CITY COUNCIL STAFF REPORT
February 4, 2025 {{section.number}}{{item.number}}
FISCAL YEAR 2024-25 BUDGET MID-YEAR REVIEW AND ADJUSTMENTS RECOMMENDATION:
Receive the report and approve the recommended Fiscal Year 2024-25 Mid-Year Budget adjustments.
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 2024. 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 2024;
2) Purchases, additional services or projects that were approved by the City Council subsequent to the adoption of the Budget (Off-Cycle Appropriations); 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 November 30, 2024, General Fund revenues totaled $36,910,422, or 49.6% of the annual projection. The chart below identifies the original revenue projection, and five months of revenue (shown on a cash basis).
Revenue by Source
5 Months
Receipts
"Cash Basis"
Percentage
Received
FY 2024-25
Adopted
Budget
Off-Cycle
Appropriations*
Mid-Year
Adjustments
Mid-Year
Projection
Property Tax $ 18,691,270 43.3% $ 43,214,820 $ - $ - $ 43,214,820 Other Taxes 14,021,786 57.5% 24,388,876 - 1,000,000 25,388,876 Licenses & Permits 26,026 69.4% 37,500 - - 37,500
Fines & fees 118,590 42.7% 278,000 - 31,000 309,000
Use of Money and Property 2,085,941 68.0% 3,067,758 - - 3,067,758 Charges for Services 586,384 36.3% 1,614,555 37,500 - 1,652,055 Intergovernmental, Reimbursements & Other Revenues 1,380,425 75.8% 1,822,340 - - 1,822,340 Other Financing Sources - N/A - - -
Total $ 36,910,422 49.6% $ 74,423,849 $ 37,500 $ 1,031,000 $ 75,492,349 *Previously approved by the City Council
The property tax, Transient Occupancy Tax (TOT), and sales/use tax continue to make up for most of the General Fund revenues received as of November 2024, at approximately 89%.
Approximately 43% of the budgeted Property Tax has been received as of November 2024, which is consistent with expectations based on the scheduled timing of receipts.
The Hotel del Coronado broke ground on its renovation of the property’s main Victorian structure in January 2024, placing several hundred rooms out of service for an extended period. The project is estimated to be completed in 2025, with rooms returning online in phases. Consequently, the Fiscal Year (FY) 2024-25 TOT budget was projected at $17.5 million, down from the prior year’s budget of $18.5 million. As of November 2024, the City received $10.3 million in TOT, which is approximately 59% of the adopted TOT budget of $17.5 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 $1,000,000 of additional revenues to the TOT budget.
Smaller revenue adjustments in the General Fund include an increase in the vehicle storage release fee ($50,000) and a decrease in the police department’s records revenue (-$19,000).
The revenue adjustments are presented in greater detail in Attachment 4.
General Fund Expenditures
Expenditures are shown below by category and by function. Through November 2024, General Fund expenditures, including transfers, are $37,903,971, which represents 51.1% of the adopted budget. All approved fund transfers ($11,170,000) occur during the first half of the fiscal year, indicating that operating expenditure is closer to where it should be at about mid-way point.
The below also includes $148,700 of Off-Cycle Appropriations, with a net impact of $111,200 with offsetting revenue of $37,500, as shown on the previous table for the General Fund Revenue.
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 2024-25 Budget.
However, they are included in the below 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 $906,000, of which $135,000 is programmed for salaries and benefits, $371,000 is programmed for services, and $350,000 is for transfer out to the Insurance Fund ($300,000) and the Vehicle and Equipment Replacement (VER) fund ($100,000). These expenditure adjustments are presented in greater detail in Attachment 3.
The expenditure adjustments represent an increase of 1.2% 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. With these changes, the projected ending fund balance for FY 2024-25 is $86,011,173, slighter greater than projected at the time of budget adoption.
Changes to Other Funds
Attachments 3 and 4 contain details regarding the other Funds' budget adjustments.
Recreation Services Fund
On the revenue side, the staff is proposing an adjustment of $110,000 based on increased offerings of youth programs.
On the expenditure side, $218,000 is proposed primarily for the additional maintenance required after the completion of the pool restoration project ($125,000). Other notable items include $45,000 for the replacement of playhouse equipment, as supported in concept by the City Council during the Community Grant discussion in June 2024, and $30,000 for new and expanded beach volleyball courts at Central Beach.
