CA Review CKM
Meeting Date: Feb. 14, 2023
To: Mayor and City Council
From: Scott Chadwick, City Manager
Staff Contact: Zach Korach, Finance Director
[email protected], 442-339-2127
Matt Sanford, Economic Development Manager
[email protected], 442-339-5987
Subject: Economic and Financial Update for the Second Quarter of Fiscal Year 2022-23
Districts: All
Reco
mmended Actions
1. Receive a report on the economic and financial update for the second quarter of fiscal year 2022-23 and provide direction as appropriate.
2. Receive a report on the results of the fiscal year 2022-23 mid-year budget review.
3. Adopt a resolution approving the appropriation of $330,000 from the Fleet Replacement Fund to replace one ambulance approximately six months before the scheduled replacement date.
Executive Summary
The City Manager has committed to providing quarterly updates to the City Council on the economic outlook and the city’s finances. The update reviews the city’s economic and fiscal health and serves as a measure of budgetary performance. While substantial recovery from the COVID-19 pandemic has occurred, economic uncertainty has increased fueled by, among other factors, geopolitical conflict and rising inflation.
In this report, staff will provide a presentation on:
• National, state, regional and Carlsbad-specific economic data • The city’s most recent financial data
• General progress and execution of the annual budget
This report details positive economic trends in the recovery from the most severe period of the pandemic as well as information pertaining to the economic uncertainty driven by continued increases in inflation. In line with regional trends, Carlsbad saw increases in revenues in almost all categories when compared to same quarter in the previous fiscal year, and expenditures are in line with the prior year’s rate of spending.
Feb. 14, 2023
Item #7 Page 1 of 28
Explanation & Analysis
Economic update
Carlsbad’s economy is diverse, has strong industry clusters and is a leader in innovation.
According to the most recent biennial business survey of Carlsbad businesses, released in January 2022, five key industry clusters are driving growth:
• Life sciences
• Information, communications and technologies
• Cleantech
• Sports innovation and design
• Hospitality and tourism
The gross regional product for Carlsbad is $15.8 billion, indicating that Carlsbad is the largest economy in the county behind the City of San Diego. Companies that call Carlsbad home are at the forefront in areas of technology and innovation, and the city’s hospitality and tourism industry generate the second-highest amount of transient occupancy tax among the county’s 18 cities.
The COVID-19 pandemic took a toll on the city’s businesses, with unemployment spiking to
13.8% in April 2020. Many businesses were forced to reduce or suspend operations temporarily at various times throughout the pandemic and corresponding public health orders.
However, because of the diversity of industries, strategic engagement by the city of Carlsbad to attract and grow innovation businesses and rapid allocation of financial resources to respond to the pandemic, the economic impact on Carlsbad was less severe than it was on surrounding cities. Many businesses recovered rapidly and resumed growth.
In 2022, Carlsbad’s economy grew by roughly $1.07 billion, with a total gross regional product of $15.8 billion. Growth occurred in all sectors except the mining and oil and gas extraction sector, which contracted slightly. Wholesale trade; manufacturing; professional, scientific and technical services; and hospitality and food service were the leading growth sectors for Carlsbad in 2022.
Through most of 2022, Carlsbad unemployment fluctuated between 2% and 3%. In December, the Carlsbad unemployment rate was 2.6%, indicating the labor market in the region remains extremely tight. In fact, regionally, 2022 ended with the tightest jobs to labor ratio in recent history. The unemployment rate in December was 4.1% at the state level and 2.9% at the county level.
Nationally, the Federal Reserve continues to raise interest rates, although it has signaled that with inflation slowing, it is more open to smaller increases than were seen in the second half of 2022. In November, inflation in the San Diego region decreased by .7% for the latest two-month period. This could indicate that the economy may end up foregoing a recession altogether, or experiencing a milder recession than once predicted.
To ensure the city remains responsive to the changing landscape, staff have capitalized on greater in-house economic data capabilities and analytics developed over the past year to publish a quarterly economic scan. The full economic scan for the second quarter of fiscal year Feb. 14, 2023
Item #7 Page 2 of 28
2022-23 is provided as Exhibit 2. Staff also publish relevant data on the city’s economic development site, carlsbadca.gov/doingbusiness.
Financial update
The COVID-19 pandemic created immense uncertainty in the city’s revenues, most notably in sales tax and transient occupancy tax, the tax assessed on local hotel and motel stays. The fiscal year 2021-22 adopted budget had anticipated continued adverse impacts from the pandemic with moderate recovery. However, based on unaudited financial statements for fiscal year 2021-22, General Fund revenues in total, specifically property, sales and transient occupancy tax revenues, reached historically high levels. This was mainly due to the staggered removal of COVID-19 restrictions, coupled with pent-up demand and inflationary increases.
While recovery from the pandemic was accelerated compared to original estimations, new uncertainty surrounding the economy is rising. Significant inflation and its impacts on disposable income, personal savings, tourism and the housing market indicate that maintaining a conservative outlook for the city’s revenues is prudent. The December 2022 Financial Status Report is provided as Exhibit 3.
Revenues
The majority of health order restrictions on businesses have been lifted since the fiscal year 2021-22 budget was adopted in June 2021, and the results have been positive across most of the city’s revenue streams. The General Fund’s top three revenue sources – property, sales and transient occupancy tax – reached historic highs in fiscal year 2021-22. The fiscal year 2022-23 adopted budget took a conservative approach at estimating these revenue sources. However, year-over-year increases through the second quarter are notably positive given the amount of uncertainty in the economy. The table below shows the differences in revenue when comparing quarter 2 of fiscal year 2022-23 with the same period in the prior fiscal year.
Fiscal year 2022-23 revenues for the first quarter
compared to fiscal year 2021-22 Q2 revenues
Revenue category Change ($) Change (%)
Property tax $3,464,833 13%
Transient occupancy tax $3,446,417 21%
Licenses and permits $1,475,233 26%
Sales tax $853,331 3%
Investments, property income $357,486 13%
Interdepartmental charges $296,914 11%
Other revenues sources $170,759 25%
Fines and forfeitures $46,503 25%
Intergovernmental -$11,114 -2%
Other taxes -$696,310 -12%
Feb. 14, 2023
Item #7 Page 3 of 28
As noted above, the city’s three major revenue sources are property tax, sales tax and transient occupancy tax.
Property tax
The majority of property tax revenue is collected in December and April each year.
Increases through the second quarter are due to an increase in assessed property values and aircraft taxes as a result of additional aircraft being housed at the airport.
Sales t ax
Most of these sales tax revenues represent receipts that were collected for the third calendar quarter of 2022, but they also include a portion of the city’s sales tax receipts from January 2022 through June 2022, as well as the first advance of the city’s sales tax revenues from the fourth calendar quarter of 2022. The prior fiscal year saw accelerated recovery from the impacts of COVID-19 and ended with historical levels of revenues.
The first two quarters of fiscal year 2022-23 experienced gains over the same period last year, primarily in the categories of general retail, food products, transportation and business-to-business. While much uncertainty remains surrounding inflation and its impacts on disposable income and savings, increased inflation appears to be increasing the level of sales tax revenues through the second quarter.
Transient occupancy tax
Year-to-date transient occupancy tax figures represent taxes collected on hotel receipts through the month of November 2022. The revenues received during the second quarter represent an increase of $3.4 million or 21% compared to the same period last year. This increase is largely due to an increase in the average daily room rate and offset with a slight reduction in occupancy rates.
Expenditures and encumbrances
Overview
Total General Fund expenditures and encumbrances – those funds either spent or committed for specific expenses – through the month of December 2022 are $124.4 million, compared to $125.3 million at the same time last year. While the year-over-year change is only $900,000, or
0.7%, there are varying factors in how each of the respective years’ expenditure totals are derived.
During the first two quarters of fiscal year 2021-22, the City Council authorized:
• $10.7 million transfer related to the Technology Investment Program in support of the Strategic Digital Transformation Investment Program
• $7.8 million transfer to the General Capital Construction Fund from fiscal year 2020-21 General Fund surplus
• $5.5 million additional discretionary payment to CalPERS, the state’s public employees pension system
During the first two quarters of fiscal year 2022-23, the City Council authorized:
• $10.2 million transfer to the city’s Workers’ Compensation Internal Service Fund • $1 million transfer to the city’s Risk Management Internal Service Fund • $1.4 million transfer to the city’s Fleet Maintenance Internal Service Fund Feb. 14, 2023
Item #7 Page 4 of 28
Surplus
On an annual basis, staff recommends to the City Council one-time expenditure uses for any surplus in the city’s General Fund. City Council-authorized expenditures of the General Fund of surplus were greater than in 2022-23. Although the fiscal year 2022-23 adopted budget was $13.8 million, or 7.5%, greater than the previous year, the difference in the authorized surplus expenditures contributed to comparable expenditure totals in both years.
Excluding the transfers out, contingencies and certain non-departmental charges, the percentage of available budget on Dec. 31, 2022, is 46.9%, slightly more than the 46.5% available on Dec. 31, 2021.
Pension funding
CalPERS and pension funding has been and will continue to be a challenge for participating agencies like the City of Carlsbad. CalPERS administers the city’s defined benefit pension plan, and costs have been increasing in past years as CalPERS addresses a structural shortfall in plan assets to cover unfunded liabilities.
