STAFF REPORT
DATE: March 1, 2022
TO: Justin Hess, City Manager
FROM: Jennifer Becker, Financial Services Director
BY: Leana Mkrtchyan, Deputy Financial Services Director Susan Langford, Revenue Manager
SUBJECT: Review the General Fund’s Financial Status as of December 31, 20 21, and Adoption of Resolution s Amending the Fiscal Year 20 21-22 Budget for the Purpose of Mid-Year Adjustments
RECOMMENDATION:
1. Adopt A RESOLUTION OF THE COUNCIL OF THE CITY OF BURBANK AMENDING THE BUDGET OF THE FISCAL YEAR 2021-22 FOR THE PURPOSE OF MID-YEAR ADJUSTMENTS.
2. Adopt A RESOLUTION OF THE HOUSING AUTHORITY OF THE CITY OF BURBANK AMENDING THE BUDGET OF THE FISCAL YEAR 2021-22 FOR THE
PURPOSE OF MID-YEAR ADJUSTMENTS
BACKGROUND:
The purpose of this report is to provide the City Council with a comprehensive review of the General Fund’s financial performance as of December 31, 2021 , and to request Council approval of mid- year adjustments to the Fiscal Year (FY) 2021 -22 Adopted Budget. This report also provides information as it relates to the development of the City’s FY 2022 -23 Budget.
Six months into each fiscal year, the City’s Budget Office asks each department to review their adopted revenues and appropriations to determine how they are tracking and identify necessary amendments to their budgetary position. Through the first half of the year, most departments are generally performing within expected budgetary levels . There are unanticipated expenditures that require an additional appropriation, generating the need for the mid-year budget requests outlined in Attachment 5.
FINANCIAL
SERVICES
DISCUSSION:
General Fund’s Financial Status - Updated FY 2021-22 Budget Based on the actual ending balance for FY 2020 -21, revised FY 2021 -22 revenue projections and adopted appropriations, we are expecting a recurring deficit in the current year of approximately $884,000 (see detail contained within the FY 2021-22 Budget Matrix in Attachment 3). This deficit is considerably lower than the $6.7 million projected during the first-quarter report, due to a stronger than expected economic recovery from the COVID-19 Pandemic. Staff is expecting an available balance of approximately $31.5 million in the General Fund at fiscal year-end, pending the approval of the mid- year budget adjustments discussed later in this report.
Fiscal Year 2021-22 General Fund Revenues
For the first six months of the fiscal year, the General Fund received $72,811,377 in recurring revenue, which represents 37. 9% of the revised revenue forecast. For perspective, revenues for the first six months of FY 2020-21 were at $61,360,111 and 35.6% of forecast.
Economic growth has surpassed consensus expectations in multiple revenue categories, as households and businesses have returned to pre- pandemic levels of spending despite the continuing impacts of COVID -19. The strength in economic output is a result of the significant legislative response to the Pandemic. Bold policies, such as the American Rescue Plan Act (ARPA) and the COVID -19 vaccine program have bolstered the recovery and provided direct aid to households. After reviewing Burbank’s second quarter FY 2021 -22 receipts, staff is recommending adjustments to sales tax, property tax, utility user’s tax, in- lieu of tax, service charges, transient occupancy tax, and transient parking tax. The net total for the mid-year adjustments is an increase of approximately $5.8 million.
Table 1 outlines the adjustments to FY 2021-22 recurring General Fund revenue projections by category. This is the best estimate of General Fund revenue available at this time, which is based on actual receipts during the first half of the year. Staff will provide additional updates as new information becomes available.
