CITY COUNCIL STAFF REPORT
March 5, 2024 {{section.number}}c
FISCAL YEAR 2023-24 BUDGET MID-YEAR REVIEW AND ADJUSTMENTS RECOMMENDATION:
Receive the report and approve the recommended Fiscal Year (FY) 2023-24 Mid-Year Budget adjustments as listed in Attachments 3 and 4.
BACKGROUND:
The Mid-Year Budget review provides an overview of the City’s Budget at the halfway point in the fiscal year. It also allows for modifications to the adopted Budget necessitated by emergent needs or changed conditions that were not anticipated or fully defined when the Budget was adopted in June 2023. The items for which adjustments are recommended to the City Council for approval fall into the following categories:
1) Revenue and expenditure changes from events, emergent needs or changed conditions that were not anticipated or fully known when Budget was adopted by the City Council in June 2023;
2) Purchases, additional services or projects that were approved by the City Council subsequent to the adoption of the Budget; and
3) Additional expenditures associated with minor course corrections in programs or projects to reflect the actual operational experience in the first half of the fiscal year.
ANALYSIS:
This report focuses on the General Fund with highlights of other funds with notable changes.
General Fund Revenue
As of December 31, 2023, General Fund revenues totaled $32,612,168, or 48.2% of the annual projection. The chart below identifies the original revenue projection, and six months of revenue (shown on a cash basis).
Revenue by Source
6 Months
Receipts
"Cash Basis"
Percentage
Received
FY 2023-24
Adopted
Budget
Mid-Year
Adjustments
Mid-Year
Projection
Property Tax $ 14,921,714 37.9% $ 39,357,663 $ - $ 39,357,663 Other Taxes 14,646,413 64.2% 22,798,006 500,000 23,298,006 Licenses & Permits 15,385 41.0% 37,500 - 37,500
Fines & fees 108,147 39.2% 276,000 - 276,000
Use of Money and Property 1,461,659 115.4% 1,266,526 2,000,000 3,266,526 Charges for Services 527,046 32.6% 1,614,305 - 1,614,305 Intergovernmental, Reimbursements & Other Revenues 931,804 39.9% 2,337,340 - 2,337,340 Other Financing Sources - N/A - - -
Total $ 32,612,168 48.2% $ 67,687,340 $ 2,500,000 $ 70,187,340 Property tax, Transient Occupancy Tax (TOT), and sales/use tax continue to make up the majority of the General Fund revenues received as of December 2023, at approximately 90% of total revenues.
Approximately 38% of the budgeted Property Tax has been received at fiscal year mid-way point, which is consistent with expectations based on the scheduled timing of receipts. The Hotel del Coronado broke ground on its planned renovation of the property’s main Victorian structure in January 2024, placing several hundred rooms out of service for an extended period until construction is completed. Completion of the project is estimated in about 18 months, with rooms returning online in phases. Consequently, the FY 2023-24 TOT budget was reduced to $16 million, down from the prior year’s budget of $18.5 million. As of December 2023 collection, the City received $12.4 million in TOT, which is 78% of the adopted TOT budget of $16 million. Based on the year-to-date revenues received and the trajectory for the remainder of the fiscal year, the staff is proposing an adjustment of $500,000 in additional revenues to the TOT budget.
The Use of Money and Property category comprises investment revenue and concessionaire rentals. The City has historically budgeted for investment revenues based on the preceding four fiscal quarters’ average yields (0.75% - 2.83%) of the investment pools in which the City participates. During FY 2023-24, the yields continued its steady rise to the current yield of 4.0% as of January 2024. As a result, the year-to-date investment revenue of $1.5 million already exceeds the adopted budget of $1.3 million. In addition, the recent investment allocation changes implemented project to maintain higher than budgeted investment yields for the remainder of the fiscal year. Accordingly, the staff is proposing an adjustment of $2.0 million to this revenue category.
The details of the revenue adjustments are presented in greater detail in Attachment 4.
General Fund Expenditures
Expenditures are shown below by Category and by Function. Through December 2023, General Fund expenditures, including transfers, are $38,029,242, which represents 56.5% of the adopted budget. Most fund transfers occur during the fiscal year's first half, indicating that operating expenditure is closer to 50% of the budget at mid-year.
The below also includes $1,000,451 of Off-Cycle appropriations. Off-cycle appropriations are individual budget requests approved by the City Council during the course of the year. As such, these are not reflected in the initially adopted FY 2023-24 Budget. However, they are included in the summary as part of the total year-to-date adjusted budget for the current fiscal year. The details of these Off-Cycle Appropriations are presented in greater detail in Attachment 5.
The new General Fund Mid-Year Budget adjustments for Council authorization total $978,300, of which $433,000 is programmed for services, $330,000 is programmed for employee costs, and $215,300 is for a transfer out to the Vehicle and Equipment Replacement (VER) fund. These expenditure adjustments are presented in greater detail in Attachment 3.
The expenditure adjustments represent an increase of 1.5% above the adopted budget. The following table displays the same information by Function.
A summary of the General Fund budget (Sources & Uses Schedule) is shown in Attachment 2 and compares the original budget with the adjusted Mid-Year budget, segregating the previously approved items from those presented here for the first time. The total projected ending fund balance for FY 2023-24 is $64,973,523.
Changes to Other Funds
Attachments 3 and 4 contain details regarding the other Funds' budget adjustments.
