2007- 2008
Budget &
Financial Plan
FINAL BUDGET
City of Milpitas
CALIFORNIA
Architect rendering of the new Milpitas Public Library on Main Street
2007- 2008
Final
Budget
Jose S. Esteves, Mayor
Robert Livengood, Vice- Mayor
Armando Gomez, Councilmember
Althea Polanski, Councilmember
Debra Giordano, Councilmember
Submitted By:
Thomas C. Williams, City Manager
Prepared By:
Finance Department
City of Milpitas, California 2007- 2008 Final Budget
TABLE OF CONTENTS
Letter of Transmittal
Budget Message. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Budget Guidelines and Fiscal Policies
Budget Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Budget Preparation Process and Timeline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Fiscal Policies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Resolutions
Resolution Adopting the Appropriations Limit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Joint Resolution Adopting the Final Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Joint Resolution Making Findings for Use of RDA Funds. . . . . . . . . . . . . . . . . . . . . 34
Resolution Determining Use of Housing Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Resolution Authorizing Public Improvements Payments . . . . . . . . . . . . . . . . . . . . . 37
General Information
City History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Demographic Profile. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Vicinity Map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
City Council, Board and Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Directory of Officials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Gann Limit Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Computation of Legal Bonded Debt Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Historical Staffing by Division . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Financial Information
Budget Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
General Fund 5- Year Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Distribution of Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Distribution of Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Revenue Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
2007- 2008 Final Budget City of Milpitas, California
Revenues by Fund ( Summary). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Revenues by Fund ( Detail). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
History of Property Tax Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
History of Transient Occupancy Tax Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Property Tax, Comparison with Other Jurisdictions . . . . . . . . . . . . . . . . . . . . . . . . . 73
Transient Occupancy Tax, Comparison with Other Jurisdiction . . . . . . . . . . . . . . . . 75
History of Sales Tax Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
History of License, Permit and Fine Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Sales Tax, Comparison with Other Jurisdictions . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Building Permits, Comparison with Other Jurisdictions . . . . . . . . . . . . . . . . . . . . . . 81
History of Intergovernmental Revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
History of " Other" Tax Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Franchise Fees, Comparison with Other Jursidictions . . . . . . . . . . . . . . . . . . . . . . . 85
Expenditures by Fund ( Summary) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Expenditures by Fund ( Detail) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Expenditures by Function . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Internal Cost Allocation by Fund Schedule. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Operating Transfers Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Budgets Narrative and Summary
City Council . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
City Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
City Clerk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
RDA & Economic Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Building and Safety. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
Information Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
Human Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
City Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
Finance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
Public Works. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
Engineering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
Planning & Neighborhood Svcs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
Parks and Recreation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
Police . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
Fire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
Non- Departmental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
City of Milpitas, California 2007- 2008 Final Budget
Capital Budget
Capital Budget Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163
Community Improvement Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164
Park Improvement Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166
Street Improvement Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168
Water Improvement Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170
Sewer Improvement Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172
Storm Drain Improvement Projects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174
Redevelopment Agency
Redevelopment Budget Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178
Appendix
Budget and Budgetary Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181
Fund Descriptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185
Revenue Descriptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188
Expenditure Descriptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191
List of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198
List of Departments/ Divisions/ Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199
List of Revenues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201
List of Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204
Abbreviations and Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206
Glossary of Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208
Index. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213
2007- 2008 Final Budget City of Milpitas, California
City of Milpitas, California 1 2007- 2008 Final Budget
Budget Message
August 24, 2007
Honorable Mayor and City Council
City of Milpitas
Milpitas, California 95035
Members of the City Council:
Submitted for your review and approval is the Annual Budget for Fiscal Year 2007- 2008. This
budget includes the City’s operating and capital improvement budget, the Redevelopment
Agency’s activities and the City’s water and sewer utility operations.
This budget has been developed to assist the City Council in the achievement of its vision for
Milpitas and to ensure the delivery of quality, timely, and cost effective services to the community
while continuing to meet future fiscal challenges in the most professional and responsive
manner. Consequently, it is appropriate to begin this discussion of the budget with a review of
the City Council’s primary policies.
Policy Direction
The Fiscal Year 2007- 08 ( FY 07- 08) budget was developed to incorporate the following City
Council’s priorities and policy direction:
􀁑 Continue to improve and provide a high level of vital public services to the community in
the most effective way
􀁑 Evaluate and review all City functions to eliminate duplications and achieve cost
efficiencies
􀁑 Maintain a reserve policy for the General Fund and other major funds to ensure against
economic uncertainties
􀁑 Complete the construction of the new Library and Midtown parking garage
􀁑 Initiate economic development strategies that will recruit and retain businesses in the City
􀁑 Focus on Redevelopment projects that will provide for the economic stability of the
community and implementation of the Midtown Specific Plan
􀁑 Encourage commercial and residential development focused in the Midtown Specific Plan
area that will center on the new light rail system and the future BART system to alleviate
traffic congestion
The Budget Highlights section describes how staff has implemented the Council’s policy direction
through the budget. The City Council held a budget planning session which was open to public
participation in February to ensure that the FY 07- 08 budget continues to meet the Council’s
priorities. At that meeting, the Council conceptually approved most of staff’s recommendations to
achieve FY 07- 08 budget objectives.
CITY OF MILPITAS
455 EAST CALAVERAS BOULEVARD, MILPITAS, CALIFORNIA 95035- 5479 www. ci. milpitas. ca. gov
2007- 2008 Final Budget 2 City of Milpitas, California
Letter of Transmittal Budget Message
BUDGET HIGHTLIGHT
FY 07- 08 Operating Budget was developed to address the continued fiscal challenges faced by
the City. Although General Fund revenues have been increasing at a good pace in the last three
years, expenditures have also increased significantly. As such, revenue continues to fall short of
expenditures and is not sufficient to close the budget gap. Medical insurance premiums continue
to increase at a rate much greater than inflation. This is not unique to the City of Milpitas and is
a cost that both public and private sector organizations must contend. In addition, in FY 07- 08,
this Budget proposes to commence with managing the unfunded liability by pre- funding retiree
medical benefits. This adds approximately $ 1.9 million in expenditures. Limited by resources,
the FY 07- 08 Operating and Capital Budgets were prioritized to provide services that are most
cost effective and beneficial to the community and projects that will bring economic stability to the
City. Some of the most significant highlights from the budget are described below:
􀁑 Balance the General Fund budget without any program cuts and without using any
General Fund reserves.
􀁑 Increase cost and work efficiencies. Examples include centralizing the management of
cell phone expenses in the Information Services department to achieve economy of scale
and re- allocate workers from the Recreation Services department to Public Works
department to ensure cross- training and coverage for the maintenance of City buildings.
􀁑 Continue to look for opportunities for cost savings but apply them in such manners that
will least impact services to the citizens and community. The FY 07- 08 operating budget
proposed resuming cost sharing with the Milpitas Unified School District for one school
resource police officer. The City continued to fund these positions when the School
District’s budget was in distress. The School District is receptive to resumption of cost
sharing next year.
􀁑 Introduce new fees and fee adjustments that will increase revenue by approximately
$ 220,000. The FY 07- 08 budget includes a small increase in Recreation service fees to
offset some of the cost increases over the years. It also includes a new processing fee
for business license applications and annual renewals to offset a portion of the
processing costs.
􀁑 Begin funding a portion of the outstanding retiree medical benefits liability by establishing
an irrevocable trust, in anticipation of the requirements of Government Accounting
Standards Board Statement No. 45.
􀁑 Careful evaluation of infrastructure and programming needs in the Five- year Capital
Improvement Program to fund and deliver the Council’s highest priority projects. These
projects will include construction of the new Library, a Midtown parking garage, and major
infrastructure and street improvement in Main Street and Abel Street. All these capital
improvement projects, centered in the Midtown area, are prioritized to encourage
commercial and residential development that will provide economic stability in that area.
􀁑 Address the needs of deferred maintenance and equipment replacement for City
buildings by funding a Capital Improvement project for Building Improvements in the
amount of $ 500,000.
􀁑 Complete Phase II of the Transit Sub- Area Land use Plan around the southern boundary
of Milpitas in order to focus on developments that will integrate with the light rail system
and the future BART system.
􀁑 Retain and recruit businesses in the City. Two new businesses, Spectra Laboratories and
Advanced Medical Optics will relocate to the City within next fiscal year. These new
businesses will generate increased sales tax and property tax revenues.
􀁑 Continue to stabilize the General Fund expenditure and revenue in order to maintain a
high “ AA” general credit rating from Standard & Poor’s.
City of Milpitas, California 3 2007- 2008 Final Budget
Letter of Transmittal Budget Message
BUDGET OVERVIEW
The total Annual Budget for FY 2007- 08 is $ 128,806,631. This is a 21.5% decrease from the FY
2006- 07 Annual Budget. Excluding the City’s FY 07- 08 Capital Improvement Budget, the total
operating budget is $ 120,361,631, a 9.9% increase from last year. The total budget includes the
City’s Water and Sewer Utility enterprise budgets of $ 12,751,621 and $ 9,794,386 respectively. It
also includes the City’s Redevelopment Agency ( RDA) budget of $ 26,508,643. The total budget
for capital improvements for FY 07- 08 is $ 8,445,000. A separate Capital Improvement Program
( CIP) budget document is produced annually that provides a detailed description of each project.
The CIP document includes all projects for the budget year as well as profiling anticipated
community needs over the subsequent four years. A summary of each project description and
funding requirement can be found on pages 163 through 175 of this document.
The General Fund budget is $ 71,633,627, a 4.9% increase compared to FY 2006- 07. The
primary component of this increase is in the category of Salaries and Benefits. Salaries and
Benefits show a net increase of 6.2% from last year due to a combination of factors: negotiated
wage increases in accordance with the labor contracts, increased medical insurance premium
and pre- funding of retiree medical benefits.
Services and supplies decreased less than 1% compared to last year primarily due to increased
funding for the following: equipment and vehicle replacement in the form of amortization charge
to the user departments, citywide utility expenditures for electricity, gas and water, and repairs
and maintenance expenditures.
Although the General Fund budget anticipates an overall 10.7% revenue increase in FY 07- 08
compared to FY 06- 07 original estimate, the City has been challenged with structural budget
deficits since FY 2002. Due to decrease of the General Fund revenues from FY 2002 through
2004, expenditures began to outpace revenue growth. The recent recovery of General Fund
revenues is not sufficient to reverse this trend. In this coming falll, the City Council plans to hold
a long- term strategic plannsing session to focus on the City’s long- term financial planning and
strategies to achieve the City’s long- term goals. In order to balance FY 07- 08 budget without
using any General Fund reserves, the budget includes cost saving measures, new revenues and
other funding strategies as follows:
􀁑 Continue the present hiring freeze of the funded positions in all but the most necessary
positions in FY 07- 08. The strategy contributes about $ 1.1 million savings for next year.
􀁑 Demand a loan payment of $ 6 million from the Redevelopment Agency. The Agency
purchased several properties from the City for redevelopment purposes. Simultaneously,
the Agency entered into a loan agreement with the City for the cost of the properties
which amounted to $ 29.3 million plus interest on unpaid balance. The City has the right
to demand payments when needed. Prior to FY 06- 07, the Agency has not made any
payments to the City. The FY 06- 07 operating budget included a $ 6.1 million scheduled
payment from the Agency. However, the revised projection for the City’s General Fund
indicated that revenues will most likely be higher than original estimate, thus reducing the
need to rely on the $ 6.1 million payment to close the budget cap. Staff recommends
deferring a portion of the loan payment to future years. The FY 07- 08 budget again
includes a $ 6 million loan payment from the Agency.
􀁑 Utilize a portion of the 2% Transient Occupancy Tax ( TOT) revenues to fund performing
art programs. The City increased the TOT rate from 8% to 10% in 2001 pursuant to the
voters’ approved Measure H and Measure I. Measure H, an advisory vote, allows the
2007- 2008 Final Budget 4 City of Milpitas, California
Letter of Transmittal Budget Message
increased 2% TOT revenue to be used to support performing and visual arts programs.
The FY 07- 08 budget recommends using $ 260,000 of the 2% TOT revenue to fund a
portion of the operating expenditures of the Rainbow Theatre and other performing art
programs.
􀁑 Resume a cost sharing agreement with the Milpitas Unified School District for one school
resource officer that will save the City approximately $ 90,000.
􀁑 Introduce new fees and fee adjustments that will bring in about $ 220,000 revenues. The
City’s business license tax has not been adjusted since the 1970’ s. Currently, the cost for
processing business license applications and annual renewals is equivalent to the
amount of business license tax collected. The FY 07- 08 operating budget proposed a
business license processing fee that will recover about $ 150,000 to offset a portion of the
processing costs. In addition, there will be minor fee adjustments in selected Recreation
programs, primarily to increase fees for non- residents that utilitize the City’s Recreation
programs and facilities.
􀁑 FY 07- 08 Operating budget does not anticipate utilizing any of the General Fund reserve
balance. The remaining unreserved, undesignated fund balance will be approximately
$ 12.3 million which at 17.3% of the FY 07- 08 budget proposed appropriations is in
compliance with the City’s budget policy of maintaining a 15% reserve.
Economic Trends, Development and Profile
Milpitas is situated within the Silicon Valley region, known throughout the world as the home of
high technology, innovation and research. Milpitas, considered the “ Crossroads of Silicon
Valley,” with most of its 13.6 square miles of land situated between two major freeways, I- 680 and
I- 880, has experienced tremendous growth since its incorporation in 1954. Over the past 30
years, the population growth has increased from 26,561 in 1970 to 62,698 in 2000 ( latest
City's Economic Trends
98 99 00 01 02 03 04 05 06 07 08
F i s c a l Y e a r s
Millions
Revenue Expenditures
Projected Budget
The following chart provides the historical trend of the General Fund revenues and
expenditures from FY 98- 99 through FY 06- 07, along with the budget projections for FY 07- 08.
City of Milpitas, California 5 2007- 2008 Final Budget
Letter of Transmittal Budget Message
census). The Bay Area has experienced significant employment growth from 1992 through
2000, adding more than 170,000 jobs. However, in 2001, Santa Clara County experienced its
first negative job growth since 1992. Between 2001 and 2004, over 130,000 jobs were lost as a
result of the economic recession. This region is severely impacted due to concentration of the
high- tech industry and the shifting of some of these technology and manufacturing jobs
overseas. Milpitas is similarly impacted because of its location and comparable economic mix.