In support of CalPERS’s strategies for plan sustainability, and as part of the city’s strategic, long- term approach to financial management, the city actively manages its unfunded pension liability. Since fiscal year 2016-17, the City Council has approved additional discretionary payments totaling $56.4 million to decrease future costs of the city’s unfunded actuarial liability and the city strives to achieve a funded status of 80% in accordance with City Council Policy Statement No. 86, the city’s pension funding policy.
In CalPERS’s latest actuarial valuation report (as of June 30, 2021), the city had a combined pension funded status of 86%, which was predominantly driven by CalPERS’s fiscal year 2020-21 investment return of 21.3%. This positive return will not impact the city’s required contributions until fiscal year 2023-24. CalPERS recently announced a preliminary net investment return of -6.1% for fiscal year 2021-22, which will significantly reduce the city’s total funded status and have a tremendous impact on the city’s future costs. This negative return will not impact the city’s required contributions until fiscal year 2024-25. Staff will continue to monitor CalPERS’s strategies and performance and report to the City Council as necessary and appropriate.
Enterprise funds
The city’s water and wastewater enterprise funds
1 continue to operate in line with budgeted
expectations. The city’s municipal golf course, The Crossings at Carlsbad, continues to exceed budgeted estimates due to higher-than-expected demand for golf.
Mid-year savings update
The city initiated a mid-year budget review of the Fiscal Year 2022-23 Operating Budget in November 2022. The Finance Department led this effort in collaboration with city departments to forecast changes to revenues and expenditures compared to their current budgets. The mid- year budget review was based on the first five months of actual activity in fiscal year 2022-23.
1 Enterprise funds are government funds usually used to account for operations that are financed and operated in a manner similar to private business enterprises, with the services provided paid for primarily through user charges.
Feb. 14, 2023
Item #7 Page 5 of 28
Departments were directed to update their revenue and expenditure projections for the rest of the fiscal year based on the observed trends.
A key component of the mid-year review was the analysis of spending within departments’ personnel budgets. In fiscal year 2022-23, the adopted budget for the city’s General Fund included a new item of $2 million for “vacancy savings.” This represents the estimated amount of budgeted personnel savings that will be realized by the end of the fiscal year. Vacancy savings are realized when vacant or new positions take longer than expected to fill or when they are filled at a lower cost than budgeted. As of the first pay period ending in January 2023, General Fund departments have realized nearly $1.3 million of the $2 million budgeted for the fiscal year, indicating that the General Fund is on track to meet the budgeted figure by fiscal year end.
There were no substantial updates to departments’ revenue estimates that would require changes to the previously budgeted figures.
The City Manager authorized several individual budget transfers with a zero-dollar budget impact to the General Fund overall, related to:
• Actual personnel budget savings through the first pay period ending in January 2023 • Projected maintenance and operations budget savings in department budgets • Actual final vacation pay through the first pay period ending in January 2023 • One budget request from the Police Department to complete the outfitting for Homeless Outreach Team vehicles, originally approved in the fiscal year 2021-22 budget and intended to be carried forward into the fiscal year 2022-23 budget.
Funding for new ambulance
Staff request the City Council consider approving one additional non-General Fund need identified during the mid-year review process: to replace an ambulance before its scheduled replacement date in fiscal year 2023-24, approximately six months early.
Lead times for purchasing an ambulance are longer than in previous years, and delaying the purchase will cause a delay in putting the ambulance into service. Costs are up approximately $80,000 since 2019 and $40,000 in the last 18 months; purchasing the ambulance now would lock in pricing. There are also manufacturer delays, ongoing supply chain issues and order restrictions that further warrant the early replacement of this ambulance.
If this request is not approved by the City Council, it will result in the loss of existing reservations with the vendor, an extension of lead time from 24 months to upwards of 36 months, greater downtimes for services and repairs, as well as higher maintenance costs. A proposed resolution approving the request is provided as Exhibit 1.
Completing the purchase in fiscal year 2022-23 will require an additional appropriation of $330,000 from the Fleet Replacement Fund. The fund has collected $154,000 to date, and the remaining funds needed to purchase the ambulance will be collected by the end of fiscal year 2024-25. The Fleet Department charges the budgets of other city departments for fleet services. The early replacement of the ambulance will not result in an increased charge back to the Fire Department overall, due to other vehicles fully depreciating and the timing of replacement purchases, as shown in the table below.
Feb. 14, 2023
Item #7 Page 6 of 28
DESCRIPTION AMOUNT
Ambulance replacement, outfitting $330,000
Replacement revenue collected so far -154,000
Funds needed $176,000
Current chargeback over FY 23-24, 24-25 -86,000
Increased chargeback over FY 23-24, 24-25 -90,000
Net impact $0
Fiscal An alysis
The request to appropriate $330,000 from the Fleet Replacement Fund to accommodate early replacement of an ambulance will not result in any citywide fiscal impact. The Fleet Replacement chargeback to the Fire Department to collect the remaining revenue in fiscal years 2023-24 and 2024-25 will not increase overall because of this purchase, due to other vehicles fully depreciating and the timing of existing replacement purchases.
The other items in this report are informational in nature with no fiscal impact.
Next Steps
The city will continue to develop tools to understand the economy, attract businesses and cultivate talent.
Staff will continue to monitor spending and intend to return to the City Council in May 2023 with a third quarter review of the General Fund’s budget. Staff plan to propose adjustments to current year revenue forecasts and may propose expenditure adjustments in line with the city’s evolving economic situation.
Staff will continue to provide quarterly updates to the City Council on the economic outlook and the city’s finances.
Vacancy savings will be re-evaluated at the fiscal year’s end to identify the approximately $700,000 remaining of the $2 million in the adopted fiscal year 2022-23 budget.
With the City Council’s approval, funds from Fleet Replacement Fund budget will be appropriated for the purchase of the new ambulance.
Enviro
nmental Evaluation
This informational report does not constitute a project within the meaning of the California Environmental Quality Act under California Public Resources Code Section 21065. It has no potential to cause either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment.
Exhibits
1. City Council resolution
2. December 2022 Economic Scan
3. December 2022 Financial Status Report
Feb. 14, 2023
Item #7 Page 7 of 28
RESOLUTION NO. 2023-054
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIFORNIA, APPROVING THE APPROPRIATION OF FUNDS FOR EARLY
REPLACEMENT OF ONE AMBULANCE FOR THE FIRE DEPARTMENT
WHEREAS, the City Council of the City of Carlsbad, California, has determined that it is in the best interest of the city to authorize the early replacement of one ambulance for the city's Fire Department in fiscal year 2022-23 in the amount of $330,000; and WHEREAS, the ambulance was originally scheduled to be replaced in fiscal year 2023-24; and WHEREAS, the city's early replacement of the ambulance will avoid further manufacturer delays, lock in current pricing during a time of inflation, and minimize downtime for service and repairs; and
WHEREAS, the Fleet Replacement Internal Service Fund will collect the remaining revenue to cover the full cost of the replacement by the end of fiscal year 2024-25; and WHEREAS, the early replacement of one ambulance will not result in an overall increase in the Fleet Replacement chargeback to the Fire Department or General Fund; and NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as follows:
1. That the above recitations are true and correct.
2. That the Deputy City Manager of Administrative Services or a designee shall be authorized to appropriate $330,000 to the Fleet Replacement Fund's 2022-23 operating budget to purchase and outfit one ambulance.
Exhibit 1
Feb. 14, 2023 Item #7 Page 8 of 28
PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of Carlsbad on the 14th day of February, 2023, by the following vote, to wit:
AYES:
NAYS:
ABSTAIN:
ABSENT:
Blackburn, Bhat-Patel, Acosta, Burkholder.
None.
None.
None.
KEITH BLACKBURN, Mayor
� j""'" -SHERRY FREISINGER, City Clerk
-r-(SEAL)
Feb. 14, 2023 Item #7 Page 9 of 28
1 Second Quarter, Fiscal Year 2022-2023
The following scan provides an overview of key economic indicators for October, November, and December 2022 for the City of Carlsbad. This economic scan is updated quarterly to provide information that is relevant to the health of Carlsbad’s economy. For regularly updated information regarding the Carlsbad economy and economic development visit carlsbadca.gov/doingbusiness.
GROSS REGIONAL PRODUCT
Carlsbad GRP (Source: Lightcast, 2022)
$15.8B
In 2022, Carlsbad had the second largest gross regional product in San Diego County at nearly $15.8B, only trailing the City of San Diego. From 2021 to 2022, Carlsbad’s gross regional product grew by $1.07B.
This growth was seen across almost all industry categories (except oil and gax extrusion) , and was led by manufacturing, wholesale trade, hospitality & food service, and professional, scientific & technical services.
JOBS
Unemployment Rate (Source: California Employment Development Department, Dec. 2022 Report) The unemployment rate in Carlsbad has hovered between 2% and 3% for the majority of 2022. In December, the unemployment rate for Carlsbad was 2.6%, bucking predictions of increased unemployment over the holidays. Comparitively, the unemployment rate for the County of San Diego was 3.1% and the State of California was 3.9%. Nationally, tech firms have laid off hundreds of thousands of workers, but the trend has not yet had an impact on Carlsbad’s labor market. In fact, in San Diego County, 2022 ended with the tightest jobs to labor ratio in recent history. 0 1
2 3
4 5
6 7
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Carlsbad Unemployment Rate 2021 vs 2022
2021 2022
0 1
2 3
4 5
6 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Unemployment Rate Comparison 2022
Carlsbad San Diego County
North County Avg w/o Carlsbad California
Innovation + Economic Development Department
Exhibit 2
Feb. 14, 2023
Item #7 Page 10 of 28
Economic Scan
{city of
Carlsbad
2 Job Postings (Source: Lightcast, October - December 2022) 13,352
There were 13,352 unique job postings in Carlsbad between October and December, a decrease of about 1,800 jobs from the previous quarter, and the second quarterly decrease in the past ten quarters.
