QUARTER 2
FY 2024
FEBRUARY 7
2024
Quarterly Budget Update
Quarterly Budget Update | Quarter 2, FY 2024
February 7, 2024
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,
2023, page 119). This quarterly
update highlights four of those
reserves. FY 2023 audited
amounts are noted in the table.
General Fund Reserves
OVERVIEW
City management is pleased to present this quarterly update summarizing the City’s overall budget activity through Quarter 2 (December 31, 2023) for Fiscal Year (FY) 2024. 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.
The revenue projections and budget expenditures presented in this update include budget adjustments approved by the City Council, continuing appropriations, and prior year encumbrances.
This quarter also includes updated information for Mid-Year revenue projections.
BUDGET ADJUSTMENTS AND REVENUE ESTIMATES
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 2024 are currently estimated at $215.7 million. Based on Mid-Year projections, the updated estimate is $221.6, an increase of $5.9 million.The revenue changes will be discussed later in this section.
The City has received or recorded 48.0% of the estimated General Fund inflows, through the end of Quarter 2 (at the time this information was prepared). Overall, inflows are up by 6.2% when compared to the same quarter of FY 2023.
As of Quarter 2 of FY 2024, the General Fund has expended 33.3% of its cumulative budget. The operating budget is 38.9% spent, while the project budget is 7.7% spent. The current savings is primarily due to capital improvement projects which will take multiple years to complete.
Comparing Quarter 2 of FY 2024 to FY 2023, expenditures are up by 2.8%, or $2.2 million.
GENERAL FUND FINANCIAL CONDITION
General Fund Revenues
Top 5 Revenues Compared
Quarter 2
GENERAL FUND INFLOWS
Top Five Revenues
The City’s top five General Fund revenue categories account for approximately 89.3% of the total estimated General Fund inflows for FY 2024. 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 below illustrates the performance of the top five revenues as compared to the same quarter of the prior two fiscal years.
Property Tax. At the end of Quarter 2,
Property Tax is the largest General Fund
revenue category. The total for property tax
is $40.3 million, an increase of $2.2 million,
or 5.8%, 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.
2 1
Sales Tax. The second largest General Fund revenue category at the end of Quarter 2 is Sales Tax. 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 $33.1 million. At the time this information was prepared, the revenues are up by 1.4%, or $0.5 million as compared to the prior year.
Quarterly Budget Update | Quarter 2, FY 2024
February 7, 2024
Investment Earnings. Interest on Investments are cummulatively up by $0.8 million when compared to Quarter 2 of FY 2023. There are increases and decreases within this category.
The largest increase is due to interest on investments. The largest decrease is due to how the City must report the unrealized gains/losses from investments. These are book entries and not actual cash.
3 4 Current Services. At the end of Quarter 2, a total of $7.0 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 down 2.5%, or $0.2 million as compared to Quarter 2 of FY 2023.
When comparing to the prior fiscal year, there is a decrease in plan check and engineering & inspection related revenues, as well as police false alarms. In addition, there are increases in after school recreation program, paramedic program, and special fire equipment inspection.
Quarterly Budget Update | Quarter 2, FY 2024
February 7, 2024
Other Taxes. At the end of Quarter 2, a total of $5.3 million has been received in the Other Taxes category. Items in this category include Franchise Fees, Transient Occupancy Taxes (TOT), Cannabis Tax, and Business Licenses Taxes. Through the end of Quarter 2, revenues are up by 13.1%, or $0.6 million as compared to FY 2023.
Franchise Fees, Cannabis Tax, and Business License Taxes are all higher when comparing to Quarter 2 of the prior year.
5 General Fund Inflows = Revenue + Transfers In
Quarter 2, FY 2023 to FY 2024
Quarterly Budget Update | Quarter 2, FY 2024
February 7, 2024
General Fund Inflows = Revenue + Transfers In
Budget to Mid-Year Estimates
FY 2024
GENERAL FUND MID-YEAR INFLOW ESTIMATES
With the updated Mid-Year projections, the General Fund inflows are estimated to increase by
2.7%, or $5.9 million, from $215.7 million to $221.6 million.
