City of Corona, CA
Quarterly Budget Update - Quarter 2, FY 2023
Overview
City management is pleased to present this quarterly
update summarizing the City’s overall budget activity
through Quarter 2 (December 31, 2022) for Fiscal
Year (FY) 2023. The City’s fiscal year is July 1
through June 30. For audited information, or to find
greater detail, please refer to the City’s annual financial statement, which is released by December 31st following the end of the fiscal year.
Budget Adjustments and Revenue Estimates. The
revenue projections and budget expenditures presented in this update include budget adjustments approved by the City Council, continuing appropriations, and prior year encumbrances. The second quarter also includes updated information for MidYear revenue projections.
General Fund
General Fund Financial Condition. The City’s General Fund is the primary source of discretionary resources that funds many of the services provided to the citizens of the City of Corona.
The General Fund inflows (revenue and transfers in)
for FY 2023 are currently estimated at $196.5 million. Based on Mid-Year projections, the updated estimate is $205.2 million, an increase of $8.8 million.
The revenue changes will be discussed later in this
section.
The City has received or recorded 49.0% of the MidYear estimated General Fund inflows, through the end of Quarter 2 (at the time this information was
prepared). Overall, inflows are up by 17.9% when
compared to the same quarter of FY 2022.
As of Quarter 2 of FY 2023, the General Fund has
expended 38.3% of its cumulative budget. The current savings is primarily due to capital improvement projects which will take multiple years to complete.
Comparing Quarter 2 of FY 2023 to FY 2022, expenditures are 73.0% lower, or $215.2 million. This is due to the PERS Unfunded Liability payments and
pension bond issuance costs in last fiscal year.
February 1, 2023 Quarter 2, Fiscal Year 2023
General Fund Inflows
Top Five Revenues. The City’s top five General
Fund revenue categories account for approximately
90% of the total estimated General Fund inflows for
FY 2023. Focusing on these sources can provide a
useful understanding of the City’s income position.
Details of the categories will be described in the following paragraphs.
The bar graph above illustrates the performance of
the top five revenues as compared to the same quarter of the prior two fiscal years.
General Fund Revenues
Top 5 Revenues Compared, Quarter 2
FY 2021 - FY 2022 - FY 2023
Property Tax. At the end of Quarter 2, Property Tax
is the largest General Fund revenue category. The
total for property taxes is $38.1 million, an increase
of $2.3 million, or 6.3%, over the prior fiscal year.
The increase is primarily in secured property taxes.
The majority of property tax revenues are recorded
as revenue and booked as a receivable, once the
annual report is received from the County of Riverside (generally November/December). Year-end adjustments ‘true-up’ the amounts to the actual cash received.
Sales Tax. At the end of Quarter 2, Sales Tax is the
second largest General Fund revenue category. This
category includes the City’s portion of sales tax,
Measure X, Prop. 172 sales tax, and allowance for
sales tax agreements. As of Quarter 2, the total received is $32.6 million. At the time this information was prepared, the revenues are up by 12.4% as
compared to the prior year.
Investment Earnings. This category is usually not
one of the five largest, but as of Quarter 2, FY 2023,
it ranks third largest. There is a significant difference when compared to the prior year that needs to be
explained.
The biggest factor in this category’s increase is due to how the City must report the unrealized gains/losses
from investments. These are book entries and not acFebruary 1, 2023 Quarter 2, Fiscal Year 2023 City of Corona, CA
Quarterly Budget Update - Quarter 2, FY 2023
tual cash. At the end of Quarter 2, the Gain/Loss entries total $5.9 million which is a positive change of $8.1 million as compared to FY 2022.
Current Services. At the end of Quarter 2, a total of
$7.1 million has been received in the Current Services
category. Items in this revenue group include plan
check fees, engineering and inspection fees, recreation revenues, and the Emergency Medical Services Program. Current Services are up 41.4%, or $2.1
million as compared to Quarter 2 of FY 2022.