The median advertised salary for these postings was $46,800, which is on average $1,200 more than jobs posted in the previous quarter. Of jobs posted, 66% indicated an education requirement of high school diploma/GED or less. Carlsbad employers have continue to note challenges in finding and hiring entry-level workers, especially front-line service workers. This has limited growth in some industries.
TALENT + WORKFORCE
Education (Source: 2021 ACS 5-Year Estimates, the latest year available) Carlsbad has established itself as having
the right workforce to fuel innovation
in tech and life sciences fields. Carlsbad
businesses can access talent from San
Diego County, Orange County, and even
southwest Riverside County. More than
60% of working-age residents hold a
bachelor’s degree, with nearly 25%
attaining an advanced degree. Outside of
some communities in central San Diego,
Carlsbad has the heaviest concentration
of households with degrees in
science, technology, engineering, and
mathematics (STEM degrees). This local
talent mix is among the leading reasons
that firms choose Carlsbad.
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
Less Than
High School
High School
Diploma
Some College,
no Degree
Associate's
Degree
Bachelor's
Degree
Graduate or
Professional
Degree
Educational Attainment Comparison Percent of
Population Over 25 Years Old
National California San Diego County Carlsbad
Nearby public and private universities,
including UC San Diego, CSU San Marcos, San
Diego State University, University of San Diego,
National University, MiraCosta College, and
Palomar College offer top-notch programs
feeding a strong talent pipeline. All located
within a 30-mile radius, these universities
and colleges confer more than 35,000
degrees annually. The Carlsbad business
community works closely with higher
education partners to align education tracks
with current and emerging workforce needs.
Talent Pipeline
Degrees Conferred by University,
Displayed as Distance from Carlsbad
San Diego State
University
9,671
Feb. 14, 2023
Item #7 Page 11 of 28
0 ~
.•• _ 111, 1111 .... 111 111I
■ ■ ■ ■
GK Cal State
MiraCoS ta San Marcos
sK c;~:~e 3,578
"
:: l
UC San
Diego
10,266
National
University
5,322
University of
San Diego
2,780
....
ll ~ ~ ~ ~
Proxlml tylnMlleslromca ,lsb;,d
3 CAPITAL
Interest Rates (Source: U.S. Department of the Treasury, December 2022) National interest rates, which have remained low for years, have steadily increased as the Federal Reserve raises rates to combat inflation. One-year rates are currently at 4.73%. Ten-year rates are currently at 3.85%. 30-year rates are currently at 3.97%. The Federal Reserve has indicated they may still pursue future rate increases, but rate hikes may be less than the 75 basis point hikes experienced in 2022 as inflation rates may be subsiding. With inflation slowing, economists remain divided on whether a recession will occur and if so, how deep it may be.
December 2021
One-year interest rate
0.39%
10-y
ear interest rate
1.52%
30-y
ear interest rate
1.9%
December 2022
One-y
ear interest rate
4.73%
10-y
ear interest rate
3.85%
30-y
ear interest rate
3.97%
COMMERCIAL REAL ESTATE
Market Vacancy Rates and Rent per Square Foot (Source: CoStar, December 2022) Commercial vacancy rates are now below pre-pandemic levels in all categories. The industrial vacancy rate is now at 3.3%, compared to 10.8% pre-pandemic. The office vacancy rate is currently 11%, compared to 15.3% pre-pandemic. Retail vacancy is now at 4%, compared to 5.3% pre-pandemic. The constrained office market may loosen as some employers embrace remote-work policies, thereby needing less space. As a result, some office-employers may let go of leases that will expire over the next several years.
The constrained industrial market is likely to push up lease rates and may yield densification in Carlsbad’s business parks.
Average market rents per square foot, per year have risen in office and industrial categories this quarter. Office rates are now $38.09. Industrial rates are now at $21.41. Retail rates decreased slightly to $41.31.
3.3%
Industrial vacancy rate
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
2020 Q1 2020 Q2 2020 Q3 2020 Q4 2021 Q1 2021 Q2 2021 Q3 2021 Q4 2022 Q1 2022 Q2 2022 Q3 2022 Q4 Carlsbad Commercial Vacancy Rates
Carlsbad Retail Carlsbad Office Carlsbad Industrial
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
Retail Office Industrial Retail Office Industrial
Carlsbad North County w/o Carlsbad
Vacancy Rate Comparison
2021 Q1 2021 Q2 2021 Q3 2021 Q4
2022 Q1 2022 Q2 2022 Q3 2022 Q4
Feb. 14, 2023
Item #7 Page 12 of 28
I I
.. ,-
• • • •
■ • • •
4 TOURISM
Throughout 2022, hotel occupancy more closely matched 2019 levels. Occupancy averaged 63.8% in the fourth quarter, which slightly lagged the fourth quarter of 2019 (64.8%). The impacts of inflation and a potential recession could hamper tourism globally, but Carlsbad is well-positioned as a destination that could see strong tourism through a recession. Baseline comparison is 2019, as it represents normal conditions.
42 With 42 hotels in Carlsbad, tourism is a major industry in terms of employment and economic impact. It is also a major contributor to city revenue, through transit occupancy tax and sales tax generation. Below are several indicators reflecting the health of the city’s tourism economy.
Hotel Occupancy (Source: Smith Travel Research, December 2022 Report) Carlsbad’s average daily room rate (ADR) remains significantly elevated compared to pre-pandemic levels. ADR averaged $202 in the fourth quarter, compared to $156 for the same quarter in 2019. As a result, despite occupancy lagging slightly, the increased ADR means revenue generated surpasses 2019. Baseline comparison is 2019, as it represents normal conditions.
Hotel Average Daily Room Rate (Source: Smith Travel Research, December 2022 Report) 50 100
150
200
250
300
350
400
450
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Avgerage Daily Rate 2022
City of Carlsbad San Diego County, CA City of Oceanside, CA City of Newport Beach, CA City of Carlsbad, 2019
0 20
40 60
80 100
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Hotel Occupancy 2022
City of Carlsbad San Diego County, CA City of Oceanside, CA City of Newport Beach, CA City of Carlsbad, 2019
Feb. 14, 2023
Item #7 Page 13 of 28
5 INCOME + HOUSING
Median Household Income (Source: 2021 ACS 5-Year Estimates, the latest year available) Median household income in Carlsbad continues to exceed county income levels. The median income for a household in Carlsbad in 2021 was $124,669 , (adjusted for inflation), which was $33,666 higher than the county median income.
Carlsbad has generally outpaced the region in terms of household income growth.
Median Home Price (Source: Zillow Home Value Index - December 2022) Home values in Carlsbad, along with San Diego County, rose significantly the past three years. Beginning in July, housing prices began to fall, and are now on average 5%, or $73,000, below their June 2022 peak. The median home price in Carlsbad was $1.44 million in December. This value is seasonally adjusted and only includes the middle price tier of homes.
Carlsbad home values have risen 18% over the past year. The continued rise in home values can be partially attributed to constrained supply and strong demand in the region.
$600,000
$700,000
$800,000
$900,000
$1,000,000
$1,100,000
$1,200,000
$1,300,000
$1,400,000
$1,500,000
$1,600,000
2019 2020 2021 2022
Carlsbad Median Home Price
Jan 2019 - Present
$600,000
$700,000
$800,000
$900,000
$1,000,000
$1,100,000
$1,200,000
$1,300,000
$1,400,000
$1,500,000
$1,600,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Median Home Price Comparison - 2022
Carlsbad North County Avg
Feb. 14, 2023
Item #7 Page 14 of 28
2016 2017 2018 2019 2020 2021
City of Carlsbad
Median Household Income $113,217 $102,722 $107,172 $123,409 $112,933 $124,669 County of San Diego
Median Household Income $70,824 $70,588 $74,855 $79,324 $82,426 $91,003 City of Carlsbad
per Capita Income $49,349 $52,560 $55,518 $63,079 $57,607 $65,430 County of San Diego
per Capita Income $32,482 $34 ,350 $36,156 $40,389 $39,737 $44,377 ----- ----
6 BUSINESS ACTIVITY
Business Licenses (Source: City of Carlsbad, December 2022) There were a total of 2,306 business licenses issued last quarter, including 933 non-residential, 569 residential, and 804 outside- the-city licenses. This is a decrease of 109 over the same quarter of 2021.
The number of licenses issued does not reflect the number of businesses in Carlsbad as a business may carry multiple licenses, short-term vacation rentals are required to get a license, and businesses outside of Carlsbad that do business in the city or with the city are required to get a license. It is estimated that there are approximately 6,678 businesses in Carlsbad.
Building Permits (Source: City of Carlsbad, December 2022) Last quarter, permit activity increased for residential building permits (1,147), continuing a strong trend for 2022.
