Item No.
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: OFFICE OF THE CITY MANAGER
BY: VANIAH DE ROJAS, ASSISTANT CITY MANAGER
DATE: APRIL 22, 2025
SUBJECT: MID-YEAR BUDGET PERFORMANCE REVIEW
EXECUTIVE SUMMARY
The City Council will receive and file the Mid-Year Budget Performance Review ending December 31, 2024, which represents the balances and activity for the first and second quarters (July through December) of the 2024-2025 Fiscal Year (FY).
RECOMMENDATION
That the City Council:
1. Receive and file the Mid-Year Budget Performance Review for the 6-month period ending December 31, 2024, which represents the balances and activity for the first and second quarters of Fiscal Year 2024-2025,
2. Approve a revenue increase of $3,888,786 to the General Fund FY 2024- 2025 budget.
3. Approve an appropriation increase of $2,735,403 to the General Fund FY 2024-2025 budget.
BACKGROUND
The City Council adopted a structurally balanced Fiscal Year (FY) 2023-2024 Annual Budget on June 25, 2024, that was developed with modest revenue growth consistent with the economic conditions at the time of budget development.
The Fiscal Year 2024-2025 Mid-Year Budget Performance Report is an important gauge of the City’s economic vitality as it provides an in-depth assessment of the City’s revenues and expenditures during the first half of the fiscal year and provides projections of the fiscal year end results. These projections serve as the starting point for the refinement of next year’s budget.
This report summarizes the City of Downey’s (City) overall financial position for the current fiscal year allowing the City to proactively respond to unanticipated changes and emerging trends. It also provides transparency and public reporting to the Community
APPROVED BYCITY MANAGER
MID-YEAR BUDGET PERFORMANCE REVIEW
APRIL 22, 2025
PAGE 2
with an emphasis on the General Fund. By December 31st, the expectation is that most budget categories will be at or below 50%, although this may fluctuate based on timing of certain receipts and expenditures/projects. After the end of the third-quarter (March 31st), staff will again conduct another review of revenues and expenditures and provide updates.
ANALYSIS
General Fund
Revenues
Total General Fund Revenues are on course to exceed the Fiscal Year 2024-2025 Adjusted Budget projection of $112,228,565 by approximately $3.9 Million. This positive year-end projection is primarily due to one-time funding that the City is projected to receive. The projection also includes both positive and negative trends in the economy, which will be described further in the below paragraphs.
Sales and Use Taxes are expected to exceed budgeted estimates by $331,197. Inflation has increased and overall consumer confidence has declined, impacting revenues funds for cities. However, Downey is in a unique position to have actually experience some growth when other jurisdictions have not, this is attributed to the City’s auto industry making a strong rebounding in recent quarters due to a renewed interest new and used vehicle purchases.
