FAIRFAX TOWN COUNCIL MEETING
STAFF REPORT
1 AGENDA ITEM #1
MEETING DATE March 5, 2025
PREPARED FOR Mayor and Town Council
PREPARED BY Michael Vivrette, Finance Director
SUBJECT Receive Fiscal Year 2024-25 Mid-Year Budget Review Report
RECOMMENDATION
Receive Fiscal Year 2024-25 Mid-Year Budget Review Report
DISCUSSION
The attached Mid-Year Budget Report (Report) reviews key FY24-25 revenue and expenditure activities for the Town. The Report provides year-end budget estimates based on actual Town expenditures and revenues posted through January 31st and historical expenditure patterns.
The FY24-25 Adopted Budget projected that the Town planned to draw down $1,537,800 of its General Fund reserves to fund additional CIP. Based on projections using January 31st income statements and reasonable estimates of financial activity through June 30th, staff estimates revenues will exceed budget by $512,300 (3.9%) and expenditures will likely be under budget by $240,100 (-1.6%). The net effect is that the combined savings of $752,400 may bring the reduction of reserves at June 30 to $785,400.
Projected revenues will exceed budget in part due to:
• Continued favorable real estate market activity impacting property tax revenue, • Inflation (increasing sales tax revenues due to higher prices), • Increasing interest rates (due to Fed Funds & LAIF rate increases), • Grant revenues received from sources not budgeted for in the current year – including $160,000 in SB 2 planning expense recovery, and
• Post Covid demand for services especially in hospitality and building.
Key factors affecting original budget expenditure estimates include:
• Higher inflation, increasing costs for materials and services, • Tight labor market reflected in delayed or unfilled positions and higher salary costs for key positions,
• Inefficiencies due to staff and contractor turnover,
• Supply chain issues affected by the global unrest and political actions.
Expenditures in the General Fund are expected to be under budget overall. We recommend the budget adjustments for the listed departments come from expense savings in other General Fund departments and projected increased revenues at the discretion of the Town Manager.
ATTACHMENT
A. FY25 Midyear Summary
B. Midyear Budget Report for Fiscal 2024-25
Projected FY25 Income Statement
at December 31, 2024
292,380 417,529 215,772 2,515,108 267,863 532,112 4,240,765 8,604,105 7,890,910 713,195 109.0% 18,927 28,882 12,628 159,168 67,112 8,655 295,373 484,158 471,000 13,158 102.8% 17,802 23,422 50,786 9,761 3,596 4,502 109,869 128,378 120,000 8,378 107.0% 4,652 634 1,633 2,073 2,833 3,743 15,568 38,828 65,000 (26,172) 59.7% 32,719 2,410 7,192 2,224 49,938 39,353 133,836 216,277 223,300 (7,023) 96.9% (25,133) - 3,482 - 7,580 1,794 (12,277) 26,948 119,600 (92,652) 22.5% - - - - - 5,000 5,000 33,432 130,000 (96,568) 25.7%
2,033 1,261 7,148 1,055 574 9,221 21,292 168,500 168,500 0 100.0% 16,481 7,304 5,070 8,474 4,845 5,132 47,307 85,000 85,000 (0) 100.0% - - - - - 3,921,800 3,921,800 3,921,800 3,921,800 - 100.0% 359,861 481,442 303,711 2,697,864 404,342 4,531,312 8,778,532 13,707,426 13,195,110 512,316 103.9% - - -
1,653 6,238 1,776 1,911 1,776 5,559 18,913 30,496 32,159 (1,663) 94.8% 203 203 203 203 203 203 1,220 3,575 4,069 (494) 87.9%