When comparing to the prior fiscal year, there is an
increase in the cannabis program related revenues,
due to the startup of hosting cannabis businesses in the City. Plan check and inspection related revenues are
also experiencing increases, as well as fire related
fees (timing issue when compared to last year). In
addition, there are decreases in paramedic program
revenues and recreation program revenues.
Other Taxes. At the end of Quarter 2, a total of $4.7
million has been received in the Other Taxes category. Items in this category include Franchise Fees, Transient Occupancy Taxes (TOT), and Business Licenses Taxes. Through the end of Quarter 2, revenues are
up by 3.4%, or $157,028, as compared to FY 2022.
TOT revenues and Business License Taxes are higher
when comparing to Quarter 2 of the prior year, but
Franchise Fees have decreased by $126,836, or
5.5%.
General Fund Mid-Year Inflow Estimates
With the updated Mid-Year projections, the General
Fund inflows are estimated to increase by 4.5%, or
$8.8 million, from $196.5 million to $205.2 million.
General Fund Inflows - Revenues + Transfers In
Quarter 2, FY 2022 to FY 2023
February 1, 2023 Quarter 2, Fiscal Year 2023
City of Corona, CA
Quarterly Budget Update - Quarter 2, FY 2023
General Fund Expenditures
The FY 2023 budget was adopted with $182.5 million in General Fund expenditures. With continuing appropriations of $19.2 million, and encumbrances
(committed purchase orders) of $5.5 million, the beginning outflow budget was $207.2 million. Through Council Actions and other authorized adjustments, the
cumulative budget is $208.5 million.
Through Quarter 2, the City has spent $79.8 million,
or 38.3% of the cumulative budget. At this point in
the fiscal year, expenditures should be approximately
50% of budget. When comparing to the same quarter
in FY 2022, outflows are down by 73.0%, or $215.2
million, largely related to the PERS unfunded pension
liability and pension bond issuance costs. The largest
expenditure category for the General Fund is Personnel Services.
General Fund Outflows
Expenditures + Transfers Out
Quarter 2, FY 2022 to FY 2023
General Fund Inflows - Revenues + Transfers In
Budget to Mid-Year Estimates, FY 2023
General Fund Mid-Year Changes. The changes in
Mid-Year estimates are based on four revenue categories. • Sales Tax. Based on the current economic outlook
and the City’s mix of sales tax generating businesses, sales tax is projected to increase. Measure X revenues are anticipated to grow by $2.7 million as compared to original estimates. The
remaining sales tax items are estimated to increase by $2.6 million, totaling and increase of $5.3 million in sales tax revenues.
• Property Tax. The property tax category is increasing based on updated assessed valuation information. The primary increase is for secured
property tax.
• Current Services. The primary increases in this
category are for plan check, engineering & inspection services, fire service agreements, and cannabis tax for storefront retailers.
• Intergovernmental Revenues. The intergovernmental revenues category is estimated to decrease based on revenue from other agencies (grants and agreements) and fire mutual aid reimbursement. The mutual aid reimbursement fluctuates each year, depending on the severity of the fire season.
General Fund Inflows - Revenues + Transfers In
Mid-Year Estimates to Actuals, Quarter 2, FY 2023
General Fund Outflows
Expenditures + Transfers Out
Budget to Actuals, Quarter 2, FY 2023
February 1, 2023 Quarter 2, Fiscal Year 2023
City of Corona, CA
Quarterly Budget Update - Quarter 2, FY 2023
General Fund Expenditures by Department. Through
December 31, 2022, approximately 50% of the fiscal
year is complete. Departments with a variance of
greater than 10% are explained in the following section. • Capital Improvement Projects. This budget does
not follow the normal trends as these are multiyear projects. Any unspent encumbrances (purchase orders) or remaining balance carries
forward to the next fiscal year to continue the
project activities.
• City Manager’s Office. Current savings are related to the contractual services budget. The contractual services are primarily related to the Homeless Program. The improvement project for the shelter
is still in progress and contracted operating costs
will begin once the shelter is operational.