Below is a breakdown of actual sales and use tax revenues. ($) (%) ($) (%)
Sales and Use Tax 27,755,000$ 8,863,663$ 27,905,000$ 8,916,578$ 52,916$ 1%28,236,197$ 331,197$ 1.19% Property Tax 35,154,991$ 8,269,998$ 37,470,000$ 8,690,941$ 420,943$ 5%37,755,162$ 285,162$ 0.76% Utility User Tax 8,710,000$ 3,706,132$ 8,602,000$ 4,085,433$ 379,301$ 10%8,723,944$ 121,944$ 1.42% Franchise Tax 3,225,000$ 428,921$ 3,714,000$ 558,798$ 129,877$ 30%3,800,764$ 86,764$ 2.34% Transient Occupancy Tax 2,075,000$ 1,033,997$ 2,360,000$ 934,844$ ($99,152.16)-10%2,476,079$ 116,079$ 4.92% Business Tax 1,645,160$ 224,098$ 1,889,500$ 730,124$ 506,026$ 226%2,334,820$ 445,320$ 23.57% Other Tax 300,000$ 171,312$ 295,000$ 119,848$ ($51,463.76)-30%276,453$ ($18,546.53)-6.29% Total Taxes 78,865,151$ 22,698,121$ 82,235,500$ 24,036,567$ 1,338,446.29$ 83,603,420.21$ 1,367,920.21$ License , Permits & Fees 9,862,300$ 5,314,414$ 12,796,950$ 5,208,629$ (105,785)$ -2%12,915,258$ 118,308$ 0.92% Fines & Forfeiture 1,716,250$ 592,881$ 1,490,900$ 606,246$ 13,365$ 2%1,434,876$ ($56,024.00)-3.76% Charges to Other Funds 3,240,569$ 1,616,737$ 2,832,000$ 1,403,490$ (213,247)$ -13%2,807,830$ ($24,169.56)-0.85% Investment Earnings & Rent 2,420,664$ 1,187,413$ 3,590,465$ 2,097,211$ 909,798$ 77%4,570,561$ 980,096$ 27.30% Other Revenue 1,189,000$ 837,715$ 1,731,250$ 912,113$ 74,399$ 9%2,712,052$ 980,802$ 56.65% Rev from other Agencies 2,184,500$ 917,318$ 2,580,500$ 983,178$ 65,860$ 7%2,809,570$ 229,070$ 8.88% Other Services 117,000$ 497$ 117,000$ 56,397$ 55,901$ 11248%165,186$ 48,186$ 41.18% Sale of Land /Property/Equipment 20,000$ -$ 5,000$ -$ -$ 0%249,596$ 244,596$ 4891.92% Transfer In From other Funds 3,526,000$ 1,312,993$ 4,849,000$ 2,424,500$ 1,111,507$ 85%4,849,000$ -$ 0.00% Total Revenue 103,141,434$ 34,478,088$ 112,228,565$ 37,728,331$ 3,250,243$ 116,117,351$ 3,888,786$ FY 2024 FY 2025
Year over Year
Variance
(July - Dec.) Adjusted
Budget
Adjusted Budget &
Projected Year-End
Variance July - Dec.
Actual
Adjusted
Budget
July - Dec.
Actual
Projected Year-
End - June 30
MID-YEAR BUDGET PERFORMANCE REVIEW
APRIL 22, 2025
PAGE 3
Property Taxes are projected to exceed budget projections by $285,162 or .76%. The Secured Property Tax projection shows a growth of .59% over the previous fiscal year with a year end projection rising from $20.40 million to $20.52 million (source City of Downey Financial Statements and HDL1). Over the past year, the median sales price for a single-family home has remained at $873,000 (source Realtor.com). The continued cooling of the housing market has resulted in a slowing in total assessed value growth for City housing units. In addition, as the growth in home value has slowed and changes in consumer confidence, the desire to sell has stayed static. Unsecured Property Taxes project a growth of .05% from $654,000 to $687,615.
Hotel Taxes are projected to exceed the adopted budget projections by $116,079 or
4.92%. This slight increase reflects a modest growth in hotel taxes.
Business License Tax are projected to increase by $445,319. This is primarily due to one business who recently updated their business license calculation, which resulted in an increase of approximately $213,000.
Licenses, Permits, and Fees are projected to exceed the adopted budget projections by $118,309 or .09%. Overall Plan Check Fees and Building Permit Fees are anticipated to be $631,000 and $88,217, respectively, below adopted budget as a result in a slowdown in development projects. However, this was offset by a significant increase in relation Paramedic Transportation. These fees are projected to realize nearly $960,000 in additional revenues. A large portion of this is related to the City’s participation in the California- Department of Health Care Services Public Provider Ground Emergency Medical Transport (PP-GEMT) Program, which the City joined in June 2023. PP-GEMT is a supplemental reimbursement program that applies to Medi-Cal patients who are transported by Public Providers, such as the Downey Fire Department. This program allows participating Public Providers, who transport Medi-Cal patients by ambulance, to recover additional costs associated with those patient transports. With such a program, it is hard to determine the transportation activity. Currently, it is anticipated the City will generate an additional $500,000 due to an overall increase in transportation activity and increase in transportation rates set by the State. Further, the City was recently notified that LA Care an insurance company participating in the PP-GEMT Program had recently Revenue
FY 2022-2023
Actual
FY 2023-2024
July - Dec.