Insurance Fund
Staff is proposing $100,000 for the City’s retention for the property claim submitted to the excess property insurance provider for damages sustained by various City facilities during the January 2024 storm.
*Storm Damage Expense: Pending reimbursement consideration from FEMA/Cal-OES.
Highway User Gas Tax (HUTA)
$200,000 is proposed from HUTA fund for two minor street projects (sidewalks, street/cross gutter repairs), which must be completed before the annual slurry / preventive maintenance zone project.
RTCIP
$80,000 is proposed from the RTCIP fund for field testing of a street light battery backup system with an improved lifecycle and reduced maintenance requirements.
Expenditure by Category
6 Months
Expenditures
Percentage
Expended
FY 2023-24
Adopted
Budget
Off-Cycle
Appropriations*
Mid-Year
Adjustments
Adjusted
Budget
Salaries & Benefits $ 20,176,441 51.3% $ 39,366,217 $ 398,755 $ 330,000 $ 40,094,972 Services, Supplies & Properties 7,490,911 42.5% 17,616,189 601,696 433,000 18,650,885 Transfer to:
Operating Funds 9,645,450 100.0% 9,645,450 - 215,300 9,860,750 Capital Projects Funds 716,440 100.0% 716,440 - - 716,440 115 Trust for Pension Stabilization - N/A - - - -
Total 38,029,242 56.5% 67,344,296 1,000,451 978,300 69,323,047 *Previously approved by the City Council
Expenditure by Function
6 Months
Expenditures
Percentage
Expended
FY 2023-24
Adopted
Budget
Off-Cycle
Appropriations*
Mid-Year
Adjustments
Adjusted
Budget
General Government $ 3,841,405 40.6% $ 9,464,329 $ 1,000,451 $ 134,500 $ 10,599,280 Community Grants 905,183 89.2% 1,015,000 - - 1,015,000
Public Safety 15,076,277 51.1% 29,521,766 - 393,500 29,915,266 Construction & Maintenance 6,018,335 45.4% 13,248,484 - 235,000 13,483,484 Culture & Leisure 1,826,153 48.9% 3,732,827 - - 3,732,827 Transfers 10,361,890 100.0% 10,361,890 - 215,300 10,577,190 Total 38,029,243 56.5% 67,344,296 1,000,451 978,300 69,323,047 *Previously approved by the City Council
Wastewater Utility
$60,000 is proposed for concrete pour and remediation work performed on a sinkhole identified during the January 2024 storm.
*Storm Damage Expense: Pending reimbursement consideration from FEMA/Cal-OES.
Golf Course Fund
The Fund is projecting an increased revenue of $65,000 in the restaurant and concessionaire rent from the increased number of covers.
On the expenditure side, the staff is proposing $267,000 for the additional tree trimming/maintenance, increased repair materials costs, and for the design of irrigation system replacement of system at the Golf Course.
Staff is also proposing $1,300,000 for the estimated repair cost of damages sustained to all existing bunkers on the Coronado Golf Course during the January 2024 storm. *Storm Damage Expense: Pending reimbursement consideration from FEMA/Cal-OES.
The following provides a summary of new FY 2023-24 Budget adjustments by Fund:
Revenues Expenditures
General Fund General Fund
TOT $ 500,000 Various $ 134,500
Investement Revenue 2,000,000 Police Department 130,000 Fire Department 263,500
Public Services & Engineering 235,000
Transfer Out - VER 215,300
Total General Fund Revenues 2,500,000 Total General Fund Expenditures* 978,300 Other Funds Other Funds
Insurance Fund 100,000
Highway User Gas Tax 200,000
RTCIP 80,000
Wastewater Utility 60,000
Golf Course Rent / Concessionaire 65,000 Golf Course Fund 1,567,000 Total Other Funds Revenues 65,000 Total Other Funds 2,007,000 Total All Funds Revenues $ 2,565,000 Total All Funds Expenditures $ 2,985,300 * This does not include off-cycle appropriation of $6,838,500.
SUMMARY OF NEW BUDGET ADJUSTMENTS BY FUND
FISCAL IMPACT:
The proposed new expenditure budget adjustments for all funds are $2,985,300: $978,300 for the General Fund, and $2,007,000 for the other funds. The details of these revenues are presented in greater detail in Attachment 3.
The previously approved FY 2023-24 Off-Cycle appropriation total is $6,838,500: $1,000,451 for the General Fund, and $5,838,049 for the other funds. This includes all year-to-date Off-Cycle appropriations approved by the City Council as of February 20, 2024, and are presented in greater detail in Attachment 5.
The proposed revenue adjustments for all funds in total are $2,565,000. Adjustments to the General Fund are $2,500,000, and to other funds are $65,000. The details of these revenues are presented in greater detail in Attachment 4.
The ending General Fund Balance on June 30, 2024, is expected to increase by approximately $521,000 from the initial adoption, to $64,983,523.
ALTERNATIVE:
The City Council may direct staff to modify any of the proposed budget adjustments.
CALIFORNIA ENVIRONMENTAL QUALITY ACT:
Not Applicable.
PUBLIC NOTICE:
No notice required.
ATTACHMENTS:
1. Updated Budget Summary by Fund
2. Updated General Fund (Sources and Uses Schedule)
3. Detailed Expenditure Adjustments by Fund
4. Detailed Revenue Adjustments by Fund
5. Detailed Off-Cycle Appropriation
Submitted By: Administrative Services Department / John Kim