Commercial permits issued (98), was roughly equivilent to last quarter. The number of residential building permits issued has been generally increasing over the past several years. 0 200
400
600
800
1000
1200
1400
Commercial Residential Commercial Residential Commercial Residential 2020 2021 2022
Building Permits Issued
Q1 Q2 Q3 Q4
0 500
1000
1500
2000
2500
3000
Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Business Licenses Issued by Quarter
Non-Residential Residential Outside City Total
Feb. 14, 2023
Item #7 Page 15 of 28
- - -
f
• • • •
7 INDUSTRY CLUSTERS
Life Sciences (Source: 2022 Business Report and Industry Cluster Update) The Life Sciences industry cluster employs 6,657 workers across 134 firms and experienced a 2.6% increase in employment between 2018 and 2020. The cluster is 5.51 times more concentrated in Carlsbad than the national average and annual wages per worker average $123,702.
San Diego County and California have experienced parallel employment growth in the Life Sciences cluster between 2010 and 2020. In the same ten-year period, employment in Carlsbad grew by 75%. Between 2016 and 2018, Carlsbad experienced over 40% growth. Over the past two years (2018-2020), however, employment growth tapered off compared to years prior.
Technology (Source: 2022 Business Report and Industry Cluster Update) The Information and Communications Technologies (ICT) cluster employs 9,008 workers across 343 firms in Carlsbad and is
2.75 times more concentrated in Carlsbad than the national average. Annual wages per worker average $136,254, and the ICT industry cluster experienced a 3.3% increase in the number of jobs between 2018 and 2020.
San Diego County and California experienced steady parallel growth in the ICT cluster between 2010 and 2020. In the same ten-year period, Carlsbad experienced an initial decline in employment between 2012 and 2015; between 2015 and 2020, employment in the ICT cluster has steadily trended upwards.
Clean Technology (Source: 2022 Business Report and Industry Cluster Update) Between 2018 and 2020, the number of workers employed at Cleantech firms increased by 22.2%. By 2019, the 48 Cleantech firms in Carlsbad employed more than 872 people. The average annual wage per worker is $109,779, and the Cleantech industry cluster in Carlsbad is 4.66 times more concentrated than the national average.
Between 2010 and 2012, Carlsbad experienced an initial employment drop for the Cleantech industry followed by steady growth between 2012 and 2020. Employment growth in California peaked in 2013 and has been on a steady decline since.
Growth in San Diego County also peaked in 2013, dropping by over 25% between 2013 and 2017. Since 2017, employment in the Cleantech cluster for San Diego County has been on a steady increase.
Sports Innovation & Design (Source: 2022 Business Report and Industry Cluster Update) The Sports Innovation & Design industry cluster employs 1,804 workers across 116 firms and experienced a 16.3% decrease in employment between 2018 and 2020. The cluster is 5.06 times more concentrated in Carlsbad than the national average and annual wages per worker average $75,652.
Employment in the Sports Innovation & Design cluster has steadily declined since 2013 in Carlsbad. Both San Diego County and California have declined steadily since 2015 and experienced sharp declines between 2019 and 2020, likely due to the COVID-19 pandemic.
Hospitality & Tourism (Source: 2022 Business Report and Industry Cluster Update) Carlsbad’s Hospitality & Tourism cluster is about 1.35 times more concentrated in Carlsbad than the national average and employs 9,179 people across 467 businesses. Hospitality & Tourism experienced a sharp 34% decrease in employment between 2018 and 2020, driven by the effects of the COVID-19 pandemic between 2019 and 2020. Average annual wages per worker remain low relative to other key industry clusters, with workers earning $31,315 on average.
Carlsbad, San Diego County, and California experienced sharp declines between 2019 and 2020, during which sub-clusters like Theater Companies and Dinner Theaters, Amusement and Theme Parks, and Amusement Arcades were shut down to mitigate the effects of the COVID-19 pandemic.
Feb. 14, 2023
Item #7 Page 16 of 28
8 INDUSTRY IMPACT
Largest Industries (Source: Lightcast, December 2022)
Carlsbad’s economy significantly exceeds the national average in manufacturing, accommodation and food services, and professional, scientific and technical services jobs. These sectors, which would include tech, life sciences, and other innovation industries are generally more resilient to recessions, also represent significant job growth in the economy.
GRP by Industry
Industry size by employment
Feb. 14, 2023
Item #7 Page 17 of 28
• G r o ss Region a l Pro d uct
Manufacturing
Professional, Scientific. and Technical Services
Management of Companies and Enterpr ises
Wholesa le Trade
Finance and Insurance
Retail Trade
Rea l Estate and Ren t al and Leasing
Cons t ruction
Government
Hea lth Care and Social Ass istance
Information
Accommodation and Food Services
Administrative and Support and Waste Management and
Remediation Services
Utilities
---■
I
Transportation and Warehousing
Other Services (except Pub lic Admin istration)
Arts. Entertainment. and Recreation
Educational Services
Agricu lture, Forestry, F ish i ng and Hunting
Mining, Quarrying, and Oil and Gas Extraction
$0.000 $ 500.0M $ 1. 000 8
• Indu stry Job s • N ation a l A ve ra g e
Professional, Scientific, and Technical Services
Manufacturing
Management of Companies and Enterpr ises
Accommodation and Food Services
Retail Trade
Heal t h Care and Social Assistance
Construction
Government
Wholesale Trade
Other Services (excep t Pub lic Admin istration)
Admin istrative and Support and Waste Management and
Remediation Services
F inance and Insurance
Rea l Estate and Rental and Leasing
Arts, Entertainment, and Recreation
Transportation and Warehousing
Information -
Educational Services -
Agricu lture, Forestry, F ish i ng and Hunting - I
Utilities
Mining, Q u arrying, and O il and Gas Extraction
0 ,_
2,000 4 .000 6,000
$1. 500 8 $ 2 .000 8 $ 2 .500 8
--
8.000 10,000 12,000
9 INNOVATION
Patents (Source: 2020 Carlsbad Industry Cluster Patent Update) Four of the key industry clusters mentioned above drive innovation activity in Carlsbad. The figure below shows that while the life sciences cluster has been a long-term driver of the city’s innovation economy, information & communications technology patents have seen dramatic growth over the past ten years and was responsible for virtually the same number of new patents as life sciences in 2019. It is also worth noting that clean technology, which is the industry cluster with the lowest number of patents, has grown by more than 800% since 2009. In total, these four industry clusters accounted for 96% of all patents awarded to Carlsbad firms in 2019.
Patents per Capita
2019 Patents per 1,000 Workers in the Labor Force
Carlsbad has a notably higher proportion
of patents per 1,000 workers—over 60%
more than the next-closest competitor
city. This figure shows that Carlsbad has
a greater concentration of patent activity
than even the technology hubs of San
Jose, Seattle, San Francisco, and Boston. In
2019, Carlsbad had 1.6 patents for every
1 patent per 1,000 workers in San Jose.
That ratio was 2.5 and 2.8 for Seattle and
San Francisco.
Released November 15, 2022
The quarterly economic scan is developed by the City of Carlsbad Innovation & Economic Development Department.
For more information, visit carlsbadca.gov/doingbusiness, or contact the team at [email protected].
Feb. 14, 2023
Item #7 Page 18 of 28
Growth in Patents Held by Carlsbad Businesses
350
209%
300
....
C 250 ::J
0 u .... 200 C
~
"' c.. 150
"' ::J
C
C 100 <l'.
so
0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 - clean Technology - Information and Communications Technology - Life Sciences - sports Innovation and Design
Portland
-Denver
-Baltimore
-Pittsburgh
Austin
Boston
San Francisco
Seattle
San Jose
Carlsbad
0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0
This
report summarizes the City of Carlsbad’s General Fund revenues and expenditures through December 31, 2022. It compares revenues and e xpenditures for the first six months of fiscal year 2022-23 and fiscal year 2021-22. In addition, the financial status of the Water and Wastewater Enterprises are included. This report is for internal use only. The figures presented here are unaudited and have not been prepared in accordance with Generally Accepted Accounting Principles.
General Fund Revenues
Property Taxes ($29.8 million) – The majority of property tax revenue is collected in December and April each year. According to the County of San Diego Assessor’s Office, assessed values in Carlsbad have increased by 8.13% for fiscal year 2022-
23. This is the tenth year in a row that Carlsbad’s assessed values have increased from year to year, and in line with assessed value increases with other cities in San Diego County for the year. This reflects continued strength in the regional housing market. The increase in this year’s assessed values is due to a large increase in the assessed values of residential p
roperties in the city; the city saw smaller increases in commercial and industrial property values for the year. This is the eighth year in a row since the Great Recession ended that the city saw increases in assessed values in all three property components (residential, commercial and industrial).
The property taxes for the first six m onths of the fiscal year have increased by 13% as compared to the prior fiscal year. The primary reasons for the increase are:
• Current taxes are up by $2.6 million or 11% mainly due to increased assessed values. • Supplemental and surplus property taxes are $348,000 higher when compared with the prior year. • Aircraft taxes are also up $590,000 or 44% due to an increase in aircrafts being housed at the airport.
Sales Taxes ($26 .6 million) – For the first six months of the fiscal year, sales tax revenues are $ 853,000 higher than the same period in the previous fiscal ye ar.
Sales tax revenues for the current fiscal year represent the city’s first advance for the fourth calendar quarter of 2022, the third calendar quarter of 2022 sales tax revenues and the city’s remaining first and second calendar quarter 2022 sales tax revenues.
In the prio
r fiscal year, the city saw accelerated recovery from the impacts of the COVID-19 pandemic including the shelter-in-place orders, which essentially shut down all non-essential businesses, and where small businesses in the State of California were allowed to defer sales tax payments. FY 2021-22 experienced historically high levels of sales tax revenues.