Expenditure by Category
5 Months
Expenditures
Percentage
Expended
FY 2024-25
Adopted
Budget
Off-Cycle
Appropriations*
Mid-Year
Adjustments
Adjusted
Budget
Salaries & Benefits $ 19,558,463 45.6% $ 42,904,151 $ 148,700 $ 100,000 $ 43,152,851 Services, Supplies & Properties 7,175,508 35.8% 20,055,278 - 406,000 20,461,278 Transfer to:
Operating Funds 10,320,000 100.0% 10,320,000 - 400,000 10,720,000 Capital Projects Funds 850,000 100.0% 850,000 - - 850,000 115 Trust for Pension Stabilization - N/A - - - -
Total 37,903,971 51.1% 74,129,429 148,700 906,000 75,184,129 *Previously approved by the City Council
Expenditure by Function
5 Months
Expenditures
Percentage
Expended
FY 2024-25
Adopted
Budget
Off-Cycle
Appropriations*
Mid-Year
Adjustments
Adjusted
Budget
General Government $ 4,052,575 36.8% $ 11,002,369 $ 98,700 $ 159,000 $ 11,260,069 Community Grants 911,916 84.6% 1,078,000 - - 1,078,000
Public Safety 14,683,435 45.0% 32,610,623 50,000 182,000 32,842,623 Construction & Maintenance 5,388,525 37.8% 14,252,517 - 155,000 14,407,517 Culture & Leisure 1,697,520 42.3% 4,015,919 - 10,000 4,025,919 Transfers 11,170,000 100.0% 11,170,000 - 400,000 11,570,000 Total 37,903,971 51.1% 74,129,429 148,700 906,000 75,184,129 *Previously approved by the City Council
Community Development Agency (CDA) Loan Fund
$2,000,000 is proposed for additional funding needed for the continuing construction of the Parker Pump Station rehabilitation project.
Regional Transportation Congestion Improvement Plan (RTCIP) $32,381 is proposed for appropriation on eligible traffic signal projects to ensure timely expenditure of the RTCIP fund balance.
Federal Grant
An increase in the revenue of $22,363 is proposed for the police department’s Homeland Security Grant Program (HSGP) grant reimbursement anticipated on eligible expenditures incurred during FY 2024-25.
Wastewater Utility
$600,000 is proposed for additional contract expenses to support the wastewater operations and maintenance projects over the next six months due to current staffing capacity challenges.
Storm Drain
$350,000 is proposed for two items. $300,000 is related to an unforeseen maintenance project mandated by SDGE at the Bandel Pump Station that depleted most of the originally adopted budget. $50,000 is related to the stormwater program services and Metro JPA Committee obligations.
The following provides a summary of new FY 2024-25 Budget adjustments by Fund:
Revenues Expenditures
General Fund General Fund
TOT $ 1,000,000 Various $ 159,000
Public Safety 31,000 Fire Department 182,000
Library Services 10,000
Public Services & Engineering 155,000
Transfer Out - Insurance & VER 400,000
Total General Fund Revenues 1,031,000 Total General Fund Expenditures* 906,000 Other Funds Other Funds
Recreation Services 110,000 Recreation Services 218,000 Federal Grants 22,363 CDA Loan Fund 2,000,000
RTCIP 32,381
Wastewater Utility 600,000
Storm Drain 350,000
Total Other Funds Revenues 132,363 Total Other Funds 3,200,381 Total All Funds Revenues $ 1,163,363 Total All Funds Expenditures $ 4,106,381 * This does not include off-cycle appropriation of $4,950,357.
SUMMARY OF NEW BUDGET ADJUSTMENTS BY FUND
Other Funds Off-Cycle Appropriation
As previously noted, Off-Cycle Appropriations are individual budget requests approved by the City Council during the course of the year. For FY 2024-25, these previously approved appropriations for funds other than the General Fund total to $4,839,157. Some of the significant appropriations include additional fund for the Wastewater Main Replacement project ($3,230,591), additional funds for the electric fire engine ($900,000), and phase II of the Silver Strand Undergrounding project ($550,000). Details of Other Funds Off-Cycle Appropriations are presented in Attachment
5. FISCAL IMPACT:
The proposed revenue adjustments for all funds in total are $1,163,363. Adjustments to the General Fund are $1,031,000, and to other funds are $132,363. The details of these revenues are presented in greater detail in Attachment 4.
The proposed new budget adjustments for all funds are $4,106,381: $906,000 for the General Fund, and $3,200,381 for the other funds. The details of these expenses are presented in greater detail in Attachment 3.
The previously approved FY 2024-25 Off-Cycle appropriation total for all funds is $4,950,357: net $111,200 for the General Fund, and $4,839,157 for the other funds. This includes all year-to-date Off-Cycle appropriations approved by the City Council as of January 21, 2025, and are presented in greater detail in Attachment 5.
The ending General Fund Balance on June 30, 2025, is expected to increase by approximately $13,800 from the initial adoption, to $86,011,173.
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