33,712 - 4,400 9,071 - 13,517 60,700 62,800 62,800 - 100.0% 58,300 64,740 64,740 64,740 64,740 64,740 382,000 608,813 340,000 268,813 179.1% 21,981 25,053 25,053 25,053 25,053 25,053 147,247 292,641 292,641 0 100.0% 19,327 48,755 48,755 48,755 48,755 48,755 263,102 360,167 360,167 0 100.0% - - - - - - - 3,400 13,400 (10,000) 25.4%
11,919 11,919 11,919 11,919 11,919 11,919 71,516 147,233 154,095 (6,862) 95.5% 31,285 31,285 31,285 31,285 31,285 31,285 187,712 404,111 417,638 (13,527) 96.8% 77,055 77,055 77,055 77,055 77,055 77,055 462,328 815,203 1,019,264 (204,061) 80.0% 29,259 29,259 29,259 29,259 42,259 42,259 201,554 350,848 355,238 (4,390) 98.8% 294,284 993,021 294,284 294,284 294,284 350,000 2,520,159 4,434,901 4,626,771 (191,870) 95.9% 7,892 4,395 - 70 - - 12,358 17,816 9,139 8,677 194.9%
275,869 275,869 275,869 275,869 275,869 275,869 1,655,213 3,349,934 3,355,477 (5,544) 99.8% 23,089 29,911 23,089 23,089 23,089 31,449 153,716 322,809 343,790 (20,981) 93.9% 49,373 52,404 49,373 88,150 49,373 114,546 403,219 707,893 583,397 124,496 121.3% 41,159 8,801 8,801 8,801 8,801 8,801 85,162 160,000 160,000 0 100.0% 10,678 10,678 10,678 10,678 10,678 10,678 64,070 97,570 245,966 (148,396) 39.7% 21,970 22,425 23,685 19,824 25,192 46,327 159,423 297,527 297,732 (205) 99.9% 10,945 3,810 2,812 2,800 3,375 5,286 29,029 110,367 139,044 (28,677) 79.4% 8,325 8,325 8,325 8,325 8,325 8,325 49,948 114,667 120,070 (5,403) 95.5% 666 - - - - 6,792 7,458 22,348 22,348 (0) 100.0%
3,710 - 250 - - 9,945 13,905 67,240 67,240 (0) 100.0%
103,647 91,838 91,838 91,838 91,838 91,838 562,837 1,116,393 1,116,393 0 100.0% - 594,000 594,000 594,000 594,000 - 100.0%
19,476 - - - - (12,768) 6,708 (0) - (0)
1,155,777 1,795,986 1,083,450 1,122,979 1,093,870 1,861,432 8,113,495 14,492,752 14,732,838 (240,086) 98.4% ▲ %
911 - BUILDING MAINTANANCE (6,708)
Expense Total: 6,379,257
715 - NON DEPARTMENTAL 553,556
725 - TRANSFERS OUT -
622 - SUMMER CAMPS 14,889
625 - RENTAL FACILITIES 53,335
617 - RECREATION 81,338
621 - FAIRFAX RECREATION 64,720
514 - CLIMATE & ENVIRON 33,501
611 - PARK MAINTENANCE 138,103
511 - STREET MAINTENANCE 304,674
512 - STREET LGHT & TRAF SIGNALS 74,839
421 - ROSS VALLEY FIRE SERVICE 1,694,721
510 - PUBLIC WORKS ADMIN 169,093
411 - POLICE 1,914,742
418 - DISASTER PREP 5,458
311 - PLANNING 352,874
321 - BLDG INSP & PERMITS 149,294
231 - PERSONNEL 75,717
241 - FINANCE 216,399
221 - TOWN CLERK 97,066
222 - ELECTIONS 3,400
121 - TOWN ATTORNEY 226,813
211 - TOWN MANAGER 145,394
112 - TOWN TREASURER 2,355
116 - INDEPENDENT AUDITOR 2,100
Expense
111 - TOWN COUNCIL 11,584
100 - TRANSFERS IN -
Revenue Total: 4,928,893
080 - CHARGES FOR CURRENT SERVICES 147,209
090 - OTHER FEES 37,693
060 - REVENUES FROM OTHER AGENCIES 39,225
070 - GRANTS FROM OTHER AGENCIES 28,432
040 - FINES 23,260
050 - INTEREST & RENTS 82,440
020 - FRANCHISE FEES 188,785
030 - LICENSES 18,509
Town of Fairfax, CA
Revenue
010 - TAXES 4,363,340
PROJECTED
JAN-JUN 25
PROJECTED
FY25
CURRENT
BUDGET ▲ $
Fund: 01 - GENERAL FUND
JAN 25 FEB 25 MAR 25 APR 25 MAY 25 JUN 25 + JULY - DEC
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ATTACHMENT B
Midyear Budget Report for Fiscal 2024-25
REVENUES
The General Funds are the seven discretionary funds including: General Fund (01), Dry Period Fund (02), Building & Planning Fund (04), Retirement Fund (06), and three equipment replacement funds: Field & Vehicle (03), Building (05), and Office (08).
