Fiscal Year 2022/23
First Quarter Financial Report
Un-Audited Fiscal Year July 1, 2022, to September 30, 2022 Administrative Services 10/21/22 Q1 2022/23
First Quarter Report
Fiscal Year 2022/23
FISCAL YEAR 2022/23 FIRST QUARTER FINANCIAL REPORT | PAGE 1 of 9 Introduction
This financial report provides an overview of where we are within the budget cycle, then a summary of the City’s financial position through the Fiscal Year (FY) 2022/23 First Quarter (July 1, 2022, through September 30, 2022) for (1) Citywide Revenues and Expenses, (2) the General Fund, (3) Enterprise Funds, and (4) Summary of Cash and Investments. Notable cumulative first quarter to first quarter and preliminary budget to actual comparisons are included in this report.
The following factors should be taken into consideration when analyzing year-end data:
• Revenues reported herein are calculated based on actual receipts through September 30, 2022, but received through October 20, 2022. Some revenues for the first quarter are still being received and will be properly accrued once received. • Construction projects, specifically streets improvements, have a different project cycle and are typically funded across two or more Fiscal Years.
Standard Budget Process Cycle - Where We Are Now & Next Steps:
Tentative Schedule for Financial Reporting and Budget Year 2023/24 Planning:
• September 6th – Start of 2021/22 Fiscal Year end audit fieldwork • November 8th – Present the Q1 2022/23 financial summary to Council • November 8th – Discuss & initiate scheduling for FY 2023/24 budget planning meetings. • December 6th – Present audited financial statements and community annual financial report to the Council for Fiscal Year 2021/22.
February
Year-end & Financial
Performance Review
March
Year-end & Financial
Performance Review
Internal Budget Review,
Strategic/Long-Term and
Capital Planning
April - May
Draft Budget
Budget Workshops
May
Budget Adoption
* NOW *July - December
Financial Evaluations
Budget Adjustments as
Approved by Council
November-December
City Manager and Admin.
Services Budget Planning
Meetings
FISCAL YEAR 2022/23 FIRST QUARTER FINANCIAL REPORT | PAGE 2 of 9 Citywide Revenues and Expenses
*Other Special Revenues consists of the following funds: Gas Tax, RMRA, Public Safety, K-9 Program, Traffic Mitigation, CDBG Grants, Inclusionary Housing, Linkage Affordable Housing, MTC Streets, Measure M Parks, PEG, and Bed Tax.
City-wide Significant Variances
Fund type variances where revenues were less than 20% or expenditures are greater than 20% of budget as of year-end were evaluated as follows:
• Revenues for the General Fund, Wastewater and Water Funds are all considered in line with expectations given their specific timing for receipts. Further discussions in detail are provided in their detailed sections herein.
• Special Revenues funds are primarily derived for other special taxes which are reported to the City months after collection. As such they are accrued for in the prior year through the fiscal year end close.
• Capital Projects revenues and expenditures were less than budgeted due to the timing of the projects in place. Priority projects are still in design or were in construction during the first quarter of Fiscal Year 2022/23.
• Internal Services Funds had lower revenues and expenditures than budgeted primarily due to most leave payouts occurring nearer to the end of the calendar year in the next quarter, and the purchase of new vehicles which are not scheduled to take place until the second quarter of Fiscal Year 2022/23.
FISCAL YEAR 2022/23 FIRST QUARTER FINANCIAL REPORT | PAGE 3 of 9 FISCAL YEAR 2022/23 FIRST QUARTER FINANCIAL REPORT | PAGE 4 of 9 General Fund: Operating Revenues
The following table includes cumulative revenue comparisons of Fiscal Year 2021/22 and Fiscal Year 2022/23, and a revenue budget to current actual comparison for Fiscal Year 2022/23.
General Fund current operating revenues are $1,861,435, or 34.3% below the same period in FY 2021/22, primarily due to the one-time receipt of $886K of ARPA funds in July 2021. To properly depict the revenue for sales tax the City has included an estimated accrual of approximately $501K expected to be received by the end of November 2022 (Receipts in October for August were $523K).