The changes in Mid-Year estimates are based on three 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 by $1.0 as compared to original estimates. Sales Tax revenues are anticipated to increase by $2.9 milllion, while Measure X revenues are expected to decrease by $2.0 million.
Other Taxes. The primary increases in this category are for transient occupancy tax, franchise fees and business license taxes.
Investment Earnings. There is a $2.1 million increase compared to original estimates, specifically in the interest on investments category. Based on available cash balances, estimated investment returns are trending higher.
GENERAL FUND MID-YEAR CHANGES
General Fund Inflows = Revenue + Transfers In
Mid-Year Estimates to Actuals
FY 2024
The FY 2024 budget was adopted with $201.8 million in General Fund expenditures. With continuing appropriations of $21.3 million, and encumbrances (committed purchase orders) of $5.3 million, the beginning outflow budget was $228.3 million.
Through Council Actions and other authorized adjustments, the cumulative budget is $246.7 million, with total outflows of $246.8 million.
Through Quarter 2, the City has spent $82.1 million, or 33.3% of the cumulative budget. At this point in the fiscal year, expenditures should be approximately 50% of budget. When comparing
the same quarter in FY 2023, outflows are up by 2.8%, or $2.2 million. The largest expenditure category for the General Fund is Personnel Services.
Personnel Services. Personnel Services has an increase of $3.9 million as compared to the same quarter last fiscal year.
The changes are primarily based on current Memorandum of Understanding (MOU) contracts that are good through December 2024.
Materials and Supplies. The Materials and Supplies category is down by $2.8 million when compared to Quarter 2 of FY 2023.
There are multiple increases and decreases in this category. The primary drivers for change are one-time purchases of technical rescue equipment in the prior fiscal year and an accounting change for how the motor pool rates are recorded.
Quarterly Budget Update | Quarter 2, FY 2024
February 7, 2024
General Fund Expenditures
General Fund Expenditures by Department.
Through December 31, 2023, approximately 50%
of the fiscal year is complete. Departments with
a variance of 10% are explained in the following
section.
CIP / O&M Projects. This budget does not follow
the normal trends as these are multi-year 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. Billing through December
2023 from CityNet has not been received at the
time this data was prepared.
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 and supplies and contractual
services.
General Government. Quarter 2 is trending
low due to materials and supplies. Insurance
premiums are reconciled and recorded at yearend.
Information Technology. Related to Measure
X. Current savings due to contractual services,
specifically CAD Dispatch Services.
Planning & Development. Current savings is
due to materials and supplies and contractual
services.
Public Works. Similar to the Planning &
Development Department, the Public Works
Department also has savings due to materials
and supplies and contractual services.
Quarterly Budget Update | Quarter 2, FY 2024
February 7, 2024
General Fund Outflows
Expenditures + Transfers Out
Budget to Actuals, Quarter 2, FY 2024
General Fund Outflows
Expenditures + Transfers Out
Quarter 2, FY 2023 to FY 2024
Quarterly Budget Update | Quarter 2, FY 2024
February 7, 2024
ENTERPRISE FUNDS - UTILITIES INFLOWS
The City operates three utility services through the Utilities Department:
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.
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 occurs annually, once the audit and financials are finalized. Enterprise Funds - Utilities Revenues Compared, Quarter 2 FY 2022 - FY 2023 - FY 2024 $-
$10
$20
$30
$40
$50
$60
Electric Water Sewer
FY 2022
FY 2023
FY 2024
Millions
UTILITIES
RESERVES
Enterprise Funds-Utilities Revenues
Through Quarter 2 FY 2024, revenues received have decreased 18.5%, or $14.4 million, as compared to the same quarter in Fiscal Year 2023.
Electric. Comparing Quarter 2 FY 2024 revenues to FY 2023, there is an increase of $0.4 million, or
3.7%. There were decreases in categories: Fines, Penalties & Forfeitures, Inventment Earnings, and Intergovernmental Revenues. There were increases in categories: Current Services, Fees & Permits, Other Revenue, and Utility Services Charges. 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. Adjusting for GASB31 book entries, Quarter 2 revenues are a net increase of $0.6 million, or 6.5%.