Table 1 - General Fund Recurring Revenues as of December 31, 2021
Sales Tax: The California Department of Tax and Fee Administration (CDTFA) has released sales tax information for sales occurring in the second and third quarters of the calendar year 2021 . Burbank received these allocations in the first two quarters of the current fiscal year. After correcting for one-time adjustments, traditional (Bradley Burns) sales tax receipts for the second and third quarters increased by 54.5% and 27. 9% respectively, compared to the same quarters in the prior year . The strong percentage gains signify a rebound from the financial impacts of COVID -19, as quarterly revenues now exceed pre- Pandemic levels. Pent-up demand for travel and dining boosted the sales receipts for restaurants and hotels. Family apparel, home furnishings, and specialty stores were largely responsible for the growth in general consumer goods. Despite inventory shortages on new and used vehicles, auto dealers experienced positive growth due to elevated pricing resulting from increased demand. Fuel and service stations have also seen significant gains due to rising prices and increase s in jet fuel sales at the Hollywood Burbank airport.
The City’s Transactions and Use Tax (TUT) revenues, which are derived from Measure P, experienced similar positive results to the Bradley Burns tax receipts. Restaurants, vehicle sales, and robust online sales activity by Burbank residents contributed most to the growth. Of the $18.3 million that was received in sales tax for the first six months of FY 2021-22, $5 million was generated from Measure P (TUT) revenue.
Due to the factors mentioned above, our consultants from HdL Companies have revised their FY 2021-22 forecast for Burbank to reflect an increase in sales tax revenue above and beyond their initial projections for the year . Staff is adjusting Burbank’s sales tax Sales Tax 46,363,192$ 49,788,463$ 2,788,000$ 52,576,463$ 18,333,418$ 34.9% Property Tax 62,106,513 59,021,784 800,000 59,821,784 16,278,359 27.2% Utility Users Tax 15,595,788 16,707,000 (1,000,000) 15,707,000 7,825,667 49.8% Services Charges - Intra City 13,218,489 13,396,765 13,396,765 6,670,612 49.8% Services Charges 15,600,507 16,051,612 750,000 16,801,612 8,660,431 51.5% In Lieu of Tax 8,287,655 8,792,381 (400,000) 8,392,381 3,990,168 47.5% Interest/Use of Money 1,684,075 2,013,006 2,013,006 1,185,360 58.9% Parking/Traffic/Other Fines 2,074,373 2,202,000 2,202,000 672,016 30.5% Transient Occupancy Tax 5,531,388 7,000,000 1,373,000 8,373,000 4,187,240 50.0% Building Permits/License Fees 4,851,794 4,819,895 4,819,895 3,088,781 64.1% Transient Parking Tax 1,282,537 1,680,000 1,500,000 3,180,000 908,251 28.6% Business Taxes 2,063,546 2,300,000 2,300,000 504,800 21.9% Franchises 1,467,346 1,524,179 1,524,179 286,257 18.8% Intergovernmental Revenues 696,021 859,475 859,475 220,016 25.6% TOTAL RECURRING REVENUE $180,823,225 $186,156,560 5,811,000$ $191,967,560 72,811,377$ 37.9%
RECURRING REVENUE
CATEGORY
ACTUAL
RECURRING
FY 2020-21
ADOPTED
RECURRING
FY 2021-22
REVISED
RECURRING
FY 2021-22
ACTUAL
RECURRING
12/31/21
% OF
REVISED
REC'D
CHANGE
FROM
ADOPTED
projections accordingly, with an increase of $2.8 million for FY 2021-22. Sales tax results for the fourth-quarter holiday shopping season will be available in April 2022.
Property Tax: A total tax of 1% is levied on the Assessed Value (AV) of property as determined by the Los Angeles County Assessor. The City of Burbank receives approximately 18.5% of the 1% levy on AV. Compared to FY 2020- 21, the AV for the entire city increased 2.0%. General Fund related AV increased 3.4%. The AV for the City grew approximately $517 million from the prior year. Sale prices continue to grow due to low inventory and the continued lower mortgage interest rates. The median sales price of a detached single-family residential home in Burbank for the fourth quart er of 2021 was $1,130,000; this is a 15.4% increase when c ompared to the fourth quarter of 2020 at $979,000. Property tax revenues are above forecast due to the strong growth in secured assessed value. Based on the positive growth in property tax, forecasted FY 2021-22 revenues will be increased by $800,000.
