Budget Message for 2019-20 Fiscal year

It is my privilege to present for your consideration a balanced Operating and Capital Improvement Program Budget, which includes a General Fund surplus of $971,200. Of this surplus, $810,533 are reimbursements from State grants and $160,667 is the estimated surplus for the City’s General Fund. The budget reflects the City Council’s tradition of careful stewardship of City’s finances, while continuing to expand upon our reputation for innovative and progressive community leadership. The focus of our budget is to maintain our commitment to provide quality programs, events, and services, and to also maintain a quality infrastructure for our residents, businesses, and visitors.

The City’s revenue structure determines the scope and kind of services provided to taxpayers and residents. The U.S. economic GDP forecast is showing strong consumer spending and reduced unemployment rate, which are positive economic indicators. The City is projecting continuous growth for our major revenue category, property tax revenues, due to rising house values and new property assessments arising from new developments. 

Economic development is an integral component for the City to strengthen our revenue base. With the completion of the Garvey Avenue Specific Plan, the City will continue its efforts to bring national name-brand businesses to Rosemead to spur and guide economic development. Recent project completion includes a residential/commercial mixed-use project called the “New Garvey 168 Plaza”; the location site is at 8479 Garvey Avenue. They received a Certificate of Occupancy and held their grand opening event on April 27, 2019. The New Garvey 168 Plaza comprises of a 10,460 square feet commercial property and 36 residential units. Future development includes the Garvey Garden Plaza Project with a location site at 8408 Garvey Ave; this project is currently under construction and will complete in early 2020. The project comprises a 11,860 square feet commercial property and 46 residential units. 

The City also received entitlement applications for a dual hotel project, Residence Inn and Courtyard by Marriott, with the location site at 500 Montebello Blvd. next to Doubletree Hotel. The project will demolish all existing building and improvements on the property and is expected to build 97 rooms for the Marriot Residence Inn and 105 rooms for the Marriott Courtyard. These projects will generate more Transient Occupancy Tax (TOT) in the future. 

2019/20 Expenditures

Total appropriations for all funds are $38.8 million, with General Fund appropriation at $23.9 million. The total Capital Improvement Projects (CIP) appropriation is $4.5 million, of which $3.6 million is for road resurfacing projects and $900 thousand is for parks and facilities projects. The budget continues to reflect the Successor Agency (SA) appropriation of $4 million for enforceable obligations and administrative costs for winding down procedures of the former Rosemead Redevelopment Agency. 

General Fund expenditures are projected to increase at a higher rate than revenues due to the escalating “cost of doing business.” The City’s largest area of expenditures is the Los Angeles County Sheriff’s Department contract which will increase by approximately 5% over the previous year and the Liability Trust Fund will increase 0.5%. Other financial challenge is the State unfunded mandates imposed on cities by the State Water Quality Control Board relative to storm water runoff, the costs will continue to create a financial hardship for the General Fund. 

2019/20 Revenues

Total revenues for all funds are $40.3 million, with General Fund revenues at $24.9 million. General Fund is the main operating fund of the City and pays for most of City services such as police, building, zoning, public works, park maintenance, recreation, support services, and community events. Property tax, sales tax, and TOT revenues continue to be the largest revenue sources, representing 71% of total General Fund revenues. 

• Property tax revenues continue to be the City’s largest source of income. Property taxes constitutes 39% of General Fund revenues. Total gross assessed value from the 2018/19 tax roll is $4.7 billion, up $220 million from last year. This is primarily due to an increase in residential properties from 9,681 to 9,730 parcels/assessment counts and an increase in median sales price for single family homes from $557,000 to $593,500. The residential category assessed value increased approximately $183 million, which represents a 5.4% increase. The peak median price before recession in 2006 was $495,000 and the current median price is $593,500, an increase of 19.9%.

• Sales tax receipts is the City’s second leading source of General Fund revenues and are projected to remain at $5.6 million for FY 2019/20. Sales taxes constitute 23% of General Fund revenues. The City continues to receive sales tax from three large general consumer goods businesses (Walmart, Target and Macy’s), which generate 40% of sales tax revenues. However, a used auto dealership has relocated to a neighboring City, causing sales tax to decline in the autos-transportation category. Fortunately, the City has continuously added new businesses such as Ross, Lucille’s Smokehouse Bar-B-Que, Boiling Crab, Starbucks, Sunshine Seafood, Skechers (Walgreen’s location), and St Exotics over the last two years. The City anticipates new retailers/restaurants opening when several mixed-used projects are completed. The City is also expecting to receive delayed disbursements from the State related to the CDTFA’s software conversion owed to the City.

• Hotel transient occupancy tax (TOT) revenues are the third largest source of income to the General Fund and are projected to remain at $2.4 million for FY 2019/20. The three largest revenue producers are Double Tree, Fairfield Inn & Suites, and Motel 6, which generates 69% of TOT tax revenues. The City does not anticipate new hotels in the FY 2019/20 budget. 

Balanced Budget

Total revenues from all funds exceed total appropriations for all funds by $1.4 million. The City has a balanced operating budget with a small General Fund surplus of $160,667 that will be used to build up General Fund reserves. The projected General Fund “fund balance” is estimated at $20.2 million at the end of FY 2019/20. The City has also accumulated over $3 million in a separate trust fund to pay for future retiree medical insurance obligations. Therefore, with a balanced operating budget and ample reserves, the City’s overall financial health remains strong.
 
