City of Irvine - Fiscal Year 2023-25 Adopted Budget

City of Irvine 2023–2025 Budget

ADOPTED

IRVINE CITY OFFICIALS

Farrah N. Khan Mayor

Tammy Kim Vice Mayor

Larry Agran Councilmember

Mike Carroll Councilmember

Kathleen Treseder Councilmember

City Manager/Executive Director of Great Park Oliver C. Chi

Assistant City Manager............................................................................ Pete Carmichael Assistant City Manager............................................................................ Michelle Grettenberg Assistant City Manager............................................................................Brian King City Attorney .......................................................................................... Jeff Melching City Clerk ................................................................................................ Carl Petersen Director of Administrative Services ........................................................ Dahle Bulosan Director of Community Development .................................................... Tim Gehrich Director of Community Services ............................................................ Chris Slama Director of Human Resources ................................................................ Jimmee Medina Director of Project Delivery & Sustainability .......................................... Sean Crumby Director of Public Safety . ....................................................................... Michael Kent Director of Public Works & Transportation ............................................ Jaimee Bourgeois

Table of Contents

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FY 2023-25 Adopted Budget

TABLE OF CONTENTS

City Manager’s Budget Message ............................................................................................ 9

General Fund Summary .............................................................................................................................. 12 Contingency Reserve Overview .................................................................................................................. 15 Great Park ................................................................................................................................................... 15 Investing in the City’s Essential Infrastructure……… ................................................................................... 16 Fiscal Responsibility and Transparency....................................................................................................... 17

Introduction ........................................................................................................................ 19

User’s Guide to the Budget......................................................................................................................... 21 Budget Development Process ..................................................................................................................... 24 Appropriations Limit ................................................................................................................................... 25 City Organizational Chart ............................................................................................................................ 28 General Contacts......................................................................................................................................... 29 Advisory Commissions ................................................................................................................................ 30 Government Finance Officers Association (GFOA) Award.......................................................................... 31 California Society of Municipal Finance Officers (CSMFO) Award.............................................................. 32

Community Profile .............................................................................................................. 33

Revenue and Expenditure Assumptions ............................................................................... 45

Key Indicators.............................................................................................................................................. 48 Revenues..................................................................................................................................................... 50 Expenditures ............................................................................................................................................... 62

Budget Summary ................................................................................................................. 69

Department Summaries.............................................................................................................................. 72 General Fund Resources ............................................................................................................................. 76 General Fund Expenditures......................................................................................................................... 77 Charts and Summary Tables ....................................................................................................................... 78

Personnel and Staffing......................................................................................................... 91

Position Increases and Decreases ............................................................................................................... 95 Full-Time Personnel by Classification ......................................................................................................... 96

City Council ........................................................................................................................103

City Manager’s Office .........................................................................................................109

City Clerk............................................................................................................................117

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TABLE OF CONTENTS

Administrative Services ......................................................................................................125

Human Resources...............................................................................................................147

Community Development...................................................................................................155

Community Services ...........................................................................................................175

Community Parks & Special Events........................................................................................................... 180 Seniors....................................................................................................................................................... 183 Child, Youth & Family................................................................................................................................ 186 Athletics .................................................................................................................................................... 189 Aquatics..................................................................................................................................................... 192 Fine Arts .................................................................................................................................................... 195 Animal Care............................................................................................................................................... 198 Transportation .......................................................................................................................................... 201 Open Space Programs ............................................................................................................................... 204 Administration & Business Support Services ............................................................................................ 206 Community Services Great Park Operations & Programs......................................................................... 209

Public Safety ......................................................................................................................213

Public Works & Transportation ...........................................................................................233

Administration .......................................................................................................................................... 238 Fleet Services ............................................................................................................................................ 241 Landscape Maintenance ........................................................................................................................... 244 Signal Maintenance................................................................................................................................... 247 Street & Right-of-Way Maintenance ........................................................................................................ 250 Facilities Maintenance .............................................................................................................................. 253 Facilities Rehabilitation ............................................................................................................................. 256 Traffic Management ................................................................................................................................. 259 Neighborhood Traffic................................................................................................................................ 262 Transportation Planning & Project Development..................................................................................... 265

