One of the primary responsibilities of the City Manager is to prepare and submit to the City Council (and the citizens they represent) an annual operating budget and strategic plan for the City. It is my duty and particularly my privilege to place before the City’s governing board, the adopted budget for FY 2001-2002.

Each year the budget process provides for several important focal points in deciding the future direction of City government and the community. Mark Twain noted with his insightful words that "the best way to predict the future is to invent it". As noted in past submittals, the budget is a blueprint – a community-based vision to encourage and retain an urban character, combined with comprehensive development and a quality of life plan for years to come.

Burbank is already a great community. Burbank also aspires to become even better in the years ahead. To do so, challenges to those aspirations must be met. Priorities must be set and parameters shaped.

The adopted budget was prepared with a commitment to meeting the priorities of citizens, as expressed directly and through elected representatives. The budget also seeks to balance the need for community services with the equally important need to maintain a fair and equitable tax/rate structure.

My hope is that this document (including additional details provided by staff) will be the basis for a thorough and thoughtful public examination of the way the city intends to use taxes, fees and other revenue during the next year.

To reiterate, it is my pleasure to present the adopted Fiscal Year 2001-02 operating budget for the City of Burbank. Along with the adopted Capital Improvement Program, this budget presents a comprehensive plan of activities and allocation of funds. Each fiscal year, it is the goal of staff to present a financial plan that improves the quality and scope of municipal services, while maintaining the financial integrity of the City.

Recent years have seen an unparalleled rise in the economy at both the federal and state levels, outperforming expectations of economists. Economic vitality resulted in a sizable surplus of nearly $9 billion within California. Late in 2000, the financial picture shifted dramatically when the impact of the utility deregulation affected Californians. The operation of our own municipal utility, Burbank Water and Power, has not left the City insulated from the affects of "the energy crisis". Burbank citizens and businesses have been fortunate to reside in a community that has not been disrupted by interruptions in electrical service.

Municipalities have closely monitored activities in Sacramento, as the potential existed for lawmakers to utilize local revenues to assist in offsetting the energy crisis. Burbank has a varied revenue base, and while any shift in dollars from municipalities to the state has an impact, the current state budget has intergovernmental revenues intact.

The City Council adopted a 10-Year Strategic Plan entitled Burbank-Moving Toward the 21^st Century in 1990. This plan served as the basis for identifying common goals and a framework was established that became the annual work program. With the dawn of the new century, a new 10-Year Strategic Plan entitled Embarking on a New Millennium (2001-2010) will serve to identify and define strategic priorities. Alfred Edward Perlman states "After you’ve done a thing the same way for two years, look it over carefully. After five years, look at it with suspicion. After ten years, throw it away and start all over."

Since Fiscal Year 1990-1991, the City Council has held annual workshops to develop specific objectives for the upcoming year. At its May 5, 2001 workshop, the City Council identified its top common priorities or "goals," which are listed in the following table. This list of goals, as well as the departmental projects identified in the FY 2001-2002 budget, has been incorporated within this year's work program document.

Airport Resolution – Continue to work with the Burbank-Glendale-Pasadena Airport Authority and the cities of Glendale and Pasadena towards a long-term resolution for the airport.

Economic Development – To further enhance the Downtown Village area, the following specific objectives would be achieved:

1. Facilitate and monitor construction for the Burbank Entertainment Village (AMC Project).

c) Encourage and assist the Media City Center Mall to upgrade and re-tenant the mall.

d) Select Developer and complete entitlements for the Old Police Block.

Assist the economic development and enhancement of the South San Fernando Redevelopment Area by achieving the following specific objectives:

1. Review the financial analysis of childcare/housing proposals
2. Complete the schematic design phase for the South San Fernando Blvd. Streetscape project.
3. Continue determination of appropriate use, development and continue to encourage environmental remediation for the former Menasco site.

Continue to support the revitalization of the Magnolia Park area by encouraging active leadership through the Magnolia Park Citizen Advisory Committee and exploring funding strategies.

Facilitate the process of major entitlements, planned developments, conditional use permits and development review for the former Zero Corporation Site (Auto Dealership).

Develop a program for implementing the recommended actions of the Five-Year Economic Development Plan which outlines business retention, attraction, and diversification strategies. This plan will provide additional analysis on: Burbank industry cluster analysis, entertainment/media industry cluster studies, retail demand/opportunities, and competitive assessment of Burbank vs. other local cities.

