City of Culver City
FISCAL YEAR 2023-2024
UNAUDITED
GENERAL FUND
FINANCIAL REPORT
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1 INTRODUCTION
The Finance Department has prepared a Fiscal Year 2023-2024 Unaudited Financial Report for the General Fund. It is important to note, the enclosed year-end financials are approximately 98% complete and the final audit has not yet been completed by the City’s auditors. The report is intended to provide an overview of the City’s actual General Fund operating revenues and expenditures for Fiscal Year 2023- 2024 as compared to the revised budget amounts adopted by the City Council and explain any notable deviations or trends in the numbers.
This fiscal year-end report illustrates the City’s focus on monitoring its revenues and expenditures, with the intent to proactively respond to unanticipated changes or emerging trends. Secondly, and equally important, the report serves to support fiscal transparency and accountability by providing the Council and members of the public with information on the sources and uses of City revenue.
Finance Department staff will continue to watch these trends carefully as the current fiscal year progresses and as the City begins the budget process for Fiscal Year 2025-2026.
Finance staff have reviewed all budget line items and compared actual results against budget expectations, historical trends, seasonality, and other known factors affecting revenue or spending streams to inform its recommendations during upcoming budget discussions.
REPORT HIGHLIGHTS:
• General Fund Operating Revenues for Fiscal Year 2023-2024 were $178.4 million. This increased amount reflects the full implementation of Measure BL, an update to the City’s business license tax rates passed by Culver City voters in November 2022, higher than anticipated earnings from investments, and transfers.
o Actual revenues were 110% of the Fiscal Year 2023-2024 Revised Budget of $162.2 million. Further detail is included in the report outlining some of the larger variances between the actual and revised budget.
• General Fund Expenditures for Fiscal Year 2023-2024 were $180.4 million. There are $8.1 million in encumbrances that will be carried over into Fiscal Year 2024-2025, along with approved carryover in the amount of $5.7 million for items such as programs, services, and the purchase of equipment that was unable to be completed in Fiscal Year 2023-2024.
o Actual expenditures were 94.1% of the Fiscal Year 2023-2024 Revised Budget of $191.8 million. The timing of contract work and staff vacancies were two major factors contributing to this variance.
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2 GENERAL FUND
GENERAL FUND REVENUES
General Fund R evenues were $178.4 million or 110% of the Fiscal Year 2023-2024 Revised Budget. The table below displays comparisons between the Adopted Budget, Revised Budget, and Actual amount s for Fiscal Year 2023-2024. The percentage difference is based on the Actual amounts versus the Revised Budget amounts. Total General Fund Revenues from Fiscal Year 2022-2023 have also been included as a comparison. Actual revenues for F iscal Year 2023-2024 were $17.5 million higher than actual revenues for the prior year.
Property Tax – For Fiscal Year 2023-2024, this category was $15.5 million or 108.6% of the Revised Budget amount, and 5 .5.% above the previous year . Housing sales have remained low compared to previous years due to high interest rates and economic uncertainty, but this revenue category is anticipated to continue to experience measured growth in Fiscal Year 2024-2025 based on increased assessed values in the City and the winding down of the debt obligations for the City’s former Redevelopment Agency.
Sales Tax – Total Sales Tax receipts for Fiscal Year 2023-2024 were $41.2 million or
99.2% of the Revised Budget, and $1.2 million below the previous year. The Sales Tax total includes Bradley-Burns Uniform Local Sales Tax, Measure C an d Measure CC revenues. Several sectors remained cool during the year , including auto sales, service stations, business and indust ry, and general consumer goods , along with receipts from ATTACHMENT 1
3 the City’s share of the State and County pool s. Inflation and other current economic stressors are prolonging this flattening out of Sales Tax receipts in the current fiscal year based on data received from the City’s Sales Tax consultant, HdL.
Business Tax – Business Tax receipts for Fiscal Year 2023-2024 were $31.3 million, 136.8% of the Revised Budget, and $12.6 million above the previous year. On November 8, 2022, Culver City voters approved an update to the City’s Business Tax rates. The increases in this revenue source over the last two years reflect s the phased implementation of the new rates. In April 2023, t he new rates went into effect for new businesses. The new rates went into effect for existing businesses as part of the 2024 renewal period and are reflected in Fiscal Year 2023-2024 receipts.
Utility Users Taxes (UUT) – Total UUT receipts for Fiscal Year 2023-2024 are $16.5 million or 97.1% of the Revised Budget and remained roughly flat from the previous year.
UUT for Gas, Cable and Electricity has increased between Fiscal Year 2020- 2021 and Fiscal Year 2022- 2023 driven by price increases from utility companies, along with increased telecommuting activities. Staff is currently working with the City’s consultant Avenu to increase the City’s auditing efforts to help capture any UUT revenues not currently being collected.
Transient Occupancy Tax (TOT) – For Fiscal Year 2023-2024, receipts in this category were just over $12.5 million or 100.3% of the Revised Budget, and 4.8% increase from the prior year . Revenue for the first six months of the current fiscal year is on track to meet budget expectations.
Franchise Tax – Revenues for Fiscal Year 2023-2024 were $2.1 million or 141.2% of the Revised Budget. Revenue was higher than t he prior year revenue by $276,537.
Historically, this category stays around $1.4 million and routinely meets estimates.
Real Property Transfer Tax – Revenues for Fiscal Year 2023-2024 were $7.4 million or
92.3% of R evised Budget. The decreasing number of sales due to inflation and high interest rates resulted in this revenue source not meeting the City’s lowered budget expectations. Due to ongoing inflation and other economic concerns, interest rates are not anticipated to be lowered in the near-term. This is reflected in lower than anticipated receipts in recent months. Finance staff will watch this carefully as predictions are made for the upcoming budget.
