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City of Culver City
MID-YEAR BUDGET REPORT
FISCAL YEAR 2024-2025
Through December 31, 2024
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1 INTRODUCTION
This Mid-Year Budget Report presents an overview of the City’s operating revenues and expenditures for the first half of Fiscal Year 2024-2025 as compared to budgeted amounts , explaining any notable deviations or t rends in the numbers . The information in this report is organized into two sections:
General Fund and Other Major Funds.
The Mid-Year Budget Report’s purpose is threefold. First, it 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 City Council and members of the public with information on the sources and uses of City revenue. Finally, the information in this report serves as a starting point for preparing the Fiscal Year 2025-2026 Proposed Budget.
The first six months of the City’s fiscal year, July – December, present an ideal point of analysis for the adopted budget, and if and where adjustments should be considered. The Finance Department staff has reviewed all line items and compared actual results against budget expectations, historical trends, seasonality, and other known factors affecting both revenue and spending streams to determine if recommendations for reductions or increases should be made. As the defined mid- point of the fiscal year, it may be presumed that most categories should be at 50% of budget; however, City revenues historically lag expenditures at this point in the fiscal year. This is due primarily to year-end accounting adjustments to major revenue sources and the fact that the bulk of the property tax and business license revenues are received later in the fiscal year.
REPORT HIGHLIGHTS:
• General Fund Operating Revenues through December 31, 2024 total $48.8 million or 29% of the current Revised Fiscal Year 2024-2025 Budget. Analysis of the current fiscal year suggests the City’s overall recurring General Fund revenues, along with one-time revenues, are expected to be less than the Adopted Fiscal Year 2024-2025 Budget. Additional General Fund Revenue details are provided beginning on page 2 of this report. Staff is recommending that some revenue categories be increased, and others be decreased for a net reduction of $2,560,697.
• General Fund Expenditures through December total $87.8 million or 43% of the current revised Fiscal Year 2024-2025 Budget. There are proposed mid-year budget adjustments explained in more detail starting on page 7 of this report, along with Staff Report Attachment No. 5.
• A brief mid-year overview is included in this report for Enterprise Funds and Internal Service Funds starting on page 8.
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2 GENERAL FUND
GENERAL FUND REVENUES
As of December 31, 2024, General Fund operating revenue was $48.8 million, or 29% of the current revised budget. City revenues historically are less than 50% at this point in the fiscal year . This is primarily due to year-end accounting adjustments to major revenues and the fact that the bulk of the property tax and business license revenues are received later in the fiscal year. Analysis of the current fiscal year suggests some of the City’s recurring General Fund revenues, specifically property tax, utility user’s tax, transient occupancy tax, franchise tax, intergovernmental revenues, and other miscellaneous revenues are expected to exceed the current Revised Fiscal Year 2024-2025 Budget, while others, including sales tax, real property transfer tax, licenses and permits, fines & forfeitures, cannabis business tax, and charges for services are expected to fall short . The net impact of the recommended adjustments is a decrease in revenue of 1.5%, or $2.6 million.
The table below displays the comparison between revenues received as of December 31 st for th e
current and prior fiscal year. The actual revenues received during this period in Fiscal Year 2024-2025 are $5.4 million lower than the same period in Fiscal Year 2023-2024. This overall decrease is primarily attributed to lower Measure RE real property transfer tax receipts , lower sales tax receipts (including Measure C and Measure CC), and lower fines and forfeitures revenues compared with the same period in last fiscal year. These decreases are partially offset by increases in secured property tax receipts , and Business Tax receipts when compared to the same period in last fiscal year. The table also includes projected revenues for Fiscal Year 2024-2025 compared to the revised budget.
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3 Table 1
Property Tax – As of December 31, 202 4, the City received $ 2.8 million in Property Tax.
Property tax revenue is composed of secured property tax and pass-through increments that are distributed after the debts of the former Culver City Redevelopment Agency are paid. The City’s secured property tax receipts are above last year and are estimated to exceed original budget projections for Fiscal Year 2024-2025. As the enforceable obligations of the Successor Agency to the Redevelopment Agency are paid off, the pass -through property tax increment the City receives increases. Based on these trends, staff recommends increasing the revenues in this category by $1.0 million.