Utilities – Continue to enhance Electric / Energy Issues and Water Quality Issues

1. Restructive power supply management and operations to lower power costs by reducing operation costs and use of surplus energy.
2. Obtain certification to construct the Magnolia Power Plant.
3. Implement a telecommunications network for the City and BWP customers
4. Explore the feasibility of providing customers Internet access through their municipal service accounts.
5. Develop and implement communications plan to promote electric and water customer and conservation goals
6. Implement a comprehensive energy procurement and marketing Risk Management Program.

Communications – While the citizen survey evidenced an extremely high level of satisfaction regarding services provides to the community, innovative organizations seeking to improve service delivery will focus on communication. Several opportunities to focus on this topic include:

Improve communications with the public.

Complete the new 10-Year Strategic Plan (Like any well-run business, a local government needs a clear and concise game plan to get things done. This fiscal year, the City Council will have the opportunity to establish a new Strategic Plan that will guide the city during the first decade of the new millennium.)

Improve working relationships with Boards and Commissions including joint meetings with other boards (i.e. Planning Board and School Board) and conflict resolution training.

Project/Issue Updates such as enhancement of the City’s website offering users basic information on departments and special activities; continued use of Burbank TV6 in terms of video programming and updated TV scrolls; dissemination through Council Meeting reports; and reinstatement of the citywide newsletter.

Infrastructure Improvements – The Council has closely monitored the condition of streets, sidewalks and alleys within Burbank. A variety of funding sources provides over $2.6 million on an annual basis. During the budget study sessions held in May, Council directed staff to re-allocate a portion of one-time dollars to alleviate the backlog in repairs.

Youth Issues – The Council has repeatedly demonstrated its support of youth programs such as youth job placement, offering youth an opportunity to work at a local business, the PeaceBuilders program, Youth Solution Summit and the successful transportation program, Got Wheels!

Residential – Housing and Childcare – The City has made commitments to improved housing through the Low Moderate Housing program. Due to the rising housing market and loss of affordable units, City staff has examined the housing stock and made preliminary recommendations for enhancements. Included in this effort will be neighborhood revitalization and an examination of the reuse of the former Buena Vista Library site.

The aforementioned highlights over 300 goals and objectives (including several capital improvement projects) included in the FY 2001-2002 Work Program. These goals and objectives are organized into seven general sections and are entitled:

Section C Coordination, Development and Enhancement of Police and Fire Services

Section D Park Services, Library Services, and Cultural Services

Section E Environmental Protection/Infrastructure

Section F General City Operations-Cooperation/Stability/Responsiveness

Section G General City Operations-Responsibility/Leadership/Management

The City’s adopted budget for FY 2001-02 totals $582,369,088 for all funds, including enterprise and capital funds. This compares with an adopted $365,273,383 for all funds for FY 2000-01. The most significant increases relate to the amounts for funding Cost-of-Living Adjustments, various non-departmental (capital projects), increase in power costs, and wholesale trading activities. Departmental appropriations for the General Fund, along with other funds, can be found in the Budget Summaries section of this document.

The budget is balanced for all funds. For most funds, revenues equal expenditures, except for those funds that have a planned drawdown of fund balances for one-time expenditures (primarily for capital projects). Most programs have been funded at an increased level over the prior year. These increases primarily cover costs for current service levels, with some limited service level expansion. For some key operations, cost increases have exceeded inflation due to increased demand for certain supplies and services throughout Southern California.

Sales Tax – The largest source of General Fund revenue is sales tax. This tax generally grows as a function of the economy. A review of the last ten years shows that sales tax revenues has mirrored the economy with steady growth except for 1991/92 fiscal year. Sales tax has grown at an average annual growth rate of 4.8%. The FY 2001-02 sales tax is expected to grow at a net 4.5% growth rate, which reflects 2.5% growth rate in the base, plus anticipated sales tax revenues from the Burbank Empire Project offset by an anticipated loss of sales tax revenues related to e-commerce of 1%.

Property Tax – Property tax revenues traditionally have been a stable revenue source for cities. Property tax revenues generally reflect economic conditions except when the State of California shifted property tax revenues from the City to the State’s Educational Revenue Augmentation Fund (ERAF) during June 1993 through June 1995. Subsequent to the ERAF shift, property tax revenue growth was stunted due to a large number of property tax reduction appeals until the 2000-01 fiscal year when the assessed valuation grew by 6.2%. The ten-year average annual growth rate for property tax revenues is less than 1%. The FY 2001-02 property tax is expected to grow by 3.9%.