Staff projects revenues in the General Fund (01) will exceed budget by $512,300 (3.9%) primarily due to higher-than-projected property and sales tax revenues, as well as UUT, Wildfire tax, and Property tax-in-lieu of VLF.
Revenues in the Building & Planning Fund (04) are projected to be slightly ahead of budget, and Retirement Fund (06) revenues are projected to closely match the budgeted total.
Table A: Projected Year-End Revenue Variance – General Fund (01)
Source: Projected Variance:
Taxes + $ 713,200
Franchise Fees + 13,200
Licenses + 8,400
Fines - 26,200
Interest & Rents - 7,000
Revenues From Other Agencies - 92,700
Grants from Other Agencies - 96,600
Projected Additional Revenue +512,300
Property Taxes, Property tax in Lieu of VLF, & ERAF
Total property tax revenues are projected to exceed budget by $495,300 (+6.7%). Secured Property Tax will exceed budget by $114,400 (3.2%).
Revenue estimates are based on county estimates which were exceeded as we continue to experience a robust housing market. We continue to monitor factors affecting future property tax revenue (such as mortgage rates, real estate prices and projected development).
Property Tax in Lieu of VLF (Vehicle License Fees) from the state is projected to exceed budget by $222,800. ERAF (Educational Revenue Augmentation Fund) Excess revenues will be $53,100 higher than the estimates made when the budget was adopted. Revised estimates will mean an additional $113,400 in Wildfire tax revenues should be available.
ATTACHMENT B
Sales Taxes
Sales tax revenues are expected to exceed budget by an estimated $98,100 (+3.5%). The base 1% sales tax (Bradley Burns) is estimated to exceed budget by $79,000. The ¾ cent District Tax (Measure C) is estimated to be $20,000 over original estimates.
When the budget was prepared, staff opted to be conservative in projections in case there might be a downturn in the economy (which has not materialized.) Sales tax revenues have been healthy, in part due to inflation and increased consumer confidence in the first part of the year.
The estimate of sales tax revenues to be received are based on the projections of Avenu – the Town’s sales tax consultants. The most recent report for the 3rd quarter of 2024 shows sales tax decreasing in the overall Bay Area by -4.1% quarter-over-quarter but only decreasing in Fairfax by -.2%. Avenu uses this information in their quarterly estimates.
User Taxes
Utility User Tax (UUT) revenues from Energy & Telecom are projected to be $117,800 (33.7%) higher than budgeted due to significant increases in utility rates. Hotel User Tax (HUT) will likely be slightly higher than projected as the Town sees increases from short-term rentals (STR).
Franchise Fees
Franchise fees are collected from Garbage, Gas & Electric and Cable. Staff projects that the revenues will be $13,200 higher than budgeted due to higher rates charged to consumers.
Cable fee revenues have been higher than expected. Gas & Electric fees are all paid in April and are projected to be close to budget, though higher rates may result in higher revenues for the Town.
Fines, Revenues from Other Agencies & Grants
Revenues from Fines i.e. Vehicle code fines and Parking tickets are likely to be $26,200 below budget projections. Such projections are based on previous receipts and are highly variable.
Interest & Rent Revenues
Projected interest from LAIF will be about $185,500 – about $14,500 less than budgeted.
Interest rates have benefited from Fed Fund rate increases earlier this fiscal year which have now peaked and are declining slightly. Due to the terms of investments it holds, LAIF interest rates lag general interest rate increases and is higher when rates fall. LAIF interest rate was
4.366% in January 2025 (compared to 4.012% in January 2024 and 2.425% in January 2023).
The Town received higher interest during the summer and has experienced lower interest in subsequent quarters due to lower invested balances.
Our current balance in LAIF has decreased by slightly less than $550,000 year-over-year, to $4.6 million. ARPA funds ($1.8M) represent the largest portion of the LAIF balance.