• Debt Services. Quarter 2 is low due to the timing
of debt service payments based on approved
payment cycles.
• Economic Development. Current savings is due to
materials & supplies and contractual services.
• Human Resources. Barely missing the 10% variance, this department has a savings in contractual services.
• Information Technology. Related to Measure X.
There are some vacancy savings and some projects that have not started as of quarter 2. • Maintenance Services. Maintenance Services is
currently higher than 50% due to the personnel
and utilities categories. This is related to the
reorganization that occurred in FY 2022. Staff is
working to address the charges and the issues
should be resolved by Quarter 3.
• Planning & Development. Current savings is due
to vacancies and contractual services.
• Public Works. The Public Works Department currently has savings due to personnel vacancies, materials and supplies, and contractual services.
Personnel Services. In the PERS unfunded liability
line item, there is a decrease of $225.1 million, or
100%, when compared to the prior year. This is due
to the issuance of pension obligation bonds in October 2021. For the life of the bonds, the debt service payments will move from the personnel category to
materials and supplies.
The Personnel Services (Other) is an increase of $4.2
million as compared to the same quarter last fiscal
year. The changes are based on current MOU contracts that are good through December 2024.
Materials and Supplies. The Materials and Supplies
category is up by $6.4 million when compared to
Quarter 2 of FY 2022. There are multiple increases
and decreases in this category. The primary drivers
are pension bond debt service payments and onetime expenditures for technical rescue equipment and furniture/equipment purchases.
February 1, 2023 Quarter 2, Fiscal Year 2023
City of Corona, CA
Quarterly Budget Update - Quarter 2, FY 2023
General Fund Reserves
The General Fund has multiple reserves in fund balance for various purposes. For the full list, please reference the City’s financial statements, Note 15 (for Fiscal Year Ending June 30, 2022, page 116). This
quarterly update will highlight four of those reserves.
Noted below are the audited FY 2022 amounts,
which total $99.1 million.
Enterprise Funds-Utilities
The City operates three utility services through the
Utilities Department (formerly the Department of
Water and Power): electric, water, and sewer.
Through the collection of fees and charges, these
funds should collect revenues sufficient to finance the costs associated with administration, operations, capital improvement projects (CIP), and debt service.
Enterprise Funds-Utilities Revenues
Through Quarter 2 FY 2023, revenues received have
an increase of 47.8%, or $25.0 million, as compared
to the same quarter in Fiscal Year 2022.
Electric. Comparing Quarter 2 FY 2023 revenues to
FY 2022, there is an increase of $527,749, or 6.1%.
There is currently an increase in Current Services,
Fines, Penalties, and Forfeitures, Intergovernmental
Revenue and Investment Earnings. The change in the
Investment Earnings category is due to how the City
must report the unrealized gains/losses from investments. These are book entries and not actual cash.
The book entries for the Electric Utility are an increase of $1.3 million when compared to Quarter 2 of FY
2022.
Water. Through the second quarter of FY 2023, there
is an increase of 67.0%, or $20.2 million, as compared to FY 2022. Other Revenue has an increase of $19.0 million, largely due to a one-time lawsuit settlement. Investment Earnings has an increase of $1.5 million, almost entirely due to the unrealized gains/
losses from investments which are book entries. There
is a decrease of $0.6 million in the Utility Service
Charges category and decrease of $0.4 million in the
Licenses, Fees and Permits category related to onetime capacity fees received in FY 2022 (building related activity).
Sewer. Through Quarter 2, there is an increase of
31.6%, or $4.3 million, when compared to FY 2022.
There is an increase of $3.8 million in the Investment
Earnings, almost entirely due to the unrealized gains/
losses from investments which are book entries. There
is also an increase of $175,008 in Fines, Penalties &
Forfeitures and a decrease of $17,767 for licenses,
fees, and permits.