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TABLE OF CONTENTS

Active Transportation & Transit................................................................................................................ 268 Transportation Review & Analysis ............................................................................................................ 271

Project Delivery & Sustainability.........................................................................................275

Non-Departmental .............................................................................................................293

Special Funds......................................................................................................................305

Special Funds Introduction ....................................................................................................................... 309 General Reserve Funds ............................................................................................................................. 314 Special Revenue Funds.............................................................................................................................. 325 Capital Projects Funds............................................................................................................................... 354 Internal Service Funds............................................................................................................................... 365

Capital Improvement Program............................................................................................371

CIP Introduction ........................................................................................................................................ 373 Five Year CIP.............................................................................................................................................. 380 Active CIP Projects .................................................................................................................................... 383 CIP Project Descriptions ............................................................................................................................ 392

Strategic Business Plan .......................................................................................................421

Strategic Technology Plan...................................................................................................437

Financial Policies ................................................................................................................447

Glossary .............................................................................................................................479

Acronyms .................................................................................................................................................. 481 Terms ........................................................................................................................................................ 487

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TABLE OF CONTENTS

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City Manager’s Budget Message

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FY 2023-25 Adopted Budget

CITY MANAGER’S BUDGET MESSAGE

TO:

HONORABLE MAYOR AND CITY COUNCIL

FROM:

OLIVER CHI, CITY MANAGER

Honorable Mayor and Members of the City Council:

I am pleased to present to you the Adopted Fiscal Year (FY) 2023-2025 Two-Year Budget and corresponding Five-Year Strategic Business Plan for the City of Irvine. The Biennial Budget and Five-Year Plan are built upon the City Council’s strategic priorities and provide a long-term policy framework and financial plan to deliver high-quality programs and services to our community. Over the last year, the City has come together as One Irvine in an extraordinary way to address the recovery from the COVID-19 pande mic and the continued growth of Irvine. In particular, we’ve spent considerable time working to implement our team-oriented values of serving with Humility, Innovation, Empathy, Passion, and Integrity. We are confident that this focus on values has aided the development of a healthy and vibrant workplace culture here at the City. The pandemic had unprecedented and significant impacts on the City’s revenues and operations, as well as on our residential and business community. In prior fiscal years, the pa ndemic’s financial impacts were lowered thanks to City Council and staff’s quick implementation of cost containment measures to hold expenditures while maintaining essential services. This strategic approach and strong economic recovery led to a healthy financial standing in FY 2021-22, resulting in a surplus that was used to replenish contingency reserve levels, invest in the aging City’s infrastructure, and pay down increasing pension costs. In the current fiscal year, strong revenues continue to pave the way for the City’s financial stability due to Irvine’s growing housing market and population, as well as new developments and businesses entering Irvine. We have faced challenging fiscal environments and have come out stronger as key City revenues have surpassed pre-COVID-19 levels and the City can focus on improving and enhancing essential services for the community. To continue delivering outstanding services to our residents, businesses and visitors, the City’s leadership team developed a thoughtful budget that compliments the City’s strong fiscal foundation. As the City faces new challenges ahead, such as possible slowdowns in the volatile economy, we will move forward together as One Irvine and continue to strive to serve the community with passion and exceptionality. City’s Comprehensive and Participatory Budget Development Process The City starts the budget development process early, with internal data analysis and projections beginning in October, including receiving the community’s input and pri orities through an online budget outreach survey. Meetings are also held with key subject matter experts including financial experts, consultants, and business partners to develop five- year financial projections. In January, the City’s departments begin putting together their budgets, followed by internal balancing measures to provide fiscal sustainability. In March, the City continued its budget outreach efforts by hosting in-person community budget meetings and presenting the preliminary budget to the public, while taking in additional input and answering questions. Following these meetings, a balanced budget is finalized and presented to the Finance Commission in April, other Commissions in May, and to the City Council in June. Upon City Council approval in June, the two-year budget goes into effect on July 1, 2023, with quarterly financial updates and budget revisions each year, as necessary.