The following is an explanation of the notable variances:
- Sales Tax revenues are approximately 4.1% or $65K less than last year’s cumulative first quarter ending balance. The primary source of this decrease is; due to the Amazon distribution center tax apportionment rules applied by the state.
Adjusting the sales tax on an annualized basis, the revenue compared to budget is in line with budgetary expectations.
- Other taxes are primarily made up of Cannabis Business Tax. The change from the previous year is primarily due to growth of the businesses operating within the City. As additional businesses are anticipated to start operations within the City in coming months, this revenue is expected to continue to grow as well as meet budget expectations. - Property Taxes are received in December and April of the Fiscal Year, and as such are not included in this report to date. We have budgeted for over $2 million, in line with the County’s proposed allocation, for Fiscal Year 2022/23.
FISCAL YEAR 2022/23 FIRST QUARTER FINANCIAL REPORT | PAGE 5 of 9 - Community Development Charges have remained constant compared to the prior year, but Public Works Charges revenues decreased by $11K due to fewer permits being issued related to development projects, primarily as Kessing Ranch is nearing completion. - Other Revenues received to date increased by 16.3% or over $7K primarily due to reimbursements for damage to city property, and increased recreation class revenue as we continue to recover from the pandemic.
General Fund: Department Operating Expenditures
The following table includes cumulative actual expenditure comparisons by department and again by expenditure type for Fiscal Year 2021/22 and Fiscal Year 2022/23 and an expenditure budget to actual comparison for Fiscal Year 2022/23.
Expenditures by Department
Expenditures by Type
Overall, cumulative General Fund expenditures decreased from the previous year by approximately 15% or $402K. This change was due to a combination of the reduction in transfers out required for capital projects which was offset by increases in utility payments and other general expenditures.
Spending by General Fund Departments is slightly lower than the prior year with total dollar decreases noted in police and public works who are currently in the process of recruiting additional staff. Additional budgeted increases also include funding required for increased insurance and other negotiated payroll costs.
FISCAL YEAR 2022/23 FIRST QUARTER FINANCIAL REPORT | PAGE 6 of 9 Enterprise Funds: Operating Revenue & Expense
The following table includes cumulative revenue and expenses comparisons of Fiscal Year 2021/22 and Fiscal Year 2022/23, and a budget to actual comparison for Fiscal Year 2022/23 for the Enterprise Funds.
The Water and Wastewater Funds revenues include charges for services, connection fees other revenues, and development fees. Utility accounts are billed every two months as such within the first quarter of the fiscal year, only one billing cycle has been completed of the six in a year.
The revenues for the Water Funds have decreased primarily due the completion of the development projects and reduced connection fees in this quarter of approximately $35K. Total connection fees incurred by the City in prior year 2021/22 was $327K. Due to the ongoing drought, Cotati residents and business are continuing to decrease water consumption, which also decreases the volume factor for the utility billing. This decreased customer usage offset the rate increase applied during the same period. We believe the revenues are still inline with expectations for budget but will continue to evaluate on an ongoing basis.
For the Wastewater Funds, the decrease in revenue from prior year are also primarily due to the additional connection charges of approximately $91K received in the prior year. As with Water, the revenues for the Wastewater Funds are considered in line with budget expectations, however staff will continue evaluations on an ongoing basis.
For FY 2022/23, most expenses are in line with budget expectations. One significant increase is the cost of Wastewater treatment due to the increased rates from Santa Rosa.
FISCAL YEAR 2022/23 FIRST QUARTER FINANCIAL REPORT | PAGE 7 of 9 Cash and Investments
The tables below show the cash and investments held by the City as of September 30, 2022.
The current cash and investment balances are in line with the City adopted investment policy and as budgeted are enough to meet the City’s expenditure requirements into the next fiscal year.
FISCAL YEAR 2022/23 FIRST QUARTER FINANCIAL REPORT | PAGE 8 of 9 Cash and Investment Detail by Composition
Conclusion
Except for identified variances, expenditures and revenues are mostly in line with budget.
Continued budgetary strategic planning for future years along with pension planning strategies will continue to improve the City’s position into the future. Staff will provide the Council and community financial reporting for the Fiscal Year 2021/22 annual audited financial statements as well as Fiscal Year 2022/23 quarterly budget to actual reports.