City of Corona, CA
Quarterly Budget Update - Quarter 3, FY 2023
Overview
City management is pleased to present this quarterly
update summarizing the City’s overall budget activity
through Quarter 3 (March 31, 2023) 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, mid-year revenue estimates, and updated revenue estimates presented at the Spring Financial Workshop on April 13, 2023.
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
is made up of the General Fund, Measure X Fund,
and Historic Civic Center Fund.
The General Fund inflows (revenue and transfers in)
for FY 2023 are currently estimated at $210.7 million. Based on FY 2023 projections, there is an estimated increase of $14.2 million when compared to the cumulative budget.
The City has received or recorded 73.1% of the estimated General Fund inflows, through the end of Quarter 3 (at the time this information was prepared). Overall, inflows are down by 56.8% when compared to the same quarter of FY 2022, but this is
related to accounting for the pension obligation
bonds (POBs) in Quarter 3 of FY 2022.
As of Quarter 3 of FY 2023, the General Fund has
expended 55.6% of its cumulative budget. The current savings is primarily due to capital improvement projects which will take multiple years to complete.
May 3, 2023 Quarter 3, Fiscal Year 2023
Comparing Quarter 3 of FY 2023 to FY 2022, expenditures are 65.2% lower, or $216.7 million. This is due to the PERS Unfunded Liability payments and
pension bond issuance costs in last fiscal year.
General Fund Inflows
Top Five Revenues. The City’s top five General
Fund revenue categories account for approximately
89.9% 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 3
FY 2021 - FY 2022 - FY 2023
Sales Tax. At the end of Quarter 3, Sales Tax is the
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 3, the total received is
$58.3 million. At the time this information was prepared, the revenues are up by 12.1% as compared to the prior year.
Property Tax. The second largest General Fund revenue category at the end of Quarter 3 is Property Tax. The total for property taxes is $50.1 million, an
increase of $3.6 million, or 7.8%, 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.
Current Services. At the end of Quarter 3, a total of
$10.7 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 11.1%, or $1.1 million as compared to Quarter 3 of FY 2022.
When comparing to the prior fiscal year, there is an
increase in the cannabis program related revenues,
May 3, 2023 Quarter 3, Fiscal Year 2023
City of Corona, CA
Quarterly Budget Update - Quarter 3, FY 2023
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 passport processing
fees, after school recreation program, Kids Camp,
EMS subscription and EMS direct bill.
Other Revenues. The Other Revenues category is the
fourth largest category at the end of the Quarter 3.
Activity in this revenue group includes Rental/Lease
Income, Development Agreements, Telecommunication
Site Rentals, and Billboard Revenues. At the end of
Quarter 3, the total received is $9.5 million. Overall, the Other Revenues category is down by 1.5%, or $0.1 million, as compared to the same quarter in FY
2022. This is due to decreases across the various donations accounts.
Investment Earnings. This category is usually not one
of the five largest, but as of Quarter 3, FY 2023, it
ranks fifth 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 actual cash. At the end of Quarter 3, the Gain/Loss entries total $5.8 million which is a positive change of $7.9 million as compared to FY 2022.
General Fund Inflows - Revenues + Transfers In
Quarter 3, FY 2022 to FY 2023
General Fund Inflows - Revenues + Transfers In
FY 2023, Projected Revenues to Quarter 3 Actuals
May 3, 2023 Quarter 3, Fiscal Year 2023
City of Corona, CA
Quarterly Budget Update - Quarter 3, FY 2023
Materials and Supplies. The Materials and Supplies
category is up by $1.4 million when compared to
Quarter 3 of FY 2022. There are multiple increases
and decreases in this category. The primary drivers
are pension bond debt service payments, tree maintenance, and one-time expenditures for technical rescue equipment and furniture/equipment purchases.
General Fund Expenditures by Department. Through
March 31, 2023, approximately 75% 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.
General Fund Outflows
Expenditures + Transfers Out
Quarter 3, FY 2022 to 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 $208.4 million.
Through Quarter 3, the City has spent $115.8 million,
or 55.6% of the cumulative budget. At this point in
the fiscal year, expenditures should be approximately 75% of budget. When comparing to the same quarter in FY 2022, outflows are down by 65.2%, or
$216.7 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.