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Balancing Principles: Framework for Responsible Budgeting Early in the budget development process, the City established balancing principles to set the foundation for budget balancing measures that meet the City’s standards for excellent service and align with the City Council’s strategic priorities. The following six key balancing principles guided the development of a balanced two-year budget and five-year plan: 1. Prioritize essential services 2. Avoid service disruptions and layoffs 3. Maximize savings by monitoring contracts, controlling overtime, and re-evaluating all discretionary spending 4. Maximize discretionary revenues by matching fees to costs of services 5. Continue responsible investments in the City’s infrastructure 6. Minimize further impacts on City’s fiscal reserves General Fund Summary The FY 2023-25 Adopted Budget is a balanced budget, including the five-year financial plan. The City continues to fully recover financially from the COVID-19 pandemic, with a majority of its key revenue sources projecting higher than pre-pandemic levels and continue to modestly grow in future years. Expenditures also continue to increase as service levels return to normal; however, the City is experiencing increasing costs across the board, with the most pronounced impacts in construction, labor, and material expenses.

2023-24 Adopted

2024-25 Adopted

2025-26 Forecast

2026-27 Forecast

2027-28 Forecast

GENERAL FUND

Revenues & Transfers-In

253,465,202 263,357,393

272,843,707

282,290,990

293,086,312

Expenditures & Transfers-Out

263,133,648 272,451,543

282,112,782 292,473,687

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General Fund Revenues The General Fund revenue budget begins in FY 2023-24 at $253.5 million, a $18.1 million, or 7.7 percent increase from the FY 2022-23 Adjusted Budget of $235.4 million. In FY 2022-23, revenues are anticipated to be higher than what was budgeted due to the continued recovery from COVID-19 and overall growth in Irvine. The top three major revenue categories (Property Tax, Sales Tax, and Hotel Tax) make up approximately 80 percent of all General Fund revenues.

Property Tax is the City’s largest revenue source at $93.7 million in FY 2023 -24, an increase of $5.6 million, or 6.3 percent, from the FY 2022-23 Adjusted Budget of $88.1 million. This increase is due to the strong housing market and sales of homes in Irvine. As the City’s highest revenue generator, Property Tax brings financial sustain ability for Irvine’s future. This revenue source has stable growth as it is based on the assessed valuation of all the properties in Irvine, which has reached $100 billion according to the Orange County Assessor, and continues to grow. External factors such as higher interest rates and a slowdown in the housing market may affect Property Tax revenue growth. However, our best projections indicate that the growth rate will slow only slightly. Sales Tax, the City’s second largest revenue source, in FY 2023 -24 is budgeted at $91.9 million, an increase of $7.3 million, or 8.7 percent from the FY 2022-23 Adjusted Budget of $84.6 million. This increase is due to the strong economic recovery from the COVID-19 pandemic and higher consumer spending, especially in automobile sales, sit-down casual restaurants, and business-industry purchases. Sales Tax is highly volatile to external factors, where we saw a large decline in revenues during the pandemic. On the positive side, its volatility also results in higher growth from the recovery from the pandemic and when residents and visitors shop and eat in Irvine. We expect a steady growth in Sales Tax over the next five years; however, staff also monitors it very closely so the City is prepared for any changes in the economy. Hotel Tax may only represent 7 percent of the General Fund revenues, but it is the City’s third largest revenue source. In FY 2023-24, Hotel Tax is budgeted at $17.7 million, an increase of $2.9 million, or 20.1 percent from the FY 2022-23 Adjusted Budget of $14.8 million. Hotel Tax revenue was heavily impacted by the COVID-19 pandemic due to closures and restrictions of hotels, and was expected to make a slow recovery. We have seen this revenue recovery quicker than anticipated as there has been a shift in the nature of travel in Irvine from business to leisure travel. Hotel occupancy levels are still not fully recovered, but the revenue has been supplemented by higher hotel rates. There are currently 23 hotels located in Irvine with 4 new hotels expected to open over the next five years. The assessment revenue for the Hotel

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Improvement District (HID) will also be shifted to stay within the City and administered by a new HID Board to provide economic development services and attract more people to Irvine.