For sales occu rrin g in the third calendar quarter of 202 2 (the most recent data available), key year -over-year gains were seen in general retail, food products, transportation, and business -to-business During the same period, key declines were seen in construction. The largest economic segments in the city are automobile dealers, general retail stores, and restaurants. Together, they generate 76% of the city’s sales tax revenues.
December 31, 2022
13%
3%
Exhibit 3
Feb. 14, 2023
Item #7 Page 19 of 28
PREPARED BY THE F I NANCE DEPARTMENT
Financial Status Report
FOR
SALE
{city of
Carlsbad
Monthly Financial Report _________________________________________________________________ 2
Transient Occupancy Tax ($20.2 million) – The city’s third highest General Fund revenue source on an annual basis is Transient Occupancy Tax (TOT or hotel tax), estimated at $ 28.8 million for the current fiscal year. A tax of 10% of the rent amount is collected on all occupancies less than 30 days (transient) in duration.
Year-to-date TOT figures represent taxes collected on hotel receipts through the month of November 2022. TOT collected for the six months of the fiscal year reflects an increase of $3.4 million, or 21%, more than the previous year.
Currently, there are 4,775 hotel rooms in service (of 5,056 total rooms built in the city), 668 timeshares and 395 registered short-term vacation rentals. The average occupancy of hotel rooms over the most recent 12 months has been 56.4% which is slightly down from 56.9% at this time last year.
Business License Tax ($ 2.9 million) – All entities doing business in the City of Carlsbad are required to have a valid business license. Business license revenue is estimated at $6.2 million for the current fiscal year. Business license revenues are down $419,000 or 13%, from the previous fiscal year. The decrease is due to a reduction in payments received for overdue business license renewals and penalties that were received last year and as a result of COVID-19.
There are currently 9,502 licensed businesses operating within the city, 22 less than the prior year. The majority of taxed businesses (6,320 businesses) are located in Carlsbad, with 2,379 of these businesses home-based.
Interdepartmental Charges ($2.9 million) – Interdepartmental charges are up by $297,000 when compared with the same period last year. These charges are generated through engineering services charged to capital projects (up $183,000 due to more staff time charged to capital projects); reimbursed work from other funds (no change ); and miscellaneous interdepartmental expenses charged to funds outside the General Fund for services performed by departments within the General Fund (up $104,000).
Income from Investments and Property ($3.0 million) – For the first six months of the fiscal year, income from investments and property is up $ 357,000 compared to the previous fiscal year. This increase is largely due to a rise in yield from 1.12% as of December 2021 to 2.01% as of December 2022.
Throughout the pandemic, t he Federal Reserve ha d maintained an effective benchmark rate between 0 and 0.25%. However, inflation has been on a historic rise for much of the last year and resulted in the Federal Reserve increasing benchmark rates all the way to
4.25%-4.50% as of December 2022. While 2022 saw repeated and large interest rate hikes, 2023 is expected to see a few smaller hikes earlier in the year, but rates could then hold steady, or even fall for much of 2023.
Recreation Fees ($ 1.8 million) – Recreation fees are generated through instructional classes, camps, youth and adult sports, special events, parent participation preschool, senior programs, and various aquatic programs.
Recreation revenues are up by $ 375,000 compared to last year at this time.
While programs began to reopen more in the summer of 2021, this increase can also be attributed to recovery growth since the onset of the pandemic.
11%
21%
26%
24%
13%
13%
Feb. 14, 2023
Item #7 Page 20 of 28
Monthly Financial Report _________________________________________________________________ 3 Development Related Revenues ($2.4 million) – Development related revenues, which include building permits, planning fees, building department fees, and engineering fees, reflect a 20% increase for the first six months of the fiscal year.
Development related fees are paid by developers to cover a portion of the cost of reviewing and monitoring development activities, such as plan checks and inspections. Engineering plan check fees are one of the first fees paid during the initial stages of development.
Activity during the second fiscal quarter of 2022 included permits associated with commercial permit revisions, second dwelling units, single family detached, and various tenant improvements.
One source of development related revenue is building permits, which are up 44% compared to last fiscal year.
The year-to-date valuation of new construction in the current fiscal year is $ 114.4 million. This represents a $43.5 million, or 61%, increase over the previous fiscal year.
Franchise Tax ($ 1.7 million) – Franchise taxes are generated from public utility sources, such as San Diego Gas & Electric (SDG&E), trash collection franchises, and cable franchises conducting business within city limits. Franchise tax revenue is estimated to be at $6.9 million for the current fiscal year. Year- to-date franchise taxes are $190,000 higher when compared to the same period last year.
Cable television franchise revenues (Spectrum and AT&T) are up $ 81,000 representing a relatively nominal amount of change for subscription services (premium video, equipment rental, on-demand, and programming services). An increase in trash collection revenue of $ 109,000 resulted from the city’s new contract with Republic and represents a relatively nominal amount of change when considering applied rates and the number of trash customers.
SDG&E pays franchise taxes for the use of public land over which they transport gas and electric services. In addition, SDG&E pays an “in -lieu” franchise tax based on the value of gas and electricity transpo rted through SDG&E lines but purchased from another source. The “in -lieu” tax was put in place to capture the franchise taxes on gas and electricity that is transported using public lands, but which would not otherwise be included in the calculations for franchise taxes. Approximately 46% of the city’s franchise taxes are anticipated to be received from SDG&E in April 2023.
Ambulance Fees ($2.1 mill
ion) – The city bills any individual who is transported in one of the city’s ambulances. Through December 2022, receipts from ambulance fees are up $678,000, or 48%, compared to last fiscal year. The increase in revenue for the first six months of the fiscal year is mainly due to an increase in the number of billable transports, 3,618 in the first six months of fiscal year 202 2-23 versus 2,787 at the same time in the prior fiscal year.
Other Revenue Sources ($ 845,000) – Other revenue sources have increased by $170,800 and include revenues received by the city to offset the costs of special studies or projects for developers; reimbursements for damage done to city streets, rights-of-way, and other city-owned property; donations; reimbursement from the Gas Tax Fund for traffic signal maintenance; and miscellaneous reimbursed expenses and refunds of prior year fees. The increase to date is related to higher amounts received for developer funded studies in the current fiscal year when compared to the prior fiscal year.
20%
48%
13%
25%
Feb. 14, 2023
Item #7 Page 21 of 28
~·~
~
1111
Monthly Financial Report _________________________________________________________________ 4 Other Licenses and Permits ($ 440,000) – Other licenses and permits consist of fire protection services, right-of-way, lagoon, grading, hazardous uses, and other miscellaneous permit revenues. These permits usually increase/decrease along with increases/decreases in development activity. Other licenses and permit revenues can vary throughout the year. To date, the decrease of $108,000 is primarily a result of decreased coastal development permits compared to the same period last year.
Fines and Forfeitures ($231,000) – Fi nes and forfeitures represent fees collected for code violations, parking citations, overdue fines, and returned checks. The city recognizes revenues when the citizen pays the fine or forfeiture, as opposed to when the fine is imposed. The increase to date of $ 46,500 is mainly due to increases in code violations.
Intergovernmental Revenues ($552,000) – Intergovernmental revenues include homeowners property tax exemption revenue and miscellaneous receipts received from the state or federal governments, as well as local school districts.
Various miscellaneous receipts comprise the $ 552,000 received this year which represents a nominal decrease over the same period last year.
Transfer Taxes ($ 467,000) –
When real property is sold, the County Assessor’s
Office charges a transfer tax. The transfer tax rate in San Diego County is $0.0011 multiplied by the selling price of the property. The city receives 50% of the transfer tax charged for sales within the City of Carlsbad. Revenues have decreased over the same period last year due to a decrease in property transfers.
Other Charges or Fees ($532,000) – O
ther charges or fees are generated through
the sale of city documents, such as staff reports, blueprints and copies; general fees collected for false alarms, easements and agreements, weed abatement and kiosk signs; and general services, such as mutual aid response, mall police services, emergency response services, reports, etc. These fees are up by $133,000 or 33% mainly due to an increase in fire mutual aid response.
A detai
led schedule of General Fund revenues is provided on the following page.
