FISCAL YEAR 2022/23
MID-YEAR BUDGET UPDATE
April 4, 2023
Overview
• General Fund Overview
• General Fund Five-Year Forecast
• Citywide Projects
• Budget Calendar
2 FY 2022/23 Adopted Budget
Citywide Expenditures
Enterprise Funds
40%
General Fund
21%
Internal Service
18%
Special
Revenues
12% Other Restricted
4%
Capital Projects
4%
Other General
Purpose
1%
3 $2.0B
FY 2022/23 Adopted Budget
4 Enterprise Funds
40%
General Fund
21%
Internal Service
18%
Special
Revenues
12% Other Restricted
4%
Capital Projects
4%
Other General
Purpose
1%
Citywide Expenditures
FY 2022/23 Adopted General Fund Budget
Sources
5 Uses
$510.3M $510.3M
Personnel
Services
57%
Other
Operating
23%
Debt Service
<1%
Capital Outlay
<1% Transfers to
Other Funds
20%Transient
Occupancy
Taxes
36%
Sales and
Use Taxes
20%
Property
Taxes
18%
Business
License/Property
Transfer Tax
2%
Fees &
Permits
7% Other
Revenues
12%
Transfers
from Other
Funds
5%
Transient Occupancy Tax
Tax rate = 15% of room sale
Locally controlled, city collects 100% monthly
Stays of less than 30 days
6 FY 2022/23 Adopted General Fund Budget
Transient
Occupancy Taxes
36%
Sales and Use
Taxes
20%
Property Taxes
18%
Business
License/Property
Transfer Tax
2%
Fees & Permits
7%
Other Revenues
12%
Transfers From
Other Funds
5%
Financial Sources by Category
TOT
$184.4M
7 8
Transient Occupancy Tax (in millions)
$138.5
$150.3 $155.7 $162.6
$123.0
$30.3
$177.7 $184.4
$201.0
$-
$50.0
$100.0
$150.0
$200.0
$250.0
FY 16
Actual
FY 17
Actual
FY 18
Actual
FY 19
Actual
FY 20
Actual
FY 21
Actual
FY 22
Actual
FY 23
Budget
FY 23
Projected
8.5% 3.6% 4.4%
-24.4%
-75.4%
486.5% 3.8%
9.0%
Sales & Use Tax
Collected by the State, remitted quarterly
City piece is 1% of purchase price
Tax applies to sale of tangible property
State
5.00%
Local Public Safety
(Prop 172)
0.50%
Health and Welfare
0.50%
Local City or County
1.00%
OC Mass Transit
(Measure M)
0.50%
.
Local Transportation/
Road Maintenance 0.25%
9 Sales & Use Tax
10Sales Tax by Sector
General Retail
30%
Food Products
18%
Transportation
18%
Construction
16%
Business to
Business
17% Miscellaneous
1%
11 FY 2022/23 Adopted General Fund Budget
Sales & Use
Tax
$103.6M
Transient
Occupancy Taxes
36%
Sales and Use
Taxes
20%
Property Taxes
18%
Business
License/Property
Transfer Tax
2%
Fees & Permits
7%
Other Revenues
12%
Transfers From
Other Funds
5%
Financial Sources by Category
Sales & Use Tax (in millions)
$77.5 $80.7 $82.0 $85.1
$77.1 $77.0
$103.7 $103.6 $107.3
$-
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
FY 16
Actual
FY 17
Actual
FY 18
Actual
FY 19
Actual
FY 20
Actual
FY 21
Actual
FY 22
Actual
FY 23
Budget
FY 23
Projected
4.1% 1.6% 3.8%
-9.4% -0.1%
12 34.7% -0.1%
3.6%
13 Property Tax
Basic levy = 1%
County collects, remitted semi-annually
Basic levy shared among tax entities
City Share is approximately 20%
School
Districts
46%
City
Government
20%
County
Government
13%
Special
Districts
11%
Redevelopment Property
Tax Trust Fund (RPTTF)
10%
14 Transient
Occupancy Taxes
36%
Sales and Use
Taxes
20%
Property Taxes
18%
Business
License/Property
Transfer Tax
2%
Fees & Permits
7% Other Revenues
12%
Transfers From
Other Funds
5%Property
Tax
$92.7M
FY 2022/23 Adopted General Fund Budget
Financial Sources by Category
Property Tax (in millions)
$67.7 $70.4 $73.7 $77.5
$82.4 $86.3 $89.6 $92.7 $95.8
$-
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
FY 16
Actual
FY 17
Actual
FY 18
Actual
FY 19
Actual
FY 20
Actual
FY 21
Actual
FY 22
Actual
FY 23
Budget
FY 23
Projected
4.0%
4.7% 5.2%
6.3% 4.7%
15 3.8% 3.5% 3.3%
16 Transient Occupancy
Taxes
36%
Sales and Use Taxes