Utility User’s Tax (UUT): The City of Burbank collects a 7% tax on qualifying electricity, natural gas, and telecommunication utility charges. Unlike many other cities, Burbank does not assess UUT on water or video services. Reductions in power consumption from businesses along with e lectrical conservation have contributed to a decline in electric UUT revenue. Additionally, Burbank continues to experience declines in both wired and wireless telecom UUT revenue. The City’s UUT consultant, MuniServices, LLC, is currently evaluating the taxable status of bundled packages that could be attributable to the reduction in wireless telecom revenue. Revised projections reflect a reduction of $1 million in revenue from the adopted FY 2021-22 projection.
In-Lieu of Tax: The In-Lieu of Tax has experienced a 2.6% decline in revenues for the first six months of the year compared to the prior year. As with the electric UUT revenue, increased energy efficiency , and a reduction in power consumption from businesses have driven a reduction in revenues. In-Lieu of Tax is projected to be $400,000 less than the FY 2021-22 adopted revenue forecast.
Service Charges: Service Charges experienced an increase of 41.4% for the first half of the fiscal year compared to the prior year. Most notable in this category are increases to passport revenues, safety services for filming, and golf revenues. As travel restrictions have been lifted in other countries for vaccinated tourists, there is an increase in the demand for new passports or renewals. Passport revenues increased by $252,370, or 187%, for the first six months of FY 2021- 22 versus the first half of FY 2020- 21. The motion picture industry’s return to full activity has also increased the need for safety personnel to provide services during film production. At six months into FY 2021-22, the revenue received for safety services was $419,614 which is close to meeting the year- end actuals for FY 2020- 21 at $457,136. The DeBell Golf Course continues to see an increase in revenues for the first half of the year. From July through December of 2021, golf revenues were up 40.2% compared to the same period from the prior year. Bas ed on the positive growth in this category, an increase of $750,000 is forecasted for FY 2021-22.
Transient Occupancy Tax (TOT): The pent -up demand for domestic leisure travel is widespread as travelers continued to move about the country despite the threat of the Omicron and Delta variants. Additionally, business group travel is seeing a return with the lifting of restrictions. The U.S. Travel Association forecasts that domestic business travel spending will increase more than 50% in 2022. Burbank’s hotel occupancy rate for December 2021 was 69.6% compared to 42.3% in December 2020. TOT revenues for the first six months of FY 2021-22 are $4.1 million, an increase of 113.3% over the same period from the prior year. Although not fully recovered to the pre-Pandemic levels, hotel occupancy is rebounding faster than anticipated. As a result, projected TOT revenue for FY 2021-22 has been increased by $1.4 million. Chart 1 shows the hotel occupancy rates from FY 2018-19 through December 2021.
Chart 1 – Burbank Hotel Occupancy Rates
Transient Parking Tax (TPT): With a majority of the parking tax revenue derived from parking lots at or directly servicing the Hollywood Burbank Airport, the City’s TPT revenue is dependent on the travel demand. Mirroring the increase in hotel occupancy , airport activity has experienced a rebound from the Pandemic due to the pent -up demand for leisure travel. Passenger counts at the Burbank Airport for 2021 from January through December have increased by 87% over the same period in 2020. With the positive performance of the first six months of FY 2021-22, staff is increasing the forecast by $1.5 million. Chart 2 compares the airport passenger counts for FY 2018-19, FY 2019-20, FY 2020-21, and FY 2021-22 to date.
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN
FY 18-19 FY 19-20 FY 20-21 FY 21-22
Chart 2 – Hollywood Burbank Airport Passenger Counts
Fiscal Year 2021-22 General Fund Expenditures
As of December 31, 2021, 48.3% of the General Fund’s recurring appropriations have been expended, coinciding with the general expectation of 50% for the halfway point of the fiscal year. For perspective, 49.8% of recurring appropriations were expended for the same period last year. Table 3 provides budget to actual results by department for the General Fund expenditures at the end of the second quarter. Expenditures for two departments are trending above expectations six months into the fiscal year as follows:
Fire Department expenditures are trending above expectation at 52%, due to higher overtime costs necessary to backfill absences related to COVID -19, Industrial Accidents (IA) leave, and reimbursable strike team participation. After including anticipated reimbursement revenues, Fire Department expenditures are at 50.4% as of December 31, 2021.