33%
20%
25%
43%
2%
Feb. 14, 2023
Item #7 Page 22 of 28
Monthly Financial Report _________________________________________________________________ 5
REVENUE
REVENUE EXPECTED ACTUAL ACTUAL CHANGE FROM
BUDGETED THROUGH FY 2022 FY 2023 YTD 2022 TO PERCENT
FOR FY 2022-23 12/31/22 AS OF 12/31/21 AS OF 12/31/22 YTD 2023 CHANGE TAXES
PROPERTY TAX $81,508,000 $26,818,122 $26,327,011 $29,791,844 $3,464,833 13% SALES TAX 49,123,000 24,757,971 25,792,391 26,645,722 853,331 3% TRANSIENT OCCUPANCY TAX 28,803,000 14,926,845 16,792,389 20,238,806 3,446,417 21% FRANCHISE TAX 6,958,000 1,658,640 1,518,697 1,708,792 190,095 13% BUSINESS LICENSE TAX 6,242,000 3,118,791 3,307,305 2,887,870 (419,435) -13% TRANSFER TAX 1,570,000 773,643 1,073,599 606,629 (466,970) -43% TOTAL TAXES 174,204,000 72,054,013 74,811,392 81,879,663 7,068,271 9%
INTERGOVERNMENTAL
VEHICLE LICENSE FEES 50,000 0 0 0 0 0%
HOMEOWNERS EXEMPTIONS 353,000 52,950 50,740 50,768 28 0% OTHER REIMBURSEMENT 737,809 50,933 512,140 500,998 (11,142) -2% TOTAL INTERGOVERNMENTAL 1,140,809 103,884 562,880 551,766 (11,114) -2%
LICENSES AND PERMITS
BUILDING PERMITS 900,000 373,581 702,123 1,009,970 307,847 44% OTHER LICENSES & PERMITS 963,000 499,933 547,232 439,391 (107,841) -20% TOTAL LICENSES & PERMITS 1,863,000 873,514 1,249,355 1,449,361 200,006 16%
CHARGES FOR SERVICES
PLANNING FEES 456,000 252,105 385,111 246,652 (138,459) -36% BUILDING DEPARTMENT FEES 895,317 412,867 398,271 583,169 184,898 46% ENGINEERING FEES 608,900 312,520 480,052 522,387 42,335 9% AMBULANCE FEES 3,850,000 1,572,333 1,398,881 2,077,050 678,169 48% RECREATION FEES 2,315,500 1,221,303 1,424,688 1,799,550 374,862 26% OTHER CHARGES OR FEES 1,504,300 351,211 399,009 532,431 133,422 33% TOTAL CHARGES FOR SERVICES 9,630,017 4,122,339 4,486,012 5,761,239 1,275,227 28% FINES AND FORFEITURES 210,750 113,234 184,262 230,765 46,503 25% INCOME FROM INVESTMENTS & PROPERTY 5,481,000 2,640,280 2,689,792 3,047,278 357,486 13% INTERDEPARTMENTAL CHARGES 5,236,449 2,566,145 2,604,453 2,901,367 296,914 11% OTHER REVENUE SOURCES 1,038,884 592,099 673,830 844,589 170,759 25% TRANSFERS IN 10,000 10,000 10,000 0 (10,000) -100%
TOTAL GENERAL FUND $198,814,909 $83,075,507 87,271,976 $96,666,028 $9,394,052 10.8% (1)
(1) C alculated General Fund rev enues are 16% abov e estimates as of December 31, 2022.
GENERAL FUND
REVENUE COMPARISON
Feb. 14, 2023
Item #7 Page 23 of 28
Monthly Financial Report _________________________________________________________________ 6 Expenditures
Total General Fund expenditures and encumbrances through the month of December 2022 are $124.4 million, compared to $ 125.3 million at the same time last year. While the year- over-year change is only $ 900,000 or
0.7%, there are varying factors in how each of the respective years’ expenditure totals are derived. During the first quarter of fiscal year 2021 -22, City Council authorized a $10.7 million transfer related to the Technology Investment Program in support of the Strategic Digital Transformation Investment Program, a $7.8 million transfer to the General Capital Construction Fund from fiscal year 2020 -21 General Fund surplus, and a $5.5 million additional discretionary payment to CalPERS. During the first quarter of fiscal year 2022-23, City Council authorized a $10.2 million transfer to the city’s Workers’ Compensation Internal Service Fund, a $1 million transfer to the city’s Risk Management Internal Service Fund, and a $1.4 million to the city’s Fleet Maintenance Internal Service Fund. While surplus authorizations in accordance with City Council Policy Statement No. 87 were higher in fiscal year 2021 -22 and resulted in additional expenditures through the first two quarters, the fiscal year 2022-23 adopted budget was $13.8 mi llion or 7.5% greater than the previous year which contributed to comparable expenditure totals in both years.
The remaining budget available through the fiscal year ending June 30, 2023 is $104.5 million, or 45.7%. If funds were spent in the same proportion as the previous year, the General Fund would have 43.5% or $96.5 million available. Excluding transfers out, contingencies, and non -departmental charges, the percentage available on December 31, 2022, is 46.9%, slightly more than the 46.5% available on December 31, 2021.
The adopted General Fund budget for fiscal year 2022-23 increased by 7.5% or $13.8 million due to:
• Increased personnel costs (increase of $9.8 million):
o $5.5 million in salaries and wages due to the addition of 24 new full- time positions and 3.4 full -time equivalent part-time positions.
o $3.5 million in health insurance and retirement benefits costs o $0.8 million increase in other personnel costs (Medicare, unemployment and disability benefits) o ($2.0) million in vacancy savings. The fiscal year 2022-23 budget introduced a mechanism for accounting for vacancy savings at the beginning of the budget cycle rather than at the end. This mechanism (1) reduces the amount of budget in the General Fund, (2) closer alignment between budgeted and actual personnel costs, (3) increased alignment with the city’s 10-year forecast • Decreased maintenance and operations costs (decrease of $1.1 million):
o Under the direction of the City Manager, departments were instructed to identify budgetary savings for fiscal year 2022-23 which resulted in a $1.5 million reduction in base operating costs. • $6.5 million increase in transfers. This increase was a result of a temporary reduction in capital project transfers in fiscal year 2021-22 as a result of COVID-19 and its anticipated adverse fiscal impacts.
CalPERS and pension funding has been and will continue to be a challenge for participating agencies. CalPERS administers the city’s defi ned benefit pension plan and costs have been increasing in past years as CalPERS addresses a structural shortfall in plan assets to cover unfunded liabilities. In support of CalPERS strategies for plan sustainability and as part of the city’s strategic, lo ng-term approach to financial management, the city actively manages its unfunded pension liability. Since fiscal year 2016 -17, the City Council has approved additional discretionary payments of $56.4 million to decrease future costs of the city’s unfunded actuarial liability and strive to achieve a funded status of 80% in accordance with City Council Policy Statement No. 86.
CalPERS latest actuarial valuation report (as of June 30, 2021), the city had a combined pension funded status of 86% which was predominantly driven by CalPERS’ fiscal year 2020-21 investment return of 21.3%. This positive return will not impact the city’s required contributions until fiscal year 2023 -24. CalPERS recently announced preliminary net investment return of -6.1% for fiscal year 2021-22 which will significantly reduce the city’s total funded status and have a tremendous impact on the city’s future costs. This negative return will not impact the city’s required contributions until fiscal year 2024 -25. Staff will continue to monitor CalPERS’ strategies and performance and report to City Council as necessary and appropriate.
Feb. 14, 2023
Item #7 Page 24 of 28
Monthly Financial Report _________________________________________________________________ 7 The city will continue monitoring spending and intends to return to the City Council in early 2023 with a midyear review of the General Fund’s budget. Staff plans to propose adjustments to current year revenue forecasts and may propose expenditure adjustments in line with the city’s evolving economic situation.
A detailed schedule of General Fund expenditures is provided below.
ADOPTED WORKING
BUDGET BUDGET AMOUNT AVAILABLE %
DEPARTMENT DESCRIPTION FY 2022-23 FY 2022-23 (a) COMMITTED (b) BALANCE AVAILABLE (c)
POLICY AND LEADERSHIP GROUP
CITY ATTORNEY $2,033,508 $2,103,944 $1,038,835 $1,065,109 50.6% CITY CLERK SERVICES 1,394,162 1,450,310 531,647 918,663 63.3% CITY COUNCIL 652,220 653,262 267,688 385,574 59.0%
CITY MANAGER 2,156,145 2,332,291 1,189,368 1,142,923 49.0% CITY TREASURER 249,945 214,664 52,681 161,983 75.5%
COMMUNICATIONS & ENGAGEMENT 1,979,186 2,518,732 1,547,472 971,260 38.6% TOTAL POLICY AND LEADERSHIP GROUP 8,465,166 9,273,203 4,627,691 4,645,512 50.1%
ADMINISTRATIVE SERVICES
ADMINISTRATION 747,797 756,348 373,512 382,836 50.6%
FINANCE 5,472,176 6,035,401 3,157,376 2,878,025 47.7%
HUMAN RESOURCES 5,264,775 5,329,529 2,533,099 2,796,430 52.5% INNOVATION & ECONOMIC DEVELOPMENT 2,585,951 2,653,533 1,287,601 1,365,932 51.5% TOTAL ADMINISTRATIVE SERVICES 14,070,699 14,774,811 7,351,588 7,423,223 50.2%
PUBLIC SAFETY
POLICE 51,240,884 57,699,507 30,014,885 27,684,622 48.0% FIRE 37,756,943 39,502,653 20,309,613 19,193,040 48.6%
TOTAL PUBLIC SAFETY 88,997,827 97,202,160 50,324,498 46,877,662 48.2%
COMMUNITY SERVICES
COMMUNITY SERVICES ADMINISTRATION 675,917 842,700 506,483 336,217 39.9% COMMUNITY DEVELOPMENT 10,384,700 12,518,164 7,104,332 5,413,832 43.2% HOUSING & HOMELESS SERVICES 3,134,115 3,838,192 2,194,495 1,643,697 42.8% LIBRARY & CULTURAL ARTS 14,088,425 14,422,200 6,953,584 7,468,616 51.8% PARKS & RECREATION 21,167,014 22,026,639 12,760,513 9,266,126 42.1% TOTAL COMMUNITY SERVICES 49,450,171 53,647,895 29,519,407 24,128,488 45.0%
PUBLIC WORKS
PUBLIC WORKS ADMINISTRATION 1,440,649 1,458,318 748,389 709,929 48.7% CONSTRUCTION MANAGEMENT & INSPECTIONS 3,262,768 3,511,909 1,634,370 1,877,539 53.5% ENVIRONMENTAL SUSTAINABILITY 1,159,789 1,624,413 981,079 643,334 39.6% FACILITIES 6,768,736 8,366,112 5,029,096 3,337,016 39.9% TRANSPORTATION 9,707,559 10,837,283 6,281,409 4,555,874 42.0% TOTAL PUBLIC WORKS 22,339,501 25,798,035 14,674,343 11,123,692 43.1%
NON-DEPARTMENTAL & CONTINGENCY
(d) OTHER NON-DEPARTMENTAL 1,021,658 3,634,892 557,696 3,077,196 84.7% OPERATING TRANSFERS OUT 13,600,000 24,208,252 17,408,262 6,799,990 28.1% CONTINGENCY 500,000 492,224 0 492,224 100.0%
TOTAL NON-DEPT & CONTINGENCY 15,121,658 28,335,368 17,965,958 10,369,410 36.6% TOTAL GENERAL FUND $198,445,022 $229,031,472 $124,463,485 $104,567,987 45.7% (a) Working budget includes the adopted budget, open encumbrances from the end of the prior fiscal year, appr ov ed c ar r y for war ds of the pr ior fisc al y ear and all other c ounc il appr ov als. (b) Actual expenditures on a budgetary basis include encumbrances and exclude non-budgeted items. (c) Amount available would be 43.5% if funds were spent in the same proportion as the previous year. (d) Other non-depar tmental inc ludes pr oper ty tax administr ation fees, assessment distr ic t administr ation, c ity wide litigation ex penses, and other items not attributed to a specific department.
