CC 2020-03-10_11b FY 2019-20 Mid-Year Budget Report_PP Presentation
Mid-Year Budget Update
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Purpose
Opportunity to review first six months of the fiscal year
Update prior year ending numbers
Compare current year with prior year
Make minor corrections and fine-tune budget
Adjust for emerging issues or trends
We are here tonight to talk about the Mid-Year budget update. As the Council will recall, we check in with you formally at the beginning of the fiscal year and then again about half
way through the fiscal year so that we have an opportunity to look at what has transpired during those first 6 months of the year. We generally update the financial picture with prior
year ending numbers. Although this year, we have not yet completed our audit work and CAFR but we hope to get that to you within the coming months. The purpose of the mid-year budget
is to look at those years over year changes; compare the current budget to the prior year, fine tune the budget as needed, and adjust for things that came up during the first 6 months
if we see some emerging issues, that we hadn’t adequately addressed when we created the budget. Over the current year, a lot has changed from then to now. This presentation will focus
on the general fund.
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Revenue Review
2/27/2018
At the mid-year point not all of our revenues and expenditures occur exactly in 1/12th increments every month; so there is some cyclical nature to the collection of some of those revenues.
Taking a quick look at the General Fund Revenues, with half the year behind us, we are at 45% of our revenue target. This is consistent with previous years and reflects the fact that
not all revenues are received in equal increments and there are timing issues related to when we receive the revenue. Specifically, it only represents five months of Sales Tax revenue,
five months of Transient Occupancy Tax (TOT) revenue and four months of Franchise Fee revenue.
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Revenue Review
Key changes in revenues to be noted are:
That Property tax trends are consistent with the same period last year and budgeted revenues are expected to be met.
Sales tax is higher than projected and higher than the same period last fiscal year.
The majority of Transient Occupancy Tax increases reflect the recent opening of the Agrarian hotel.
The increase in other Revenue sources reflect the $747,422 payment received from PG&E for the Community Impact Mitigation Program (CIMP) due to the Diablo Decommission. These revenues
will be accounted for in a reserve fund until the City implements a plan for these Community Impact Mitigation Program (CIMP) Funds.
All other variances are within normal ranges.
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Mid-Year Revenue Requests
Here is are the two revenue adjustment requests. Revenues from Engineering Inspection Fees should be increased by $173,000. We received revenues from the Creek Stone Development. We
also anticipate higher building permit fee revenue due to the increase in building plan checks.
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Expenditures
Most of the departments are less than 50% expended which again is consistent with prior trends. There are always some variables. Not all of our expenditures happen in exactly 1/12th
increments, for example we pay our insurance premiums July 1st so the entire year’s premium is expended in that first month. We look at changes from last year; trends that have happened.
The Non Departmental variance from the prior year reflects timing of payments made for the City’s contribution to Five Cities Fire Authority as well as the annual payments made in July
for Liability Insurance premiums. The Police Department decrease reflects the planned $3,000,000 CalPERS prepayment made in July 2018 and the $2,000,000 CalPERS prepayment made in July
2019 to reduce the City’s unfunded pension liability principal balance and achieve significant savings in interest payments. All other variances are within a normal range.
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Mid-Year Expenditure Requests
With that said, we did ask departments to look at where we are in the year with their budgets and propose any adjustments that they felt were necessary at this time. Most of these are
minor operational corrections, or issues that emerged after we created the budget.
The first request is for the Building Division. They are requesting an increase in contractual services for building plan checks. The FY 2019-20 budget allocated a total of $90,000 to
Building Division contractual services, including $10,000 for plan check costs and $80,000 for inspection costs. Year-to-date, $97,179.26 has been billed for plan check services and
$32,848.25 has been billed for building inspection services. During this time, development and building permit activity has increased and a demand for plan check services has resulted.
In order to continue to decrease the processing time to return building permit plan checks to customers, additional contractual services totaling $90,000 is requested. This increase
is expected to be offset by fee revenues.
The next request is to retain a professional outreach firm in an amount up to $25,000 to engage in public education efforts regarding the City’s financial needs. The City Council will
be considering the placement of a local sales tax measure on the November 2020 ballot. Due to the heightened activity anticipated with ballot measures for cities and counties statewide,
and in order to ensure public outreach and communications are effective, cost efficient, and comply with legal requirements.
The third request was stated at the December 10, 2019 Council Meeting when Council expressed an interest in considering an increase to the Jim Guthrie Community Services Grant Fund.
If the City Council desires, staff has included a $10,000 increase for Council discussion and consideration. Between 2015 to 2020 the average total request amount is $49,000. The 2020
requests totaled $60,630, the review process will begin shortly and the results will be presented to Council in April.
The Recreation Services Department purchased and implemented CivicRec software in FY 2018-19. The Department is requesting an increase of $4,500 for FY2019-20 for the annual cost to
host, maintain, and support the software, which was not included in the annual budget. This cost will be placed in the Information Technology (IT) contractual services account in order
to streamline administration and tracking of the City’s ongoing technology programs and services, and will be included in the IT budget as a recurring cost in future budget years.
The purchase of a new field paint sprayer for the Soto Sports Complex was needed as the old one failed in the middle of the season. The Department is requesting an increase of $2,551.
Due to the failure of the transmission and hydraulic system of the City’s 2003 Kubota tractor, the Department is requesting an increase of $2,500 to augment the existing equipment replacement
account.
The total of all these general fund requests are $134,551. Keep in mind that we are adjusting revenues of the general fund by $213,500, which means that these budget requests will not
negatively affect the fund balance.
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Recommendation
1. Approve detailed budget adjustments and requests for additional appropriations listed in the Mid-Year Budget Report; and
Approve Schedule A attached to the Mid-Year Budget Report; and
Tonight, the recommendation before the Council is to to approve the budget adjustments, along with schedule A, attached to your report which provides the updated financial information
for each fund.
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Questions
And with that I’d be happy to take any questions.
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