Non-Departmental expenditures are well above the general 50% expectation due to two large payments within this expenditure category. The first is the $8.8 million payment made to the California Public Employees’ Retirement System (CalPERS) in July as part of the City Council’s multi-year pension funding plan. The second is the annual $4.7 million General Fund Infrastructure Funding Commitment transfer to the Municipal Infrastructure Fund 534.
Table 3 - General Fund Expenditures as of December 31, 2021*
*Appropriations include all carryovers as well as any additional General Fund budget amendments approved by the City Council since the adoption of the FY 2021-22 Budget. The original General Fund adopted budget totals $203,984,849.
Mid-year Budget Adjustments
As was previously discussed, departments were asked to identify necessary adjustments to their budgets r esulting from changed circumstances and/or unanticipated expenses that exceed their budget authority. Each of the requested adjustments (both appropriations and revenues) is itemized and described in detail and can be found in Attachment 5.
General Fund appropriation requests total $687,958 and are offset by revenue adjustments and the use of restricted funding of $445,111 for a net impact of $242,847. Requests include additional funding for the Management Services Department to pay for the services of a consultant that will assist with the management of the City’s disability compliance obligations as well as for the Fire Department to be able to absorb price increases for medical supplies and pharmaceuticals . Other requests include a dditional funding for the Parks and Recreation Department to pay for the unanticipated costs associated with emergency tree removal services and appropriating various grants that the Community Development Department received from the Los Angeles County and Providence Saint Joseph H ospital for providing public health services, developing homeless solutions , and providing interim housing.
Non-General Fund appropriation requests total $1 1,815,316 and are offset by revenue adjustments of $197,832 for a net impact of $11,617,484. $9.8 million of this amount relates to additional funding requested from the Burbank Water and Power Electric Fund to address the increase in power supply costs related to supply chain issues and an upsurge in natural
EXPENDITURE APPROPRIATIONS EXPENDITURES PERCENT
CATEGORY FY 2021-22 as of 12/31/2021 EXPENDED
City Attorney 4,404,632 2,201,025 50.0%
City Clerk 1,955,846 691,793 35.4%
City Council 725,508 274,546 37.8%
City Manager 2,514,470 1,161,593 46.2%
City Treasurer 888,744 395,790 44.5%
Community Development 18,321,234 6,377,395 34.8%
Financial Services 5,793,792 2,622,246 45.3%
Fire 38,493,079 20,023,354 52.0%
Library Services 8,551,079 3,938,348 46.1%
Management Services 7,103,216 2,486,735 35.0%
Non-Departmental 18,643,190 15,327,021 82.2%
Parks and Recreation 28,300,550 12,748,641 45.0%
Police 64,445,129 29,227,342 45.4%
Public Works 17,797,644 7,734,217 43.5%
TOTALS 217,938,113 105,210,044 48.3%
gas prices, as well as complete the unexpected overhaul of the Lake Unit. Other requests include additional funding to pay for consulting services to assist in Section 8 operations, appropriating grant funding for the development of a homeless allocation plan, and an increase in the General Liability and Workers’ Compensation Funds to cover higher than anticipated insurance costs.
General Fund Financial Forecast
The purpose of the Financial Forecast is to provide insight on the potential long- term financial trends for the General Fund, allowing the City Council to make informed decisions today while fully understanding the future impacts of these decisions. Based on current assumptions as described below, it is staff’s expectation that General Fund recurring revenues’ will recover by an average of 3.4% over the next four years of our forecast.
General Fund expenditures are project ed to grow by an average of 3.1% over this same time-period.