Sales Tax / Measure C/ Measure CC / PSAF – Total Sales Tax receipts as of December 31, 2024 were $13.0 million, or 31% of the current Revised Budget. There are only four months of receipts reflected in this report. In accordance with government accounting standards and the remittance schedule from the California Department of Tax and Fee Administration ( CDTFA), sales tax revenues are received about two months in arrears.
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4 Preliminary data shows that consumers have pulled back on spending compared to the immediate post -pandemic years. Most sectors are seeing declines including automobile dealerships, apparel and electronics-appliance stores. Based on the most recent report from the City’s sales tax consultant, HdL, sales tax receipts are expected to be lower than the original budget estimate. It is recommended to decrease the Total Sales Tax category by $1.2 million.
This is inclusive of the City’s Bradley Burns Sales Tax, Measure C, Measure CC and Public Safety Sales Tax (PSAF) receipts.
Business Tax – The Business Tax category in Table 1 is composed of Business Licenses Taxes and Cannabis Business Tax. Total Business License Tax receipts as of December 31, 2024 are $2.9 million. Most of the revenues in this category are received between January and June due to the business license renewal cycle and subsequent compliance efforts. Staff anticipates an increase of $250,000 related to increased compliance efforts to ensure all businesses are properly registered with the City and paying taxes. However, this anticipated increase will be entirely offset by a reduction of anticipated Cannabis Business Tax revenue. The cannabis industry has been in decline since its strong start several years ago, and that is reflected in the low receipts this fiscal year.
Franchise Tax - Franchise fees are a form of rent businesses pay for use of public streets and roadways. Total receipts as of December 31, 2024 were $525,865 and are higher than the same period in the prior year. Based on this trend, staff recommends increasing this revenue projection by $325,000.
Real Property Transfer Tax – Real Property Transfer Tax receipts as of December 31, 202 4 were $1.2 million or 15% of the Revised Budget. Real Property Transfer Tax came in significantly lower than the $3.4 million received during the same period of the previous fiscal year. Due to timing of tax payments , this report reflects five months of receipts. This revenue source is extremely elastic and unpredictable. Receipts have not shown the same strength as in previous fiscal years when Measure RE was initially implemented. The rise in interest rates has had a cooling effect on the real estate market. Th e number of property sales in recent months is less than the number of sales for the same period in prior years. Due to these factors, staff recommends a reduction of $4 million in anticipated receipts.
Utility Users Taxes (UUT) – Total UUT receipts as of December 31, 2024 were $7.0 million, or 44% of the current R evised Budget. In accordance with the same accounting standards that apply to sales tax receipts, UUT receipts received in July are recorded into the prior fiscal year.
As a result, as of December 2024, only five months of receipts have been recorded. Based on estimates received from the City’s utility tax consultant, Avenu, and the consideration of accrual calculations along with current activity, it is recommended that UUT is increased by an aggregate amount of $1.0 million ($1.4 million increase in Electric UUT, $0.5 million decrease Gas UUT, $0.3 million increase in Water UUT , $0.17 million decrease in Telecommunications UUT and $32,000 decrease in Cable UUT). The increase in Electric UUT is due to a combination of increased power rates and a change in SCE’s collection practice. This change in practice is due to a settlement between SCE and a coalition of cities surrounding the application of Public Utilities Commission credits to customer bills.
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5 Transient Occupancy Tax (TOT) – TOT receipts as of December 31, 202 4 were $5.3 million or 43% of the Revised Budget. TOT is paid one month in arrears, so revenue at this point in the fiscal year accounts for the first five months. Staff recommends increasing TOT estimates by $300,000 based on the analysis of current year activity.
Commercial/Industrial Development Tax – This category is driven by residential and commercial construction activity. It is a n unpredictable revenue source, and very difficult to estimate. To account for this, budget projections for this revenue source tend to be conservative.