In the last three years, the economy has shown signs of recovery as indicated by increased sales
tax revenue, transient occupancy tax revenue and property tax revenue. The following section
entitled “ Major Development Activities in the City” will discuss some of the more large scale
development activities that are occurring in Milpitas.
There are approximately 1,790 acres or 2.9 square miles of land area in the City limits
designated for various industrial uses; about 271 acres are vacant and available in parcels
ranging in size from ½ acre to 75 acres. Included in this acreage total are eight industrial parks
and 550 manufacturing plants. An estimated 350 acres of land are dedicated to regional and
community retail centers supporting 3.5 million square feet of commercial shops. The Great Mall
of the Bay Area is the largest enclosed mall in Northern California, with approximately 1.1 million
square feet of leasable space for retail and entertainment operations. Several local shopping
centers serve regional needs for Asian- oriented retail and services.
The leading economic segments are restaurants, apparel stores and electronics equipment. The
five largest manufacturing employers are Cisco Systems, Inc., Lifescan Inc., LSI Logic
Corporation, Seagate Technology and Solectron Corporation. Other major employers include
SanDisk, Linear Technology, and KLA- Tencor. Several of these top employers make Milpitas
their corporate headquarters. The two largest non- manufacturing employers in Milpitas are The
Great Mall of the Bay Area and the Milpitas Unified School District.
Milpitas Redevelopment Agency ( RDA) is one of the top ten RDAs in the State. With the 2003
expansion of the RDA, Redevelopment Area 1 encompasses 2,230 acres or 26% of the City.
The Project area produces over $ 27 million in annual gross tax increment. In November 2003
the RDA issued $ 200 million in tax allocation bonds to generate funds for key City and Agency
projects including a new library, major infrastructure improvements and a new senior center.
Major Development Activities in the City
Midtown Specific Plan – The vision for this area includes high density housing within walking
distance to light rail and BART to support the public investment in mass transit, transforming
neighborhoods into an attractive and economically vital district with plazas and network of
pedestrian and bicycle trails, a vibrant streetscape along the north end of Main Street and a
mixture of housing, shopping, employment, entertainment, and cultural and recreational
opportunities. The implementation efforts began by several capital improvement projects such
as the new Library, parking garage, Main Street and Abel Street infrastructure improvements.
Other development activities that are being planned by outside agencies include the design and
construction of a County Health Center, parking garage and a 103- unit Senior Housing restricted
for low- income seniors.
Transit Sub- Area Land Use Plan – The City developed phase I of a Transit Sub- Area Land Use
Plan which provides development concept for the area surrounding the future Montague/ Capitol
BART station and two VTA Light Rail Stations. In FY 07- 08, the City will complete phase II of the
2007- 2008 Final Budget 6 City of Milpitas, California
Letter of Transmittal Budget Message
Plan which will include a general plan amendment, zoning changes, design guidelines, fiscal
impact study and environmental report. The intent of the Plan is to foster economic development
of the area, strengthen and expand retail uses to increase sales tax revenues, attract major
retailers and provide housing and amenities such as parks, schools, retail and restaurants.
Residential Development – Residential development activities remained relatively strong.
Milpitas represents one of the more affordable alternatives in Santa Clara County, with median
home prices at $ 670,000, lower than the County’s median home price of $ 680,000. Residential
development approvals in progress outside the Midtown area include California Project ( 181
condominium units) and Town Center ( 65 housing units). Spurred by the high density potential of
the Midtown Plan, residential and mixed use developments that are in the planning stage include
Apton Plaza ( 98 condominium units and 3,000 square feet of retail space), and under
construction include Centria ( 481 condominium units), and Paragon ( 141 townhouse units).
Other residential development under construction includes 683 condominium and townhouse
units of the KB Homes project, of which 110 units will be deed restricted for affordable housing.
Non- residential Development – Non- residential development includes redevelopment of existing
tenant spaces and buildings in the Town Center. A Super Safeway was added to the Town
Center as a major anchor store. Construction was completed in April 2007. Other commercial
development activities include the development of land adjacent to the KB Homes for three car
dealerships. Piercy Toyota was approved to construct a 70,000 square foot showroom and a 52-
bay service area at that site. It is anticipated that construction will compete in the fall of 2007.
Great Mall of the Bay Area - The Great Mall is the largest enclosed mall in Northern California,
with approximately 1.1 million square foot of leasable space. The Simon Group, the new owner
of the Great Mall, continued its efforts to attract new anchor tenants. A Neiman Marcus outlet
was added in 2006. Other new tenants currently under negotiation will be added next year.
Consumer Confidence Level
The consumer confidence index in February 2007 was at its highest since 2002. The overall
consumers’ assessment of current economic conditions remains favorable, primarily due to
improved job outlook. Consumers are more optimistic than they were a year ago, which could
lead to more consumer spending. This sentiment is reflected by increased local sales tax
revenue in recent months.
Consumer Confidence
40
50
60
70
80
90
100
110
120
J a n- 0 2 J an- 0 3 Ja n- 0 4 J an- 0 5 Ja n- 0 6 J a n- 0 7
Source: Consumer Conference Board
City of Milpitas, California 7 2007- 2008 Final Budget
Letter of Transmittal Budget Message
Revised General Fund Revenue Estimates for Current Fiscal Year 2006- 2007
Recent economic recovery in the Bay Area continued to improve the City’s revenue. The year-to-
date revenue was better than projected, primarily due to the improved economy and increased
development activities locally. The revised revenue estimates for FY 2006- 07 assume that
General Fund revenues will be $ 3.3 million ( 6.5%) more than budgeted.
Sales tax revenues are expected to be $ 1.4 million more than budget primarily due to economic
recovery that increased sales tax revenues from apparel stores, restaurants and furniture and
appliances economic segments. Building permit revenue is expected to be almost $ 420,000
more than originally estimated increased development activities in the City.
Transient Occupancy Tax ( TOT) revenue is expected to be more than original estimate by
$ 480,000 primarily due to increased occupancy and increased room rates. Property tax is
expected to be approximately the same as original projection.
Other revenues such as charges for services and miscellaneous revenue also show increases
over original estimates. The increase in charges for services of about $ 790,000 is primarily
related to reimbursement of staff’s services provided to private developers. The miscellaneous
revenue increase of about $ 190,000 is related to booking fee reimbursement from the State and
Federal grants that were not anticipated in the original revenue projection.
City Sales Tax Revenues
Top 10 Economic Segments ($ 11.7 million)
6.5%
7.8%
11.2%
9.0%
4.0%
9.8%
15.0%
8.3%
13.5%
14.1%
Service Stations 6.5%
Bldg Mtrls- Retail 7.8%
Furn/ Appliance 11.2%
Misc Retail 8.3%
Dept Stores 9.0%
Apparel Stores 14.1%
Light Industry 4.0%
Restaurants 15.8%
Electronic Equip 13.5%
Source: MBIA MuniServices Company Office Equip 9.8%
Top Ten Sales Tax Generators by Economic Segment
The chart below provides a snapshot of the City’s sales tax revenue by economic segment in
the last four quarters. Total amount of sales tax revenue for the latest benchmark year was
about $ 13.8 million, with the top ten economic segments generated about $ 11.7 million. Sectors
such as general retail and food products lead the increases over a year ago.
2007- 2008 Final Budget 8 City of Milpitas, California
Letter of Transmittal Budget Message
Due to revenue increases experienced in several major revenue sources, the General Fund is
projected to close out the fiscal year using not mroe than $ 1.5 million of the loan payment from
Redevelopment Agency. The FY 06- 07 budget scheduled a $ 6.1 million payment from the
Redevelopment Agency Fund, for acquisition of several key City properties for redevelopment
purposes. Staff proposes to defer the remaining balance to future years, as one of the strategies
to balance FY 07- 08 budget.
REVENUES AND OTHER FINANCING SOURCES
Revenue Estimates for Fiscal Year 2007- 08
Total estimated revenue and other financing sources that include the use of reserves are
estimated to decrease by $ 35.3 million compared to the FY 2006- 07 budget. This is due to FY
06- 07 funding of major capital improvement projects such as the new Library, parking garage.
These are non- routine capital projects that were funded by the issuance of the 2003 Tax
Allocation Bonds. In FY 07- 08, General Fund revenues are projected to be $ 55.6 million,
approximately $ 2.1 million higher than FY 06- 07’ s revised revenue of $ 53.5 million. The
projected increase for FY 07- 08 General Fund reveune is primarily due to continued economic
recovery as evidenced by the increase in sales tax and Transient Occupancy tax revenues as
well as increased development activities locally. The assumptions for projection and analysis of
the major revenue sources are discussed below.
General Fund Revenue Estimates
FY 2007- 08 estimated General Fund revenue assume a $ 5.4 million or 10.7% increase over FY
06- 07 budgeted revenue but only a moderate 3.9% or $ 2.1 million increase from FY 06- 07
revised revenue projection. Some of the changes include the following.
Revenue detail is shown in the Financial Information section of the budget. A summary of
revenues, including transfers between funds, and the increase or use of fund balances for
various funds is shown on the following chart as a comparison between FY 06- 07 and FY 07- 08.
REVENUES AND OTHER FINANCING SOURCES
Fund FY 06- 07 FY 07- 08
Over ( Under)
Prior Year
General $ 68,300,030 $ 71,633,627 $ 3,333,597
Library 345,000 345,000 0
Special Revenue 3,805,675 3,757,044 ( 48,631)
Capital Project 2,705,239 4,016,310 1,311,071
Redevelopment 60,134,501 26,508,643 ( 33,625,858)
Water 11,446,545 12,751,621 1,305,076
Sewer 17,400,700 9,794,386 ( 7,606,314)
Total $ 164,137,690 $ 128,806,631 $ ( 35,331,059)
City of Milpitas, California 9 2007- 2008 Final Budget
Letter of Transmittal Budget Message
Sales tax revenues for FY 06- 07 are revised to be more than budget by $ 1.4 million. Although
the Association of Bay Area Governments ( ABAG)’ s forecast is 8% increase for the Santa Clara
County next year, our assumption for FY 07- 08 sales tax revenue is a 5.8% increase over FY 06-
07 revised estimate, more conservative than ABAG’s projection. Total sales tax revenue is
estimated to be $ 18.7 million. The projection is based on continued economic recovery locally in
the electronic economic segment and increased sales in the food products and general retail
economic segments. The Great Mall of the Bay Area shopping mall has added new anchor
stores which will generate increased sales. In addition, a major car dealership is expected to
open its operation in Milpitas in FY 07- 08.
Building permit revenue for FY 06- 07 is estimated to be $ 420,000 more than budget due to
increased commercial and residential development activities. In FY 07- 08, building permit
revenues are projected to be approximately $ 4.1 million at more or less the same level as FY 06-
07 revised revenue. The projection is based on the number of recent applications submitted and
the size of the projects. It is anticipated KB Homes, Centria and Paragon will continue with their
construction activities that require building inspection services and other residential development
projects Town Center and Apton Plaza will commence.
Property tax revenues are estimated to increase by 4.5% in FY 07- 08, based on the report of
growth on assessed valuation provided by the County Assessor. The increase is primarily due to
increased investment in capital assets, changes of ownership and newly constructed properties
that added value to the tax roll.
Hotel/ motel Transient Occupancy Tax ( TOT) revenue showed an increase of $ 480,000 or 13%
over budget in FY 06- 07. It is projected that FY 07- 08 TOT will increase by a modest 1.5% to
$ 4.9 million. The projection is conservative but given the huge increase experienced in FY 06-
07, staff anticipates the growth rate to slow down somewhat in FY 07- 08.
Interest income is anticipated to increase by $ 207,000 compared to the FY 06- 07 budget,
primarily due to higher investment earnings on the investment portfolio as some of the lower yield
securities matured. Projected interest income for FY 07- 08 is approximately $ 1.2 million.
Interest income is based on projected earnings from the investment portfolio at an assumed
reinvestment rate of 4.75% that will be allocated to the General Fund based on its projected cash
balance.
Other Financing Sources consisted of two funding sources and are shown as operating transfers
in the budget document. The first financing source is a loan payment of $ 6 million from the
Redevelopment Agency. This payment will repay a portion of the outstanding principal and
interest owed by the Agency pursuant to a loan agreement This payment was discussed in detail
in the Budget Overview section. The second component of the other financing sources are
operating transfers between funds primarily to allocate operating costs and capital budget
contributions from one project fund to another.
Cost Allocation. A cost allocation worksheet is utilized to allocate central service costs that are
typically budgeted in the General fund to various programs in order to determine the full cost of
providing City services. In FY 06- 07, the City conducted an updated Cost Allocation study to
calculate the percentage of costs that should be allocated to each major program and major
operating fund. The results from the study were applied to the FY 07- 08 budget.
2007- 2008 Final Budget 10 City of Milpitas, California
Letter of Transmittal Budget Message
For each City service or program, in addition to direct staff support and appropriation for supplies
and servcies, it also receives support from the administrative staff and benefits from centralized
services such as building occupancy and equipment maintenance. These indirect costs need to
be allocated to each major service or program in order to determine the full cost of providing City
services. Similarly, the Cost Allcoation Study also computed the percentage of centralized costs
that should be assigned to other operating funds. These centralized costs are typically budgeted
and advanced by the General Fund. Cost allocation is necessary to ensure that each of these
operating funds share the administrative and overhead costs equitably. A summary Internal Cost
Allocation Schedule showing the cost allocation by fund for FY 07- 08 can be found on pages 94
to 95.
RDA Revenue Estimates
FY 06- 07 Redevelopment property tax increment was revised downward by $ 1.1 million or 4% to
$ 27.1 million primarily due to decreased assessed valuation on unsecured properties. However,
FY 07- 08 tax increment is expected to increase by 4.5%, based on the report of growth on
assessed valuation provided by the County Assessor. Although the commercial properties still
experienced relatively high vacancy rates, assessed valuation on residential properties remained
stable. The addition of new housing units in the Project area should contribute to higher tax
increment revenues.
Utility Rates
Utility rate increase for Water and Sewer operations were not included in the FY 07- 08 budget.
Approximately 50% of the utility operation costs were attributed to outside agencies costs that
were passed through to the utility ratepayers. These costs include wholesale water costs from
The chart below provides an overview of the City’s General Fund revenue sources including
operating transfers from other funds.