Projected Revenues
Forecasted revenues are driven by the parameters included in Attachment 4 . Although the forecast assumes a continued economic recovery in FY 2021- 22 and beyond, it will likely take several years for some revenue categories to return to the level projected before COVID-19. Currently, the five-year average revenue growth includes projected increases in Sales Tax by 4.7%, Property Tax by 4%, and UUT by 1.5%. Forecasted revenues include increases to sales tax receipts resulting from a strong rebound from the Pandemic with the full re-opening of the economy and the anticipated price increases from the growth of retail sales throughout the City. Property tax cont inues to increase as a result of the consistent rise in home values. Continued weakness in UUT due to electric conservation is also reflected within the revenue projections. Revenue projections included in the forecast are based on staff’s best estimates and may be subject to fluctuations resulting from economic cycles and legislation . Staff will continue to monitor projected revenues periodically throughout the year and provide the City Council with updates as new information becomes available.
Projected Expenses
The two main drivers of expenditures for the General Fund are salaries and benefits, and most significantly the CalPERS rates that are applied to the base salaries. The forecasted expenditure growth assumes the following costs:
Memorandum of Understanding (MOU) Projected Costs:
Salaries and benefits currently comprise approximately 75% of the General Fund recurring budget. As such, the City’s MOU negotiation process for the various bargaining groups plays a significant role in determining the City’s financial position. At present time, all of the City’s bargaining groups have current MOU s. Aligning with the City Council’s Financial Policies related to employee compensation, the General Fund forecast includes assumptions for salary and benefit growth over the next five years based on projected market rates for all employee groups. The City’s Financial Policies also dictate that the City and employees will evenly share the normal cost of the CalPERS pension benefits. The General Fund forecast reflects all groups reaching the 50% target by the end of FY 2021 -22, in accordance with
the provisions of each MOU.
Public Employees Retirement System (PERS) Costs:
Managing costs associated with CalPERS pensions continues to be a challenge for the City, leading to a significant fiscal constraint. In recent years, Burbank has taken measures towards mitigating pension cost increases, including sending lump sum contributions to CalPERS to decrease the City’s unfunded liability, establishing a Section 115 trust to offset future pension volatility, increasing employee contributions towards their pension rates, and implementing the changes directed by the Public Employees’ Pension Reform Act (PEPRA) adopted by the State of California in 2012.
In July of 2021, the City received the CalPERS actuarial reports for the FY 2022-23 budget year. Based on the most recent reports, Burbank currently has an Unfunded Actuarial Liability (UAL) of just under $3 85 million across the City’s three pension plans. Table 4 shows the actual CalPERS employer rates and UAL contributions for the three employee classifications for the current year (FY 202 1-22), next fiscal year (FY 202 2-23), and the projected employer rates and contributions for the following two fiscal years (FY 2023 -24 and FY 2024-25).
Table 4 – City of Burbank Pension Costs FY 2021-22 – FY 2024-25
Classification
Actual
FY 2021-22
Actual
FY 2022-23*
Projected
FY 2023-24
Projected
FY 2024-25
Police 3% @ 50 Rate 23.1% 22.05% 21.5% 21.1%
Police Liability Payment $7,300,248 $8,152,664 $8,733,000 $9,341,000 Fire 3% @ 55 Rate 17.55% 17.71% 17.3% 17.0%
Fire Liability Payment $4,561,502 $5,028,014 $5,413,000 $5,856,000 Misc 2.5% @ 55 Rate 10.38% 10.00% 9.8% 9.6%
Misc Liability Payment $19,578,570 $21,224,820 $22,627,000 $24,294,000 * Amounts shown are the total amounts due for FY 2022- 23 if the City were to pay CalPERS on a monthly basis. For FY 2022-23, staff will propose prepaying the liability payments, which will result in a net savings of $1,094,974 citywide.
It should be noticed that a number of CalPERS actions subsequent to the issuance of the 2021 actuarial reports are not yet factored in to the rates provided above but will most certainly impact Burbank’s projected pension costs beginning in FY 2023- 24. Fir st, the
21.3% fiscal year end investment returns earned by CalPERS in 2021 will decrease the City’s UAL payment amount and increase the overall funded status of Burbank’s three plans by as much as 10%. Offsetting the investment gains is CalPERS’ recent dec ision to lower the discount rate from 7% to 6.8%, as well as the adoption of new assumptions regarding retirement age, life expectancy, and salary inflation. These revised assumptions are projected to increase the normal cost rates for each plan by a range of 1.7% - 3%. Overall, CalPERS estimates that the UAL savings from investment gains will offset the normal cost increases and still provide a nominal net benefit to the City, but this is contingent on CalPERS meeting their projected rate of return in future fiscal years.