The total revenue received for this category as of December 31, 2024 was $68,344 or 14% of the revised budget. Staff recommends no change to this revenue source and anticipates that the City will receive the anticipated $500,000 by the end of the fiscal year.
Licenses & Permits – Licenses and permits for building, electrical and plumbing are the major sources of revenue for this category. Like Commercial/Industrial Development Tax, Licenses and Permits revenue is driven by residential and commercial construction activity. This activity slowed considerably in recent fiscal years. This revenue was initially estimated to experience a rebound this fiscal year , but high interest rates have had a cooling effect on construction .
Revenues as of December 31, 202 4 were $1.36 million or 34% of the Revised Budget. The revenues for this category are tracking lower than the same period in Fiscal Year 2023-2024.
Based on the revenue to date, staff recommends decreasing this category by $375,000 overall.
Intergovernmental Revenue – Intergovernmental revenue is mostly comprised of the motor vehicle license fees (VLF) from the State Department of Motor Vehicles which are received in January and May. In prior years it has also included revenue s from the POST program, CNG Excise Tax credits, and CARES Act and FEMA reimbursements. Intergovernmental revenue as of December 31, 202 4 was $19,484 or 0.2% of the Revised B udget. Based on $4.1 million in State DMV Vehicle License Fee In- Lieu the City received in January 2025, staff anticipates receiving $8.1 million by the end of the fiscal year, resulting in a budget increase of $0.3 million.
Charges for Services – Receipts in this category as of December 31 , 2024 were $5.0 million or 46% of the Revised Budget. The Charges for Services category is comprised of a variety of revenues ranging from fees for recreation program s to police services to plan check. Staff anticipates a reduction in plan check and building permits revenues due to a slow down in development, partially offset by an increase in one- time revenues related to Fire Department strike team deployments associated with the recent wildfires. Staff recommends decreasing this category by $171,000 in recognition of these anticipated changes.
Fines and Forfeitures – Fines and Forfeitures as of December 31, 2024 were $1.45 million or 33% of the Revised Budget. This category is primarily comprised of red-light camera violations and moving violations written by Culver City traffic enforcement, and parking violations written by Culver City parking enforcement. Based on an analysis of the current activity, staff is recommending a decrease in this category of $1.29 million.
Use of Money and Property – Use of Money and Property includes revenues from interest income, investments, income from the rental of City properties and rental registration unit fees.
The revenues were $ 2.7 million or 84% of the Revised B udget. Due to ongoing accounting entries that occur during the fiscal year, this amount fluctuates over the course of the year , and ATTACHMENT 2
6 staff recommends maintaining the original budget estimate for investment income and increasing the anticipated revenues for rental registration unit fees by $ 361,000 based on an analysis of current year activity due to increased program compliance.
Interfund Transfers In – This category represents transfers into the General Fund from non - General Fund Departments as a reimbursement for costs associated with administrative support services including accounting, information technology and legal services funded from the General Fund. Staff recommends a one-time increase of $1.0 million to account for the close out of 13 capital projects that were originally funded by the General Fund and were completed on time and under budget. This $1.0 million transfer will return these funds from Fund 420 to the General Fund.
Other Revenues – Other Revenues is comprised of loan payments, land sale proceeds, donations, miscellaneous revenues, and anticipated revenues from the updated fee schedule Council adopted on January 13, 2025. Other Revenues as of December 31, 2024 were $224,656 or 17% of the Revised Budget which appears in line with previous years . Staff is currently working to update the various subsidiary software system s and payment platforms to program the new fees across multiple departments to ensure timely implementation. Staff recommends increasing this revenue by $189,000 to account for anticipated legal settlement fees and other miscellaneous revenue.
The recommended Mid-Year Revenue Adjustments total a net $2,560,697 decrease from the current Revised Fiscal Year 2024-2025 Budget.