General Fund Expenditures The General Fund expenditures budget in FY 2023-24 is at $253.5 million, a $18.5 million, or 7.9 percent increase from the FY 2022-23 Adjusted Budget of $235 million (after removing one-time prior year surplus adjustments). The City faces the challenge of rising costs due to inflation and cost of services as we remain vigilant in enhancing and maintaining the high-quality of services for the community. The City implemented a reorganization plan to emphasize capital project delivery, sustainability efforts, and health/wellness activities throughout Irvine.

Salaries & Benefits are the heart of the City as it equates to the essential services we provide to residents and businesses in Irvine. In FY 2023-24, Salaries & Benefits (including Overtime) represents 65.5 percent of the General Fund expenditures with a budgeted cost of $166.1 million. The increases include the latest Memorandum of Understanding (MOU) agreements with the City’s labor groups and citywide enhancements by upgrading 14 positions from Part-Time to Full-Time. The upgraded positions are driven by the City’s growth and serve in the following areas: traffic improvements, facilities maintenance, public outreach, community engagement, recruitment, youth outreach, recreation, special events, athletics, disability services, and the Animal Care Center. We also added 7 new Full-Time positions for Public Safety, emergency services, Great Park support, and economic development. The City also continues to make additional payments to CalPERS to lower future pension costs. In FY 2023-24, Contract Services are budgeted at $31.3 million, an increase of $5.8 million, or 22.6 percent, from the FY 2022-23 Adjusted Budget of $25.5 million. Increasing costs of construction, labor, and materials have resulted in higher expenditures in contracts, especially in the City’s largest contracts, such as streets, landscape, and facilities maintenance services. The increase in Contract Services for the General Fund are also attributed to reallocation of facilities rehabilitation services from Special Funds to the General Fund as previous one-time revenues are no longer available. Supplies & Training are based on the need to run and operate the City, and to invest in City staff and development in-order to continue to provide the high-quality level of services in Irvine. The majority of other expenditures is from Internal Services, w hich are key internal services to support the City’s departments, such as information technology, mail services, duplicating services, facility operations, and

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fleet services. Some of the other expenditures include costs to maintain the City, such as utilities, repairs and maintenance, and equipment.

Contingency Reserve Overview The Contingency Reserve is used to help mitigate the effects of unanticipated situations such as disasters and severe unforeseen events. Most recently, these funds were used to offset the FY 2020- 21 deficit that was caused by the financial impacts of the COVID-19 pandemic. The City Council has set a goal to maintain a contingency reserve level of 25 percent. The projected balance of the Contingency Reserve at the beginning of the FY 2023-25 is approximately $59.1 million, which is a reserve level of 24.4 percent. As expenditures increase, the reserve level percentage decreases if no additional funds are added. The City evaluates the condition and status of the Contingency Reserve each fiscal year and brings recommendations of replenishing the reserve levels to the City Council for approval.

Great Park: Continuing Thoughtful and Responsible Development We are excited about the next phases of the Great Park development through its Framework Plan. The collaborative efforts between the Great Park Board, stakeholders, community, and staff has and will continue to pave the future path of Irvine’s Great Park. The Framework Plan is not included in the FY 2023 - 25 Great Park Budget as it continues to be developed and each project will be brought forth to the Great Park Board in future meetings for approval. The FY 2023-25 Great Park Budget includes the ongoing operations and current developments of the Great Park, including the maintenance needed to provide a prestigious park for the community. This includes maintenance and rehabilitation of athletic fields, parking lots, trails, buildings, and facilities. Development

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includes costs for professional consultants, architects, and engineers, as well as construction of the Great Park infrastructure and amenities. These services are funded through a series of revenue sources, such as the Community Facilities District proceeds, Program Fees and Rent, and Developer Fees.