AS OF 12/31/22
EXPENDITURE STATUS BY DEPARTMENT
GENERAL FUND
Feb. 14, 2023
Item #7 Page 25 of 28
Monthly Financial Report _________________________________________________________________ 8 Council Contingency
The City Council has allocated $ 500,000 out of the General Fund budget for unanticipated emergencies or unforeseen program needs. Below is a listing of the City Council’s contingency:
Donations
Carlsbad Municipal Code 2.08.100 authorizes the city manager to accept donations on behalf of the city in an amount or of value of up to $5,000 per donation. These donations shall be used in accordance with the donor’s intent or added to the city’s contingency account. Below is a listing of all donations, tha t have been accepted during fiscal year 2022-23:
CONTINGENCY ACCOUNT
USE OF FUNDS
RESOLUTION
EXPLANATION AMOUNT DATE NUMBER
ADOPTED BUDGET $500,000
USES:
Community Spirit Grant - Carlsbad Educational Foundation-Razorback Invitational (1,915) 8/8/2022 NA - See Note 1 Community Spirit Grant - Carlsbad Chamber of Commerce - Older & Bolder Expo (5,000) 8/8/2022 NA - See Note 1 Community Spirit Grant - Carlsbad High School - Lancer Day Parade (861) 10/27/2022 NA - See Note 1 TOTAL USES (7,776)
AVAILABLE BALANCE $492,224
Note 1 - City Council Policy 51 gives authorization to the City Manager to approve Community Spirit Grants less than $5,000.
Department Intention Qtr. 1 Oct. Nov. Dec. Qtr. 2 Total Parks & Recreati on Leo Carrillo Ranch Cash Donations $6,166 $689 $341 $299 $1,329 $7,495 Parks & Recreati on Opportunity Grant Donations 3,253 1,275 373 559 2,207 5,460 Parks & Recreati on Senior Center Cash Donations 1,894 678 149 1,135 1,962 3,856 Parks & Recreati on Senior Meals Cash Donations 3,392 $1,913 $1,290 $1,177 4,380 7,772 Parks & Recreati on Senior Transportation Cash Donations 375 110 96 147 353 728 Parks & Recreati on Special Events Cash Donations 1,000 0 0 0 0 1,000 Parks & Recreati on Tree San Di ego pl anti ng event (Stagecoach) 0 4,900 0 0 4,900 4,900 Subtotal - Parks & Recreation $16,080 $9,565 $2,249 $3,317 $15,131 $31,211 Library & Cultural Arts Book purchases $5,150 $50 $0 $100 $150 $5,300 Library & Cultural Arts Genealogy-subscriptions and memberships 0 0 0 3,039 3,039 3,039 Library & Cultural Arts Films in Schulman Auditorium 0 0 1,050 0 1,050 1,050 Library & Cultural Arts Support Library Programs and Services 148 1 6 2,000 2,007 2,155 Subtotal - Library & Cultural Arts $5,298 $51 $1,056 $5,139 $6,246 $11,544 Total Donations $21,378 $9,616 $3,305 $8,456 $21,377 $42,755 Donations Fiscal Year 2022 - 23
Feb. 14, 2023
Item #7 Page 26 of 28
I I I I
Monthly Financial Report _________________________________________________________________ 9 Water Enterprise
Revenues
• Increase in water due to rate increase in March 2022 offset by a 1.4% decrease in water volume sales.
• Interest earnings increased due to a 45.2% increase in the yield of the Treasurer’s portfolio combined with a 12% increase in the monthly average cash balance. • The increase in property taxes is primarily due to increase in assesed property values. • The increase in fines is due to reinstatement of late charges starting in January 2022.
Expenses
• The increase in staffing expenses includes salary increases and vacancies experienced in prior fiscal year offset by an annual required contribution to the city’s unfunded pension liability balance with CalPERS.
• Higher interdepartmental expenses resulted from increased personnel related costs, and general liability insurance.
• Purchased water expenses have increased from the prior year due to a 7.7 % rate increase in the variable cost of water purchased from the San Diego County Water Authority (SDCWA) combined with a 1.24% increase in the amount of water purchased. • Miscellaneous expenses increased from timing of purchase of replacement meters. • Captial outlay increased due to additional fleet vehicle purchase.
CHANGE FROM
BUDGET YTD (*) YTD (*) YTD 2021-22 TO PERCENT
FY 2022-23 12/31/2021 12/31/2022 YTD 2022-23 CHANGE
REVENUES:
WATER DELIVERY 41,300,000$ 21,919,401$ 22,032,282$ 112,881$ 0.5% INTEREST 354,500 170,523 242,381 71,858 42.1%
MISC. SERVICE CHARGES 321,000 146,879 150,022 3,143 2.1% PROPERTY TAXES 4,441,344 1,772,564 1,975,123 202,559 11.4% FINES, FORFEITURES & PENALTIES 161,750 2,622 195,763 193,141 7366.2% OTHER REVENUES 411,544 1,542,558 266,560 (1,275,998) -82.7% TOTAL OPERATING REVENUE 46,990,138 25,554,547 24,862,131 (692,416) -2.7% EXPENSES:
STAFFING 4,301,517 2,172,765 2,251,886 79,121 3.6%
INTERDEPARTMENTAL SERVICES 3,161,356 1,470,317 1,581,586 111,269 7.6% PURCHASED WATER 27,300,000 12,941,227 13,684,365 743,138 5.7% MWD/CWA FIXED CHARGES 6,885,000 3,342,836 3,395,390 52,554 1.6% OUTSIDE SERVICES/MAINTENANCE 2,411,554 364,415 321,107 (43,308) -11.9% DEPRECIATION/REPLACEMENT 5,000,000 2,250,000 2,499,998 249,998 11.1% MISCELLANEOUS EXPENSES 1,106,939 332,284 355,556 23,272 7.0% CAPITAL OUTLAY 77,088 0 32,776 32,776 100.0%
TOTAL OPERATING EXPENSES 50,243,454 22,873,844 24,122,664 1,248,819 5.5% OPERATING INCOME/(LOSS) (3,253,316)$ 2,680,703$ 739,467$ (1,941,235)$ -72.4% (*) Adjusted to reflect timing differences for water purchases and depreciation.
WATER OPERATIONS FUND
December 31, 2022
1%
1.9%
5.5%
2.7%
Feb. 14, 2023
Item #7 Page 27 of 28
Monthly Financial Report _________________________________________________________________ 10 Wastewater Enterprise
Revenues
• Charges for current services are higher than in the prior year due primarily to a 20% rate increase that went into effect March 2022.
• Interest earnings in creased due to a 45.2% increase in the yield of the Treasurer’s portfolio combined with a 12.3% increase in the monthly average cash balance. • The increase in other revenues is due t o late charges starting in January 2022 and reimbursement for interdepartmental labor charges.
Expenses
• The increase in staffing expenses is driven by salary increases offset by annual required contribution to the city’s unfunded pension liability balance with CalPERS. • Higher interdepartmental expenses resulted from increased personnel related costs, and general liability insurance.
• Higher miscellaneous expenses from purchase of parts. • The capital outlay in fiscal year 2021-22 was for the procurement of a utility truck.