20%
Property Taxes
18%
Business
License/Property
Transfer Tax
2%
Fees & Permits
7%
Other Revenues
12%
Transfers From Other
Funds
5%
FY 2022/23 Adopted General Fund Budget
Financial Sources by Category
Business
License/Property
Transfer Tax
6%
Fees & Permits
27%
Use of Money &
Property
20%
Fines, Forfeitures
and Penalties
3%
Reimbursements
6%
Intergovernmental
6%
Intragovernmental
Service Charges
11%
Transfers From
Other Funds
21%
Other Revenues
FY 2022/23 Adopted General Fund Budget
17 Administering
Efficient
Government
5.7%
Supporting
Activities
3.3%
Ensuring Quality
of Life
12.9%
Providing the
Necessities
6.2%
Keeping Us Safe
52.3%
Transfers to Debt
Service
18.8%
Transfers to Economic
Development
0.5%
Transfers to Other
Funds
0.3%
General Fund
Department % of Expenditures
Keeping Us Safe
Police 42.1%
Fire & Rescue 22.7%
Ensuring Quality of Life
Community Services 10.1%
Planning & Building 6.4%
Providing the Necessities
Public Works 7.2%
Public Utilities 0.5%
Administering Efficient Government
City Council 0.4%
City Administration 3.7%
City Attorney 2.5%
City Clerk 0.6%
Supporting Activities
Finance 3.2%
Human Resources 0.8%
Total 100.0%
Uses Expenditures
18 Adopted General Fund Five-Year Forecast
FY 2022/23
Adopted
FY 2023/24
Projected
FY 2024/25
Projected
FY 2025/26
Projected
FY 2026/27
Projected
Operating Sources
Revenues
Transient Occupancy Taxes $184.4 $198.5 $206.7 $212.9 $219.0 Sales and Use Taxes 103.6 107.6 112.7 117.3 121.6
Property Taxes 92.7 95.5 98.3 100.7 102.7
Other Revenues 78.6 76.9 76.9 78.0 79.1
Total Revenues 459.2 478.5 494.6 509.0 522.4
Transfers In 26.2 24.5 25.3 25.0 25.3
Total Operating Sources 485.4 503.1 519.9 533.9 547.8
Operating Uses
Expenditures
Salaries and Other Benefits (216.8) (221.7) (224.9) (227.2) (229.6) Pensions (74.8) (76.2) (79.4) (81.3) (83.0)
Total Labor (291.6) (297.9) (304.3) (308.5) (312.6)
Other Operating Costs (109.0) (110.7) (115.8) (119.8) (124.1) Total Expenditures (400.6) (408.7) (420.1) (428.3) (436.7) Transfers Out (101.3) (110.5) (115.0) (118.5) (121.8)
Total Operating Uses (501.9) (519.2) (535.1) (546.8) (558.5) Operating Sources Over/(Under) Operating Uses $(16.4) $(16.1) $(15.2) $(12.9) $(10.8) 19 Adopted General Fund Five-Year Forecast
FY 2022/23
Adopted
FY 2023/24
Projected
FY 2024/25
Projected
FY 2025/26
Projected
FY 2026/27
Projected
Total Operating Sources $485.4 $503.1 $519.9 $533.9 $547.8 Total Operating Uses (501.9) (519.2) (535.1) (546.8) (558.5) Operating Sources Over/(Under) Operating Uses $(16.4) $(16.1) $(15.2) $(12.9) $(10.8) One-Time/Limited Time Projects
Homeless Shelters (8.4) (8.7) (8.9) (0.2) (0.2)
Use of Neighborhood Set-Aside 1.5 - - - -
Deficit Bond Proceeds 23.4 26.7 31.4 14.4 -
Deficit Borrowing Repayment - (1.8) (7.3) (7.3) (7.3)
Total Change in Reserves 0.0 0.0 0.0 (6.0) (18.2)
Beginning Reserves 69.4 69.4 69.4 69.5 63.5
Ending Reserves $69.4 $69.4 $69.5 $63.5 $45.3
Reserves as a % of Ongoing General Fund
Expenditures
17% 17% 17% 15% 10%
20 21
Current Year Projections
FY 2022/23
Adopted
Projection for
FY 2022/23
Operating Sources
Revenues
Transient Occupancy Taxes $184.4 $201.0
Sales and Use Taxes 103.6 107.3
Property Taxes 92.7 95.8
Other Revenues 78.6 88.9
Total Revenues 459.2 520.7
Transfers In 26.2 27.7
Total Operating Sources 485.4 520.7
Operating Uses
Expenditures
Salaries and Other Benefits (216.8) (220.5)
Pensions (74.8) (73.3)
Total Labor (291.6) (293.7)
Other Operating Costs (109.0) (126.7)
Total Expenditures (400.6) (420.4)
Transfers Out (101.3) (111.4)
Total Operating Uses (501.9) (531.9)