Utility Users Tax – Utility Users Tax (UUT) has grown by an average annual rate of 4.5% for the past ten years. This growth has been the result of the growth in telephonic communication such as cellular usage, increasing utility rates and aggressive collection efforts on the part of the City. The FY 2000-01 projected UUT revenues grew by 4.8% due to collections resulting primarily from higher natural gas prices. The FY 2001-02 UUT growth rate is estimated at 0.5%. This estimate includes UUT revenues related to The Gas Company based on the original FY 2000-01 budget estimate plus a 2.5% growth rate.

The adopted FY 2001-02 General Fund budget is basically the same operating budget as FY 2000-01 with the significant changes/adjustments:

Salary and Fringe Benefits – The adopted budget reflects adjustments to salaries that will be in effect on July 1, 2001, according to City Council approved MOUs. The salary and benefit increases are related to the following adopted MOUs:

• Burbank City Employees’ Association
• Burbank Police Officers’ Association
• Burbank Management Association

In addition, a new Burbank City Employees Association (BCEA) Merit Program has been included as a benefit. This program has been funded at 2.5% of BCEA salaries.

Materials, Supplies, and Services (MS&S) – Departments were authorized to increase their MS&S budgets by 1.0% to compensate for the rate of inflation. Departments used their discretion in allocating the 1.0% increase. Some departments were allowed to increase MS&S beyond the 1.0% increase to provide sufficient funding where necessary.

Utilities – The Department’s utilities budgets were increased by $55,000 in total. This represents the estimated budgetary impact of increased natural gas prices.

Internal Service Charges – Internal Service charges were re-evaluated and adjustments are included in the proposed budget. The net increase to the General Fund related to Internal Service Fund charges is $251,808, which represents a 2.6% increase.

The rates for the General Liability and Workers’ Compensation Funds remained the same as the prior year.

Rates for Vehicle Maintenance and Replacement Fund remained the same with the exception of the paramedic units. The increase in the replacement cost of the paramedic units increased the rental rates by $23,000.

The increases to the Computer Equipment Replacement Fund related to new computer equipment, a change in the replacement of equipment from four to three years, and an increase in the recovery of the city-wide network. These three factors combine for a total increase of $190,864 in rental rates. The Office Equipment Maintenance and Replacement Fund remained the same as the prior year.

Rates for the Communications Equipment Rental Fund increased by 2.7% as a result of the normal inflationary pressures.

Capital Outlay – Capital outlay was authorized to the extent that departments had replacement funds. However, some departments were granted additional capital outlay appropriations which are being recommended for funding from available non-recurring balances.

The FY 2001-02 Adopted Budget includes an additional $500,000 for information technology projects. As of the date of this memo staff has identified to fund the development of the transition plan for remaining legacy systems, server configuration services and training.

In addition, a one-time total of $500,000 was allocated to towards infrastructure funding as it relates to the City’s yearly $1.1 million commitment to streets, sidewalks, and alleys rehabilitation.

Airport Related Issues – Budgetary savings from the 2000-01 fiscal year is being used to appropriate $1,750,000 for continued funding of airport related issues. In addition, staff is proposing to allocate an additional $1,500,000 out of the 2001-02 fiscal year, which will be carried-over into FY 2002-03 for the amount not expended during FY 2001-02.

The adopted budget was developed with a view of enhancing the value of City services to the citizens of the community. The Business Plan embodied in the budget addresses important services, delivered through increased use of technology, emphasizing effective management, and within a prudent financial framework.

Burbank continues to move forward and the adopted budget is part of that progress. Critical issues are addressed. Burbank is a safe city. Burbank will sustain what it builds. Burbank will offer amenities and a high quality of life. The budget as adopted is the best effort of staff. It has been placed before the governing body for its consideration, amendment as deemed appropriate, and subsequent adoption.

It takes the concerted efforts of many employees and the understanding of fellow employees and our families to complete the budget. I would like to thank everyone for their efforts, feedback and understanding in the preparation of this budget. A special thanks to members of the City Council who have provided several helpful suggestions in the preparation of this budget – I hope it meets your needs.

My heartfelt thanks to the following people in the Financial Services Department – Budget Office who without their help and dedication this budget would not have been completed. I am grateful for the tremendous efforts of our Financial Services Director, Derek Hanway, Assistant Financial Services Director, Vilko Domic, Administrative Analyst II, Joan Michaels, and Administrative Analyst I, Jennifer Kaplan, who spent countless hours organizing the work to be done and pulling everything together into a single working document. The team that makes up this office makes a most difficult job much easier for anyone lucky enough to work with them.

Respectfully submitted,

Robert R. Ovrom

City Manager