FY 2023-2024
Actual
FY 2024-2025
Adjusted Budget
FY 2024-2025
July - Dec.
Year over Year
(July - Dec.)
Variance($)
Year over Year
Variance (July -
Dec.) (%)
FY 2024-2025
Projected Year-
End
Adjusted Budget
Vs. Projected
Amount ($)
Adjusted Budget
Vs. Projected
Amount (%)
PROP TAX-SECURED 17,830,962$ 7,593,526$ 19,329,898$ 20,409,000$ 7,998,221$ 404,695$ 5.33% 20,528,604$ 119,604$ 0.59% PROP TAX-UNSECURED 550,000$ 552,583$ 661,359$ 654,000$ 574,520$ 21,938$ 3.97% 687,615$ 33,615$ 5.14% Total Revenues 18,380,962$ 8,146,109$ 19,991,257$ 21,063,000$ 8,572,741$ 426,633$ 21,216,219$ 153,219$ Revenue
FY 2022-2023
Actual
FY 2023-2024
July - Dec.
FY 2023-2024
Actual
FY 2024-2025
Adjusted Budget
FY 2024-2025
July - Dec.
Year over Year
Variance (July -
Dec.) ($)
Year over Year
Variance (July -
Dec.) (%)
FY 2024-2025
Projected Year-
End
Adjusted Budget
Vs. Projected
Amount ($)
Adjusted Budget
Vs. Projected
Amount (%)
Sales and Use Tax 26,211,940$ 8,579,541$ 26,470,252$ 27,016,000$ 8,639,507$ 59,965$ 0.70% 27,390,094$ 374,094$ 1.38% Prop 172 Sales Tax 879,568$ 284,121$ 865,179$ 889,000$ 277,072$ (7,050)$ -2.48% 846,103$ (42,897)$ -4.83% Total Revenues 27,091,507$ 8,863,663$ 27,335,431$ 27,905,000$ 8,916,578$ 52,916$ 28,236,197$ 331,197$
MID-YEAR BUDGET PERFORMANCE REVIEW
APRIL 22, 2025
PAGE 4
made a one-time catchup payment of $417,102. They previously were challenging their share of the program cost, but were recently notified that they did in fact have to pay.
Investment income and Rents are projected to exceed the adopted budget projections by $949,000 or 27.30%. This increase is primarily driven by the effect of increased interest rates on both the Local Agency Investment Fund (LAIF) pool and the City’s overall investments portfolio.
To take advantage of the increase in interest rates, the City has been lengthening its average maturity date and average rate of return on investments primarily through the purchase of non-callable investments. All purchases were compliant with the City’s Investment Policy. It should be noted that these rates of return is not anticipated to continue due the current market volatility and tariff discussion.
The following table demonstrates the lengthening of investment Maturities over the last 12 months:
Other Revenue is projected to exceed budgetary estimates by $980,802 or 56.65%. One of the major contributors is a $363,000 increase in the City’s Host Fee agreement with Athens to host the Transfer (DART) facility in Downey. There is a certain amount charged for each ton sent to the facility. There has been an increase in tonnage being sent to facility. These types of activity are difficult to predict as they can fluctuate depending on economic conditions. Additionally, the City received approximately $600,000 in State Reimbursement for its Regional Fire Response, Strike Team, efforts. However, it should be noted that these monies offset the cost of staff/expenditures, and will ultimately result in a net $0 outcome.
Revenue from Other Agencies is projected to exceed budgetary estimates by $229,070 or 8.88%. One of the major contributors is approximately $100,000 increase in the State Mandate reimbursement costs related to Police Department activities. These revenues are difficult to predict as not all submitted reimbursement requests are accepted by the state and the timing of receiving payment may not always fall in the same fiscal year that the expenditure was incurred.
