Agenda #: 7.1
Meeting Date: February 21, 2023
TO: Honorable Mayor and Members of the City Council
FROM: Daniel Fox, City Manager
TITLE: FISCAL YEAR 2022-23 MID-YEAR BUDGET REVIEW
STRATEGIC
GOAL: Responsible Stewardship of Public Resources
RECOMMENDATION:
Adopt Resolution No. 2023-06 amending the Fiscal Year 2022-23 Municipal Budget revenue estimates and appropriations.
FINANCIAL IMPACT:
The Fiscal Year (FY) 2022/23 Mid-Year budget review proposes an increase in estimated resources of $625,408 for all funds, and an overall increase in appropriations of $386,272 for all funds (see table below). The impact for the General Fund is an estimated addition of $223,974 to the General Fund’s fund balance, resulting in a yearend estimated budgetary fund balance increase of $56,015 through June 30, 2023. This is a reduction from the original budgetary surplus of $481,131 included within the FY 2022/23 Adopted Budget; this change is mainly due to one-time amendments approved by the City Council along with carryover items from the prior fiscal year (as shown in the second table below).
Additionally, the proposed Mid-Year adjustments include a combined increase in resources for the CDBG Fund and Tres Hermanos Fund of $89,143, and a combined increase in appropriations of $62,065 for those same funds. The proposed adjustments will also increase both resources and uses within the CIP Fund by $11,916.
Proposed revisions to resources and appropriations, including estimated fund balances at the end of the current FY 2022/23 are included in the attached Exhibit A (Attachment 2), and are discussed throughout the report as summarized below:
BACKGROUND:
The City Council adopted Resolution No. 2022-30 on June 7, 2022 approving the FY 2022/23 Adopted Budget. The City Council has since approved additional appropriations as they have occurred throughout the year, as well as carry-over requests from FY 2022/23. It is City policy for staff and the City Council to periodically review the annual budget and make any additional adjustments as deemed necessary.
Staff has conducted the mid-year review of the FY 2022/23 Adopted Budget, evaluated current revenue and expenditure trends, and confirmed the status of capital improvement projects. Based on this review, a Resolution amending the FY 2022/23 Adopted Budget is proposed for City Council consideration.
ANALYSIS:
The City’s current Revised General Fund Budget for FY 2022/23 estimates anticipated resources to be $32,175,812 (includes the Adopted Budget plus City Council amendments). It is recommended that these resource estimates be increased by $536,265 to $32,712,077. The current Revised General Fund Budget for FY 2022/23 includes appropriations totaling $32,343,771 (Adopted Budget plus City Council amendments and carryovers). It is recommended that this budget be increased by $312,291 to $32,656,062. As a result of these actions, the General Fund’s fund balance reserves will increase by $223.974. These recommended changes in estimated resources and uses are expected to leave the General Fund with a combined Unassigned and Contingency Reserve fund balance of $27,618,748 at the end of the fiscal year, which is an increase of $56,015 from the prior year.
General Fund Revenues:
In preparation for the mid-year budget review, staff examined the City’s revenue sources to ensure valid revenue estimates based on current trends and activities. The below table includes a summary of proposed changes to the General Fund revenue estimates. Included within the revised estimates is an increase in anticipated Permit and Plan Check revenues of $113,265, and increase in anticipated Sales Tax revenues of $250,000, an increase in Franchise Fee revenues of $133,000, and an increase to Recreation Contract Class revenues in the amount of $40,000. All other revenue sources are currently trending as anticipated in the Adopted Budget.
General Fund Expenditures:
The adjustments to General Fund appropriations are listed in the table below.
Other Governmental Funds and Capital Improvement Project Fund:
The following table summarizes the proposed changes in revenue and expenditures for the various other Governmental Funds and the Capital Improvement Project (CIP) Fund. The proposed adjustments include funding for Tres Hermanos maintenance, funding and appropriations for the CDBG Fund related to previously-approved allocations and programming, and additional funding for the Area 3 ADA Curb Ramp capital improvement project.
The action before the City Council tonight would also formally commit the second remaining installment of American Rescue Plan Act (“ARPA”) State and Local Fiscal Recovery Fund (SLFRF) monies in the amount of $3.4 million which were received in June 2022 following the approval of the Adopted Budget. Pursuant to U.S. Treasury’s requirement that ARPA funds claimed as replacement of lost revenue be utilized for government services, it is recommended that the City Council formally commit to use this second and final installment for contracted public safety services provided by the Los Angeles County Sheriff (the first installment was similarly committed to public safety services, as well as a small allocation for part-time staff). These funds were previously included in the Adopted Budget and, as such, there is no related budget amendment required with this action.
PREPARED BY:
REVIEWED BY:
Attachments:
1. 7.1.a Resolution No. 2023-06; Mid-Year 2022-23 Budget
2. 7.1.b Exhbit A - Mid Year Adjustments and Fund Balances