City of Culver City
First Quarter
Fiscal Year 2021/2022
Unaudited General Fund
Financial Report
This page left intentionally blank
1 INTRODUCTION
The Fiscal Year (FY) 202 1/2022 First Quarter Unaudited Financial Report presents an overview of Culver City’s (“City”) General Fund operating revenues and expenditures. This report compares actual revenues and expenditures to revised budget amounts and explicates any notable deviations or trends in the numbers. The enclosed first quarter financials (July 2021 – September 2021) represent 25% of the fiscal year and revenues and expenditures recorded thus far and are reported on a cash basis. Any revenues or expenditures significantly above or below 25% will be discussed in the body of this report.
The first quarter financial report is presented:
1. To illustrate the City’s focus on monitoring its revenues and expenditures, with the intent to proactively respond to unanticipated changes or emerging trends during the COVID -19 pandemic.
2. To provide fiscal transparency of City finances as the City is ultim ately accountable to its residents for the use of revenue.
3. Finally, an important reason to provide such information is that it serves as a starting point for preparing mid-year budget adjustments to the FY 2021/2022 Budget.
Finance Department s taff have reviewed all line items and compared actual results against budget expectations, historical trends, seasonality, and other known factors affecting either revenue or spending streams to determine if recommendations for reductions or increases should be made. There are no recommendations included in this first quarter report . Any proposed changes to revenue estimates or appropriations will be included in the FY 2021/2022 Mid- Year Budget Report, which will be presented to the City Council at the end of February.
REPORT HIGHLIGHTS:
• General Fund Operating Revenues for first quarter FY 2021/2022 were $13.6M. o Actual revenues were 10.3% of the FY 2021/2022 Revised Budget. o Actual revenues were $878.3K higher than first quarter FY 2020/2021. o Analysis of the current fiscal year’s first quarter suggests that the City’s overall recurring General Fund revenues, along with one-time revenues, are likely to meet the goal of the FY 2021/2022 Revised Budget.
• General Fund Expenditures for first quarter FY 2021/2022 were $39.6M. o Actual expenditures were 28.7% of the FY 2021/2022 Revised Budget of $138.0M. o Actual expenditures were $2.4M higher than first quarter FY 2020/2021. o Personnel Costs include the funding and filling of positions that were previously frozen in FY 2020/2021 due to the COVID-19 pandemic.
2 GENERAL FUND REVENUES
General Fund Revenues were $13.6M or 10.3% of the FY2021/2022 Revised Budget. Table 1 displays comparisons between the Original Adopted Budget, Revised Budget and Actual amount s for FY 2021/2022. The percentages are based on the a ctual revenue amounts received in the first quarter versus the total FY 2021/2022 Revised Budget amounts. Additionally, actual revenues from the first quarter of FY 2020/2021 have been included as a comparison. Actual revenues for FY 2021/2022 were $878.3K higher than the prior fiscal year.
TABLE 1
• Property Tax – The first payment of Property tax is not scheduled to be received until the second quarter of FY 2021/2022. The FY 2021/2022 Mid- Year Report will have further information included in this category.
Sales Tax / Measure C and CC – Sales Tax and Measure C/CC receipts reflected in Table 1 are $1.6M and $1.1M respectively, which represent total Sales Tax (including Public Safety Tax) received for the month of July only . The July sales tax revenue reported above also includes funds received in arears for prior quarters. Funds received in arears were higher in FY 2020/2021 due to the Governor’s Executive Orders allowing businesses to defer sales tax remittances as a suppor tive measure early in the COVID -19 pandemic . Businesses are no longer deferring payments, which is reflected in current fiscal year’s lower Actual revenue for the first quarter. Based on the process implemented by the California Department of Tax and Fee Administration (CDFTA), Sales Tax Revenues for August 2021 and September 2021 are not 2021 Variance
Original Budget Revised Budget Actual % Actual Actual
30 - Property Tax 10,511,000 10,511,000 - 0.0% - - 31 - Sales Tax 22,100,192 22,100,192 1,571,461 7.1% 1,713,094 (141,633) 32 - Measure C & CC 14,851,000 14,851,000 1,057,977 7.1% 1,780,846 (722,868) 33 - Business Tax 15,561,000 15,561,000 211,296 1.4% 696,241 (484,945) 34 - UUT 13,397,000 13,397,000 2,549,141 19.0% 2,211,982 337,159 35 - TOT 3,704,000 3,704,000 923,858 24.9% 360,355 563,503 36 - Franchise Tax 1,400,000 1,400,000 101,805 7.3% 98,891 2,914 37 - Real Prop Trans Tax 10,550,000 10,550,000 1,094,888 10.4% 713,308 381,580 38 - Comm/Ind Dev Tax 500,000 500,000 115,599 23.1% 110,350 5,249 3E - Licenses & Permits 5,322,500 5,322,500 997,357 18.7% 816,028 181,330 3F - Fines & Forfeitures 2,912,000 2,912,000 677,294 23.3% 270,247 407,047 3G - Intergovernmental 10,030,259 10,030,259 13,573 0.1% 94,212 (80,639) 3H - Charges for Services 8,897,965 9,024,959 1,856,816 20.6% 828,643 1,028,173 3I - Use of Money & Prop 1,920,365 1,920,365 25,347 1.3% 644,049 (618,702) 3J - Other Revenue 1,111,595 1,111,595 (2,020) -0.2% 320,832 (322,853) 3K - Other-Transfers 3,958,668 3,958,668 989,667 25.0% 679,306 310,361 3L - Cost Allocation Rec 5,560,449 5,560,449 1,390,112 25.0% 1,357,483 32,629 90 - Transfers - - - 0.0% - - Total Revenues 132,287,993$ 132,414,987$ 13,574,172$ 10.3% 12,695,866$ 878,306$ Character Code
Revenues
2022
3 received by the City until October and November and are therefore not included in Table 1 (cash basis) above.
