Presentation Item 3a
STAFF REPORT
City Council Presentation/Discussion Item
DATE: February 18, 2025
TO: Honorable Mayor and Council Members
FROM: Aaron Felmlee, Finance Director
THRU: Amy Nilsen, City Manager
SUBJECT: Fiscal Year 2024-25 Mid-Year Budget Review
STAFF RECOMMENDATION:
1. Receive the Fiscal Year (FY) 2024-25 Mid-Year Budget Report; and
2. Review any questions with staff.
EXECUTIVE SUMMARY:
The Finance Department has conducted a mid-year budget review for FY 2024-25. The intent of this report and discussion is to review activities for the first half of this fiscal year, in this case July 2024 through December 2024, and provide a revised projection of revenues and expenditures to fiscal year end. The formal submittal of a review during the fiscal year provides an opportunity to identify and present any fiscal problem areas to the City Council, and to recommend corrective action if required.
Mid-year is also a good time to review actual revenues and expenditures for the prior fiscal year.
The General Fund at present will end FY 23-24 with a net surplus of $11,391. The surplus was primarily due to increases in investment revenues. Compared to FY 22-23 investment revenues increased by approximately $350,000. While this increase in investment revenue is great news staff is remaining cautious in estimating future revenue from investment activity. One of the main investment options the City utilizes, the Local Agency Investment Fund (LAIF), is returning over 4% on investments which is the highest return in over 15 years.
As part of our mid-year budget analysis, staff has reviewed every line item of each activity for Fiscal Year 2024-25. Staff has provided estimates within the attached document for where we expect expenditures to finish at June 30, 2025. Staff is estimating having an increase in department operating expenditures of $135,000 in the General Fund for FY 2024-25. The increase can be primarily attributed to two supplemental budget requests that the City Council has already approved this fiscal year. The first was for the City Hall remodel project which added $95,000 to the budget and the second was for on-call planning services which added $65,000 to the budget.
On the revenue side of the mid-year analysis sales tax is estimated to be $50,000 below what was budgeted and come in 7% below what the City received in Fiscal Year 2021-22. Franchise Fee revenue is estimated to exceed budget by $30,000, the City receives this revenue based on Utility Franchise revenue receipts so as those increase the City’s share also increases. As stated above, investment revenue is exceeding expectations and historical trends and we anticipate receiving an Presentation Item 3a
additional $100,000 in investment revenue. Staff will continue to monitor the City’s fiscal health and use these findings to assist in preparing the FY 25-26 budget.
As part of this discussion staff is not recommending making any budget adjustments to the current adopted budget. Any proposed supplemental budget adjustments by staff will come before Council as a separate item for Council consideration and approval.
RECOMMENDED COUNCIL ACTION:
Receive the FY 2024-25 Mid-Year Budget Review; and review questions with staff.
ATTACHMENTS:
A. FY 2024-25 Mid-Year Budget Review