General Fund Rev enue Sources
( in Millions $ )
16.21
1.20
8.51
0.06
18.71
16.08 0.85
4.71
0.90
4.43
Property Taxes $ 16.21M
Us e of Money & Property $ 1.20M
Other Taxes $ 8.51M
Other Revenue $ 0.06M
Sales Tax $ 18.71M
Licens e & Permits $ 4.71M
Intergov't $ 0.90M
Serv ic e Charges $ 4.43M
Other Financing Sources $ 16.08M
Fines & Forfeitures $ 0.85M
City of Milpitas, California 11 2007- 2008 Final Budget
Letter of Transmittal Budget Message
the Santa Clara Valley Water District, San Francisco Public Utility Commission as well as City’s
share of capital improvement project costs for Water operation. The San Jose/ Santa Clara
Sewer Treatment Plant operation and capital improvement project costs were also passed
through to the ratepayers for the Sewer operation. In the past, the City had to estimate these
pass- through cost increases due to timing of the budget preparation cycle of these outside
agencies do not coincide with the City’s. For FY 07- 08, the City decided to delay its utiltiy rate
hearing to the beginning of next fiscal year to ascertain the pass- through rate increases. The
City anticipates that utility consumption will remain stable in FY 07- 08.
EXPENDITURES
Total expenditures represent an overall 21.5% decrease from FY 06- 07. Operating expenditures,
excluding capital improvement, increased by 9.9% compared to last year. Following is a
summary of the changes in operating expenditures by category:
Salaries and benefits are expected to increase by 6.3%. The net increase to the General
Fund is $ 3.4 million ( 6.2%). The total citywide budget increase in this category is $ 3.83 million,
The projected FY 07- 08 salary and wage increases reflect negotiated increases in accordance
with various Memoranda of Understanding. Health insurance premiums are anticipated to
increase by approximately 8% in January 2008. In addition, the FY 07- 08 budget includes pre-funding
of retiree medical benefits in the amount of $ 1.9 million citywide and $ 1.7 million for the
General Fund. Excluding the pre- funding of retiree medical benefits, the increases would have
been 2.5% citywide and 2.2% for the General Fund.
Services and supplies are expected to increase by $ 6.24 million or 20.8% citywide, with
$ 100,000 ( 1%) decrease in the General Fund. The services and supplies budget include
services that were provided by outside parties. The expenditure increase includes $ 5.3 million
housing loan and silent second mortgages that will be funded by the Housing Set- aside Fund in
A budget comparison of appropriations for all funds between FY 06- 07 ( Adopted Budget) and
FY 07- 08 ( Adopted Budget) is as follows:
Appropriations
Adopted
Budget
FY 06- 07
Adopted
Budget
FY 07- 08
Over ( Under)
Prior Year
Salaries & Benefits $ 60,886,955 $ 64,718,248 $ 3,831,293
Services & Supplies 30,072,691 36,313,266 6,240,575
Capital Outlay 550,750 625,117 74,367
Subtotal $ 91,510,396 $ 101,656,631 $ 10,146,235
Capital Improvement 54,651,294 8,445,000 ( 46,206,294)
Debt Service 17,976,000 18,705,000 729,000
Total Appropriations $ 164,137,690 $ 128,806,631 $ ( 35,331,059)
2007- 2008 Final Budget 12 City of Milpitas, California
Letter of Transmittal Budget Message
FY 07- 08. Other cost increases are due to cost increases from outside agencies or vendors that
are beyond the control of the City. For example, the City’s utility expenses are anticipated to
increase by 6% or $ 160,000. The costs of water purchased from San Francisco Public Utility
Commission and Santa Clara Valley Water District is anticipate to increase by $ 313,000. The
amount that the Sewer Fund has to contribute to the San Jose/ Santa Clara Water Pollution
Control Plant will also increase by $ 1.05 million. General Fund is similarly impacted as it pays for
majority of the gas and electricity costs. Other increases include equipment replacement in the
form of amortization charge to the user departments and maintenance for City buildings.
Capital Outlay - This category includes new and scheduled vehicle and equipment
replacements. Total capital outlay request for FY 07- 08 is $ 625,000. Approximately $ 428,000 of
the equipment and vehicles will be fully funded by the Equipment Replacement Fund. Major
Capital outlay requests include replacement of twelve vehicles, 2 for Parks and Recreation
Department, 2 for Public Works Department, and 8 for Police Department. Other capital outlay
requests include replacement of defibrillators for the Fire Department and hydrants and water
meters for Public Works.
Debt Service in FY 07- 08 totals almost $ 18 million. Debt service budget increases by
approximately $ 700,000 due to issuance of the 2006 Certificates of Participation ( 2006 COPs) to
finance capital improvements for the sewer system. In addition to the debt service payment for
the 2006 COPs, the debt service category included payments for two outstanding debt issues,
the 2000 Certificates of Participation ( Technology COPS) and 2003 Redevelopment Agency Tax
Allocation Bonds, the 2006 COPs, and a $ 4 million annual payment to the County of Santa Clara
pursuant to a Purchase and Sale Agreement between the County and the Redevelopment
Agency.
The City’s legal bonded debt limit, as established by the California Government Code, is
approximately $ 373 million. Currently, the 2006 Certificates of Participation issued in 2006 has
an outstanding balance of $ 9,535,000, the Technology Financing Phase I Certificates of
Participation issued in 2000 has an outstanding balance of $ 2,410,000 and the Redevelopment
Agency Tax Allocation Bonds issued in 2003 has an outstanding balance of $ 187,030,000.
Neither one of these bonded debts is subject to the legal debt limit. The interest rates of the
outstanding bonds range from 2.75% to 5.25% and the final payments will occur between fiscal
years 2010 and 2033. The Puchase and Sale Agreement requires an annual payment to the
County ranges from $ 4 million to $ 6 million. Future payments to the County have been
discounted at 5% to a present value of $ 46.8 million outstanding balance.
The City’s debt policy includes a comprehensive, thorough review and analysis of the City’s long-term
capital project needs. Once project needs are established and prioritized, funding options
are reviewed. Depending on the funding requirements and available reserves, either existing
reserves are used or tax- exempt securities are issued. The City will utilize debt financing for
capital improvement which has a useful life that can reasonbly be expected to exceed the period
of debt service payments.
City of Milpitas, California 13 2007- 2008 Final Budget
Letter of Transmittal Budget Message
CAPITAL IMPROVEMENTS
The City records the cost of all acquistion, construction, expansion or rehabilitation of the City’s
physical plant and facilities in the Capital Improvement Budget. Typically, a capital improvement
project exceeds $ 10,000 and may take more than one year to construct. The cost of the capital
project is capitalized as capital assets of the City upon completion. The total FY 07- 08 Adopted
Capital Improvement Program ( CIP) funding is $ 46.2 million less than the FY 06- 07 CIP, primarily
due to funding for three major projects, $ 33.7 million for construction of the New Library, $ 6.35
million for Midtown Streetscape, and $ 9.2 million for Main Sewage Pump Station in FY 06- 07 that
The following table shows the annual debt service requirements for the three outstanding debt
issues and the obligation created by the Purchase and Sale Agreement:
Year Ending
June 30
Total
Principal
Total
Interest
2008 $ 8,865,350 $ 9,838,302
2009 8,825,810 9,807,479
2010 8,524,105 9,746,247
2011 8,594,862 9,697,315
2012 8,632,725 9,646,686
2013- 2017 47,522,552 47,585,539
2018- 2022 55,749,566 44,077,616
2023- 2027 55,783,124 20,833,614
2028- 2032 38,755,000 5,246,960
2033 4,565,000 112,984
Total $ 245,818,094 $ 166,592,74
The Capital Improvement Budget funding for FY 07- 08 by Project Category is as follows:
Project Category
Adopted
Budget
Percentage
of Total
Community Improvements $ 1,690,000 20.01%
Park Improvements 590,000 6.99%
Street Improvements 3,305,000 39.13%
Water improvements 2,540,000 30.08%
Sewer Improvements 150,000 1.78%
Storm Drain Improvements 170,000 2.01%
Total $ 8,445,000 100.00%
2007- 2008 Final Budget 14 City of Milpitas, California
Letter of Transmittal Budget Message
are non- recurring in FY 07- 08. There are no significant non- routine capital projects in FY 07- 08
and majority of the projects are much smaller in scale. Staff worked with the City Couccil CIP
Subcommittee to prioritize all CIP projects based on available resources and needs. The CIP
Subcommittee meets quarterly in an open meeting to receive a status report of these various
capital projects.
The Capital Improvement Budget has been reviewed by the Planning Commission to determine
its conformance with the City’s General Plan. Park improvement projects for FY 07- 08 were also
reviewed by the Parks, Recreation and Cultural Arts Commission.
Although cost savings is one of the considerations in implementing the capital improvement
program, many projects are prioritized for reasons such as health and safety for the public,
replacement of deteriorated capital assets or systems, or enhancement of economic
development and quality of life for the citizens. New buildings tend to be more energy efficient
and replacing deteriorated capital assets tend to save repair costs in the long run. The actual
cost savings is difficult to quantify. On the other hand, some of these projects especially those
that are not replacement projects will increase operating costs upon completion. These costs, to
the extent that they can be estimated, are identified in the Capital Budget section of this
document. Total estimated maintenance costs is approximately $ 14,000 annually. The
increased operating costs for each of project are identified in the Capital Budget Section of this
document.
The Capital Budget Section also provides a brief description and status of the projects to be
funded in FY 07- 08. For further details on the capital improvement projects, a separate Five Year
Capital Improvement Program FY 2007- 2012 prepared by the Engineering Division may be
obtained at 455 E. Calaveras Blvd, Milpitas, CA 95035 or at the City’s website.
FUND BALANCES/ RETAINED EARNINGS
An important resource for a City is the funding that is available for future appropriations and
unexpected emergencies. A complete schedule of the Budget Summary of the Revenue,
Expenditures, Transfers, and Fund Balances is shown in the Financial Information section of the
Budget. Other than the Redevelopment Agency Fund Balance which will be utilized for
redevelopment and affordable housing projects, there are no significant changes to the rest of
the fund balances.
City of Milpitas, California 15 2007- 2008 Final Budget
Letter of Transmittal Budget Message
The projected percentage of the estimated unreserved, undesignated fund balance for the
General Fund is 17.3% which meets the Council’s policy of maintaining a minimum unreserved,
undesignated fund balance at 15% of the General Fund budget appropriations. It is also
projected that $ 5.4 million unreserved fund balance, designated for the PERS Rate Stabilization
Reserve will remain at the end of FY 07- 08.
.
The Restricted Funds listed above have legal restrictions on the way in which the funds may be
used. The estimated fund balances in the Restricted Funds include amounts that have already
The following schedule shows the estimated undesignated Fund Balance for the General Fund
and the percentage of the balance in relation to the Fund’s total appropriations. Also shown
are the total estimated fund balances for the Restricted Funds:
Fund
Budgeted
Expenditures
FY 07- 08
Estimated
Balance
6/ 30/ 08
% of Budgeted
Expenditures
Unreserved – Undesignated
General $ 71,633,627 $ 12,391,000 17.3%
Restricted
HCD 2,728,223
Street Improvement 8,815,690
General Government CIP 1,017,000
Park 6,771,000
Water 15,980,658
Sewer 18,942,662
Storm Drain 877,000
Redevelopment 104,526,079
Library 4,904,000
Other 11,037,602
GF Unreserved, Undesignated Fund Balance
as a Percentage of GF Expenditures
0%
5%
10%
15%
20%
25%
30%
35%
' 98 ' 99 ' 00 01 02 03 04 05 06 07 08
F i s c a l Y e a r s
% of Expenditures
Budget
The chart below provides a historical perspective of the City’s General Fund unreserved,
undesignated fund balance as a percentage of General Fund expenditures.
2007- 2008 Final Budget 16 City of Milpitas, California
Letter of Transmittal Budget Message
been committed for projects or programs approved by the Council/ Agency. In addition, the
Restricted Funds fund balances include bond proceeds or anticipated bond proceeds that have
legal restrictions for their use as outlined in the bond documents.
FIVE YEAR GENERAL FUND FORECAST
The Five- year General Fund Forecast allows the Council and the community to assess the
sustainability of City services in the long term. The projection also identifies the type of
commitments and resource demands in the next five years. The Five Year General Fund
Projection schedule can be found in the Financial Information Section of this document,
immediately behind the 2007- 08 Budget Summary.
Property tax revenues are expected to increase 5% in FY 08- 09 and 4% in subsequent years.
Although Proposition 13 limited the annual assessed value adjustments to the lesser of the
increase in the California consumer price index or 2%, staff’s projections are higher due to new
construction that will be added to the tax roll, change of ownerships and assessed valuation
increase for unsecured properties as local businesses continue to recover and add capital
assets. As evidenced by the plan check and building permit service demands, there are still
plenty of development activities occurring in the City. Staff expected that construction of some of
these development will complete in phases in the next few years and add to the assessed
valuation.
Sales tax revenues are projected to increase 6.3% in FY 08- 09 and FY 09- 10, and 4% in FY 10-
11 through FY 2012- 13. In addition to assuming the continued recovery of the economy, the
increases factored in the opening of a major car dealership in the fall of 2007 and subsequent
opening of at least one more car dealership in FY 09- 10. With the addition of residents as some
of residential developments are completed and occupied, it is anticipated that Milpitas
businesses will capture a portion of the consumers’ spending. Recent sales tax revenue trend
shows that the retail and restaurant economic segment continue to be strong. The Great Mall of
the Bay Area continues to renovate and add anchor stores and has become a regional attraction
in recent years.
Hotel tax revenues are projected to increase 3% annually starting from FY 08- 09. Hotel
occupancy has increased in recent years and is expected to stabilize in the next few years. It is
assumed that the hotel operators will increase room price by the average consumer price index
which is approximately 3% to recover costs.
Other Taxes include real estate transfer tax, franchise tax and business license tax. As
residential units are being developed and occupied, it is anticipated that the City will collect more
real estate transfer tax and franchise tax from utility and cable companies. The projection is 4%
increase in FY 08- 09 through FY 10- 11, and tapering off to 3.5% increase in FY 11- 12 and FY 12-
13 respectively.
License and permits consist of building permits and fire permits which are primarily construction
related. Due to the number of applications submitted for Midtown and potential developments in
the Transit Sub- area, it is anticipated that these fees will remain at a high level for a couple of
years. The projection for FY 08- 09 and FY 09- 10 is 5% increase annually and 3.5% increase
annually for the subsequent years.