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 $6.1
million as compared to the same quarter last fiscal
year. The changes are based on current MOU contracts that are good through December 2024.
General Fund Outflows
Expenditures + Transfers Out
Budget to Actuals, Quarter 3, FY 2023
May 3, 2023 Quarter 3, Fiscal Year 2023
City of Corona, CA
Quarterly Budget Update - Quarter 3, FY 2023
· Debt Services. Quarter 3 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.
· Elected Officials. Current savings in materials &
supplies, mainly in conference, training & travel.
· Finance. The Finance Department currently has a
savings due to personnel vacancies, materials and
supplies, and contractual services.
· Human Resources. Current savings is due to personnel vacancies, materials and supplies, and contractual services. · Information Technology. Related to Measure X.
There are some vacancy savings and some projects that have not started as of quarter 3. · Maintenance Services. The Maintenance Services
Department currently is higher than 75% 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 4.
· Public Works. The Public Works Department currently has savings due to personnel vacancies, materials and supplies, and contractual services.
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 3 FY 2023, revenues received have
an increase of 31.6%, or $25.5 million, as compared
to the same quarter in Fiscal Year 2022.
Electric. Comparing Quarter 3 FY 2023 revenues to
FY 2022, there is an increase of $766,635, or 6.2%.
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 3 of FY
2022.
Enterprise Funds-Utilities Revenues
Revenues Compared, Quarter 3
FY 2021 - FY 2022 - FY 2023
May 3, 2023 Quarter 3, Fiscal Year 2023
City of Corona, CA
Quarterly Budget Update - Quarter 3, FY 2023
Water. Through the third quarter of FY 2023, there is
an increase of 46.4%, or $21.1 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 $1.1 million in the Utility Service Charges category and decrease of $0.9 million in the Licenses,
Fees and Permits category related to one-time capacity fees received in FY 2022 (building related activity).
Sewer. Through Quarter 3, there is an increase of
15.8%, or $3.6 million, when compared to FY 2022.
There is an increase of $3.7 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 $208,944 in Fines, Penalties & Forfeitures and a decrease of $105,749 for licenses, fees, and permits.
Enterprise Funds-Utilities Outflows
When comparing the total of utility outflows, Quarter
3 of FY 2023 to FY 2022, outflows are lower by
34.7%, or $39.3 million. The main drivers for the
overall decrease is in Personnel Services (unfunded
liability payments related to the pension obligation
bonds). In addition, there are decreases in contractual obligations, mainly construction contracts, and in materials and supplies, primarily $2.5 million for the retrofit program.
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.
Enterprise Funds-Utilities
Inflows - Revenues + Transfers In
Quarter 3, FY 2022 to FY 2023
Enterprise Funds-Utilities
Inflows - Revenues + Transfers In
FY 2023, Projected Revenues to Quarter 3 Actuals
Enterprise Funds-Utilities
Outflows - Expenditures + Transfers Out
Quarter 3, FY 2022 to FY 2023
May 3, 2023 Quarter 3, Fiscal Year 2023
City of Corona, CA
Quarterly Budget Update - Quarter 3, FY 2023
Sewer. The Sewer utility expenditures are down by
28.6%, or $9.6 million when compared to Quarter 3
of FY 2022. The decreases are in contractual obligations and the PERS Unfunded Liability. In addition, there are increases in utilities and materials and supplies.
Enterprise Fund Reserves
The Reserve Policy for Utilities Department Operating
Funds was approved by the City Council on May 18,
2022. Commencing with FY 2022, the target reserve
amount for each of the operating funds shall be set at
ninety (90) days. 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. Depending on the fund, it will take time to hit the target reserve amount. 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.
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.
Electric. Overall, the Electric utility expenditures
through Quarter 3 are down by 31.3% 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 38.7% or $25.0 million, when compared to
Quarter 3 in FY 2022. Much like the Electric utility,
this is due to the PERS Unfunded Liability, contracted
services, and materials and supplies. The Water utility has a small increase in Utilities, $152,183, or
3.6% related to electric utility costs.
Enterprise Funds-Utilities
Outflows Expenditures + Transfers Out
Budget to Actuals, Quarter 3, FY 2023