As the Great Park grows, expenditures and operational needs also increases. The City, in consultation with stakeholders and the community, continues to work and implement the Framework Plan for the remaining portions of the Great Park, achieving Irvine’s high -quality standards. This effort will also monitor and balance the Great Park Funds, ensuring enough revenues are received for ongoing operations and maintenance, as well as future developments. The City will continue to evaluate the Great Park operational models to create a sustainable financial future for the Great Park.

Investing in the City’s Essential Infrastructure As part of the two-year budget and five-year financial plan development process, the City develops a comprehensive five-year Capital Improvement Program (CIP) document outlining capital projects and funding sources. Over the next five years, the City will invest a total of $148.4 million in local infrastructure (excluding capital development costs associated with the Great Park Framework Plan), to continue keeping our streets, public buildings, and parks well maintained and operated. A total of 28 capital projects are planned for FY 2023-25, representing $85.3 million in capital investments. These projects and associated expenses are incorporated into the FY 2023-25 Biennial Budget.

The two-year CIP budget includes $39 million for new construction and $46.3 million for rehabilitation. The table below shows a CIP breakdown by project category.

CIP Project Summary

Project Category

New Construction

Rehabilitation

Total

Facility Improvements

7,975,000

150,000

8,125,000 3,825,000 73,354,000 85,304,000

Great Park Improvements

3,825,000

Street & Mobility Improvements

31,005,000 38,980,000

42,349,000 46,324,000

Total

Key capital projects approved for the next two years include:

Facility Improvements: o



Mike Ward Community Park – Woodbridge Pickleball Courts o Oak Creek Community Park Improvements

 Great Park Infrastructure/Improvements: o Synthetic Turf Installation

Street and Mobility Improvements: o



Jamboree Road/Main Street Intersection Enhancements o Sand Canyon Pavement Rehabilitation (Quail Hill to Barranca)

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o Traffic Signal Vehicle and Bicycle Detection System o South Yale Avenue Corridor Improvements

Fiscal Responsibility and Transparency The City continues to do an outstanding job of financial planning and reporting in a transparent and open manner. For many consective years, the City is recognized by the California Society of Municipal Finance Officers (CSMFO) with the Operating Budget Excellence Award and by the Government Finance Officers Association (GFOA) with the Dintiguished Budget Presentation Award, the highest form of recognition in governmental budgeting. The City is also recognized by the GFOA with the Certificate of Achievement for Exce llence in Financial Reporting for the City’s Annual Comprehensive Financial Report (ACFR), the highest form of recognition in governmental accounting and financial reporting. Last, but not least, the City is recognized by the National Procurement Institute (NPI) with the Achievement of Excellence in Procurement Award, the only City in Orange County to consistently achieve this award. The City also continues to be ranked one of the top most fiscally healthy large cities in the nation by Truth in Accounting. These awards represents a significant accomplishment by a government and its management, and demonstrates how the City of Irvine goes above and beyond to achieve fiscal responsibility and transparency. Conclusion The FY 2023-25 Adopted Budget was carefully prepared to balance City Council and community priorities with a sustainable and sound financial plan. I am grateful for the valuable policy guidance provided by the City Council during the budget development process. This fiscally conservative budget balances immediate priorities along with the need for long-term investments. With its strong leadership and financial standing, the City of Irvine enjoys many advantages that empower it to effectively manage upcoming challenges. These advantages include a strong, diverse local economy, a very high quality of life, and a history of responsible financial stewardship. This budget reflects both the challenges and opportunities that will shape our future. I would like to specifically thank all City department directors and their staff for their continued focus on serving our community in the continual pursuit of a City that offers an exceptional quality of life. In particular and with regard to the City’s FY 2023 -25 spending plan, I want to acknowledge and thank our terrific Adminstrative Services Department team, who worked collaboratively to develop and produce this balanced budget. Moving forward, with the City Council’s leadership and the combined efforts of all members of the City of Irvine team, we will continue to ensure that Irvine remains the brightest gem in the crown that is Orange County.