Compensation and Staffing Level 

As a “contract city”, with public safety services provided by the Los Angeles County Sheriff’s Department and the Los Angeles County Fire Department, Rosemead’s organizational workforce will continue to operate with 58 full-time employees complemented by 141 part-time and seasonal positions. The budget includes the State mandated minimum wage increases to $13 per hour in January 2020 for part-time personnel, as well as salary adjustments for full-time staff based on MOUs and contracts. Despite these lean staffing levels, the City will continue the delivery of high-quality municipal services to the residents and businesses of this community during the upcoming fiscal year. 

Strategic Goal: Enhance Public Safety

The number one funding priority of the City continues to be law enforcement to ensure the safety of our residents, businesses, and visitors. The budget allocation for the Public Safety Department includes a 5% increase in annual costs for the Los Angeles Sheriff Department (LASD) contract as well as a 0.5% increase in the Liability Trust Fund portion of the LASD contract. Key components of the City’s Public Safety efforts include the following: 

“Rosemead Model” for Public Safety. The “Rosemead Model” is a unified command structure that features a Sheriff Lieutenant serving as the City’s Chief of Police. This organizational structure enables Rosemead to maximize the financial benefits and abundant resources of being a “contract city” while, at the same time, strengthening the City’s ability to exercise “local control” in addressing challenges unique to our community. Utilizing this model, the Public Safety Department will continue efforts to combat crimes that are largely attributed to adverse impacts of the state correctional system known as “realignment” and the passage of a state-wide proposition that decriminalized various drug related offenses. These changes continue to result in the early release of thousands of convicted felon PSP’s (post-released supervised parolees) and drug offenders back onto the streets in Los Angeles County. 

Continuation of Deployment Levels. This budget continues to provide funding for the Sheriff’s full complement of a Lieutenant, a Sergeant, three to five Deputy squad cars patrolling the streets of Rosemead on a continual basis, supplemented by two Motorcycle Deputy, and seven Special Assignment Team (SAT) Deputies. In addition, a Deputy is assigned as a full-time School Resource Officer (SRO) at Rosemead High School. 

The City implemented the Success Through Awareness & Resistance (STAR) program with the Rosemead and Garvey School Districts. A Deputy will teach in-classroom instruction to 4th, 5th, and 6th grade level students of the STAR program on school grounds. 

Community Outreach. During FY 2019/20, the Public Safety Department will continue to convene “Area Watch” meetings in each of the neighborhoods of the City. Monthly Area Watch meetings are at a neighborhood school or church to interact with residents. The Public Safety Department will continue to coordinate monthly CONNECTIONS meetings. CONNECTIONS is a “grassroots” group of citizens, community-based organizations, churches, schools, City Council, and staff with a mission to prevent crime and combat drugs and alcohol abuse, promote positive recreational activities and community service opportunities, coordinate with human and social services organizations, and facilitate emergency preparedness. To promote community outreach, the City has held several events including National Night Out, First Responders Day, and Coffee with the Chief. 

Recreation Programs and Special Events. Rosemead’s outstanding Parks & Recreation Department continues to organize programs and special events that contribute greatly to the quality of life in the community. In FY 2019/20, the Department will continue its robust sports programs on Saturdays and evenings during the week for youth and families at Garvey Park Gym and other venues throughout the community. In addition, after school drop-in recreation programs will continue to be offered at Rosemead Park and Garvey Park at no cost to participants. A full calendar of major special events will be administered for the community. A full schedule of aquatics programs will again be conducted at the Rosemead Aquatic Center and at the Splash Zone at Garvey Park. 

A full slate of community special events will be held in FY 2019/20, including the 4th of July festivities, Summer Concerts in the Park, 9-11 Memorial Remembrance, Fall Fiesta, the Moon Festival, Trunk or Treat, the Annual Tree Lighting Ceremony, Eggstravaganza, and the Memorial Day Remembrance, and the City’s 60th anniversary.

Strategic Goal: Beautify Residential Neighborhoods and Commercial Corridors

During FY 2019/20, the City will continue its excellent work to improve and maintain the public infrastructure and aesthetics of the community. An aggressive capital improvement program (CIP) administered by the Public Works Department includes, funding for improvements to various roadways, sidewalks and traffic signal upgrades, parks and storm water improvements. The Annual Slurry Seal project, Sidewalk Replacement project, Traffic Impact Analysis, Crosswalk Installation project, and City Hall Basement Improvement Phase I project were completed in FY 2018/19. The City also established its first Community Garden. 

In the upcoming year, the community will see the Walnut Grove Resurfacing Project Phase I and II, Valley Boulevard Resurfacing Project Phase I and II, Walnut Grove Utility Underground Project from Marshall Avenue to Valley Boulevard, and City Entry Monuments will be started and completed in FY 2019/20. The City anticipates the Garvey Park Restroom Renovation, Duff Park Improvement project, dog park, and replacement of picnic tables and trash receptacles will be completed in FY 2019/20. 

Conclusion

The FY 2019/20 budget is a transparent, dynamic and responsible financial plan that will enable the City to continue to provide the community with a full scope of high-quality municipal services, programs and special events that enhance the quality of life of all residents. It will also provide the required resources to construct significant capital improvement projects that will improve infrastructure and facilities and beautify the community.

With vision and direction provided by the City Council and Commissions through the Strategic Plan, and with the effective work of each of the City departments, the City is operating with a clear understanding of our community’s values, while continuing to maintain financial stability. This budget will enable Rosemead to continue its quality of life as a welcoming and thriving community that honors tradition, unites in diversity and evolves for the future.

It is my sincere pleasure and honor to serve as your City Manager. Under the leadership of the City Council, I look forward to a successful fiscal year that brings us closer to achieving the goals of our strategic plan and enhancing the level of service we provide to our community members.

View 2019-20 Fiscal Year Budget