o Since Sales Tax is a major revenue source for the City, Table 2 has been included in this report to show Bradley Burns Sales Tax, Measure C, and Measure CC tax revenue for the months of July, August, and September. Note: Table 2 does not include the one-half percent levy of public safety sales tax approved by voters in November 1993, which is a very small amount.
o Table 2 shows there is an increase in sales tax of 27.6% over the prior fiscal year. Based on information provided by HdL, Los Angeles County experienced a 20.0% increase in sales tax revenue over the same quarter in the prior year , and the State of California experienced an
18.3% increase.
o Actual sales tax received for the first quarter is 28.5% of the FY 2021/2022 Revised Budget.
Sales Tax revenues are coming in higher than expected by a positive margin of 3.5%, due to rebounds in multiple retailers, a return to dining in restaurants, a steady demand for vehicles and an increase in the numbers of commuters . Staff will continue to monitor this revenue and propose any recommended changes during the Mid-Year process.
TABLE 2
Note: During the March 2020 election, Culver City residents voted to extend the sunset date of Measure CC (formerly Measure Y), the City’s ½ Transaction Tax, by another ten years.
• Business Tax & Cannabis Tax – Business Tax receipts were $ 211.3K or 1.4% of the FY 2021/2022 Revised Budget. The business tax revenues have come in lower than the prior year due to a change in business tax payment deadlines. To support businesses during the COVID- 19 pandemic, the deadline to pay Business License renewals in 2020 was extended to June of 2020. As a result, a portion of the payments were delayed until July of FY 2020/2021 and are reflected in higher first quarter revenues for that fiscal year . In comparison, the deadline for Business License renewals in 2021 was March 31, 2021 , so those payment s remained in the prior fiscal year.
• Utility Users Taxes (UUT) – Total UUT receipts of $2.5M reflects July 2021 and August 2021 payments. This revenue source is higher when compared to the same period for FY 2020/2021.
The Finance Department will begin an audit of these services in the current fiscal year to capture any potential lost revenues, specifically, in the area of telecommunications.
• Transient Occupancy Tax ( TOT) – TOT receipts for this quarter were $923.9K and reflect revenue for July 2021 and August 2021. This revenue is higher when compared to the same period of FY 2020/2021. As COVID-19 travel restrictions ease, TOT revenue is beginning to July August September Total July August September Total Variance Bradley Burns 1,528,727$ 2,203,265$ 2,708,606$ 6,440,598$ 1,675,140$ 2,011,109$ 1,398,509$ 5,084,758$ 1,355,840$ Measure C 352,089$ 526,512$ 466,290$ 1,344,891$ 377,855$ 519,012$ 143,802$ 1,040,669$ 304,222$ Measure CC 705,889$ 1,076,076$ 965,299$ 2,747,264$ 765,135$ 1,031,979$ 329,107$ 2,126,221$ 621,043$ Total Sales Tax 2,586,705$ 3,805,854$ 4,140,194$ 10,532,753$ 2,818,130$ 3,562,100$ 1,871,418$ 8,251,648$ 2,281,105$ FY 2021/2022 FY 2020/2021
Sales Tax
4 recover. TOT has increased $563.5K over the prior fiscal year but has not yet returned to pre- pandemic levels. It is possible this revenue will meet or exceed budget by the end of the year.
• Franchise Fees - Franchise fees for this quarter were at $101.8K or 7.3% of the FY 2021/2022 Revised Budget. Franchise tax came in slightly higher than the previous fiscal year for the same period. This revenue source will be monitored and adjusted during the Mid- Year process, if needed.