Regards,

Oliver Chi City Manager

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Introduction

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INTRODUCTION

USER’S GUIDE TO THE BUDGET

A local government budget is a plan to match existing resources with the needs of the community. The functions of local government stem from three levels of policy direction: federal, state, and local. Within this intergovernmental system, local government is the workhorse of domestic policy. Local government has the responsibility to provide basic public services such as maintaining streets and roadways, providing traffic management systems, maintaining parks, providing community services, and ensuring public safety. Local government must also fulfill certain state and national policy objectives such as transportation and environmental protection while meeting the expectations and priorities of its constituents.

For local governments, the primary tool used to coordinate these requirements is the budget. Article X of the Irvine City Charter and Section I-3-210 of the Irvine Code of Ordinances set forth the legal requirements for preparation of the Two-Year Budget. The City of Irvine’s Budget provides the residents of Irvine with a plan for matching available resources to the services, goals, and objectives specified in Irvine’s Strategic Busines s Plan. The user’s guide is designed to assist readers in understanding the information provided in the Two -Year 2023-25 Budget, as well as how the document is organized. The Budget document includes 22 chapters, with a table of contents and a glossary. The explanations below provide additional details for each of the sections. City Manager’s Budget Message Overview of the budget including a summary of the General Fund, Contingency Reserve, Great Park, critical issues and applicable solutions, City priorities and upcoming challenges for FY 2023-25, and long- term plans for the capital investment in the City. Introduction The user’s guide provides a layout of the budget book, descriptions of each chapter, budget development process, citywide organization chart, key contacts throughout the City (including elected and appointed officials), and budget awards (Government Finance Officers Association Distinguished Budget Presentation Award and California Society of Municipal Finance Officers Excellence in Operational Budgeting Award). Community Profile Provides historical, demographic, and statistical information on the City of Irvine, including information on the City’s population, educational facilities, recreation and open space, and listing of the top sales tax producers and employers in the City.

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Revenue and Expenditure Assumptions Revenue and expenditure overview, including assumptions and methodology used to develop budget estimates, summary by budget categories, and historical trends. Budget Summary Comprehensive overview of revenues and expenditures for the General Fund and All Funds, as well as fund balance projections. This chapter also includes summaries of each department, per capita expenditures, and a budget comparison with other cities.

Personnel and Staffing Summary of funded personnel and staffing changes, as well as a list of full-time personnel by classification.

Departmental Chapters Summary of information on the City’s operating departments:

City Council Department City Manager’s Office

Community Services

Public Safety

City Clerk

Public Works & Transportation Project Delivery & Sustainability

Human Resources

Administrative Services Community Development

Non-Departmental

Department-wide service center/division information includes strategic goals, performance measures, organizational charts, summary of staffing, and tables for revenues and expenditures. summary and detailed Special Funds Overview of each of the City’s Special Funds, including fund descriptions, revenues, and expenditures.

Special Funds are classified into six categories:  General Reserve  Special Revenue  Capital Projects  Debt Service  Internal Service  Trust and Agency

Capital Improvement Program Overview of the City’s Capital Improvement Program (CIP), including revenues and expenditures for the two-year fiscal cycle (2023-25) as well as an additional three years of CIPs that serve as a guide for future capital investments. This section also includes a description page for each project, detailing its location, classification, and expenditures and provides a five-year capital project and infrastructure investment plan.

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Strategic Business Plan Provides five-year General Fund revenue and expenditure projections, and balancing measures to achieve long-term financial sustainability of the City. This chapter also includes descriptions of the City Council strategic priorities that set the foundation of the five-year strategic business plan, which align with each department goals, performance indicators, and budget allocations.