Staff continues to implement the City Council’s multi-year pension funding plan approved as part of the FY 2019- 20 Budget process to help reduce future pension payments , with the most recent discretionary payment of $13 million sent to CalPERS in July of 2021. To date, $41 million in one-time resources across all City funds were sent to CalPERS, with a total of $53 million in planned contributions over a four -year period. The General Fund portion of this commitment is approximately 68% ($36 million). In September 2021, CalPERS provided the City with an update of the UAL payment amounts for FY 2022 -23, which accounts for the July payment. The revisions show that Burbank is continuing to realize the benefits of our multi-year pension funding plan with a savings of $1.5 million citywide ($1 million General Fund) in UAL payments generated from this third payment of our multi -year plan. To date, the City has achieved $4.6 million in recurring savings as a re sult of the City Council’s pension funding plan.
FY 2022-23 State Budget Proposal
In early January, Governor Newsom released his proposed budget for FY 2022- 23. This proposal serves as the beginning of deliberations in the State Legislature leading to final budget adoption in June 2022. The proposal calls for a $286.4 billion budget, with a General Fund total of $213.1 billion. The b udget proposes a series of emergency investments to respond to the public health effects of COVID-19 and a combination of one-time and ongoing investments to provide greater support for the health and economi c well- being of Californians. The state entered the COVID-19 recession on a strong fiscal foundation after years of building reserves and a focus on maintaining balanced budgets over the long term.
The budget reflects the utilization of $34 billion from budgetary reserves and discretionary surplus. Although the COVID-19 Pandemic has been devastating to many Californians, the state has recently experienced unprecedented revenue growth due to factors including surging incomes among the wealthy, the booming st ock market, steep growth in corporate profits, and strong retail sales. According to current estimates, the state exceeded its Appropriations Limit or “Gann Limit” by $19 billion in FY 2020-21 and is expected to be under the limit by $16.4 billion in FY 2021-22. The difference between the two fiscal years of $2.6 billion is the projected amount to surpass the Gann Limit . Any funds above this limit are constitutionally required to be allocated evenly between schools and a refund to taxpayers.
To prepare for uncertainties with future variants, t he administration proposes additional funding to bolster vaccination and booster efforts, expand testing capacity, and support health care workers. The administration proposes a total of $2.7 billion to mitigate the spread of the virus and protect the health of Californians. Of this amount, the administration requests that $1.4 billion be included in an early action package before the June budget. The proposed budget would provide a comprehensive Medi -Cal plan for Californians who are undocumented, provide cash assistance for low -income households through state tax credits, invest in homelessness prevention and housing, invest in behavioral health, and commit additional funding across education systems, from early learning to K -12 to higher education. The budget would also provide temporary tax credits for companies investing in climate change mitigation and green energy technologies that are headquartered in California.
The administration is continuing to i mplement the Road Repair and Accountability Act of 2017, Senate Bill 1 (SB-1), which provides funding for both state and local transportation infrastructure. SB-1 increased the gas fuel tax by 12 cents, providing a stable and ongoing increase in state transportation funding. To provide relief to consumers and lower gasoline and fuel prices, the budget proposes to suspend the annual inflation adjustment to the per - gallon fuel excise tax rate scheduled for July 1, 2022. Based on an estimated 5.6% inflation rate, fuel tax revenues would be reduced by $523 million in FY 2022-23. The Governor and the Legislature have committed to backfill any revenue impact on local streets and roads allocations to make them whole. The City of Burbank is estimated to receive SB -1 funding of $2.4 million in FY 2022-23, which assumes the inflationary adjustment. Staff will continue to monitor developments in the state budget process and provide updates to the City Council as necessary.