• Real Property Transfer Tax - Real Property Transfer Tax (RPTT) for this quarter was $1.1M or
10.4% of the FY 2021/2022 Revised Budget. RPTT was $381.6K higher compared to the same period of the previous fiscal year. Real Property Transfer Tax came in strong due to higher sales of residential properties fueled by record low mortgage rates and the implementation of Measure RE in April 2021.
At the November 3, 2020 election, Culver City residents voted to approve Measure RE. Measure RE establishes a marginal tax rate with four brackets, based on sales price or value, for the City's real estate transfer tax effective April 1, 2021. This marginal tax adds 1.5% on amounts from $1,500,000 to $2,999,999, 3% on amounts from $3,000,000 to $9,999,999, and 4% on amounts $10,000,000 and above. Measure RE does not apply to sales under $1,500,000, affordable housing, and first transfer of new multi-family properties.
• Community/Industrial Development Tax – This revenue category continues to be significantly decreased due to the pandemic. The total revenue received for this category in the first quarter was $115.6K or 23.1% of the FY 2021/2022 Revised Budget. The revenues are up by $5.2K compared to the same quarter in the prior fiscal year but have not yet rebounded to pre - pandemic levels.
• Licenses & Permits – Revenues for this quarter were $997.4K or 18.7% of the FY 2021/2022 Revised Budget. The revenues for this category were up by $181.3K compared to the same quarter of the prior fiscal year but have not yet rebounded to pre-pandemic levels. Licenses and Permits for building, electrical and plumbing are the significant source of revenues for this category. This revenue source will be monitored and adjusted during the Mid- Year process, if needed.
• Fines and Forfeitures – Fines and Forfeitures were $677.3K or 23.3% of the FY 202 1/2022 Revised Budget. This category is primarily comprised of red- light camera violations , moving violations written by Culver City traffic enforcement, and parking violations written by Culver City parking enforcement. When you compare fines and forfeiture revenue for the same period of FY 2020/2021, revenues were up by $407.0K. In the first quarter of FY 2020/2021, the State and the County of Los Angeles w ere still under Safer at Home orders , and very few people were commuting to work. In the first quarter of FY 2021/2022, more people had resumed in person activities, which resulted in more vehicles on the road.
• Intergovernmental – Intergovernmental revenue was $13.6K or 0.1% of the FY 202 1/2022 Revised Budget. This revenue is comprised of the motor vehicle license fees from the State Department of Motor Vehicles. The majority of receipts, in this category, come s from the State Motor VLF In-Lieu payments, which are received in January and May of each fiscal year.
5 • Charges for Services – Receipts in this category were $1.9M or 20.6% of the FY 202 1/2022 Revised Budget. Charges for Services category is comprised of a variety of revenues ranging from recreation program fees to police services and plan checks. This category ha d also experienced significant decreases in the prior fiscal year due to the C OVID-19 pandemic. The revenue for this category has increased by $1.0M compared to same period last year.
• Use of Money and Property – This category includes revenues from interest income , investments, and income from the rental of city properties. T he revenues were $25.3K or 1.3% of the revised budget. This amount is significantly lower than the first quarter of the prior year due to an accounting reversal entry to adjust for the fair market value allocation on investments that was recorded in July.
• Other Revenue – Other Revenues is comprised of loan payments, land sale proceeds, donations, miscellaneous revenues and accounting journal entries. Revenues for this category are currently showing negative for the first quarter due to accounting journal entries.
• Other – Transfers & Cost Allocation Rec – This category includes inter-departmental transfers for covering General Fund expenses. The total revenues for these categories were $989.7K or 25% of the FY 2021/2022 Revised Budget.
Overall, the revenues for the General Fund finished the first quarter $878.3K above the same period of FY 2020/2021. Finance will continue to monitor the major revenue sources to determine if budget for revenue estimates need to be adjusted during the Mid-Year process.
6 GENERAL FUND EXPENDITURES
General Fund E xpenditures for first quarter FY 20 21/2022 were $39.6M or 28.7% of the Revised Budget. Tables 3 and 4 below include information for the Original Adopted Budget, Revised Budget, Actual amount and current Encumbrances. The percentages shown in both tables are based on the Actual expenditure amounts in the first quarter versus the total FY 2021/2022 Revised Budget amounts.
Additionally, Actual General Fund Expenditures from first quarter FY 2020/2021 have been included as a comparison. Expenditures in the first quarter of FY 2021/2022 are $2.4M above the same quarter of the prior year. The Encumbrances are at $10.1M for FY 2021/2022, and they represent purchase orders and contracts that are not yet completed.