Charges for Services include charges for private development related services, engineering fees
and recreation services charges. It is anticipated that the increases in charges to developers will
be similar to the increases for license and permits. Therefore, the projection for FY 08- 09 and FY
City of Milpitas, California 17 2007- 2008 Final Budget
Letter of Transmittal Budget Message
09- 10 is 3.5% increase annually and 3% increase annually for the subsequent years.
Operating transfers are mainly reimbursements from other funds for the staff support and
administrative overhead provided by General Fund. These transfers will increase in conjunction
with operating expenditure increases. In addition, operating transfers also include an annual
loan repayment of $ 4 million from the Redevelopment Agency. The City’s Five Year Capital
Improvement Program anticipates storm drain improvement projects. The City Council could
consider collecting storm drain fee which requires voters’ approval. Unless then, the General
Fund is the only feasible funding source for these capital improvement projects which will require
an annual funding of $ 1 million and transfer to the Storm Drain Fund starting from FY 09- 10. The
City issued Technology Certificates of Participation in 2000 to fund technology capital
improvement projects. As some of these equipment and systems become outdated, they will
need to be replaced. The Five Year Forecast anticipates an annual funding and transfer to the
Technology Replacement Fund beginning in FY 09- 10 in the amount of $ 250,000.
Salaries and benefits other than medical insurance are anticipated to increase by 3% annually.
The consumer price index ( CPI) increase in the San Francisco- Oakland- San Jose area averaged
around 3% in the last ten years. The projection for salary and benefits is based on historical
increase of the CPI. It is also assumed that employer contribution rates to the California Public
Employees Retirement System will remain stable. Medical insurance premiums will increase
faster than CPI and is estimated to be 8% annually. Beginning in FY 07- 08, the City will
contribute towards the unfunded retiree medical benefits liability pursuant to GASB 45. Based on
an actuarial study conducted in April 2005, the normal cost of the contribution is approximately
5% of the annual payroll. The Five- Year General Fund forecasts include the funding requirement
in the benefits category.
Services and Supplies costs are anticipated to increase by 3% annually, assuming an average
CPI increase of 3%.
Capital Outlay includes funding for both equipment replacement and capital improvement
projects. Majority of the equipment replacement will be funded by the Equipment Replacement
Fund. The City established equipment replacement for capital assets over $ 5,000 and the
replacements costs are charged to the user departments as equipment amortization
expenditures annually. Consequently, the projection for capital outlay includes only capital
improvement projects and capital outlay that no prior replacement fund has been set- aside.
Debt Service for the only General Fund debt will mature in FY 08- 09. The debt was issued to
fund the City’s technological equipment and system needs. The City does not contemplate
issuing another General Fund debt in the next five years.
2007- 2008 Final Budget 18 City of Milpitas, California
Letter of Transmittal Budget Message
ACKNOWLEDGEMENTS
We want to thank the Mayor and City Council for their guidance and integrity in directing the
financial affairs of the City in a most responsible and progressive manner. We also extend our
appreciation to the Finance Department staff who worked on the budget, along with all the
Division/ Department Heads and the Budget Liaisons for their hard work, assistance, and
cooperation in preparing this Budget.
The overall budget envisions an operating program that carefully considers the general economic
climate in conjunction with the many progressive projects and programs the City will be providing
to the citizens of Milpitas. The Budget establishes the projected resources to pay for all
requested appropriations. The City Council and members of the Redevelopment Agency have
guided the City of Milpitas to a very stable financial position that enables the City to undertake
new capital improvement projects while maintaining its high level of services for all Milpitas
citizens, even during difficult economic situations. The City Council’s approval of the FY 07- 08
Budget continues its commitment to excellence in citizen services and prudent financial
management.
Respectfully submitted,
Thomas C. Williams Emma C. Karlen, CPA
City Manager Director of Financial Services
City of Milpitas, California 19 2007- 2008 Final Budget
Budget Guidelines and Fiscal Policies Budget Guidelines
BUDGET GUIDELINES
The annual operating budget is the primary short- term financial plan for the City. The operating budget
shall serve as the policy document of the City Council for implementing Council goals and objectives. It is
used to set forth the City's estimates of resources available to fund services that are consistent with the
Council’s goals. Since no plan will prove to be an absolutely accurate reflection of future events,
management must have sufficient flexibility to make adjustments during the year, provided these
adjustments do not materially alter the general intent of the City Council when adopting the budget. These
guidelines are intended to provide that flexibility and to establish adequate controls, through budget
monitoring and periodic reporting, to ensure that the overall distribution of resources achieves the results
contemplated by the City Council.
Annually, the City Council establishes priorities regarding service levels to provide guidance to
management in preparing the recommended budget. Through its legislative authority, the Council
approves and adopts the budget by resolution.
The City Manager is responsible for proposing to the City Council a balanced budget which is consistent
with the Council’s service level priorities and sound business practices. Balanced budget is defined as a
budget where the anticipated operating revenues and other financing resources including carryover of
outstanding encumbrances from prior year are equal to or exceed operating expenditures. The City
Manager is also responsible for establishing a system for the preparation, execution, and control of the
budget which provides reasonable assurances that the intent of Council policies are met.
The Director of Financial Services is responsible for providing periodic budget status reports to the City
Manager and the City Council and monthly budget reports to the Department Heads to facilitate control
and compliance with the budget.
The Department Heads are responsible for monitoring their respective budgets for compliance with the
intent of Council priorities and for insuring that appropriations of the aggregate total of the department are
not exceeded.
SUMMARY OF BUDGET GUIDELINES
General
These guidelines are intended to require that procedures be used in the development, review, adoption,
and monitoring of the budget, and to set forth the nature of those procedures. The detailed procedures
used are to be established by the City Manager.
1. Budget Calendar
A budget preparation calendar will be provided to the Department Heads and to the City Council at the
beginning of the budget process each year. The calendar will set forth, at a minimum, dates for the
following:
a. Review of service level priorities by the City Council at an annual City Council and City
Management Planning Workshop.
b. Presentation of the City Manager's proposed budget to the City Council, which shall be no later
than the second week in June.
2. Form and Content of the City Manager's Proposed Budget
a. The City Manager's proposed budget, the Preliminary Budget and Financial Plan, shall be
presented in a form which is sufficient to allow the City Council to determine and review:
2007- 2008 Final Budget 20 City of Milpitas, California
Budget Guidelines and Fiscal Policies Budget Guidelines
􀁑 Provision of City Council priorities as established at the annual City Council and City
Management Planning Workshop;
􀁑 Projected revenues by major category;
􀁑 Operating expenditures by department or program, and by fund;
􀁑 Historical Staffing by Division;
􀁑 Service levels;
􀁑 Statements of objectives and accomplishments;
􀁑 Recommendations for policy changes and impact;
􀁑 Capital improvement appropriations by project.
b. Comparison with the preceding year's actual results and current year's projected results will be
provided for each category of revenue and expenditure shown in the budget.
c. A description of the service levels to be provided under the proposed budget will be included.
d. A statement of the services reduced or eliminated and the services improved or added, as
compared to the current year, will be included.
e. A schedule showing General Fund Revenue and Expenditure projection for the next five years.
3. Adoption of the Budget
The City Council will adopt the budget by resolution no later than June 30th of the previous fiscal year,
setting forth the amount of appropriations and authority of the City Manager to administer the adopted
budget.
4. Budget Authority of the City Manager
The City Manager shall have the authority to amend appropriations within the various departments and
projects within a fund, provided that the amount of the amended appropriation is $ 20,000 or less. Interfund
transfers or transfers of an appropriation amount within a fund which in any single instance exceed
$ 20,000 require prior approval of the City Council. No expenditures may be made from any undesignated
fund balances without an appropriation by the City Council.
The City Manager shall have the authority to reasonably deviate from the budgeted personnel allocation
schedule provided that at no time will the number of permanent, full- time employees authorized by the City
Council be exceeded.
5. Budget Amendments by the City Council
The City Council may from time to time approve expenditures and identify funding sources not provided for
in the adopted budget including those expenditures funded through undesignated fund balances. The
Finance Subcommittee shall review any requests for budget amendments prior to submitting to the City
Council.
6. Budget Transfers and Modification Procedures
Procedures to implement budget transfers or budget modifications are detailed in Standard Procedure No.
21- 1, subject to any changes by the Budget Resolution.
7. Automatic Adjustments and Reappropriations
a. Outstanding encumbrances at prior fiscal year- end will automatically be carried over to current
year’s budgets.
b. Unspent appropriations that are authorized and funded by grant revenues from prior fiscal year will
automatically be carried over to current year’s budgets.
c. Incomplete multiple year project balances will automatically be reappropriated.
City of Milpitas, California 21 2007- 2008 Final Budget
Budget Guidelines and Fiscal Policies Budget Guidelines
8. Budget Monitoring and Reporting
a. General Monthly Reports - The Director of Financial Services will prepare a monthly budget report
including actual expenditures and encumbrances for distribution to the City Manager and
Department Heads, to facilitate monitoring of the budget.
b. Periodic Budget Reports - The Director of Financial Services will periodically prepare a budget
status report for presentation to the City Council. At the minimum, the report shall include the
status of the General Fund revenues and expenditures, Water and Sewer utility fund revenues,
and Redevelopment Project fund revenues.
9. Reserves
Various unallocated reserves are desired in each of the City's funds to protect the City in emergencies,
economic uncertainties, and to finance unforeseen opportunities and/ or requirements. Reserve policies
for various funds are described in detail in the document entitled “ City of Milpitas Fiscal Policies”.
2007- 2008 Final Budget 22 City of Milpitas, California
Budget Guidelines and Fiscal Policies Budget Preparation Process and Timeline
January- February 2007
Budget Preparation
􀁑 Revenue and Expenditure Projection
􀁑 Budget Requests for Personnel, Services and
Supplies, and Capital Outlay
􀁑 Proposed Capital Improvement Program
December 2006
Personnel Expenditures Projection ( except
Temporary staff and overtime)
February 27, 2007 -- Council Budget Worksessions
March- April 2007
Budget Revisions, Reconciliations,
and Final Review
May 8, 2007 -- Public Hearing
June 5, 2007 -- Adopt the 2007- 08 budget and the 2007- 2012 Capital Improvement Program ( CIP)
September 4, 2007 -- Distribute the approved 2007- 08 Final Budget and the 2007- 2012 CIP
City of Milpitas
2007- 2008 Budget Process
City of Milpitas, California 23 2007- 2008 Final Budget
Budget Guidelines and Fiscal Policies Budget Preparation Process and Timeline
CITY OF MILPITAS
BUDGET PREPARATION TIMELINE
2007- 2008 FINANCIAL PLAN
Id # DATE TASK RESPONSIBILITY
1 12/ 13/ 06 and
01/ 12/ 07
Meetings with Senior Staff to discuss programs, service levels,
position requests, capital outlay requests, and budget process.
City Manager,
Director of Financial
Services, Senior Staff
2 12/ 18/ 06 Issue request for Capital Improvement Program ( CIP) projects. CIP Project Team,
CIP Staff
3 01/ 08/ 07 2007- 08 Budget Preparation “ Kick- Off” meeting with Budget
Liaisons.
Director of Financial
Services, Finance
Budget Team,
Budget Liaisons
4 01/ 08/ 07-
01/ 26/ 07
Budget data entry in BRASS providing detail for temporary staff
and benefits, overtime, supplies, contractual services, meetings
and memberships, training and capital outlay.
Budget Liaisons
5 01/ 12/ 07 • Position Summary Corrections due to Finance.
• Equipment Fund Inventory changes due to Accounting
( Elena Chin).
• Capital Outlay Requests due to Finance.
Budget Unit Heads,
Budget Liaisons
6 01/ 16/ 07-
01/ 22/ 07
Conduct Revenue discussions with budget units ( Department/
Divisions) and Special Fund expenditure projections and fund
balance.
Director of Financial
Services, Admin Analysts
7 1/ 16/ 07 New Capital Improvement Program ( CIP) projects requests are
due.
Budget Unit Heads
8 01/ 19/ 07 Requests for new positions, reclassifications and reallocation of
existing positions due to Finance, with the City Manager’s initials.
Budget Unit Heads
9 01/ 22/ 07-
02/ 16/ 07
Review Personnel Requests. HR Director
2007- 2008 Final Budget 24 City of Milpitas, California
Budget Guidelines and Fiscal Policies Budget Preparation Process and Timeline
10 01/ 26/ 07 Provide fund balance numbers. Accounting Manager
11 01/ 26/ 07 • Data entry in the BRASS is complete.
• Temporary Position Forms ( one form per function)
are due to Finance.
• Explanation of enhancements or new programs on
one sheet is due to Finance.
Budget Liaisons
City Manager
Director of Financial
Services
12 01/ 26/ 07 Complete Non- Department Budget BRASS entry. Admin Analyst
13 01/ 29/ 07 Non- Department Budget Review. Director of Financial
Services, Admin Analyst
14 01/ 30/ 07 Review the new CIP requests and consider the financial impact. City Manager,
Director of Financial
Services, Accounting
Manager, Economic
Development Manager,
CIP Team
15 02/ 01/ 07 Meeting to discuss Capital Outlay Requests. Accounting Services
Mgr, Purchasing Agent,
Veh Maint Suprv,
Admin Analyst
16 02/ 02/ 07 Print and distribute Budget Proformas to Budget Units for review. Finance Budget Team
17 02/ 06/ 07 • FY 06- 07 Mid- year financial Status Report to Council.
• FY 06- 07 Mid- year budget adjustments.
• Set FY 07- 08 Budget Hearing Dates.
Director of Financial
Services, Admin Analyst
18 02/ 07/ 07 Present Cost Allocation Draft to Finance Subcommittee. Director of Financial
Services
19 02/ 08/ 07 CIP Subcommittee: review requests for new and proposed
projects.
CIP Project Team
Director of Financial
Services
20 02/ 08/ 07 All budget preparation information due to Finance: narratives, org
charts, and mission statements. Any changes on BRASS
Proformas are due.
Budget Liaisons
Id # DATE TASK RESPONSIBILITY
City of Milpitas, California 25 2007- 2008 Final Budget
Budget Guidelines and Fiscal Policies Budget Preparation Process and Timeline
21 02/ 09/ 07-
02/ 15/ 07
Narratives, org charts, mission statements and changes on
BRASS Budget Proformas entry by Finance.