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7 GENERAL FUND EXPENDITURES
General Fund expenditures through mid-year are $87.8 million or 43% of the current Revised Budget, which is $2.1 million less when compared to the same period last fiscal year. This difference between Fiscal Year 2023-2024 and Fiscal Year 2024-2025 spending is primarily due the purchase of the Martin B. Retting property attributed to Non- Departmental in the first half of the prior year and the fact that certain planned Non-Departmental Transfers have not yet been posted in Fiscal Year 2024-2025. The budgeted Non-Departmental transfers will be posted during the fiscal year-end process based on actual activity.
A closer look at expenditures by Department shows that expenditures for nearly all Departments has increased over the same period last year. This is due to the filling of new and/or previously vacant positions, greenlighting of projects and initiatives providing additional services and cost of living adjustments.
The tables below display a comparison between expenditures for the first six months of Fiscal Year 2024-2025 and Fiscal Year 2023-2024. The tables also include projected expenditures for Fiscal Year 2024-2025 compared to the 2024-2025 Revised Budget.
Comparison by Department:
Table 2
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8 Comparison by Category:
Table 3
A few departments are currently exceeding the 50% mark halfway through the fiscal year , however, Finance staff projects that most departments will end the fiscal year within budget . A number of large annual expenditures typically take place early in the fiscal year that push the 6- month percentages higher than 50%.
The Personnel category was $69.1 million or 53% of the Revised Budget. Actual expenditures exceed 50% of budget due to the prepayment of the California Public Employe es’ Retirement System (CalPERS) Unfunded Accrued Liability (UAL) of $25.2 from the General Fund. When the City pays the UAL payment up front, CalPERS offers a discount, which was approximately $0.85 million in the current fiscal year. Also reflected in the personnel category increase is Salary Ini tiative Ordinance (SIO) and negotiated increases for Miscellaneous and Safety employees and the filling of some new and/or previously vacant positions.
The Operations and Maintenance (O&M) category was $1 8.5 million or 29% of the R evised Budget.
O&M expenditures as of December 202 4 were $0.9 million higher than December 202 3 due to increased spending on necessary purchases and the implementation of programs and initiatives.
Finance staff is confident that the General Fund expenditures will end the fiscal year within the revised Fiscal Year 2024-25 Budget of $204.5 million.
Mid-Year Appropriation Adjustment Request
At the midpoint of the year, departments have reviewed their expenditures and staffing levels and have made requests to amend them based on current and projected operational needs. The staff has carefully reviewed these requests in light of the City’s strategic priorities and current budget constraints and recommends appropriation adjustments in the General Fund for mid-year of approximately $1.75 million. Recommended appropriations are primarily to provide one-time funding for select Capital Improvement Program (CIP) projects necessary to maintain critical infrastructure which will be funded by available reserve funds . Specifically, $1.58 million will come from the City’s Facilities Planning Reserve and $170,000 will come from the Recreational Facilities Reserve. The remaining one-time and ongoing requests are anticipated to be offset by expenditure savings. For a detailed explanation of each General Fund and Other Fund mid-year appropriation request see Attachment 4 of this staff
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9 report. Staff recommends approving these appropriations which would bring the revised General Fund expenditure budget to $204.5 million.
OTHER MAJOR FUNDS
A brief overview follows for the City’s Enterprise and Internal Service Funds.
ENTERPRISE FUNDS
The City has four Enterprise Funds: Refuse Disposal, Municipal Bus Lines, Sewer Enterprise, and Municipal Fiber Network, which account for the provision of direct services to the public where all or a substantial portion of the costs involved are paid in the form of user charges or fees for such services.
• Refuse Disposal Fund was established to account for the operation of the City's refuse disposal, transfer station operation, recycling efforts, and street sweeping services. • Municipal Bus Lines Fund is used to account for the operation, as well as the capital assets, of the City's Bus Lines. Other funding assistance comes from FTA Section 9 (Federal-Capital), TDA and STA (Capital and Operating), and Proposition A and Proposition C.
• Sewer Enterprise Fund is used to account for revenues collected through sewer charge fees and sewer facilities charges. These funds are used for expenditures related to the operation and maintenance of sewer disposal facilities, capital projects, and debt service on bonds for sewer facility improvements.