2024 2023
0-12 MONTHS 13,116$ 32,103$
13-24 MONTHS 14,914 13,115
25-36 MONTHS 20,884 16,914
37-48 MONTHS 26,487 9,364
49-60 MONTHS 19,587 13,640
94,988$ 85,136$
Investment Portfolio by Maturity
As of December 31
(In Millions)
MID-YEAR BUDGET PERFORMANCE REVIEW
APRIL 22, 2025
PAGE 5
Fines and Forfeitures is projected to end the year $56 thousand below budgetary estimates. The shortfall is primarily the result of a decrease in the issuance of Code and Safety related citations.
Sale of Property - As part of the sale of City property to IRG (the land south of Apollo Way) there was a condition sale agreement that if IRG did not sale a portion of the site by April 2025, that any additional presumed value/proceeds of the land above the agreed upon Proceed Threshold, would be split a 50/50 between the City and IRG. This has resulted in the City receiving a one-time payment of $249,596.
Expenditures
General Fund expenditures are projected exceed 2024-2025 budget projection of $111,858,049. While the City strives to maintain within its budget authority, a few departments and non-departmental transfers are on a trajectory to exceed their budgetary authority. These projected overages are anticipated to be offset primarily by an increase in general fund revenues and lower than expected expenditures in other departments.
The table below details General Fund expenditures by department for the first six months of the fiscal year:
As the chart shows, Police, Fire, Public Works and Library are trending to be over budget for the fiscal year.
For the Police and Fire Departments, the primary driver for the $2,108,000 and $730,000 projected variances are overtime costs, minimum manning (Fire) and accumulated paid time to retiree and separated employees. Overtime budgeting for public safety continues to be a challenge for Downey as well as many other cities. There are a number of contributing factors to overtime costs including vacancies and training time for new officers. Another significant contributing factor for both departments is the increased cost of materials, supplies, and services as a result of the inflation experienced over the last couple of years.
Department Title FY 2023 Actual
FY 2024 Adjusted
Budget
FY 2024 Mid-
Year (July-Dec.)FY 2024 Actual
FY 2025 Adjusted
Budget
FY 2025 Mid-
Year (July - Dec.)
FY 2025 Year-End
Estimated
City Council 338,508$ 297,253$ 146,517$ 301,341$ 348,326$ 131,273$ -10%(15,244.0)$ 359,515$ 3%(11,189.0)$ City Manager 1,764,127$ 2,890,949$ 917,993$ 2,427,519$ 3,271,202$ 1,379,604$ 50%461,611.0$ 3,327,026$ 2%(55,824.3)$ City Clerk 1,600,016$ 1,730,493$ 226,266$ 1,573,815$ 1,197,600$ 297,203$ 31%70,937.0$ 1,232,416$ 3%(34,816.2)$ City Attorney 808,555$ 328,233$ 166,118$ 260,134$ 367,941$ 92,833$ -44%(73,285.0)$ 269,907$ -27%98,034.0$ Finance (3,146,511)$ 4,721,661$ 2,590,796$ (3,095,380)$ 5,277,348$ 2,855,383$ 10%264,587.0$ 4,000,008$ -24%1,277,340.5$ Human Resources 1,593,355$ 1,696,920$ 774,520$ 1,872,931$ 1,771,064$ 796,151$ 3%21,631.0$ 1,707,425$ -4%63,638.7$ Police 42,564,922$ 40,151,797$ 19,839,283$ 44,662,919$ 41,367,005$ 20,309,181$ 2%469,898.0$ 43,475,097$ 5%(2,108,091.7)$ Fire 27,820,263$ 26,987,398$ 13,529,295$ 28,960,246$ 29,300,585$ 14,727,797$ 9%1,198,502.0$ 30,030,124$ 2%(729,539.3)$ Public Works 9,165,532$ 8,231,995$ 4,043,619$ 9,602,874$ 8,733,418$ 4,681,323$ 