Finance Budget Team
22 02/ 16/ 07 HR completes desk audit of new personnel requests and provides
those results to Finance.
HR Director
23 02/ 20/ 07 Present Cost Allocation Draft to City Council. City Council
Director of Financial
Services
24 02/ 20/ 07-
02/ 23/ 07
Narratives, org charts, and mission statements review by Finance. Finance Budget Team
25 02/ 22/ 07 Review Draft CIP document. CIP Staff, Finance
26 02/ 26/ 07-
03/ 02/ 07
Prepare budget reports and distribute to City Manager and Budget
Units.
Finance Budget Team
27 02/ 27/ 07 Budget Study Session. City Council
28 02/ 28/ 07 No further changes to the amounts in the CIP document by CIP
Team.
CIP Project Team
29 03/ 05/ 07 Review Draft Parks projects in the CIP Budget. PRCRC
30 03/ 05/ 07-
03/ 09/ 07
Budget Unit Worksessions - Review Operating Budget requests
with the respective budget unit staff.
• City Council/ City Manager/
• RDA- Econ Dev
• City Clerk
• Building & Safety
• Information Services
• Human Resources
• City Attorney
• Finance
• Public Works
• Engineering
• Planning and Neigh Services
• Parks and Recreation
• Police
• Fire.
Budget Unit Heads,
City Manager,
Director of Financial
Services
Id # DATE TASK RESPONSIBILITY
2007- 2008 Final Budget 26 City of Milpitas, California
Budget Guidelines and Fiscal Policies Budget Preparation Process and Timeline
31 03/ 05/ 07-
03/ 16/ 07
Review of Proposed CIP document by Finance. Director of Financial
Services, Accounting
Manager, CIP Accountant
32 03/ 12/ 07-
03/ 16/ 07
Follow- up meetings with Senior Staff, as needed, to discuss
feedback from Budget Unit Worksession.
City Manager
Director of Financial
Services, Budget Unit
Heads
33 03/ 16/ 07 Distribute budget reports to Budget Units for final review. Finance Admin Staff
34 03/ 19/ 07-
03/ 23/ 07
Final review of budget unit operating budget. No further changes
for reconciliation process.
Budget Unit Heads,
Budget Liaisons
35 03/ 26/ 07-
04/ 06/ 07
Budget Reconciliation:
• Finance: Operating budget and CIP.
Finance Budget Team,
Engineering Team
36 03/ 27/ 07 Publish Draft 2007- 2012 Capital Improvement Program and
distribute ( Due: April 3, 2007).
CIP Program Manager
CIP Staff
37 04/ 05/ 07 Review proposed CIP document by CIP Subcommittee. CIP Project Team,
Director of Financial
Services
38 04/ 09/ 07-
04/ 13/ 07
Final review of proposed budget. City Manager,
Director of Financial
Services, Finance Budget
Team
39 04/ 11/ 07 Review Draft CIP for information and General Plan conformance
findings.
Planning Commission,
CIP Program Manager
40 04/ 12/ 07-
04/ 16/ 07
Update PowerPoint slides on budget and staffing changes.
Distribute one presentation slide per section ( budget changes,
accomplishments and objectives) to the Budget Units.
Finance Budget Team
41 04/ 17/ 07 Review the Draft 2007- 2012 Capital Improvement Program. City Council
42 04/ 17/ 07-
04/ 23/ 07
Budget Units update the presentation slides ( accomplishments
and objectives) and review the budget changes.
Budget Unit Heads,
Budget Liaisons
43 04/ 18/ 07 Publish notice of public hearings regarding the Operating Budget
and Capital Improvement Program.
City Clerk
Id # DATE TASK RESPONSIBILITY
City of Milpitas, California 27 2007- 2008 Final Budget
Budget Guidelines and Fiscal Policies Budget Preparation Process and Timeline
44 04/ 23/ 07 PowerPoint slides due to Finance. Budget Liaisons
45 04/ 24/ 07-
04/ 30/ 07
Incorporate the accomplishments and objectives to the
PowerPoint slides for all Budget Units.
Finance Budget Team
46 04/ 27/ 07 Distribute the Proposed 2007- 08 Operating Budget and Financial
Plan.
Director of Financial
Services
47 05/ 03/ 07 and
05/ 07/ 07
Presentation practice ( rehearsal) on the 2007- 2008 Proposed
Budget and Financial Plan and the 2007- 2012 Capital
Improvement Program.
Budget Unit Heads
48 05/ 08/ 07 and
05/ 10/ 07
Public hearing on the recommended 2007- 2008 Proposed Budget
and Financial Plan and the 2007- 2012 Capital Improvement
Program.
City Council,
Budget Unit Heads
49 06/ 05/ 07 Adopt the 2007- 08 Budget and the 2007- 2012 Capital
Improvement Program.
City Council
50 06/ 29/ 07 Load Approved Budget. Finance Budget Team
51 08/ 03/ 07 Receive final numbers from Finance and Publish Final 2007- 2012
Capital Improvement Program.
Accounting Manager,
CIP Project Team
52 09/ 04/ 07 Distribute the approved 2007- 08 Final Budget and the 2007- 2012
Capital Improvement Program.
Director of Financial
Services
Id # DATE TASK RESPONSIBILITY
2007- 2008 Final Budget 28 City of Milpitas, California
Budget Guidelines and Fiscal Policies Fiscal Policies
CITY OF MILPITAS FISCAL POLICIES
GENERAL FINANCIAL GOALS
1. To maintain a financially viable city that can maintain an adequate level of municipal services.
2. To maintain financial flexibility in order to be able to continually adapt to local and regional economic
change.
3. To maintain and enhance the sound fiscal condition of the City.
OPERATING BUDGET POLICIES
4. The City will adopt a balanced budget by June 30th of each year.
5. An annual base operating budget will be developed by accurately and realistically projecting revenues
and expenditures for the current and forthcoming fiscal year.
6. During the annual budget development process, the existing base budget will be thoroughly examined
to assure cost effectiveness of the services or programs provided.
7. Annual operating budgets will include the cost of operations of new capital projects.
8. The City will avoid balancing the current budget at the expense of future budgets, unless the use of
reserves is expressly authorized by the City Council.
9. The City‘ s operating budget will be prepared on a basis consistent with generally accepted accounting
principles ( GAAP) except that encumbrances are considered budgetary expenditures in the year of the
commitment to purchase and capital project expenditures are budgeted on a project length basis.
REVENUE POLICIES
10. The City will try to maintain a diversified and stable revenue system to avoid over- reliance on any one
revenue source.
11. Revenue estimates are to be accurate and realistic, sensitive to both local and regional economic
conditions.
12. The City will estimate its annual revenues by an objective, analytical process utilizing trend,
judgmental, and statistical analysis as appropriate.
13. User fees will be reviewed annually for potential adjustments to recover the full cost of services
provided, except when the City Council determines that a subsidy is in the public interest.
14. The City will actively pursue federal, state, and other grant opportunities when deemed appropriate.
Before accepting any grant, the City will thoroughly consider the implications in terms of ongoing
obligations that will be required in connection with acceptance of said grant.
15. One- time revenues will be used for one- time expenditures only, including capital outlay and reserves.
EXPENDITURE POLICIES
16. The City will maintain levels of service, as determined by the City Council, to provide for the public
well- being and safety of the residents of the community.
17. Employee benefits and salaries will be maintained at competitive levels.
18. Fixed assets will be maintained and replaced as necessary, minimizing deferred maintenance.
19. The City will develop and use technology and productivity enhancements that are cost effective in
reducing or avoiding increased personnel costs.
UTILITY RATES AND FEES
20. Water and sewer utility customer rates and fees will be reviewed and adjusted annually, if necessary.
21. All utility enterprise funds will be operated in a manner similar to private enterprise. As such, the City
will set fees and user charges for each utility fund at a level that fully supports the total direct and
City of Milpitas, California 29 2007- 2008 Final Budget
Budget Guidelines and Fiscal Policies Fiscal Policies
indirect cost of the activity, including depreciation of assets, overhead charges, and reserves for
unanticipated expenses and capital projects.
CAPITAL BUDGET POLICIES
22. The City will develop an annual Five- year Capital Improvement Program ( CIP) which is designed to
develop and maintain infrastructure to support existing residences and businesses and future
anticipated development.
23. The CIP will identify the estimated full cost of each project which includes administration, design,
development and implementation, and operating costs once the projects are completed.
24. The CIP will identify potential funding sources for each proposed capital project, prior to submitting
proposed projects to the City Council for approval. When appropriate, the CIP will seek other funding
sources such as State and Federal funds, private funds and leverage these funding sources with
public money to help meet the highest priority community needs.
25. The funding for the first year of the Five- year CIP will be legally appropriated as a component of the
annual operating budget. Funding for future projects identified in the five year CIP has not been
secured or legally authorized and is therefore subject to change.
26. Each CIP project will be assigned to a Project Manager whose responsibilities are to monitor all
phases of the project to ensure timely completion of the project and compliance with the project budget
and all regulations and laws.
DEBT POLICIES
27. The City will limit long- term debt to only those capital improvements or long- term liabilities that cannot
be financed from current revenue sources.
28. The City will utilize debt financing for projects which have a useful life that can reasonably be expected
to exceed the period of debt service for the project.
29. The City will protect and enhance the City’s general credit rating of “ AA”.
30. The City may utilize interfund loans rather than outside debt to meet short- term cash flow needs.
31. The City will minimize costs and liabilities to the City when sponsoring debt financing for private
sectors.
RESERVE POLICIES
32. The City will periodically review and update reserve guidelines, to ensure that the City has sufficient
reserve balances to adequately provide for emergencies, economic uncertainties, unforeseen
operating or capital needs, economic development opportunities, and cash flow requirements.
33. The City will maintain unreserved, undesignated fund balance of at least 15% of the annual operating
expenditures in the General Fund for emergencies and unforeseen operating or capital needs.
34. The City will maintain in the General Fund a $ 5 million Public Employees Retirement Rate Stabilization
Reserve. This reserve may be drawn on if the required employer contribution rates exceed previous
year contribution rates by more than 3%. The City Council must approve utilization of this reserve at
the time of the budget hearing. This reserve will be replenished from the unreserved, undesignated
fund balance after the 15% requirement of the operating expenditures has been met.
35. The City will maintain a Storm Drain replacement reserve to replace and repair storm drain pump
stations. Beginning in FY 2009- 2010, the City will set- aside $ 1 million annually from the General Fund
reserve for this purpose.
36. The City will maintain a retiree medical benefits account established by an irrevocable trust. It is
anticipated that the City will begin funding the normal cost of the retiree medical benefits annually in
the operating budget.
37. Other reserves designated in the General Fund for investment portfolio market gain, and sick leave
payable will be calculated and adjusted annually at appropriate levels.
2007- 2008 Final Budget 30 City of Milpitas, California
Budget Guidelines and Fiscal Policies Fiscal Policies
38. The City will maintain working capital in the Water and Sewer utility enterprise funds to provide for
future capital projects and unanticipated emergencies, such as water main break repairs and pump
station repairs. The City will attempt to maintain a working capital reserve of approximately 30% of the
annual operating and maintenance expenses for Water utility fund and 25% of the annual operating
and maintenance expenses for Sewer utility fund.
39. In addition, the City will maintain Infrastructure Replacement funds for both Water and Sewer utilities.
The goal is to accumulate at least $ 2 million a year from each utility fund to set- aside for replacement
of infrastructure as the infrastructure reaches the end of its useful life.
40. The City will maintain at least $ 300,000 in the Recycled Water utility fund for the purpose of
infrastructure replacement and enhancement.
41. Reserve levels for Debt Service Funds will be established and maintained as prescribed by the bond
covenants authorized at the time of debt issuance.
42. A minimum 30% of the estimated annual Gas Tax revenues will be set aside as a reserve in the Street
Fund to provide for street repair emergencies and other unanticipated traffic safety projects.
43. The City will maintain a capital reserve in an Equipment Replacement fund, set up as an internal
service fund, to enable the timely replacement of vehicles and depreciable equipment as cost. The
City will maintain a minimum fund balance of at least 30% of the replacement costs for equipment
accounted for in this fund.
44. In addition, the City will maintain an initial capital reserve of $ 700,000 in an Equipment Replacement
fund for technological equipment replacement. Upon the full payment of the Technology Certificates of
Participation debt service in FY 09- 10, an annual amount of $ 250,000 will be set aside in this fund for
technological needs.
45. The City will maintain unreserved, undesignated fund balance of at least 15% of the annual operating
revenues in the Redevelopment Project Fund for unforeseen capital needs and economic
development opportunities such as land assemblage and developer assistance.
INVESTMENT POLICIES
46. The Finance Director/ City Treasurer will annually render an investment policy for City Council’s review
and modification as appropriate. The review will take place at a public meeting and the policy shall be
adopted by resolution of the City Council.
47. City funds and investment portfolio will be managed in a prudent and diligent manner with emphasis on
safety, liquidity, and yield, in that order.
48. Reports on the City’s investment portfolio and cash position shall be developed by the Finance
Director/ City Treasurer and reviewed by the City Council quarterly.
49. Generally Accepted Accounting Principles required that differences between the costs of the
investment portfolio and the fair value of the securities be recognized as income or losses in a
government’s annual financial report. These variances shall not be considered as budgetary resources
or uses of resources unless the securities are sold before maturity or the values of the investments are
permanently impaired.
ACCOUNTING, AUDITING, AND FINANCIAL REPORTING POLICIES
50. The City's accounting and financial reporting systems will be maintained in conformance with generally
accepted accounting principles as they apply to governmental accounting.
51. An annual audit will be performed by an independent public accounting firm with the subsequent
issuance of a Comprehensive Annual Financial Report, within six months of the close of the previous
fiscal year.
52. Periodic financial reports and status reports will be submitted to the City Council at the end of each
quarter and be made available to the public. The report will provide an analysis of budgeted versus
actual revenues and expenditures, on a year- to- date basis.