Rental facility income is projected to exceed the budget by $8,800.
ATTACHMENT B
Expenditures
The General Fund is projected to end the year with expenses under the adjusted budget by approximately $240,000 (-1.6%). The projections through June 30th are based primarily on spending for February to June 30, 2024 with adjustments for known differences and slight increases for inflation.
General Fund (GF) expenditures as of January 2025 were $7,570,000 (51.4%) of budgeted expenditures for the fiscal year. The seven-month GF total also does not include any actual transfers which are posted in June.
Personnel Costs
Personnel costs, the largest component of expenditures, are tracking on budget as of January 31, 2025. CalPERS Health insurance costs increased this year by an average of 8.7%.
However, the Delta Dental and life insurance rates remained unchanged in January which helped soften the impact. We budgeted for an overall increase of 6.0% in January, which may even-out across all employee insurance costs.
Departmental Expenditures
The year-end projection anticipates most departments are projected to be within budget overall, though there are some notable exceptions including:
• Town Attorney (121) – Expenses are projected to be over budget by $ 269,000 (179.1%) primarily due to an increase in special services to deal with increased litigation.
General services provided by the Town Attorney are projected to be at or below budget at June 30. The projected cost of special services for litigation are projected to be $323,000 by June 30 based our best estimates. Most of this cost was not anticipated or budgeted in this year’s budget. Staff recommends this department include a contingency for litigation in future budgets similar to what is done in 715 Non Departmental. Here, the town has set aside a contingency of $150,000 for Workers Comp and Settlement costs. • Disaster Preparation (418) – At December 31, the department was at 59.7%.
Projections to June 30th would have the expenditures over budget by $8,700 (194.9%). • Street Maintenance (511) – Expenses are projected to be over budget by as much as $124,500 (121.3%) based on the trends from the prior year which included increased expenses in the spring. These costs are influenced by weather and other factors which could change projections
Expenses in the General Fund are expected to be under budget overall for all departments.
Staff recommends the budget adjustments for the listed departments come from expense savings in other General Fund departments and projected increased revenues at the discretion of the Town Manager.
ATTACHMENT B
CAPITAL IMPROVEMENT PROGRAM (CIP)
Through January 2025, the Town has spent approximately $775,800 (21.9%) on CIP projects.
The adopted FY24-25 CIP budget has approximately $3.6 million for Funds 51, 52 and 53.
Road Expenses
Project 53-887 Pavement Rehab - The bulk of the expenditures budgeted are for this slurry seal and maintenance. Project went to bid in the fall but was not awarded because all bids exceeded the budget. Staff plans solicit new bids in Spring with an anticipated construction in Summer 2025 with approximately $425,000 of expenditures in the current fiscal year.
Project 51-845 103 Rocca Stabilization was completed December. Total expenditures of $290,700 are over budget by $40,700 due to change orders and will require additional General Fund transfer.
Project 51-847 Tamalpais Berry Retaining Wall was added during the year and completed in December. Actual expenses of $339,000 are under the budget of $582,000. The Town is seeking recovery of expenses from responsible parties.
In addition, the Town projects to spend $707,900 on street maintenance (Dept 511) this year.
Sidewalks
Project 53-830 Downtown Street/Sidewalk Improvements – This project is primarily grant funded. Based on engineering estimates, Staff estimates we will spend $225,000 in this fiscal year with grant reimbursement coming next fiscal year.
Bridges
Progress on bridges continues according to CalTrans’ updated schedule consistent with what Council has received previously. The town expects to spend $57,000 this fiscal year – most of which is reimbursable from federal funds which hopefully will be uninterrupted.
Facilities
Station 21 Facility Improvements – The Town budgeted $150,000 (of $600,000 projected total) in Fund 05 Building Improvement this year. Since then, cost estimates have increased to $650,000 or higher ($1.5MM). Staff expects to spend $20,000 on design costs before June 30.
We do not require any mid-year budget adjustments for the Capital Improvement Program (CIP). Budget adjustments to specific projects will be presented to Council on a specific project basis. CIP projects that are not completed in FY24-25 can be carried over and re-budgeted in the following fiscal year.