Operating Sources Over/(Under) Operating Uses $(16.4) $(11.2) Current Year Projections
FY 2022/23
Adopted
Projection for
FY 2022/23
Total Operating Sources $485.4 $520.7
Total Operating Uses (501.9) (531.9)
Operating Sources Over/(Under) Operating Uses $(16.4) $(11.2) One-Time/Limited Time Projects
Homeless Shelters (8.4) (8.4)
Homeless Revenue Transfers (ESG/HHAP) - 1.9
Use of Neighborhood Set-Aside 1.5 1.5
Deficit Bond Proceeds 23.4 9.7
One-Time Land Sales - 6.6
Total Change in Reserves 0.0 0.0
Beginning Reserves 69.4 76.4
Ending Reserves $69.4 $76.4
Reserves as a % of Ongoing General Fund Expenditures 17% 18% 22 Resort Improvement Bonds
Lease Payment Measurement Revenues
• All hotel properties in the City, excluding
certain Disney properties constructed prior
to 2009
3% of the 15% TOT rate
(i.e. 20% of all TOT)
• All TOT on Disney properties constructed
prior to 2009 and all Sales tax from Disney
properties over 1995 base ($10.5M), with
annual increases
100% of the TOT and Sales
Tax on Disney
• Disney properties over 1995 base ($0.9M),
with annual increase of 2%
100% of Property Tax on
Disney
$26.8
52.5 4.9
$84.2M
23 24
Current Year Highlights
Mobile Family Resource Center
Center Greens KaBOOM!
Brookhurst Teen
Center Addition
Aloe Promenade
25 Current Year Highlights
Real Time Crime Center
Drone as a First Responder
Ambulance Program
Community Risk Reduction
26 Current Year Highlights
Wildfire Mitigation Plan
Groundwater
Treatment Program
Neighborhood Rehabilitation
Sidewalk Improvements
27 Current Year Highlights
OC Vibe
Rebuild Beach Affordable Housing
28 Economic Outlook
The Good
• Employment
• Financial
Conditions
• Stocks Higher
• Declining
Inflation
• Interest Rates
Higher
The Bad
• Banking
Challenges
• Banks
Tightening
Lending
Standards
• Inflation Above
Fed’s Target
• Growth Slowing
The Ugly
• Housing
• Leading
Economic
Indicators
• Interest Rates
High
• Federal
Government
Interest Expense
• Yield Curve
29 Preliminary Proposed
FY 2023/24 Projected from
Adopted 5-Year Forecast
Preliminary Proposed
FY 2023/24
Total Operating Sources $503.1 $556.9
Total Operating Uses (519.2) (556.6)
Operating Sources Over/(Under) Operating Uses $(16.1) $0.3 One-Time/Limited Time Projects
Homeless Shelters (8.7) (16.7)
ESG/HHAP Revenue for Shelters - 0.9
Deficit Bond Proceeds 26.7 17.3
Deficit Borrowing Repayment (1.8) (1.8)
Total Change in Reserves 0.0 0.0
Beginning Reserves 69.4 76.4
Ending Reserves $69.4 $76.4
Reserves as a % of Ongoing General Fund Expenditures 17% 18% 30 Preliminary Proposed
FY 2023/24 Projected
from Adopted 5-Year
Forecast
Preliminary
Proposed
FY 2023/24
Preliminary
Proposed
FY 2024/25
Preliminary
Proposed
FY 2025/26
Preliminary
Proposed
FY 2026/27
Preliminary
Proposed
FY 2027/28
Total Operating Sources $503.1 $556.9 $574.7 $593.3 $609.8 $625.0 Total Operating Uses (519.2) (556.6) (582.5) (600.9) (616.1) (629.9) Operating Sources Over/(Under) Operating Uses $(16.1) $0.3 $(7.8) $(7.6) $(6.3) $(4.8) One-Time/Limited Time Projects
Homeless Shelters (8.7) (16.7) (16.7) (0.2) (0.2) (0.2) ESG/HHAP Revenue for Shelters 0.0 0.9 0.0 0.0 0.0 0.0
Deficit Bond Proceeds 26.7 17.3 31.7 15.1 13.8 8.3
Deficit Borrowing Repayment (1.8) (1.8) (7.3) (7.3) (7.3) (7.3) Total Change in Reserves 0.0 0.0 0.0 0.0 0.0 (4.0)
Beginning Reserves 69.4 76.4 76.4 76.4 76.4 76.4
Ending Reserves $69.4 $76.4 $76.4 $76.4 $76.4 $72.4
Reserves as a % of Ongoing General Fund
Expenditures
17% 18% 17% 17% 16% 15%
31 Budget Calendar
City Manager
Review
B.I.T.and
City Council
Review
Budget
Workshops
Budget Hearing
City Council
Adoption
April May June
QUESTIONS?