16%637,704.0$ 9,473,515$ 8%(740,097.0)$ Community Development 4,793,996$ 6,467,843$ 2,284,131$ 5,634,649$ 7,573,169$ 2,735,137$ 20%451,006.0$ 6,858,452$ -9%714,717.4$ Parks and Recreation 7,540,359$ 8,095,619$ 3,924,394$ 8,384,076$ 8,557,139$ 4,024,754$ 3%100,360.0$ 8,160,578$ -5%396,560.6$ Library 2,457,031$ 3,259,862$ 1,497,841$ 3,019,533$ 2,650,794$ 1,351,627$ -10%(146,214.0)$ 2,756,931$ 4%(106,137.1)$ Non-departmental 17,499,495$ 900,000$ 450,000$ 9,515,526$ 1,545,583$ 847,533$ 88%397,533.0$ 3,045,583$ 97%(1,500,000.0)$ Grand Total 114,799,648.54$ 105,760,023.00$ 50,390,773.00$ 113,120,182.50$ 111,961,174.49$ 54,229,799.00$ 8%3,839,026.0$ 114,696,578$ 2%(2,735,403.5)$ Mid-Year
Year Over Year
FY 2025 Year-End
Estimate and
MID-YEAR BUDGET PERFORMANCE REVIEW
APRIL 22, 2025
PAGE 6
Public Works is projected to exceed its General Fund budget by nearly $740,000. The significant contributors to this variance are Hazard Wasted Disposal related to homeless encampment clean ups ($387,500 increase), Facility maintenance Costs ($237,000), Overtime costs (96,800), and Contract Services.
The Library’s budget is expected to exceed its budget by $106,000 primarily due to costs related to the solar panel operating costs.
Lastly, the City an increase in a non-departmental transfer to cover expenses related to Columbia Memorial Space Center that were not captured in previous budgets.
While staff is monitoring these expenses and and working to bring these areas back in line with the annual spending plan, there will be a need to increase appropriations by $2,735,403.
Measure S Fund
Revenues
Revenues are projected to come in lower than projected, $455,586 or 3.41% less. While overall Sales Tax saw an increase, Measure S is a Transactions and Use Tax and does not always mirror the same changes as the City’s Sales Tax revenues. An example of this in action is with the Auto and Transportation industry. The City is currently seeing an increase in overall auto purchases, which is contributing to the City’s overall sales tax revenues increase. Unfortunately, those purchases were not from Downey residents, and since a Transactions and Use Tax, such as Measure S, only goes to where the vehicles is registered, the City will not see a similar increase in Measure S revenues.
Expenditures
Expenditures are coming in less than anticipated primarily due to staffing vacancies.
Year over
Year
Variance
(July - Dec.)
Year over
Year
Variance
(July - Dec.)
($)(%)($)(%)
Revenue Total 4,252,347$ 12,923,124$ 13,352,000$ 4,408,109$ 155,762$ 3.66%12,896,414$ (455,586)$ -3.41% Expenditures Total 2,404,579$ 9,783,275$ 13,448,793$ 6,329,692$ 3,925,112$ 163.23%12,720,946$ (727,847)$ -5.41% FY 2024 FY 2025
Year-To-
Date
( July -
Dec.)Actual
Adjusted
Budget
Year-To-Date
( July - Dec.)
Projected
Year -End
Estimate
Adjusted Budget &
Projected Year-End
Variance
MID-YEAR BUDGET PERFORMANCE REVIEW
APRIL 22, 2025
PAGE 7
Water Fund
Revenues
Revenues are projected to come in $609,720, or 3.44%, higher than adopted. This is primarily due to an overall water usage, approximately 3% over last year as a result of less rain the last 12 months.
Expenditures
Expenditures are expected to come in at $9,415,137, or 30%, below budgeted. This is due to some delays in water improvement capital improvement projects that will be continued into the following fiscal year.