• Municipal Fiber Network Fund was established through a loan from the General Fund to design and construct an open access network where Internet Service Providers (ISPs) will utilize City’s fiber infrastructure to service the business community.
A breakdown of the Fiscal Year 2024- 2025 expenditures through December 31, 2024 for each enterprise fund is provided in Table 4.
Table 4
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10 REFUSE DISPOSAL FUND 202
Mid-year Refuse Disposal Fund revenues are trending favorable to budget at 52% or $11.4 million out of an anticipated $21. 9 million for Fiscal Year 2024- 2025. During Fiscal Year 2024- 2025, Council approved an agreement with an outside hauler to allow delivery of municipal waste from a neighboring jurisdiction to the Culver City Transfer Station for a fee. As a result, s taff anticipates collecting an additional $1.0 million in revenues.
Expenditures in the Refuse Disposal Fund have been trending on or under budget. The mid-year request for approximately $1.0 million is to account for the ongoing funding for trucking cost and end processor cost associated with accepting and processing additional waste at the Culver City Transfer Station from outside hauling agencies before it is delivered to the end processor . This program was approved by Council on December 9, 2024 and is anticipated to be entirely offset by the additional revenues. In addition, $40,000 is needed for vehicle maintenance services.
MUNICIPAL BUS LINES FUND 203
As of December 31, 2024, the Municipal Bus Lines Fund expenditures are $15.8 million, or 19% of the Revised Budget. Only 6% of the $28.2 million budgeted for capital projects has been expended. The mid-year request for an additional $180,100 reflects $175,000 in one-time funds for on- vehicle video surveillance equipment , and $5,100 in ongoing funds to account for position reclassifications that address ongoing operational needs of the Department.
Municipal Bus Lines Fund revenues are $9.06 million or 17% of budgeted revenue. Municipal Bus Lines Fund revenues are mostly a combination of local, state, and federal funding sources along with farebox revenues. Revenue from capital grants operate on a reimbursable basis that is received after work has commenced and costs incurred.
SEWER ENTERPRISE FUND 204
As of December 31, 2024, Sewer Fund operating expenditures are approximately $1.4 million, or 6% of the revised budget. Personnel costs are at 42% of the Revised Budget. Operating expenditures are well below 50% due primarily to the timing of payments to the City of Los Angeles for the Hyperion Treatment Plant. The City budgeted $3.6 million for these services , and only $42,000 has been expended through mid-year. Capital improvement projects in the Sewer Fund are currently $3 9,000 expended, or 0.4% of capital budget. Continued activity on sewer related capital projects will occur in the second half of the fiscal year. Capital projects are funded from sewer bonds.
Sewer Enterprise Fund operating revenues at mid- year are $ 3.8 million, or 40 % of budget. Sewer Enterprise Fund revenues are on track to be fully realized at fiscal year-end.
MUNICIPAL FIBER NETWORK FUND 205
Culver Connect is the City’s open access network that was deemed operational in July 2018. In March 2021, the City transitioned to a new network operator, Onward. The City is also in partnership with Onward to provide the business community with i nternet services utilizing the Culver Connect fiber infrastructure. In October 2021, Onward lit its first internet service commercial customer. Additionally, City Council approved allowing Onward to provide residential internet services to multi -family customers. The City has continued to work with Onward to identify and market to new customers, including the development of marketing materials such as Onward advertisements on the side of City- owned vehicles and Culver City Bus. Last fiscal year, Onward increased their customer base and the ATTACHMENT 2
11 Fund also realized subscriber revenue from the contractual revenue- share partnership. Staff anticipates a reduction of $600,000 in telecommunication later IRU revenues based on analysis of current year activity.
INTERNAL SERVICE FUNDS
The Internal Service Funds are used to account for services and commodities furnished by designated funds of the City to user departments of the City.
• Equipment Replacement Fund is used to hold annual replacement payments from designated user departments and to use those funds to purchase equipment for general City purposes.