City of Milpitas, California 31 2007- 2008 Final Budget
Resolutions Resolution Adopting the Appropriations Limit
Resolution Adopting the Appropriations Limit
2007- 2008 Final Budget 32 City of Milpitas, California
Resolutions Joint Resolution Adopting the Final Budget
Joint Resolution Adopting the Final Budget
City of Milpitas, California 33 2007- 2008 Final Budget
Resolutions Joint Resolution Adopting the Final Budget
2007- 2008 Final Budget 34 City of Milpitas, California
Resolutions Joint Resolution Making Findings for Use of RDA Funds
Joint Resolution Making Findings for Use of RDA Funds
City of Milpitas, California 35 2007- 2008 Final Budget
Resolutions Joint Resolution Making Findings for Use of RDA Funds
2007- 2008 Final Budget 36 City of Milpitas, California
Resolutions Resolution Determining Use of Housing Funds
Resolution Determining Use of Housing Funds
City of Milpitas, California 37 2007- 2008 Final Budget
Resolutions Resolution Authorizing Public Improvements Payments
Resolution Authorizing Public Improvements Payments
2007- 2008 Final Budget 38 City of Milpitas, California
Resolutions Resolution Authorizing Public Improvements Payments
City of Milpitas
2007- 12 CAPITAL IMPROVEMENT PROGRAM
REDEVELOPMENT AGENCY FINANCING
Summary 2007- 08 2008- 09 2009- 10 2010- 11 2011- 12
RDA Tax Increment
TOTAL
Community Improvement 890,000 25,000 500,000 180,000 250,000 1,845,000
Park Improvement 0 75,000 200,000 0 0 275,000
Sewer Improvement 0 0 0 0 0 0
Storm Drain Improvement 50,000 875,000 0 35,000 112,000 1,072,000
Streets 765,000 1,485,000 1,566,000 0 300,000 4,116,000
Water 0 0 0 0 0 0
RDA Tax Increment Totals 1,705,000 2,460,000 2,266,000 215,000 662,000 7,308,000
2007- 08 2008- 09 2009- 10 2010- 11 2011- 12 TOTAL
Community Improvement
8174 Range Lead Containment System 40,000 25,000 0 0 0 65,000
New City Building Improvements 400,000 0 500,000 0 250,000 1,150,000
New Corporation Yard Canopies 600,000 0 0 0 0 600,000
New In- ground Water Clarifiers 175,000 0 0 180,000 0 355,000
New Midtown EIR Amendment 75,000 0 0 0 0 75,000
Total: 1,290,000 25,000 500,000 180,000 250,000 2,245,000
2007- 08 2008- 09 2009- 10 2010- 11 2011- 12 TOTAL
Park Improvement
New Cardoza Park Playground Renovation 0 75,000 200,000 0 0 275,000
Total: 0 75,000 200,000 0 0 275,000
2007- 08 2008- 09 2009- 10 2010- 11 2011- 12 TOTAL
Streets
4039 Tasman / I- 880 Interchange 0 0 0 0 300,000 300,000
4047 Dixon Landing Road / I- 880 Interchange 100,000 0 0 0 0 100,000
4170 Hwy 237/ I- 880 Interchange 200,000 216,000 0 0 0 416,000
4202 Calaveras Blvd. R/ R Overcrossing Sidewalk 650,000 0 0 0 0 650,000
Improvements
4227 Gateway Signs Project 30,000 0 0 0 0 30,000
8164 Bart Extension Coordination and Planning 85,000 85,000 0 0 0 170,000
New Carlo St. & Calaveras Blvd Ramp Conversion 250,000 0 0 0 0 250,000
Study
New Light Rail Median Landscaping 0 0 1,416,000 0 0 1,416,000
New North Milpitas Blvd. Soundwall Renovation 0 0 150,000 0 0 150,000
New Singley Area Phase 5 0 1,000,000 0 0 0 1,000,000
New Street Resurfacing Project 2009 0 400,000 0 0 0 400,000
Total: 1,315,000 1,701,000 1,566,000 0 300,000 4,882,000
2007- 08 2008- 09 2009- 10 2010- 11 2011- 12 TOTAL
Storm Drain Improvement
8140 Oakcreek Pump Station Improvement 0 800,000 0 0 0 800,000
New Fuel Tank Improvements 0 0 0 35,000 112,000 147,000
New Storm Master Plan Update 0 75,000 0 0 0 75,000
New Storm Pump Station Improvements 50,000 0 0 0 0 50,000
Total: 50,000 875,000 0 35,000 112,000 1,072,000
Summary 2007- 08 2008- 09 2009- 10 2010- 11 2011- 12 TOTAL
RDA Bond ( 1997, 2000, and 2003)
Community Improvement 400,000 0 0 0 0 400,000
Sewer Improvement 0 0 0 0 0 0
Streets 550,000 216,000 0 0 0 766,000
RDA Bond Totals 950,000 216,000 0 0 0 1,166,000
Attachment No. 1
City of Milpitas, California 39 2007- 2008 Final Budget
General Information City History
City History
Before roads were carved and houses were
built, Milpitas and its surrounding areas were
home to native Americans in the Costanoan
and Ohlone tribes. Living off the bounty of the
land around San Francisco Bay, the
Costanoans and the Ohlones prospered for
hundreds of years long before Mexican or
Spanish immigrants came to conquer the land.
In the 18th century, Spanish explorers surveyed
the land and were the first to give Milpitas its
name - milpa - or little cornfields. Three large
ranches began, and two families, the Alvisos
and the Higueras, built adobes in the mid-
1800’ s which still stand today
In 1850, the California Gold Rush began, and
“ American” settlers started taking over the
region. In 1852, a settler from Ireland, Michael
Hughes, built the first redwood- framed house in what is now Milpitas. Soon after, the first school
was built, and by 1857, Milpitas had a hotel, general store and a post office.
Fruit orchards began to spring up in the 1870s, and later the region was known for its hay
growing. The population continued to grow into the 1880s and settlers numbered over 1,500.
But by the turn of the century, only about a third of those people remained.
Populations would remain low until shortly after
World War II, when Western Pacific Railroad
bought a 300 acre industrial park within the city
and Ford Motor Company announced it would
shift its manufacturing plant from Richmond
( just north of Oakland) to Milpitas. The
population grew to 825. Sewer and water
service, and fire protection were set up shortly
after, as was one of the country’s first
integrated housing communities.
On January 26, 1954, the city was officially
incorporated, after fighting off annexation
attempts by neighboring San Jose. Ten years
later, populations grew to 7,000.
Following the computer firm boom of the 1980s
and the opening of one of the nation’s largest
malls in 1994, the city is now home to more
than 65,000 residents.
History Courtesy of: The Milpitas Post
Photos Courtesy of: Eliren Pasion
Alviso Adobe
Higuera Adobe
2007- 2008 Final Budget 40 City of Milpitas, California
General Information Demographic Profile
A Demographic Profile of Milpitas
Once a small agricultural town and later a stopover point for travelers between Oakland and San
Jose, Milpitas has blossomed into one of the world’s premier computer and semiconductor
producers. Tenants of the burgeoning city of 65,276 are family- centered communities that
embrace cultural diversity, comprehensive schooling and preservation of the hills.
Incorporated in 1954 with 825 residents, Milpitas is located at the southern tip of the San
Francisco Bay. Milpitas covers 13.6 square miles, with grassy foothills and picturesque Mount
Hamilton to the east and the Santa Clara Valley Floor to the west. The city is located in Santa
Clara County, home to close to 1.68 million residents. To the north is the city of Fremont. To the
south lies San Jose, the third largest city in California.
Milpitas’ neighborhoods are dotted with close to 18,197 households and well- placed parks.
Milpitas’ average household income is $ 93,300. The percentage of households with incomes
more than $ 75,000 is close to 69 percent. About 42% of the households earn more than
$ 100,000 annually.
Close to 68 percent of Milpitans own their own home. Rental prices vary from $ 1,115 to $ 1,645
per month for renters with one and two bedroom apartments and duplexes. Rent for two and
three bedroom houses typically run $ 1,465 to $ 2,610. The median price of a home in Milpitas is
$ 680,000. There are 20 suburban residential areas.
About 7 percent of the city’s population are 5 years old or younger, the lowest in the county.
About 18 percent are between 5 and 18 years old. About 68 percent of the population are
between 18 and 64 years old. About 7 percent of residents are over 65, also the lowest in the
county.
Milpitas has the highest population of ethnicities in all Santa Clara County. According to the 2000
census, an estimated 52 percent of residents are Asian; 24 percent are Caucasian; 17 percent
are Hispanic or Latino; and 4 percent are Black or African- Americans.
At 20 feet above sea level, Milpitas’ mild climate averages 59 degrees, with gentle winds from the
northwest and little more than 13 inches of rain expected in a typical year.
The bustling general law city is
supervised by a council- manager
form of government. The Milpitas
City Council is the flagship
decision making body that
appoints members to many
commissions that serve in
advisory capacities. The
mayorship is an elected position,
as are all the council seats.
Mayors serve two- year terms;
council members have four- year
seats.
The City Council makes the
ultimate planning and policy decisions for residents, and oversees the city’s $ 128 million budget.
The five members carry out twice a month public meetings. At these times, the public’s
Ethnic Distribution
Asian 52%
Black 4%
Hispanic 17%
Other 3%
Caucasian
24%
City of Milpitas, California 41 2007- 2008 Final Budget
General Information Demographic Profile
comments are usually heard, under the citizen’s forum. The Council’s meetings are held the first
and third Tuesdays of each month at 7: 00 p. m. in the Milpitas City Hall, 455 E. Calaveras Blvd.
There are 15 advisory commissions on which residents can participate - the Planning
Commission, Arts Commission, Youth Advisory Commission, Bicycle Transportation Advisory
Commission and Senior Advisory Commission, to name a few.
Issues challenging most commissions these days are development, quality of life and how to
streamline traffic bottlenecks that plague this area at commute times.
Courtesy of:
* State of California, Department of Finance
The Milpitas Post
The City of Milpitas, Finance Department
City of Milpitas at a Glance
Date of Incorporation January 26, 1954 Water Utility
Form of Government Council- Manager Number of Customers:
Residential 13,707
Commercial 1,034
Population ( estimated*) 65,276 Recycled Water 151
Land Area ( Square Miles) 13.56 Average Daily Consumption
Miles of Streets 138 ( in gallons) 9,162,000
Number of Street Lights 4,331
Miles of Water Mains 203
Fire Protection
Number of Stations 4 Sewer Utility
Number of Firefighters 74 Miles of Sanitary Sewers 173
Fire Apparatus 13 Miles of Storm Drains 99
Number of Fire Hydrants 1,756
Public Schools Serving the Community
Police Protection Elementary Schools 9
Number of Stations 2 Middle Schools 2
Number of Sworn Officers 95 High Schools 2
Crossing Guard Posts 38
Number of Vehicles 49 Parks and Recreation
Acres of Parkland 171.6
Employees Number of Parks 24
Permanent 496.00 Number of Swimming Pools 4
Temporary ( FTE) 68.75 Number of Tennis Courts 18
2007- 2008 Final Budget 42 City of Milpitas, California
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City of Milpitas, California 43 2007- 2008 Final Budget
General Information Vicinity Map
The City of Milpitas is located near the southern tip of San Francisco Bay, forty- five miles south of
San Francisco. Milpitas is often called the “ Crossroads of Silicon Valley” with most of its 13.56
square miles of land situated between two major freeways ( I- 880 and I- 680), State Route 237,
and a county expressway. The light rail line opened for service in 2004 and an extension of
BART, with a major multi- modal station, is in the planning stages.
2007- 2008 Final Budget 44 City of Milpitas, California
General Information City Council, Board and Commissions
City Council
Mayor Jose S. Esteves
Vice Mayor Robert Livengood
Councilmember Debra Giordano
Councilmember Armando Gomez, Jr
Councilmember Althea Polanski
Board, Commissions, and Committee
Arts Commission Community Advisory Commission
Asiya Asif Joselito Abelardo
Juniel Butler Reena Choudhury
Donine Ettinger Danny Fang
Bill Foulk Chris Lee
Robin Hays Jenifer Lind
Harriet McGuire Syed Mohsin
Mariele- Angy Ogle Viramrinder Meharu
Linda L Rabe Chinedu Nwobi
Richard Tsuei Heidi Han T. Pham
Michael Queenan
Public Art Committee Craig Ranker
Julie Cherry Nelson Villegas
Elena Lawson
Carla Ann Moss
Larry Voellger Economic Development Commission
( Plus all Arts Commission Members) Dhaval J. Brahmbhatt
Frank DeSmidt
Bicycle Pedestrian Ray Maglalang
Advisory Commission Zeya Mohsin
Rene Briones Minh Nguyen
Cheryl Bunnel Tomo Tuong Nguyen
Bill Reisinger Donald Peoples
Wesley Roediger Barbara Santos
Nawal Stanojevic Vince Songcayawon
Fred Zeise Charlene Tsao
Library Advisory Commission
Citizens Emergency Preparedness Trinidad Aoalin
Advisory Commission Linda Arbaugh
Clifford Baughn Melinda Cervantes
Michael Berryhill Yu- Lan Chou
Lori Bersabe Lynne Estandarte
Teresa Chaves Elpidio Estioko
Michelle Celones Ha Phan
Russ Cherry Marilyn Hay
Tim Howard Carmen Montano
Nancy Martinez Margie Stephens
William Nolan Sonny S. Wang
Jaime Odena
Brian Shreve
City of Milpitas, California 45 2007- 2008 Final Budget
General Information City Council, Board and Commissions
Board, Commissions, and Committee
Mobile Home Park Rental Sister Cities Commission
Review Board Massoud Arefi
Milan Dobro Echo Arthur
Florence Romito Debra Garcia
Dennis Grilli
Parks, Recreation and Cultural Beverly McCarter
Resources Commission Roselda Mateo
Kathryn Gray Maria Magdalena Ortega
Frances Krommenhock Arlyn W. Swiger
Henry Ku Oliver Wan
Naomi Matautia
Robert McGuire Telecommunications Commission
Steve Munzel Albert Alcorn
Tim Chang Satish Kumar Bansal
Raymond Serena Syed Afaq Ali Bilgrami
Edward Tuason Dinesh Gupta
Niranjan Gupta
Planning Commission William Lam
Gunawan Ali- Santosa Vishnu Mathur
Norman Azevedo M. Idrees Munir
Lawrence Ciardella Roger Shaw
Sudhir Mandal Hai Tran
Gurdev Sandhu
Noella Tabladillo Youth Advisory Commission
Cliff Williams Nida Asif
Lorden Fok
Recycling and Source Reduction Josephine Fong
Ed Blake, Jr. Joseph Hall
Hong Chen Chih- Ming Hsieh
John Cimino Jay Kumar
John Ebneter Phong La
Eulalio Mercado Jason Nguyen
Steve Ybarra Sareen Sandhu
Patrick Yung Neil Sharma
Alex Tran
Senior Advisory Commission Brian Tran
Mary Banick Aditya Ullal
Ed Connor
Bal Daquigan
Barbara Ebright
Estrella Gilana
Florentino Menor
Amanda Santos
Albert Wang
Joanne Wood
Denny Weisgerber
Bernice Wrinkle
2007- 2008 Final Budget 46 City of Milpitas, California
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City of Milpitas, California 47 2007- 2008 Final Budget
General Information Directory of Officials
DIRECTORY OF OFFICIALS
Fiscal Year 2007 – 2008
City Manager
Thomas C. Williams
Police Chief Director of Financial Services
Dennis Graham Emma Karlen, CPA
Fire Chief City Clerk
Clare Frank Mary Lavelle
City Attorney Chief Information Officer
Meyers, Nave, Riback, Silver and Wilson William Marion
Human Resources Director Public Works Director/ City Engineer
Carmen Valdez Greg Armendariz
Planning & Neighborhd Svc Director Chief Building Officer
Vacant Keyvan Irannejad
Parks and Recreation Director
Bonnie Greiner
2007- 2008 Final Budget 48 City of Milpitas, California
General Information Gann Limit Analysis
Gann Limit Analysis
Article XIIIB of the California State Constitution, more commonly referred to as the Gann Initiative
or Gann Limit, was approved by California voters in November 1979 and placed limits on the
amount of proceeds of taxes that state and local governmental agencies can receive and spend
each year. If an agency receives more revenue than the Appropriations Limit, the excess
revenue must be returned to the taxpayers through a tax reduction or refund within the next two
years. Alternatively, the agency can increase its Appropriations Limit through voters’ approval.