The City’s five strategic priorities include: 1. Quality of Life 

Placing high value on public safety

 Providing high quality recreation and open space opportunities 2. Natural Environment  Promoting the conservation of natural resources and protecting the environment 3. Traffic and Mobility  Enhancing Citywide mobility through transportation improvements 4. Fiscal Strength  Building up the Contingency Reserve to 25 percent in good times, and utilizing wisely in difficult times  Continuing efforts to reduce unfunded pension liability  Continuing responsible investment in key infrastructure, such as facilities, streets, vehicles and technology 5. Organizational Excellence  Providing high-quality essential City services  Promoting innovation through effective use of technology to streamline business processes and increase responsiveness to the community  Recruiting and retaining highly competent staff Strategic Technology Plan The Strategic Technology Plan highlights the City’s investments in Information Technology and provides a two-year budget and a five-year technical plan. The plan supports the City’s immediate needs and defines strategic priorities to maintain operational viability, increase efficiency, and promote innovation. The plan is updated biennially to capture evolving City priorities, reflect the latest technology trends, and ensure responsiveness to customer needs. The focus areas include: Cloud Computing, Cybersecurity, Disaster Recovery, Innovative Solutions, Mobility Solutions, and Open Data. Financial Policies Provide a budget guideline and outlines rules and principles that guide the development and administration of the operating budget, including rules for budget adjustments after adoption. The City of Irvine budget document contains the following Fiscal Policies:  Long-Term Financial Planning  Biennial Budget  Capital Improvement Program (CIP) Budget  Balanced Budget  General Fund Contingency Reserves  Infrastructure Funding  Interfund Transfers and Loans  User Fees and Cost Recovery

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 Cost Allocation for Administrative and Support Functions  Grants and Federal Funds  Risk Management  Investment Policy  Debt Management Policy

Glossary Listing of acronyms and terms used throughout the budget document, as well as links to external websites where additional related information can be found, when appropriate. Budget Development Process The City of Irvine operates on a fiscal year basis, starting July 1 and ending June 30, and operates on a two-year budget cycle. Article X of the Irvine City Charter and Section I-3-210 of the Code of Ordinances set forth the legal requirements for the preparation of the budget. The budget is prepared by the Budget Office and departmental budget coordinators under the supervision of the City Manager. Irvine has advisory commissions appointed by the City Council that are involved in the development and review of the budget. The Community Services Commission, Planning Commission, Transportation Commission and Senior Citizens Council provide budget input and analysis about programs relating to their particular areas of responsibility. The Finance Commission is specifically charged by the City Council to “review the City’s General Fund, Capital Improvement Program and Special Funds budget, including review of policies and procedures, timeframes, format, service delivery, funding alternatives and City Council priorities.” Following the publication of the proposed budget, the advisory commissions hold public meetings to discuss the budget and provide specific recommendations to the City Council.

The proposed budget is reviewed with the community in March, presented to the Finance Commission in April, and transmitted to the City Council in June for review, public input, deliberation and adoption.

FY 2023-25 Adopted Budget

INTRODUCTION

The Irvine City Charter, Article X, Section No. 1001 sets the legal requirement for the City Manager to submit to the City Council a proposed budget and an accompanying message at such time as the City Council shall prescribe. It is the City’s goal to fu nd current year operating expenses with current year revenues. The budget proposal presented by the City Manager is balanced, with recurring revenues meeting or exceeding recurring expenditures for ongoing operations. Non-recurring revenues may not be used to fund recurring expenditures without the approval of the City Council. Financial Monitoring and Reporting Under the direction of the City Manager, the Budget Office works with all City departments to monitor revenues and expenditures on a monthly basis, taking any necessary corrective measures to ensure a balanced budget. In addition, quarterly financial reports are presented to the City Council and Finance Commission forecasting revenues and expenditures and presenting any necessary balancing measures.

Budget Structure The City’s budget includes three broad categories of funds.

General Fund : This is the main operating fund of the City, accounting for the receipt of taxes and fees, and paying for the routine public services to the community.

Special Funds: Special Funds are used to account for revenues and expenditures that are restricted by law or set aside for a special purpose.