Enterprise Funds-Utilities Revenues
Revenues Compared, Quarter 2
FY 2021 - FY 2022 - FY 2023
February 1, 2023 Quarter 2, Fiscal Year 2023
City of Corona, CA
Quarterly Budget Update - Quarter 2, FY 2023
Enterprise Funds-Utilities Outflows
When comparing the total of utility outflows, Quarter
2 of FY 2023 to FY 2022, outflows are lower by
42.4%, or $36.5 million. The main drivers for the overall decrease is in Personnel Services (unfunded liability payments related to the pension obligation bonds).
Utilities Mid-Year Inflow Estimates
The Mid-Year estimates for the total utility inflows
are estimated to increase by 10.4% over the current
budget amount from $137.0 million to $151.3 million.
Utilities Inflow Mid-Year Changes.
• Electric. Electric utility revenues are anticipated
to increase by $1.9 million to $17.8 million. This
represents a 12.3% increase over the current
budget amount of $15.9 million. The increase is
from interest on investments, Greenfield electric
sales, and miscellaneous income/refunds.
• Water. Water utility revenues are estimated to
increase by a $11.8 million, as compared to the
current budget amount of $81.0 million. The Midyear estimate of $92.8 million represents a
14.6% increase. The increase is spread evenly
throughout the categories, but Other Revenue
sees the largest increase due to miscellaneous income/refunds. Additionally, there are anticipated decreases in license, fees & permits, more specifically, capacity fees.
Enterprise Funds-Utilities
Outflows - Expenditures + Transfers Out
Quarter 2, FY 2022 to FY 2023
Enterprise Funds-Utilities
Inflows - Revenues + Transfers In
Quarter 2, FY 2022 to FY 2023
Enterprise Funds-Utilities
Inflows - Revenues + Transfers In
Mid-Year Estimates to Actuals, Quarter 2, FY 2023
Enterprise Funds-Utilities Inflows
Budget to Mid-Year Estimates, FY 2023
February 1, 2023 Quarter 2, Fiscal Year 2023
City of Corona, CA
Quarterly Budget Update - Quarter 2, FY 2023
Personnel Services—all utilities. In the PERS unfunded liability line item, there is a significant decrease when compared to the prior year. The city issued pension obligation bonds in October 2021. Since FY 2022 and for the life of the bonds, the debt service
payments will move from the personnel category to
materials and supplies.
Electric. Overall, the Electric utility expenditures
through Quarter 2 are down by 38.2% when compared to last fiscal year, mainly because of the PERS Unfunded Liability. There is a decrease in materials
and supplies and personnel services. There is an increase in utilities and an increase in contractual services.
Water. Overall, the Water utility expenditures are
down by 40.7% or $19.9 million, when compared to
Quarter 2 in FY 2022. Much like the Electric utility,
this is due to the PERS Unfunded Liability. The Water
utility has a large increase in Utilities, $1.8 million, or 155.8% related to electric utility costs.
Sewer. The Sewer utility expenditures are down by
47.4%, or $36.5 million when compared to Quarter 2
of FY 2022. The decreases are in contractual obligations and the PERS Unfunded Liability.
Enterprise Fund Reserves
To build the target reserve amount, the Utilities Department shall annually contribute ten percent (10%) of the difference between actual operating revenues
and actual operating expenses for each of the Utilities Department Operating Funds at the beginning of each fiscal year until the target reserve is met. If the reserve amount exceeds the target reserve amount,
the additional funds shall remain in reserves.
The reserve process will occur annually, once the audit and financials are finalized. The item is currently under review and an amount will be included in the Quarter 3 update.
Enterprise Funds-Utilities
Outflows Expenditures + Transfers Out
Budget to Actuals, Quarter 2, FY 2023
What do you think? We value your opinion.
Is there anything additional you’d like to see in future reports? This will be an evolving process to capture
the areas that are of most interest to the City Council and the community. Please let us know. We appreciate the feedback! Please share your ideas at Budg[email protected], Julie.Kennicutt@CoronaCA. gov, or contact Budget staff at (951) 279-3500.