Each year’s limit is based on the amount of tax proceeds that were authorized to be spent in
Fiscal Year 1978- 79 in each agency, modified for changes in inflation and population in each
subsequent year. The City Council must adopt, by resolution, an Appropriations Limit for the
following year. Using the population and per capita personal income change factors provided by
the State of California, the City’s Appropriations Limit for FY2007- 08 has been computed to be
$ 60,096,261. Appropriations subject to the limitation in FY2007- 08 budget total $ 46,095,570 that
is $ 14,000,691 less than the computed limit.
The following chart shows the annual Appropriations Limit and the tax proceeds received since
Fiscal Year 2000- 01. The City has not exceeded its annual Appropriations Limit in any single
fiscal year. Except for the extraordinary growth in tax proceeds experienced in Fiscal Year 2000-
01, the City has been under 90% of the limitation and should not be impacted by the
Appropriations Limit.
25
30
35
40
45
50
55
60
65
In Millions
00- 01 01- 02 02- 03 03- 04 04- 05 05- 06 06- 07 07- 08
Fiscal Years
City of Mipitas Annual Appropriations Limit
Limit Tax Proceeds
--- Estimated---
City of Milpitas, California 49 2007- 2008 Final Budget
General Information Computation of Legal Bonded Debt Margin
City of Milpitas
Computation of Legal Bonded Debt Margin
June 30, 2007
ASSESSED VALUATION:
Secured property assessed value, net of
exempt real property $ 10,319,333,406
BONDED DEBT LIMIT ( 3.75% OF ASSESSED VALUE) ( A) $ 386,975,003
AMOUNT OF DEBT SUBJECT TO LIMIT:
Total Bonded Debt $ 198,975,000
Less: Tax Allocation Bonds and Certificates of
Participation, not subject to limit $ 198,975,000
Amount of debt subject to limit - 0-
LEGAL BONDED DEBT MARGIN $ 386,975,003
( a) California Government Code, Section 43605 sets the debt limit at 15%.
The Code section was enacted prior to the change in basing assessed
value to full market value when it was previously 25% of market value.
Thus, the limit shown as 3.75% is one- fourth the limit to account for the
adjustment of showing assessed valuation at full cash value.
2007- 2008 Final Budget 50 City of Milpitas, California
General Information Historical Staffing by Division
Historical Staffing by Division
04 - 05
Approved
05 - 06
Approved
06 - 07
Approved Change
07 - 08
Approved
Perm Temp Perm Temp Perm Temp Perm Temp Perm Temp
100 City Council 5.00 0.00 5.00 0.00 5.00 0.00 0.00 0.00 5.00 0.00
111 City Manager 5.25 0.00 5.00 0.00 4.00 0.00 0.00 0.00 4.00 0.00
114 City Clerk 10.00 0.00 10.00 0.50 10.00 0.00 0.00 0.00 10.00 0.00
116 RDA & Economic Dvp 1.00 0.00 1.00 0.00 1.00 0.00 0.00 0.00 1.00 0.00
530 Building and Safety 23.00 0.00 23.00 1.00 23.00 1.00 0.00 2.00 23.00 3.00
City Manager 44.25 0.00 44.00 1.50 43.00 1.00 0.00 2.00 43.00 3.00
112 Information Services 20.00 1.00 20.00 1.00 20.00 0.50 0.00 ( 0.50) 20.00 0.00
Information Systems 20.00 1.00 20.00 1.00 20.00 0.50 0.00 ( 0.50) 20.00 0.00
115 Human Resources 7.00 0.00 7.00 0.00 7.00 0.00 0.00 0.00 7.00 0.00
Human Resources 7.00 0.00 7.00 0.00 7.00 0.00 0.00 0.00 7.00 0.00
120 City Attorney 0.00 0.00 0.00 0.00 0.00 0.00 1.00 0.00 1.00 0.00
City Attorney 0.00 0.00 0.00 0.00 0.00 0.00 1.00 0.00 1.00 0.00
300 Finance Administration 7.00 0.50 7.00 0.25 7.00 0.00 0.00 0.00 7.00 0.00
310 Accounting Services 12.00 0.75 12.00 1.00 12.00 0.50 0.00 0.00 12.00 0.50
320 Fiscal Services 10.00 1.00 10.00 1.00 10.00 0.25 0.00 0.00 10.00 0.25
330 Purchasing 5.00 0.00 5.00 0.00 5.00 0.00 0.00 0.00 5.00 0.00
Finance 34.00 2.25 34.00 2.25 34.00 0.75 0.00 0.00 34.00 0.75
420 Public Works 73.75 6.25 74.00 6.00 74.00 4.25 1.00 ( 2.75) 75.00 1.50
410 Engineering 44.00 11.00 44.00 9.00 46.00 6.00 0.00 ( 5.50) 46.00 0.50
Public Works 117.75 17.25 118.00 15.00 120.00 10.25 1.00 ( 8.25) 121.00 2.00
510 Planning & Nghbrhd 17.50 2.00 17.50 2.00 16.50 2.00 0.01 0.00 16.50 2.00
Planning & Nghbrhd Svcs 17.50 2.00 17.50 2.00 16.50 2.00 0.01 0.00 16.50 2.00
424 Parks 21.00 3.00 21.00 3.00 21.00 1.00 0.00 0.00 21.00 1.00
450 Recreation 29.00 44.00 29.00 45.50 29.00 41.75 ( 1.00) 2.75 28.00 44.50
Parks and Recreation 50.00 47.00 50.00 48.50 50.00 42.75 ( 1.00) 2.75 49.00 45.50
700 Police Administration 3.00 0.00 3.00 0.00 3.00 0.00 0.00 0.00 3.00 0.00
710 Police Technical Services 31.50 2.50 31.50 2.50 31.50 0.00 0.00 2.50 31.50 2.50
720 Police Field Services 73.00 13.00 73.00 13.00 73.00 13.00 0.00 0.00 73.00 13.00
730 Special Operations 17.00 0.00 17.00 0.00 17.00 0.00 0.00 0.00 17.00 0.00
Police 124.50 15.50 124.50 15.50 124.50 13.00 0.00 2.50 124.50 15.50
800 Fire Administration 3.00 0.00 3.00 1.00 2.00 1.00 1.00 ( 1.00) 3.00 0.00
810 Emerg Resp & Prep Div 66.00 1.00 66.00 1.00 66.00 0.00 1.00 0.00 67.00 0.00
820 Prevention Division 11.00 0.50 11.00 0.50 12.00 0.00 ( 2.00) 0.00 10.00 0.00
Fire 80.00 1.50 80.00 2.50 80.00 1.00 0.00 ( 1.00) 80.00 0.00
TOTAL 495.00 86.50 495.00 88.25 495.00 71.25 1.00 ( 2.50) 496.00 68.75
Budget Summary
2007- 2008 Final Budget 52 City of Milpitas, California
Financial Information Budget Summary
Grand Total General Fund ( 1) Library Fund
ESTIMATED REVENUES
PROPERTY TAXES 46,269,000 16,214,000 0
TAXES OTHER THAN PROPERTY 28,979,000 27,218,000 1,221,000
LICENSES AND PERMITS 4,709,000 4,709,000 0
FINES AND FORFEITS 846,000 846,000 0
USE OF MONEY AND PROPERTY 6,931,000 1,200,000 128,000
INTERGOVERNMENTAL 2,766,000 902,000 0
CHARGES FOR CURRENT SERVICES 33,193,192 4,428,000 0
OTHER REVENUE 2,386,500 64,000 0
sub- total 126,079,692 55,581,000 1,349,000
OTHER FINANCING SOURCES
( INCREASE) DECREASE IN FUND BALANCE 3,998,957 ( 30,166) ( 619,000)
( INCREASE) DECREASE IN CIP RSRV ( 1,071,331) 0 0
( INCREASE) DECREASE IN HOUSING RSRV ( 200,687) 0 0
OPERATING TRANSFERS IN 18,952,793 16,182,793 0
OPERATING TRANSFERS OUT ( 18,952,793) ( 100,000) ( 385,000)
sub- total 2,726,939 16,052,627 ( 1,004,000)
TOTAL 128,806,631 71,633,627 345,000
BUDGETED APPROPRIATIONS
PERSONNEL SERVICES 64,718,248 58,378,496 0
SUPPLIES & CONTRAC SVCS 36,313,266 11,942,578 345,000
CAPITAL OUTLAY 625,117 54,553 0
sub- total 101,656,631 70,375,627 345,000
CAPITAL IMPROVEMENTS 8,445,000 0 0
DEBT SERVICE 18,705,000 1,258,000 0
sub- total 27,150,000 1,258,000 0
TOTAL 128,806,631 71,633,627 345,000
FUND BALANCE
FUND BALANCE 7/ 1/ 07 197,436,732 19,079,713 4,285,000
NET CHANGES IN FUND BALANCE ( 2,726,939) 30,166 619,000
FUND BALANCE 6/ 30/ 08 194,709,793 19,109,879 4,904,000
RESERVED 68,075,001 1,286,176 0
UNRESERVED - DESIGNATED 4,904,000 0 4,904,000
UNRESERVED, DESIGNATED FOR CIP 51,876,010 0 0
UNRESERVED, DESIGNATED FOR PERS 5,432,703 5,432,703 0
UNRESERVED, DESIGNATED FOR HOUSING 12,689,911 0 0
UNRESERVED, UNDESIGNATED 51,732,168 12,391,000 0
TOTAL 194,709,793 19,109,879 4,904,000
( 1) General Fund balance includes accrued leave, insurance liability accounts and Abandon Vehicle Abatement Fund.
( 2) Special Revenue Funds include Public Art Fund, Gas Tax Fund, Light & Landscape Maintenance District Funds, Housing and Community Development Fund, Law
Enforcement Block Grant Funds, Solid Waste Services Funds and Equipment Replacement Funds.
( 3) Capital Projects include Street Improvement Fund, Park Improvement Funds, General Government Capital Improvement Fund and Storm Drain Capital Improvement Fund.
City of Milpitas, California 53 2007- 2008 Final Budget
Financial Information Budget Summary
Special Revenue ( 2) Capital Projects ( 3) Redevelopment ( 4) Water Fund ( 5) Sewer Fund ( 6)
0 0 30,055,000 0 0
540,000 0 0 0 0
0 0 0 0 0
0 0 0 0 0
306,000 692,000 3,629,000 384,000 592,000
1,814,000 50,000 0 0 0
2,782,692 0 0 15,789,500 10,193,000
303,500 364,000 75,000 525,000 1,055,000
5,746,192 1,106,000 33,759,000 16,698,500 11,840,000
( 1,022,030) 0 6,436,832 ( 1,507,017) 740,338
0 735,310 0 ( 573,641) ( 1,233,000)
0 0 ( 200,687) 0 0
450,000 2,180,000 140,000 0 0
( 1,417,118) ( 5,000) ( 13,626,502) ( 1,866,221) ( 1,552,952)
( 1,989,148) 2,910,310 ( 7,250,357) ( 3,946,879) ( 2,045,614)
3,757,044 4,016,310 26,508,643 12,751,621 9,794,386
1,122,182 0 1,698,053 2,195,471 1,324,046
2,174,298 151,310 6,204,590 7,906,150 7,589,340
460,564 0 0 110,000 0
3,757,044 151,310 7,902,643 10,211,621 8,913,386
0 3,865,000 1,890,000 2,540,000 150,000
0 0 16,716,000 0 731,000
0 3,865,000 18,606,000 2,540,000 881,000
3,757,044 4,016,310 26,508,643 12,751,621 9,794,386
12,743,795 18,216,000 110,762,224 13,900,000 18,450,000
1,022,030 ( 735,310) ( 6,236,145) 2,080,658 492,662
13,765,825 17,480,690 104,526,079 15,980,658 18,942,662
13,765,825 0 52,995,000 0 28,000
0 0 0 0 0
0 17,480,690 6,000,000 12,180,658 16,214,662
0 0 0 0 0
0 0 12,689,911 0 0
0 0 32,841,168 3,800,000 2,700,000
13,765,825 17,480,690 104,526,079 15,980,658 18,942,662
( 4) Redevelopment Agency Funds include Housing Reserve Fund, Redevelopment Project Fund and Tax Allocation Bond Fund.
( 5) Water Fund balances are working capital and include Water Fund, Water Fund CIP, Water Line Extension Fund and Recycled Water Fund.
( 6) Sewer Fund balances are working capital and include Sewer Fund, Sewer Fund CIP, Treatment Plant Construction Fund and South Bay Water Recycling Program Fund.
