237.66
23 Citywide
4,557,581.60
SECTION 4. The Annual Operating and Capital Budget for fiscal year 2021-2022,
adopted by Resolution No. 2021-13, is hereby amended to include the mid-year budget
appropriations.
/ / /
Resolution No. 2022-05
Page 4 of 4
_______________________
SECTION 5. The City Clerk shall certify the passage and adoption of this
resolution and enter it into the book of original resolutions.
APPROVED AND ADOPTED this 15th day of March, 2022.
_____________________________
MELISSA YBARRA, Mayor
ATTEST:
LISA POPE, City Clerk
(seal)
APPROVED AS TO FORM:
_________________________________
ZAYNAH N. MOUSSA,
Interim City Attorney
I CERTIFY THAT THE FOREGOING RESOLUTION NO. 2022-05 was passed and
adopted by the City Council of the City of Vernon at the Regular meeting on March 15,
2022 by the following vote:
AYES: 5 Council Members: Larios, Lopez, Merlo, Davis, Ybarra
NOES: 0
ABSENT: 0
ABSTAIN: 0
________________________________
LISA POPE, City Clerk
(seal)
City Council Agenda Item Report
Submitted by: Angela Melgar
Submitting Department: Finance/Treasury
Meeting Date: March 15, 2022
SUBJECT
Fiscal Year 2021-22 Mid-Year Financial Update
Recommendation:
A. Find that approval of the proposed action is exempt from California Environmental
Quality Act (CEQA) review, because it is a government fiscal activity that will not result in
direct or indirect physical changes in the environment, and therefore does not constitute
a “project” as defined by CEQA Guidelines section 15378; and
B. Adopt Resolution No. 2022-05 approving Mid-Year Budget Appropriations and amending
the Annual Operating and Capital Budget for Fiscal Year 2021-22.
Background:
Finance Department will provide a briefing to the City Council to report budget to actuals for
the General Fund and Vernon Public Utilities on the first six months of Fiscal Year 2021-22
and the economic outlook for the near to mid-term.
General Fund
Revenue Trends and Highlights
Most revenue categories are expected to be consistent with projections. However, some
revenue categories, such as property and parcel taxes, are primarily collected in the second
half of the fiscal year per the disbursement schedule of the County and do not reflect 50% of
the fiscal year at December 31st. Sales Tax is expected to exceed budgeted estimates, and
the City’s sales tax analytics firm has indicated that this trend is expected to continue. Actual
sales and use tax revenues increased by 43.6% compared to the same six-month period last
year. Budgeted intergovernmental revenues include $7 million in Federal grants for Public
Works; however, these funds have not been received to date. With General Fund revenues at
45.2% as of December 31, 2021 and given the timing of revenues to be collected in the
second half of the fiscal year, revenue trends year-to-date are following the budgeted
expectations of meeting current year operations.
Expenditure trends
With 50% of the fiscal year elapsed, the General Fund expenditures across all City
Departments are at 37.2% of budgeted expenditures. Department Directors continue
exercising fiscal discipline and are working to control expenditures in their annual operating
budgets, with salaries and benefits for all departments under 50% at mid-year. Maintenance
and operations expenses are at 44.3%. Timing for anticipated capital projects and equipment
expenses may have been delayed to the second half of the fiscal year as totals for this
category are only 3.9% for all General Government departments as of December 31, 2021.
Enterprise Funds
Revenue and Expenditure Trends
As of December 31, 2021, Electric revenues are at 57.6%, Gas is at 71.1%, and charges for
services in the Water Fund are at 48%. Fiber Optic revenues are at 35% of budgeted revenue
due to the timing of billing. VPU continues to look for opportunities to operate its systems
efficiently while at the same time addressing infrastructure needs. As of mid-year, Electric and
Water Funds are below 50% of budgeted expenditures. The VPU Credit Program and an
increase in the need for system maintenance have brought Gas Fund to 71.1% and Fiber
Optic to 95% of expenditures at mid-year. Adjustments are being presented to Council to
appropriate funds for these unexpected costs.
Cash Position
Approximately 71% of the City’s cash funds are unrestricted, with the electric utility reserves
exceeding 180 days of operating expenditures. The General Fund reserve balance has
increased over the last three fiscal years. Deposits with financial institutions are approximately
41% of total funds for day to day operations and activity. The remainder of the funds are
invested in money market accounts and mutual funds.
Economic Outlook
Although the City’s economic performance throughout the state of emergency has proven very
resilient, the outlook remains one of caution. Global events, such as the Russian war on
Ukraine have driven up energy prices which directly impact the City's Enterprise Funds and its
customers. Supply chain shocks and inventory shortages have added to the inflationary trends
that are likely to continue throughout the calendar year. However, savings from City operations
will have a positive impact for the General Fund, such as the long-term savings from the
transition of City Fire operations to Los Angeles County, and leveling annual pension
payments for savings through Pension Obligation Bonds.
Proposed Budget Adjustments
Due to factors related to the state of emergency and worldwide events, as well as
expenditures that were not known or expected at the adoption of the FY 2021-22 Budget, staff
recommends adopting a resolution for budget adjustments from City departments and
enterprise funds.
Fiscal Impact:
Approved budget adjustments will result in an appropriation for each fund incorporated in the
current year budget. Approval of this action would require an appropriation of $660,344 for
City Administration, City Clerk, Public Works, and Health and Environmental Control
expenditures in various General Fund accounts from available General Fund Unassigned
Fund Balance, an appropriation of $30,000 for water treatment costs in Water Department's
Account No. 020-1084-500140 from available Water Fund Balance, an appropriation of
$2,774,393 for technical professional services and bond interest paid for various Electric Fund
accounts from available Electric Fund Balance, an appropriation of $733,952 for overtime and
customer rebate costs for various Gas Fund accounts from available Gas Fund Balance, and
an appropriation of $358,893 for repairs & maintenance, professional services, and capital
outlay costs for various Fiber Optic Fund accounts from available Fiber Optic Fund Balance.
Attachments:
1. Resolution No. 2022-05