Capital Improvement Program (CIP): The CIP budget details the acquisition, construction or rehabilitation of major capital facilities and infrastructure. The CIP budget is used to account for the receipt and disbursement of funds for specific CIP projects. For many projects, revenue resources and expenditures may extend over several years. State Appropriations Limit Article XIII B of the California Constitution (enacted with the passage of Proposition 4 in 1979 and modified with the passage of Proposition 111 in 1990) restricts the appropriations growth rate for cities and other local jurisdictions. The legislation provides that the governing body shall annually establish its appropriations limit by resolution. The appropriations limit is calculated by determining appropriations financed by proceeds of taxes in the 1978/79 base year and adjusting the limit each subsequent year for changes in the cost of living and population. This appropriation limit is the maximum limit of proceeds from taxes the City may collect or spend each year. Budgeted appropriations are limited to actual revenues if they are lower than the limit. The appropriation limit may be amended at any time during the fiscal year to reflect new data. The City annually calculates the Gann Limit according to legally established procedures (California Government Code Section 9710). The City conforms and adhere to all Gann Limit and related requirements. The City Council adopts by resolution the City’s Gann appropriations limit prior to the fiscal year and adopts by resolution certifying the City is in conformance with Gann requirements. The adoption

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INTRODUCTION

of the appropriations limit by resolution of the City Council is to be completed prior to the fiscal year in question. Once the appropriation limit has been adopted, there are two publication requirements:

 The appropriations limit and the total appropriation subject to limitation must be published in the budget. Resolutions can be found at the end of the Financial Policies Chapter.

 The State Controller’s Office requires the submission of an informational form along with the filing of the Annual Statement of Financial Transactions no later than 110 days after the close of each fiscal year.

Annually during the City’s financial audit, the auditors apply agreed -upon procedures to ensure the City meets the requirements of Section 1.5 of Article XIII-B of the California Constitution.

The City’s General Plan identifies the level and pace of growth of the undeveloped areas of the City. The Strategic Business Plan models expenditures and revenues based on these growth projections. Based on the City’s growth plan and the St rategic Business Plan projections, the City will not reach its Gann expenditure limit in the foreseeable future.

Three-Year Gann Limit Historical Data

Adopted Budget

Taxes Subject to the GANN Limit

FY 2021-22

FY 2022-23

FY 2023-24

Street Lighting District Tax

3,634,007

3,706,687

4,051,942

Property Tax

83,502,059

87,051,124

93,711,819

Sales Tax

69,946,121

72,950,140

91,381,738

Document Transfer Tax

3,544,063

3,611,400

3,936,079

Transient Occupancy Tax

11,302,661

13,945,669

17,741,311

Utility Users Tax

4,793,165

4,857,889

6,254,905

Other Agencies: State Motor Vehicle in Lieu

223,832

229,006

323,207

System Development (SDC) Fees

7,322,968

7,030,317

7,063,623

184,268,876 $

193,382,232 $

224,464,624

Taxes Subject to GANN Limit

GANN Limit

421,132,416

466,488,377

484,961,317

236,863,540 $

273,106,145 $

260,496,693

Amount Under the GANN Limit

FY 2023-25 Adopted Budget

INTRODUCTION

Legal Debt Margin Under state law, the City has a legal debt limitation not to exceed 15 percent of the total adjusted assessed valuation of taxable property within the City boundaries. In accordance with California Government Code Section 43605, only the City’s general obligation bonds are subject to that legal debt limit.

Computation of Debt Limit Margin Years ended 2021 through 2024

FY 2020-2021

FY 2021-2022

FY 2022-23

FY 2023-24

Assessed Valuation

$ 89,979,276,432

$ 94,912,704,120

$ 99,990,080,533

$ 107,641,160,442

Conversion Percentage

25%

Adjusted Assessed Valuation

22,494,819,108 $

$ 23,728,176,030

$ 24,997,520,133

$ 26,910,290,111

Debt Limit Percentage

15%

Debt Limit

3,374,222,866

3,559,226,405

3,749,628,020

4,036,543,517

Total Net Debt Applicable to Limit: General Obligation Bonds

$ $

Legal Debt Margin

3,374,222,866

3,559,226,405

3,749,628,020

4,036,543,517

The City has no outstanding general obligation bond debt.

FY 2023-25 Adopted Budget

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