2007- 2008 Final Budget 54 City of Milpitas, California
Financial Information General Fund 5- Year Forecast
General Fund 5- Year Forecast
General Fund
Five Year Forecast - FY 2008- 09 to FY 2012- 13
FY08- 09 FY09- 10 FY10- 11 FY11- 12 FY12- 13
Estimated Revenues
Property Taxes 1 7,024,700 1 7,705,688 1 8,413,916 1 9,150,472 19,916,491
Sales & Use Tax 1 9,897,600 2 1,142,480 2 1,988,179 2 2,867,706 23,782,415
Hotel/ Motel Tax 5 ,030,520 5 ,181,436 5 ,336,879 5 ,496,985 5,661,895
Other Taxes 3 ,766,880 3 ,917,555 4 ,074,257 4 ,216,856 4,364,446
License & Permits 4 ,944,450 5 ,191,673 5 ,373,381 5 ,561,449 5,756,100
Fine & Forfeitures 8 62,920 8 80,178 8 97,782 9 15,738 934,052
Rents and Concessions 3 18,240 3 24,605 3 31,097 3 37,719 344,473
Interest Income 1 ,200,000 1 ,200,000 1 ,200,000 1 ,200,000 1,200,000
Motor Veh, in- lieu fees 4 31,460 4 44,404 4 57,736 4 71,468 485,612
Charges for Services 4 ,260,060 4 ,409,162 4 ,541,437 4 ,677,680 4,818,010
Other Revenues 7 29,290 8 81,169 1 ,037,604 1 ,198,732 1,234,694
Operating Transfers 1 4,520,168 1 3,619,014 1 3,990,329 1 4,363,660 14,770,138
Total Estimated Revenues and
Other Financing Sources 7 2,986,288 7 4,897,363 7 7,642,596 8 0,458,466 83,268,327
Estimated Expenditures
Salaries 4 2,263,359 4 3,531,259 4 4,837,197 4 6,182,313 47,567,782
Benefits 1 9,054,743 1 9,940,050 2 0,877,009 2 1,848,844 22,899,436
Charged to CIP ( 1,312,909) ( 1,352,296) ( 1,392,865) ( 1,434,651) ( 1,477,691)
Subtotal 6 0,005,192 6 2,119,013 6 4,321,341 6 6,596,506 68,989,528
Services & Supplies 1 2,715,945 1 3,097,424 1 3,490,346 1 3,895,057 14,311,909
Capital Outlay - - - 2 50,000 -
Debt Service 1 ,260,000 - - - -
Subtotal 1 3,975,945 1 3,097,424 1 3,490,346 1 4,145,057 14,311,909
Total Estimated Expenditures 7 3,981,138 7 5,216,437 7 7,811,688 8 0,741,563 83,301,436
( Deficit) ( 994,850) ( 319,074) ( 169,092) ( 283,097) ( 33,109)
City of Milpitas, California 55 2007- 2008 Final Budget
Financial Information Distribution of Revenues
DISTRIBUTION OF REVENUES
2007- 2008
( All Funds)
DISTRIBUTION OF EXPENDITURES
2007- 2008
( All Funds)
8%
15%
2%
26%
5%
1%
4%
37%
2%
Property Taxes 37%
Other Taxes 8%
Sales Tax 15%
License & Permits 4%
Fines & Forfeitures 1%
Use of Money & Prop 5%
Intergovernment 2%
Service Charges 26%
Other Revenue 2%
1%
4%
12%
2%
1%
2%
16%
6%
9%
2%
22%
2%
3%
18%
City Manager 2%
Public Works 9%
Human Res 1%
Engineering 4%
Parks & Recr 6%
Police 18%
Bldg & Safety 2%
Fire 12%
Info Svcs 2%
Non Dept 22%
Finance 3%
City Attorney 1%
Planning 2%
Debt Svc 16%
2007- 2008 Final Budget 56 City of Milpitas, California
Blank Page
Distribution of Expenditures
City of Milpitas, California 57 2007- 2008 Final Budget
Financial Information Revenue Assumptions
FY 07- 08 General Fund Revenue Assumptions
Sales Tax The Association of Bay Area Governements ( ABAG)’ s forecast is 8% increase for the Santa Clara
County next year, our projection is more conservative. FY 07- 08 sales tax revenue is projected to
increase by 5.8% over FY 06- 07 revised estimate based on continued economic recovery locally and
increased sales in the food products and general retail economic segments. The Great Mall of the
Bay Area added new anchor stores which will generate increased sales. The City also anticipates
sales tax revenue increase due to opening of a major car dealership in the fall of FY 07- 08.
Property Tax For FY 07- 08, it is anticipated that property tax revenue will increase by 4.5% based on report of
assessed valuation growth provided by the County Assessor. Although Proposition 13 limited the
annual assessed avlue adjustments to the lesser of increase in Callifornia consumer price index or
2%, our projection is higher due to new construction that will be added to the tax roll, change of
property ownerships and assessed valuation increase for unsecured properties as local businesses
continue to recover and add capital assets.
Transient
Occupancy Tax
( TOT)
It is projected that that FY 07- 08 TOT will increase by a modest 1.5% over FY 06- 07 revised revenue.
For FY 06- 07, our revenue projection was revised to 13% increase or $ 480,000 over budget. Given
the hugh increase experienced in FY 06- 07, we anticipate that growth rate to slow down in FY 07- 08.
Franchise Fees Franchise fee is based on an agreed upon percentage of the gross revenue generated by the gas and
electric utility, garbage, and cable TV service providers in the City. The projection for franchise fees
take into consideration of rate increases and consumption changes. Electric, gas franchise fees are
projected to increase by 3% due to rate increase while cable franchise fees are projected to increase
by 4% next fiscal year over FY 06- 07 revised budget. Garbage franchise fee is projected to increase
by 2.5%. We anticipate that franchise fees will remain stable next fiscal year.
Building Permits FY 07- 08 building permit revenues are projected to be at the same level as FY 06- 07 revised revenue
based on the number of anticipated applications and the size of the projects that are currently being
processed by the Building Department. FY 06- 07 building permit revenues were revised to be 11.5%
over orgiinal budget projection. It is anticipated KB Homes, Centria and Paragon will continue with
their construction activities and other residential development projects such as Apton Plaza and Town
Center will commence.
$ 1.0
$ 3.0
$ 5.0
$ 7.0
$ 9.0
$ 11.0
$ 13.0
$ 15.0
$ 17.0
$ 19.0
Sales Tax Property Tax TOT Franc his e Fees Build ing Permits
Budge te d Re venues
FY 0 7 - 0 8
FY 05- 06 A c tual FY 06- 07 Projec ted FY 07- 08 Budget
Millions
2007- 2008 Final Budget 58 City of Milpitas, California
Blank Page
City of Milpitas, California 59 2007- 2008 Final Budget
Financial Information Revenues by Fund ( Summary)
Revenues by Fund ( Summary)
Actual
2004- 05
Actual
2005- 06
Budget
2006- 07
Approved
2007- 08
100 General Fund 59,071,483 68,540,510 68,322,582 71,594,793
102 Library Fund 1,129,644 ( 1,639,590) 1,258,750 964,000
105 Abandon Veh Abatement 65,134 69,940 78,000 69,000
211 H- Hetch Ground Lease 1,510,217 ( 1,455,487) 52,000 64,945
212 Public Art Fund 0 171,707 5,000 438,000
221 Gas Tax Fund ( 81,413) 254 ( 300,000) 7,000
235 95- 1 Lighting/ Lscape Dist 251,885 258,778 265,000 277,000
236 98- 1 Lighting/ Lscape Dist 30,855 32,356 32,000 33,500
250 HCD Fund 568,903 432,888 631,000 601,000
251 HCD Loan 286,241 15,829 7,000 2,000
261 Supplemental Law Enforcement 99,761 105,271 3,000 3,000
262 State Asset Seizure 24,611 24,357 3,000 10,000
263 Federal Asset Seizure 446 298 0 1,000
264 Local Law Enforcmnt Block Grant 40,895 2,387 0 0
266 COPS in School ( 493) 0 0 0
267 Justice Assistance Grant 0 10,328 0 0
280 Solid Waste Services 283,946 349,382 262,387 214,273
281 Solid Waste Reduction 253,516 302,414 310,000 211,664
290 Housing Reserve Fund 4,440,961 7,114,029 5,267,054 5,625,345
291 Housing Reserve 97 TABS 8,556 232,063 185,000 0
310 Street Fund 908,951 ( 2,246,508) ( 279,380) ( 524,000)
311 Street CIP 3,543,376 4,272,712 2,351,294 3,075,000
312 Traffic Impact Fee 0 1,139,166 0 0
313 Traffic Congestion Relief 0 771,766 0 0
320 Park Improvement Fund 452,344 ( 703,635) 406,000 ( 362,000)
321 Park Improvement CIP 567,917 739,289 195,000 590,000
322 Midtown Park Fund 942,947 35,546 28,000 33,000
330 General Government 42,441 43,744 22,000 38,000
331 General Government CIP 550,731 650,000 20,000 200,000
332 Technology Certificates of Participation ( 824,297) ( 20,703) 2,000 4,000
340 Storm Drain Development CIP 1,197 ( 15,591) 381,000 227,000
390 RDA Project Fund 73,499,688 18,678,307 11,559,607 12,035,153
391 Redevelopment CIP 5,383,500 16,916,057 40,810,000 1,890,000
392 97 RDA TABs ( 187,937) 169,986 ( 4,465,000) ( 725,000)
393 2000 RDA TABs 2,015 2,587 2,000 ( 71,000)
395 2003 RDA TABs ( 4,243,797) ( 10,653,324) ( 32,196,000) 1,518,000
400 Water M & O Fund 9,240,982 8,781,828 10,011,315 11,019,539
401 Water CIP 662,951 900,000 1,560,000 2,540,000
402 Water Line Extension Fund 55,987 539,255 431,000 563,000
406 Recycled Water Fund 719,224 708,240 780,156 709,740
450 Sewer M & O Fund 6,114,338 4,539,831 7,643,863 8,876,048
451 Sewer CIP 1,042,901 12,123,883 9,715,000 150,000
452 Treatment Plant Construction F 606,349 ( 6,134,521) 887,000 1,043,000
455 Sewer Infrastrture Replmnt 168,077 ( 69,515) ( 239,000) 190,000
456 South Bay Water Recycling Prgm 25,632 31,635 28,000 28,000
500 Equipment Mgnt Fund 2,684,676 3,038,335 170,000 2,915,692
505 Information Technology Replmnt 0 200,000 0 0
TOTAL 169,945,343 129,006,084 126,205,628 126,079,692
2007- 2008 Final Budget 60 City of Milpitas, California
Financial Information Revenues by Fund ( Detail)
Revenues by Fund ( Detail)
Description
Actual
2004- 05
Actual
2005- 06
Budget
2006- 07
Approved
2007- 08
GENERAL FUND ( 100)
PROPERTY TAXES
3010 Property Taxes, Current 12,377,455 13,370,012 14,881,000 15,534,000
3030 Property Taxes, Supplement 744,312 1,047,379 728,000 680,000
sub- total 13,121,767 14,417,392 15,609,000 16,214,000
TAXES OTHER THAN PROPERTY
3110 Sales and Use Tax 14,270,542 16,227,888 16,245,000 18,712,000
3120 Real Estate Transfer Tax 575,786 1,002,257 505,000 492,000
3131 Electric Franchise 1,045,522 979,737 1,115,000 1,039,000
3132 Gas Franchise 170,951 194,268 179,000 206,000
3133 Garbage Franchise- Commercial 766,705 660,655 729,000 729,000
3134 Garbage Franchise- NonCommercial 437,736 432,399 438,000 469,000
3137 Nitrogen Gas Franchise 34,522 37,454 35,000 40,000
3138 CATV Franchise 316,031 338,878 353,000 367,000
3140 Business License Tax 274,461 280,663 277,000 280,000
3150 Hotel/ Motel Tax 3,986,016 4,535,325 4,331,000 4,884,000
sub- total 21,878,273 24,689,525 24,207,000 27,218,000
LICENSES AND PERMITS
3210 Building Permits 2,876,211 5,740,022 3,688,000 4,047,000
3220 Fire Permits 445,882 547,779 408,000 473,000
3240 Life Safety Annual Permits 178,932 181,628 182,000 188,000
3250 Fire Inspections 982 34,656 0 1,000
sub- total 3,502,007 6,504,085 4,278,000 4,709,000
FINES AND FORFEITS
3301 Vehicle Code Fines 253,519 247,384 229,000 258,000
3302 Other Court Fines 405,915 449,098 428,000 450,000
3305 Booking Fees 36,679 29,285 24,000 13,000
3306 NBO Violation Fees 8,860 11,450 10,000 10,000
3307 Impound Fees 49,267 58,827 61,000 56,000
3308 Animal Violations 14,215 13,200 11,000 11,000
3309 False Alarm Fee 53,800 42,850 49,000 48,000
3310 Fire Administrative Citations 903 0 0 0
3312 Planning Admin Citation 2,500 0 0 0
sub- total 825,659 852,094 812,000 846,000
USE OF MONEY AND PROPERTY
3431 Pooled Investment- Interest 938,984 1,072,931 953,000 1,135,000
3432 Cash with Fiscal Agents ( 7,421) 0 0 0
3433 Other Interest Income ( 10,359) ( 162,710) 40,000 65,000
sub- total 921,204 910,221 993,000 1,200,000
INTERGOVERNMENTAL
3511 Motor Vehicle In Lieu Tax 420,823 1,548,080 404,000 423,000
3521 Homeowners Property Tax Relief 131,066 130,893 130,000 130,000
3532 Off- Highway Tax 859 2,446 2,000 0
3555 Federal Contributions- Eng & Planning 0 74,135 0 0
3556 Federal Contributions- Recreation 22,094 15,700 13,000 15,000
3557 Federal Contributions- Police 18,833 19,015 0 0
3558 Federal Contributions- Fire 70,296 116,231 0 0
City of Milpitas, California 61 2007- 2008 Final Budget
Financial Information Revenues by Fund ( Detail)
3562 POST Grant 23,649 27,726 18,000 18,000
3565 State Contributions- Eng & Planning 0 1,016 0 0
3567 State Contributions- Police 1,921 0 0 0
3568 State Contributions- Fire 0 3,600 0 0
3576 County Contributions- Recreation 61,111 66,021 72,000 77,000
3577 County Contributions- Police 0 3,346 0 0
3582 SB90 Grant