FY 2022-23 Budget Development Process
The FY 2022-23 budget process is underway and City departments are currently working on their respective budgets. While staff initially projected a deficit for the 2022- 23 fiscal year, the forecast now estimates a recurring balance of approximately $1.1 million, due to the revenue revisions discussed previously in this report. After a downward trend in fiscal years 2023-24 and 2024-25, the recurring balance is expected to rebound to about $1.1 million by the last year of the Five- Year Forecast. Staff will continue to focus on strengthening revenues and developing additional cost-saving initiatives to provide long-term fiscal stability and prevent future structural imbalances in the City’s financial forecast.
The City Manager’s Office is in the process of reviewing each department’s proposed budget and incorporating revisions as needed, with the goal of preparing a Proposed FY 2022-23 Budget for review in late April. Should City Council Members have specific requests or items of their own for the upcoming fiscal year, staff encourages the City Council to inform them before the scheduled budget study sessions in April and May, to help streamline the review process and provide for adequate research time, if necessary.
FISCAL IMPACT:
If approved, the requested mid- year adjustments for the General Fund will total $6 87,958 and are offset by revenue adjustments and the use of restricted funding of $ 445,111 for a net impact of $242,848. Overall, mid -year appropriation requests for all funds total $11,860,331 net of revenue (total appropriations are $12,503,274).
CONCLUSION:
Economists are forecasting s teady economic growth in 2022 despite concerns about inflation, Federal Reserve tightening, supply chain disruptions, and unforeseen consequences related to future COVID -19 variants. The City’s revenues are recovering significantly above expectations, placing Burbank’s fiscal health in a much better position at the end of the second quarter of the FY 2021- 22. The General Fund five -year financial forecast includes a deficit of $884 thousand for the current fiscal year. The deficit will be eliminated by the next fiscal year, showing a recurring balance of about $1.1 million for FY 2022-23 prior to any new budget items or requests . This positive change is a result of continued economic rebounding from the pandemic , coupled with prior prudent financial
decisions, including the enactment of cost -savings measures and the continuation of the four-year pension funding plan. It should be noted that there are several risks associated with our projections, including further potential changes to CalPERS assumptions, impacts of local development projects, and potential future variants or new waves of COVID-19.
Chart 1 - General Fund Financial Forecast FY 2021-22 through FY 2025-26
Fortunately, the City’s cash position is also strong, thanks to the aforementioned fiscal policies and strategies along with significant assistance from the federal government.
Assuming the adoption of mid- year requests, the General Fund’s projected year -end spendable balance is at approximately $31.5 million. As we proceed with the development of the FY 2022-23 budget in the months to come, staff looks forward to working with the City Council to protect the programs and services our community has come to expect and maintain and enhance Burbank’s long term financial stability. Staff will continue to monitor current economic events, future developments, and legislative actions that may impact the City’s financial position and provide updates to the City Council.
ATTACHMENTS:
Attachment 1: A RESOLUTION OF THE COUNCIL OF THE CITY OF BURBANK AMENDING THE BUDGET OF FISCAL YEAR 202 1-2022 FOR THE
PURPOSE OF MID-YEAR ADJUSTMENTS.
Attachment 2: A RESOLUTION OF THE HOUSING AUTHORITY OF THE CITY OF BURBANK AMENDING THE BUDGET OF FISCAL YEAR 2021-2022 FOR THE PURPOSE OF MID-YEAR ADJUSTMENTS.
Attachment 3: General Fund Projected Spendable Fund Balance for June 30, 2022 Attachment 4: General Fund Financial Forecast FY 2021-22 through FY 2025-26 Attachment 5: Mid-Year Appropriation Requests and Revenue Adjustments $192.0
$199.5
$205.7
$212.6
$219.2
$192.9
$198.4
$205.3
$211.9
$218.0
$160
$170
$180
$190
$200
$210
$220
2021-22 2022-23 2023-24 2024-25 2025-26
Revenue Expenses
Balance: ($0.9) $1.1 $0.4 $0.7 $1.1