Water. Through the second quarter of FY 2024, there is a decrease of 28.1%, or $14.1 million, as compared to FY 2023. Other Revenue has a decrease of $19.0 million, largely due to a one-time lawsuit settlement from last fiscal year. Investment Earnings has an increase of $702,701, due to the unrealized gains/losses from investments which are book entries. There is an increase of $3.6 million in Intergovernmental Revenues.
This is due to how we record revenue for grants. It is spread over several years and is recognized in the period in which it is earned. If GASB31 book entries are excluded, Quarter 2 revenues are a net decrease of $14.8 million, or 30.1%.
Sewer. Through Quarter 2, there is a decrease of 3.8%, or $0.7 million, when compared to FY 2023. There were decreases in categories: Fines, Penalties & Forfeitures, Intergovernmental Revenues, Investment Earnings, Licenses, Fees & Permits, and Other Revenue. There were increases in categories: Current Services, Fees & Permits, and Utility Services Charges. 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. Excluding GASB31 book entries, Quarter 2 revenues are a net decrease of $0.5 million, or 3.1%.
Quarterly Budget Update | Quarter 2, FY 2024
February 7, 2024
Enterprise Funds - Utilities
Inflows = Revenues + Transfers In
Quarter 2, FY 2023 to FY 2024
Enterprise Funds - Utilities
Inflows = Revenues + Transfers In
Budget to Actuals
Quarter 2, FY 2024
Quarterly Budget Update | Quarter 2, FY 2024
February 7, 2024
Budget to Mid-Year Estimates, FY 2024
UTILITIES MID-YEAR INFLOW ESTIMATES
The Mid-Year estimates for the total utility inflows are estimated to decrease by 0.1% over the current budget amount from $135.7 million to $135.5 million.
Electric. Electric utility revenues are anticipated to increase by $0.4 million to $18.3 million. This represents a 2.5% increase over the current budget amount of $17.9 million. The increase is spread across multiple categories, but interest on investments, miscellaneous income/refunds, and other electric sales see the largest increases.
Water. Water utility revenues are estimated to decrease by $0.7 million, as compared to the current budget amount of $81.0 million. The Mid-Year estimate of $80.3 million represents a 0.9% decrease. There are both increases and decreases across all categories. The net decrease is attributed to utility service charges, specifically commercial water sales.
Sewer. Sewer utility revenues are are estimated to increase by $0.1 million, from $35.7 million to $35.8 million. This represents a 0.4% increase over the current budget. There is an increase in sewer service charges and interest on investments. Also, there is an anticipated decrease in capacity fees.
UTILITIES INFLOWS MID-YEAR CHANGES
Budget to Mid-Year Estimates to Actuals, Quarter 2, FY 2024 When comparing the total of utility outflows, Quarter 2 of FY 2024 to FY 2023, outflows are higher by
8.5%, or $4.2 million.
Electric. Overall, the Electric utility expenditures through Quarter 2 are up by 6.3% when compared to last fiscal year. There is an increase in personnel services and utilities. There is as a decrease in contractual and materials and supplies. At Quarter 2, project expenditures equate to 0.7% of the cumulative budget.
The operating budget expenditures total 48.2% of the current FY 2024 budget.
Water. Overall, the Water utility expenditures are down by 1.6% or $0.4 million when compared to Quarter 2 in FY 2023. There are increases in personnel services and utilities. Decreases are seen in contractual and materials and supplies. Through Quarter 2, project expenditures are 5.5% of the current expenditure budget. The operating budget transactions total 41.7% of the current FY 2024 budget.
Sewer. The Sewer utility expenditures are up by 32.1%, or $4.2 million, when compared to Quarter 2 of FY 2023. There were increases across all categories: contractual, materials and supplies, personnel services, and utilities. At the end of Quarter 2, project expenditures total 5.9% of the cumulative budget.
The oeprating budget expenditures total 43.2% of the current FY 2024 budget.
Quarterly Budget Update | Quarter 2, FY 2024
February 7, 2024
ENTERPRISE FUNDS-UTILITIES OUTFLOWS
Enterprise Funds - Utilities
Outflows = Expenditures + Transfers Out
Quarter 2, FY 2023 to FY 2024
Enterprise Funds - Utilities
Outflows = Expenditures + Transfers Out
Budget to Actuals, Quarter 2, FY 2024
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