• Equipment Maintenance & Fleet Services (EMFS) Fund accounts for all activities of the City's central equipment maintenance operations, the costs of which are distributed among designated user departments.
• Self-Insurance Fund receives and disburses funds pertaining to the general liability and workers' compensation insurance programs. It also funds the Employee Disability (IOD) program for employee long-term work-related disabilities. • Central Stores accounts for the timely purchase of needed materials, supplies and auto parts in advance of actual need. Departments are billed as items are issued for use.
Table 5
EQUIPMENT REPLACEMENT FUND 307
At mid-year, the Equipment Replacement Fund actual expenditures are $2.9 million, or 24% of the Revised Budget. Currently there is $3.1 million encumbered for vehicles/equipment set to be received by the end of the current fiscal year or in the early part of next fiscal year.
There are four mid-year requests totaling $937,000 for this fund: early appropriation for replacement of two Fire Department Advanced Life Support rescue vehicles ($345,000), one Public Works Transfer Station frontline loader ($580,000), and one PRCS lawnmower replacement ($12,000).
Equipment Replacement revenues, which are mainly the contributions from the various funds for replacement costs, will be fully recognized at year-end.
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12 EQUIPMENT MAINTENANCE & FLEET SERVICES (EMFS) FUND 308 The EMFS Fund mid-year expenditures are approximately $5.1 million, or 47% of the Revised Budget.
Personnel costs are approximately $2.6 million, or about 45% of the current year personnel budget.
Fuel expenditures are approximately $900,000, or about 43% of the fuel budget. The one-time midyear expenditure request of $175,000 reflects an increase in funds for repairs and maintenance of rolling stock due to higher prices for parts and repairs.
EMFS Fund revenues are on track to be fully realized at fiscal year-end. All expenditures will be covered to ensure this Fund continues to operate in a financially sound manner.
SELF-INSURANCE FUND 309
The Self-Insurance Fund (SIF) regular expenditures at mid-year are $7.2 million, or 55% of the Revised Budget. This fund exceeds 50% due to higher than estimated l iability claims, workers compensation claims and higher personnel costs due to an above average number of employees on IOD . Further analysis of this fund will be performed by Finance and Human Resources staff as part of the Fiscal Year 2025-2026 budget process.
Revenues for the SIF Fund are mainly allocations from the various funds and are on track to be fully realized at fiscal year-end. However, an in-depth review will be performed on the SIF Fund in the next couple of months to ensure the City meets the reserve percentage established in City’s the financial policies. Any identified changes to Department allocations will be made during the F iscal Year 2025- 2026 budget process.
CENTRAL STORES FUND 310
The Central Stores Fund operations are expected to meet revised budget projections for F iscal Year 2024-2025. Overall e xpenditures as of December 31, 2024 are $1. 4 million or 41.1% of Revised Budget. There are no recommended changes for the mid-year.
CONCLUSION
General Fund projections for Fiscal Year 2024-2025 show total estimated revenues at $167.8 million, approximately $2.6 million less than the current Revised Budget total. This projected revenue reduction coupled with the proposed use of $1.75 million from the Facilities Planning Reserve and the Recreational Facilities Reserve increases the City’s use of the General Fund Reserves for Fiscal Year 2024-2025. As part of the Adopted Budget for Fiscal Year 2024-2025 the City intended to draw down approximately $18.3 million from the General Fund Balance to address its $5.7 million structural budget shortfall and fund one-time capital projects. General Fund reserves were also needed to fund expenditures approved in the Revised Budget for Fiscal Year 2023-2024 that, due to project timing and implementation, did not get completed. These Council approved expenditures were carried-forward to Fiscal Year 2024-2025 in the amount of $13.9 million. As of a result of this reliance on the General Fund Reserve, the City is projected to end Fiscal Year 2024-2025 with $2.8 million in Unassigned Fund Balance.
Table 6 summarizes the projected Fiscal Year 2024-2025 ending fund balance for the General Fund.
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13 Table 6