CHANGE FROM
BUDGET YTD* YTD* YTD 2021-22 TO PERCENT
FY 2022-23 12/31/2021 12/31/2022 YTD 2022-23 CHANGE
REVENUES:
CHARGES FOR CURRENT SERVICES 19,000,000 7,726,915 9,172,435 1,445,520 18.7% INTEREST 95,000 47,916 63,011 15,095 31.5%
OTHER REVENUES 181,500 55,593 153,627 98,034 176.3%
TOTAL OPERATING REVENUE 19,276,500 7,830,424 9,389,073 1,558,649 19.9% EXPENSES:
STAFFING 2,971,244 1,370,981 1,431,934 60,953 4.4%
INTERDEPARTMENTAL SERVICES 1,519,845 672,776 756,091 83,315 12.4% ENCINA PLANT SERVICES 4,665,000 3,129,258 3,013,640 (115,618) -3.7% OUTSIDE SERVICES/MAINTENANCE 1,825,185 177,424 190,978 13,554 7.6% DEPRECIATION/REPLACEMENT 5,300,000 2,650,000 2,649,998 (2) 0.0% MISCELLANEOUS EXPENSES 1,158,133 288,947 347,678 58,731 20.3% CAPITAL OUTLAY 9,750 35,032 0 (35,032) -100.0%
TOTAL OPERATING EXPENSES 17,449,157 8,324,418 8,390,319 65,901 0.8% OPERATING INCOME/LOSS 1,827,343 (493,994) 998,754 1,492,748 -302.2% (*) Adjusted to reflect timing differences for Encina quarterly invoices and depreciation.
WASTEWATER OPERATIONS FUND
December 31, 2022
12.9%
2.4%
19.9%
2.4%
0.8%
Feb. 14, 2023
Item #7 Page 28 of 28
Matt Sanford, Economic Development Manager
Zach Korach, Finance Director
February 14, 2023
Economic and Financial
Update: Q2 FY 2022-23
TODAY’S PRESENTATION
• Economic update
• Financial update
• Mid-year budget review
E C O N O M I C A N D F I N A N C I A L U P D AT E
ECONOMIC UPDATE
3 • Timeframe analyzed
o Second quarter FY2022-2023 (October –
December 2022)
• Macro Trends
• Local Impact
E C O N O M I C A N D F I N A N C I A L U P D AT E
EVOLVING ECONOMIC CONDITIONS
• Macro-disruptions continue to affect Carlsbad businesses o Inflation
o Higher cost of capital
o Tight labor market
o Despite uncertainty, Carlsbad finished 2022 with a strong economy
E C O N O M I C A N D F I N A N C I A L U P D AT E
INFLATION CONCERNS
• Cost increases continue to drive
concern for businesses and
consumers
• San Diego area prices are up 1.8%
over the past two months
• Over-the-year prices are up 6.4%
E C O N O M I C A N D F I N A N C I A L U P D AT E
CARLSBAD ECONOMY
• The Carlsbad GRP is now $15.8 Billion
• Carlsbad’s economy grew by more than $1 Billion in 2022 • Manufacturing, Wholesale Trade, Accommodation &
Food Service, and Professional Scientific & Technical
Services saw largest increases
E C O N O M I C A N D F I N A N C I A L U P D AT E
WORKER/TALENT SHORTAGE
• EDD September unemployment data
o California unemployment rate:
4.1%, (.2% increase)
o County unemployment rate:
2.9%, (.2% improvement)
o Carlsbad unemployment rate:
2.5%, (.1% improvement)
E C O N O M I C A N D F I N A N C I A L U P D AT E
0 1
2 3
4 5
6 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Unemployment Rate Comparison 2022
Carlsbad San Diego County
North County Avg w/o Carlsbad California
CARLSBAD JOBS
• October through December saw 13,352 unique job postings • Second consecutive quarterly decrease in job postings • Average salary for posted jobs was $46,800, an increase of $1,200 over last quarter
E C O N O M I C A N D F I N A N C I A L U P D AT E
CARLSBAD TOURISM
• Leisure Travel was strong throughout 2022
• Group and conference travel recovering but still uncertain
E C O N O M I C A N D F I N A N C I A L U P D AT E
50 100
150
200
250
300
350
400
450
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Average Daily Rate 2022
City of Carlsbad San Diego County, CA
City of Oceanside, CA City of Newport Beach, CA
City of Carlsbad, 2019
0 20
40 60
80 100
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Hotel Occupancy 2022
City of Carlsbad San Diego County, CA
City of Oceanside, CA City of Newport Beach, CA
City of Carlsbad, 2019
COMMERCIAL REAL ESTATE
• Vacancy rates for industrial properties are 3.3%
• Vacancy rates for office properties are 11%
• Vacancy rates for retail properties are 4%
E C O N O M I C A N D F I N A N C I A L U P D AT E
RESIDENTIAL REAL ESTATE
• Median home values ended the quarter at $1.44 million • Roughly 10% below peak prices, but still up more than 37% in the past few years
E C O N O M I C A N D F I N A N C I A L U P D AT E
$600,000
$700,000
$800,000
$900,000
$1,000,000
$1,100,000
$1,200,000
$1,300,000
$1,400,000
$1,500,000
$1,600,000
2019 2020 2021 2022
Carlsbad Median Home Price
Jan 2019 - Present
NEW DEVELOPMENT
& BUSINESS ACTIVITY
• Business licenses issued was strongest in two years
• Home builder optimism is rising, but costs are a challenge
E C O N O M I C A N D F I N A N C I A L U P D AT E
0 500
1000
1500
2000
2500
3000
Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Business Licenses Issued by Quarter
Non-Residential Residential Outside City Total
0 200
400
600
800
1000
1200
1400
Commercial Residential Commercial Residential Commercial Residential 2020 2021 2022
Building Permits Issued
Q1 Q2 Q3 Q4
KEY TAKEAWAYS
• Carlsbad’s economy thrived in 2022
• Prices may be stabilizing but inflation is still a concern • Major layoffs have not impacted Carlsbad at this point • The job-to-labor ratio remains extremely tight
E C O N O M I C A N D F I N A N C I A L U P D AT E
GENERAL FUND REVENUES
(second quarter of fy 2022-23)
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
Property tax Sales tax Transient
occupancy tax
Other taxes Income from
inv. and prop.
Development
related revenue
Other revenues
FY 2021-22
FY 2022-23 Expected
FY 2022-23 Actual
GENERAL FUND REVENUES
Revenue category
Actual
FY 2021-22
Actual
FY 2022-23
$
difference
%
difference
Property tax $26.3 $29.8 $3.5 13%
Sales tax 25.8 26.6 0.9 3%
Transient occupancy tax 16.8 20.2 3.4 21%
Other taxes 5.9 5.2 -0.7 -12%
Income from inv. and property 2.7 3.0 0.3 13%
Development related revenue 2.0 2.4 0.4 20%
Other revenues 7.8 9.4 1.6 20%
Total $87.3 $96.7 $9.4 11%
(in millions)
GENERAL FUND BUDGET
E C O N O M I C A N D F I N A N C I A L U P D AT E
• Adopted budget of $198.4 million
• Working budget of $229.0 million
• Available budget remaining of $104.6 million, or 46%
• Includes actual expenditures through Dec. 2022
• Includes open purchase order commitments
GENERAL FUND EXPENDITURES & ENCUMBRANCES
20 (second quarter of fy 2022-23)
$0
$20,000,000
$40,000,000
$60,000,000
$80,000,000
$100,000,000
$120,000,000
$140,000,000
Personnel Maintenance & operations Transfers out Other
FY 2022-23 Budget
Q2 FY 2021-22 Actual
Q2 FY 2022-23 Actual
GENERAL FUND EXPENDITURES
(in millions)
Category
FY 2022-23
Appropriation
QTR 2 EXP
FY 2022-23
% of Budget
Spent to Date
OPEN POs
at 12/31/22
Personnel $124.2 $63.0 51% $0.0
Maintenance & operations 71.3 24.7 35% 14.4
Transfers out 24.2 17.4 72% 0.0
Capital outlay 8.4 1.3 16% 3.4
COVID-19 & Innovation 0.2 0.0 12% 0.1
Contingency 0.9 0.0 0% 0.0
Total $229.0 $106.4 46% $18.0
WATER AND WASTEWATER
E C O N O M I C A N D F I N A N C I A L U P D AT E
Compared to prior year through Q2:
• Water revenues are down 2.7% and expenses
are up 5.5%
• Wastewater revenues are up 19.9% and
expenses are up 0.8%
GOLF COURSE
E C O N O M I C A N D F I N A N C I A L U P D AT E
• Net income $235,000 higher than last year
• Driven by continued demand for golf,
increase in private events, and increases in
food & beverage sales
NEXT STEPS
• Monitor revenues and expenditures
• Publish economic and financial status reports:
carlsbadca.gov/doingbusiness
carlsbadca.gov/departments/finance/financial-reports
• Return in May 2023 with Q3 update
E C O N O M I C A N D F I N A N C I A L U P D AT E
MID-YEAR BUDGET REVIEW
• Citywide review
• Departments’ analysis of whether revenues and
expenditures to date are in line with targets
adopted in the FY 2022-23 operating budget
• Personnel vacancy savings analysis
E C O N O M I C A N D F I N A N C I A L U P D AT E
RESULTS OF REVIEW
• Several departments identified budget savings
in maintenance & operations
• $1.3 million of $2 million in personnel savings
realized as of first pay period ending in Jan.
2023.
E C O N O M I C A N D F I N A N C I A L U P D AT E
MID-YEAR BUDGET REQUEST
• Early replacement of one ambulance in Fleet
• $330,000 appropriation; no General Fund
impact
• Will minimize lead times, lock in pricing, and
avoid manufacturer delays
E C O N O M I C A N D F I N A N C I A L U P D AT E
NEXT STEPS
• Adopt the resolution approving the additional
appropriation of $330,000 in the Fleet
Replacement Fund
E C O N O M I C A N D F I N A N C I A L U P D AT E