Commercial and Industrial Development Tax – Revenues for Fiscal Year 2023-2024 were $889,120 or 177.8% of the Revised Budget. This was largely due to the initiation of more development projects.
Licenses & Permits – Revenues for Fiscal Year 2023-2024 were $4.1 million or 96.2% of Revised Budget and are slightly up from the previous year. Licenses and Permits revenues are driven by residential and commercial construction activity . Building, Electrical and Plumbing permits are the most significant source for this revenue category.
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4 Intergovernmental Revenue – Intergovernmental revenue is $7.8 million or 102.6% of the Revised Budget. This revenue is normally comprised of the motor vehicle license fees from the State Department of Motor Vehicles.
Charges for Services – Receipts in this category were almost $10.1 million or 93.5% of the Revised Budget, and 8.1% below the previous year. Charges for Services category is comprised of a variety of revenues ranging from recreation fees to police services and plan checks. After seeing a dramatic recovery from the impacts of the pandemic these activities slowed in Fiscal Year 2022-2023 and remained lower than anticipated in Fiscal Year 2023-2024. The Council adopted a new Comprehensive Fee Schedule in January 2025 which is anticipated to generate greater cost recovery and increase receipts in future years.
Fines and Forfeitures – Fines and Forfeitures were $4.7 million or 118.2% of the 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.
Earnings, Property Use and Transfers-In – This category was $17.4 million or 165.0% of the R evised Budget. Th e revenue received in this category improved due to higher returns on investments and increasing interest rates, creating a significant increase in the actual interest income, along with a positive fair market value adjustment . Staff will continue to monitor economic conditions that may impact this revenue source in the current and upcoming fiscal year.
Overall, the revenues for the General Fund finished $ 16.2 million above the City’s Fiscal Year 2023-2024 Revised Budget revenue predictions. Proceeds from the City’s updated business tax rates far exceeded expectations and more than made up for the softening of other City revenues including Sales Tax, Real Property Transfer Tax and Charges for Services.
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5 GENERAL FUND EXPENDITURES
General Fund Expenditures for Fiscal Year 2023-2024 were $180.4 million or 94.1% of Fiscal Year 2023-2024 Revised Budget.
The tables below include information for the Adopted Budget, Revised Budget and Actual amount, a s well as the Encumbrance amount carried over to F iscal Year 2024-2025. The Encumbrance amount also includes City Manager approved carry overs. The percentage difference is based on the Actual amounts versus the Revised Budget amounts. Total General Fund Expenditures from Fiscal Year 2022-2023 have also been included as a comparison.
Comparison by Department:
Comparison by Category:
As can be seen on the expenditure chart by Department, the actual expenditures came in below the 202 3-2024 Revised Budget for most General and Operating Departments . The Encumbrances are $8.1 million for Fiscal Year 2024-2025. They represent purchase orders and contracts that were not completed in F iscal Year 2023-2024 and include some encumbrances carried forward from prior fiscal years. Adding the City Manager approved Carry Over amounts ATTACHMENT 1
6 for necessary equipment and supply purchases that were unable to be completed by the end of the fiscal year increases this total to $13.9 million. This amount will be carried over and realized in Fiscal Year 2024-2025. Non-Departmental actuals are greater than predicted because it includes an end of year transfer of $ 6 million to the Self Insurance Fund to satis fy reserve requirements.
The Personnel category is $119.4 million or 97.9% of the Revised Budget. This represents an increase of $11.0 million over the City’s Fiscal Year 2022-2023 personnel expenditures. As HR has built back its staff resources in recent years, recruitments are moving forward more quickly, but all the vacancies have not yet been filled.
Operations and Maintenance (O&M) category was $40.8 million or 69.9% of the Revised Budget.
This category saw a significant increase in spending over the previous year. The higher Revised Budget total for Fiscal Year 2023-2024 also included F iscal Year 2022-2023 encumbrance carryover of $7.2 million. This category was also increased during the Mid-Year Budget process, but departments did not have sufficient time remaining or staffing resources availability in the fiscal year to implement purchases and procurement of services. Many of these expenditures were approved by the City Manager to be carried forward into the current fiscal year.
Overall, the total General Fund expenditures came in $11.4 million below the Fiscal Year 2023- 2024 Revised Budget of $ 191.8 million and $29.9 million more than the previous year . The difference between the Revised Budget and Actuals is largely attributable to the time it takes to establish new programs and initiate new projects and continued personnel vacancies.
CONCLUSION
In conclusion, the Unaudited Financial Report for Fiscal Year 2023-2024 shows that the estimated General Fund En ding Balance decreased from the prior year. This was due to significant increases in City’s expenditures which, as anticipated, required reserve spending to fund. While proceeds from the City’s business tax measure far exceeded expectations and more than made up for the softening of other City’s revenues including Sales Tax, Real P roperty Transfer Tax and C harges for S ervices, it could not fully off-set increased expenditures. As a result, the estimated General Fund Reserve decreased by $2.0 million from $153.4 to $151.4 million which includes $135.4 million in Non- spendable, Restricted, Committed and Assigned funds and an estimated $16.0 million in Unassigned Fund Balance as shown i n the following charts. The Adopted Budget for Fiscal Year 2024- 2025 includes increased expenditure appropriation to fund operations and capital projects that requires a significant use of the Unassigned and Committed Reserves.
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