CITY OF CARMEL-BY-THE-SEA
CITY COUNCIL
Regular Meeting
Tuesday, March 13, 2007
X. Resolutions
A. Consideration of a Resolution to approve the transfer of the fiscal year 2005-06 General Fund surplus of $636,273 to the Capital Improvement Reserve Fund.
During City Council deliberations, City Administrator Rich Guillen stated the following:
“There was a question, do these funds or revenues that we place into capital improvement program funds have to remain those type of funds, and the answer is no, you can use them for something else if you decided to do that. So basically…we’re putting into a saving account for future use that the council can deliberate at your workshop during the budget process.”
Later, Mayor Sue McCloud and City Administrator Rich Guillen had the following exchange:
Mayor Sue McCloud: “...that $10 million you’ve referred for reserves, a lot of that isn’t available for reserve spending because it is like deferred workmen’s compensation and things that are restricted for use, when you factor those out, I’m not sure of the exact figure is, but it’s way less, is it half?"
Rich Guillen: “Yea, about half.”
Mayor McCloud: “About half that our reserves actually show because they’re not restricted.”
COMMENTS:
Review the following “Fund Balances” from the CITY OF CARMEL-BY-THE-SEA California, Annual Financial Reports, completed by Nicholson & Olson, Certified Public Accountants.
CITY OF CARMEL-BY-THE-SEA
California
Annual Financial Report
June 30, 2006
BALANCE SHEET
Government Funds
June 30, 2006
FUND BALANCES
Reserved for debt service: $627,309
Unreserved:
Designated: $5,359,692
Reserved: $552,884 (Parking)
Undesignated: $3,053,341
Total Fund Balances: $9,040,342 $552,884
TOTAL: $9,593,226.00
Note: $9,593,226 represents an increase of $694,804 over the previous fiscal year.
(Source: Financial Statements, CITY OF CARMEL-BY-THE-SEA, BALANCE SHEET, Government Funds, June 30, 2006, CITY OF CARMEL-BY-THE-SEA, California, Annual Financial Report, June 30, 2006.)
CITY OF CARMEL-BY-THE-SEA
California
Annual Financial Report
June 30, 2005
BALANCE SHEET
Government Funds
June 30, 2005
Fund Balances
623,709 Reserved for debt service
Unreserved
$37,662 Designated for street and traffic safety
$740,451 Designated for liability insurance
$647,527 Designated for health insurance
$1,370,334 Designated for capital improvements
$249,579 Designated for equipment replacement
$1,432,394 Designated for benefits and wc insurance
$657,000 Designated for reserves
$549,690 Designated for economic uncertainty
$165,011 Designated for emergency response
$140,000 Designated for general services and operations
$468,857 Designated for customer deposits
$1,240,439 Undesignated
8,322,653 Total Fund Balances
TOTAL: $8,898,422 (including Parking & Grants)
Note: $8,898,422 represents an increase of $266,264 from the previous fiscal year.
(Source: CITY OF CARMEL-BY-THE-SEA California, Annual Financial Report, June 30, 2005, FINANCIAL STATEMENTS, Fund Financial Statements, Balance Sheet – Governmental Funds.)
• The Government Funds, or commonly referred to as reserve funds, are categorized for auditing purposes as Reserved, Unreserved /Designated and Unreserved/Undesignated. To use Fiscal Year 2004/05 as a reference due to the itemization of the Unreserved/Designated items, of the total $8,898,422, benefits and workmen’s compensation equaled 16%; liability and health insurance equaled 16%; capital improvements, equipment replacement and street/traffic safety equaled 19%; Undesignated equaled 14%; Reserved for debt service and other Unreserved/Designated equaled 35%.
• An analysis indicates that the City Council has the discretion and ability to spend up to all of the Unreserved/Undesignated amount for any project. (FY 2005/06 Undesignated: $3,053,341). Furthermore, for capital improvement projects, the city has approximately $1.7 million available for expenditure. The City Council also has the discretion at any time to move amounts from one Unreserved/Designated item to another item.
• Basically, the City is the authority over allocations and amounts in reserve fund items.
• On a City Reserve Policy: The reserve policy of any given city is at the discretion of the elected representatives of a given city. Given that the City of Carmel-by-the-Sea is a one industry tourism village, a “prudent” reserve policy may be a goal of reserve fund amounts between 6 months to 1 year of income; or in the case of Carmel, between $6 million and $12 million. Still, reserve funds are reserve funds, whether Reserved, Unreserved/Designated or Unreserved/Undesignated; $9.6 million in reserve funds relative to an annual budget of approximately $12 million is extraordinarily high compared to other California cities.
• Voters ultimately decide whether they want a City Council which views reserves as a savings account to accrue more and more money or a City Council which views reserves for basis employee and insurance obligations, emergencies and long-term projects. If voters continue to support the present City Council, residents will continue to see deferred maintenance projects unfunded. Alternatively, if voters come to believe that there is a dire need to fund projects such as the Scout House, the Forest Theatre and, as required by law and now the formal order of a Superior Court Judge, the Flanders Mansion, residents will seek to influence the present City Council to do more for the city’s infrastructure and historical and cultural assets or elect other residents to the City Council.
2 comments:
Most of the blame for this should be placed at the feet of Rich Guillen.
At least Seaside had the sense to realize Rich was not fit to be a city manager. Now, 6 years and counting, Carmel is the beneficiary of his incompetent city management.
Beware of mayors who hand pick weak and incompetent city managers and committee members. It reflects insecurity and a lack of competence.
Issue politics for a change instead of personality politics as usual. Are Carmelites up to it?
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