TABLE 3
TABLE 4
The Personnel category was $33.4M or 32.2% of the FY 2021/2022 Revised Budget. Personnel costs have gone up by $ 1.3M over the same period for the previous fiscal year. Included in this number is an increase of $1.02M in Worker’s Compensation contributions and an increase of $150K in part-time salaries. The increase in part-time salaries reflects the restoration in FY 2021/2022 of many seasonal programs that were canceled or cut back in FY 2019/2020 and FY 2020/2021 due to the pandemic . 2021 Variance
Original Budget Revised Budget Actual % Actual Actual
10 - Administration 1,844,225 1,876,557 527,534 28.1% 512,835 14,699 13 - City Attorney 2,906,725 2,932,425 623,143 21.3% 594,775 28,369 14 - Finance 6,163,591 6,179,164 1,596,068 25.8% 1,490,467 105,601 16 - Non-Departmental 6,350,464 6,501,323 1,277,379 19.6% 1,080,285 197,094 22 - Administrative Services 2,810,926 2,928,377 739,529 25.3% 645,852 93,677 24 - Information Technology 5,110,978 5,174,798 1,164,653 22.5% 1,234,375 (69,721) 30 - Parks Recreation & Comm Svs 9,759,843 10,048,194 2,348,151 23.4% 2,092,052 256,100 40 - Police 48,282,825 48,392,033 15,993,951 33.1% 15,141,077 852,873 45 - Fire 27,826,478 28,063,482 9,709,101 34.6% 9,011,136 697,965 50 - Community Development 9,575,327 10,990,482 2,170,697 19.8% 2,128,928 41,769 60 - Public Works 14,588,671 14,955,623 3,429,754 22.9% 3,286,613 143,141 Total Expenditures $135,220,053 $138,042,458 $39,579,960 28.7% $37,218,394 $2,361,566 Expenditures by Department
2022
Expenditures by Department
2021 Variance
Original Budget Revised Budget Actual % Actual Actual
Personnel 103,846,736 103,846,736 33,406,530 32.2% 32,076,883 1,329,647 O & M 28,978,748 31,677,449 5,433,454 17.2% 4,868,945 564,510 Capital 492,569 646,273 49,203 7.6% 76,227 (27,024) Excess Appropriations 1,902,000 1,872,000 690,773 36.9% 196,340 494,433 Total Expenditure 135,220,053$ 138,042,458$ 39,579,960$ 28.7% 37,218,394$ 2,361,566$ Expenditures by Type
Expenditures
2022
7 The Personnel category also includes lump sum payments, like the CalPERS Unfunded Accrued Liability (UAL), that occur in the beginning of each fiscal year. These payments increase the quarterly percentage against the total expenditure budget.
The Operations and Maintenance (O&M) category was $5.4M or 17.2% of the FY 2021/2022 Revised Budget. O&M expenditures came in higher by $564.5K compared to first quarter of FY 2020/2021 as a result of increased spending from resumed programs and other activities as pandemic restrictions have eased.
The Capital Category was $49.2K or 7.6% of the FY 202 1/2022 Revised Budget. The capital budget category contains property conversion funding for the purchase of four vehicles and three in-car camera systems for the Police Department . The capital budget also includes the modification of office space in the Building Safety Division. Most of these capital projects were not yet completed in the first quarter of the fiscal year.
The Other/Excess Appropriations category was at $690.8K and includes amounts transferred to other funds within the City. This category is $494.4K higher than the first quarter of the previous fiscal year and includes a higher transfer amount to the Capital Improvement & Acquisition Fund (Fund 420) than the previous year for capital projects.
Overall, despite increases over the prior year, the total General Fund expenditures are anticipated to come in below the Revised Budget for FY 2021- 2022. Additional analysis and information will be included in the FY 2021/2022 Mid-Year Budget Report that will be presented to City Council at the end of February.
CONCLUSION
In conclusion, the First Quarter Financial Report for FY 2021/2022 indicates that the General Fund Revenues are $878.3K higher compared to the same period in FY 2020/2021. Revenues such as Sales Tax, TOT, UUT, Charge for Services, Licenses and Permits, and Fines/Forfeitures will continue to be monitored in FY2021/2022.
General Fund Expenditures are currently at 28.7% of budget, and the expenditures are $2.4M higher than the same period in FY 2020/2021. The higher expenditures include needed operational purchases in O&M by all the departments now that many COVID-19 funding restrictions have lifted, along with the filling of previously frozen staff positions from FY 2020/2021.
Finance staff will present a FY 2021/2022 Mid- Year Budget R eport to City Council at the end of February 2022, and staff will provide recommendations for necessary budget adjustments at that time.