Sewer Fund
Revenues
Revenues are projected to be slightly above adjusted budget at $55,000, or 3.15%, higher than adjusted.
Expenditures
Expenditures are expected to aligned with adjusted budget, with anticipated expenses coming in $262,000, or 7.58% below budgeted.
Golf Fund
Revenues
Revenues are projected to be above adjusted budget at $441,447, or 8.69%, higher than adjusted. This is attributed to increase in usage green ($193,200) and cart ($129,600) FY 2023
Year over
Year
Variance
(July -
Dec.)
Year over
Year
Variance
(July -
Dec.)
($)(%)($)(%)
Revenue Total 2,096,929$ 718,596$ 1,900,865$ 1,745,000$ 804,383$ 85,787$ 11.94%1,800,000$ 55,000$ 3.15% Expenditures Total 2,671,907$ 626,299$ 3,011,942$ 3,462,374$ 658,065$ 31,766$ 5%3,200,000$ (262,374)$ -7.58% FY 2024 FY 2025
Actual
Year-To-Date
( July - Dec.)Actual
Adjusted
Budget
Year-To-Date
( July - Dec.)
Projected
Year -End
Estimate
Adjusted Budget &
Projected Year-End
Variance
FY 2023
Year over
Year Variance
(July - Dec.)
Year over
Year Variance
(July - Dec.)
($)(%)($)(%)
Revenue Total 17,904,295$ 7,142,576$ 17,264,940$ 17,712,000$ 7,864,821$ 722,245$ 10.11%18,321,720$ 609,720$ 3.44% Expenditures Total 17,226,049.38$ 7,403,664.12$ 16,873,560.73$ 31,515,137.88$ 9,577,367.26$ 2,173,703$ 29%22,100,000$ (9,415,138)$ -29.87% Adopted Budget &
Projected Year-End
Variance
Actual
Year-To-Date
( July - Dec.)Actual
Adopted
Budget
Year-To-Date
( July - Dec.)
Projected
Year -End
Estimate
FY 2024 FY 2025
MID-YEAR BUDGET PERFORMANCE REVIEW
APRIL 22, 2025
PAGE 8
fees, due to an increase in activity. Additionally, the fund saw increase in investment returns ($40,000). This increase is primarily driven by the effect of increased interest rates on both the Local Agency Investment Fund (LAIF) pool and the City’s overall investments portfolio.
Expenditures
Expenditures are expected to aligned with adjusted budget, with anticipated expenses coming in $138,000, or 3.13% below budgeted.
CITY COUNCIL PRIORITIES
Fiscal Responsibility
Public Engagement
FISCAL IMPACT
Approval of the recommended action will result in an increase in General Fund revenue increase of $3,888,786 in the General Fund FY 2024-2025 budget. Additionally, the recommended action will result in an appropriation of $2,735,403 to the FY 2024-2025 budget in the following General Fund accounts:
Department Title Appropriation Account
Police 1,608,092 10-4-2110-001
Fire 529,539 10-4-2110-001
Public Works 540,097 10-4-3110-0665
Library 57,675 10-4-4390-0550
Total $2,735,403
Year over
Year
Variance
(July - Dec.)
Year over
Year
Variance
(July - Dec.)
($)(%)($)(%)
Revenue Total 4,555,262$ 2,568,247$ 5,401,877$ 5,080,000$ 2,676,153$ 107,906$ 4.20%5,521,447$ 441,447$ 8.69% Expenditures Total 2,968,497$ 1,818,221$ 3,840,177$ 4,413,586$ 1,814,111$ (4,109)$ 0%4,275,490$ (138,096)$ -3.13% Actual
Year-To-
Date
( July -
Dec.)Actual
Adjusted
Budget
Year-To-
Date
( July -
Dec.)
Projected
Year -End
Estimate
Adjusted Budget &
Projected Year-End
Variance