DATE: February 26, 2024
TO: Mayor and Members of the City Council
VIA: Stefan Chatwin, City Manager
FROM: Edmund Suen, Finance Director
SUBJECT: 2ND QUARTER FY 2023-24 FINANCIAL UPDATE
RECOMMENDATION
It is recommended that the City Council, by Minute Order, receive and accept the report on the 2nd Quarter FY 2023-24 Financial Update.
EXECUTIVE SUMMARY
City staff has prepared the attached Second Quarter FY 2023-24 Financial Update report, also known as the Mid-Year Financial Report. General Fund revenues (Funds 001 to 003) for the six-month period were $31.23 million. Revenue and expenditures projections for the full year are $60.83 million and $59.35 million respectively. After adding Transfers in of $21,948 from the Foster City Foundation Fund and Transfers Out of $6.0 million to the City CIP Fund and $41,983 to the Low-and-Moderate Income Housing Fund, the estimated FY 2023-24 deficit is $4.54 million. Property Tax revenues, including ERAF refunds, are projected to reach $37.95 million. FY 2023-24 property tax in lieu of vehicle license fees (VLF) is anticipated to be $3.74 million with five non-basic aid school districts versus six in the prior year, which in turn means less available property tax revenues to fund the FY 2023-24 VLF. San Mateo County continues to work with the State for a permanent solution for VLF shortfalls. Staff notes that the State did not include San Mateo County's FY 2022-23 shortfall of $70.05 million (FC's portion is $1,398,496) in its January 2024 proposed FY 2024-25 budget. Transient Occupancy Tax (TOT) gains for the six-month period through 12/31/23 were encouraging. As a result, full-year projections are now $3.95 million vs. budgeted estimates of $3.56 million. Although there has been talk of interest rate reductions over
the past few months, the Federal Reserve has maintained its Fed Funds rate of 5.25% to 5.50% since July 2023. Based on the longevity of these high rates, the City’s investment income projections have been lifted across multiple Funds, including a $1.1 million increase for the General Fund.
At the 6-month mark, General Fund (Funds 001 to 003) operating expenditures were
48.4% of its amended budget or $28.72 million and included 9 months of funding to San Mateo Consolidated Fire Department for the City’s shared costs for fire protection and prevention services. City staff expects full year General Fund operating expenditures to be below the City’s operating budget of $59.35 million (before Transfers Out) and once full year staff vacancy savings are tabulated at year end, additional budget savings are expected. Expenditures for the City’s other Governmental Funds, Internal Service Funds, and the District’s Water and Wastewater Funds are performing generally as expected.
BACKGROUND/ANALYSIS
The City Council and City staff have committed to providing quarterly financial updates at City Council meetings to review quarterly financial performance and identify general economic trends and specific issues that may affect, positively and negatively, the City’s financial condition.
The report is intended to provide high-level financial information for the City Council, City Departments, and the community as a whole. Supplemental revenue and expenditure analyses are also provided for those readers desiring more detailed financial information.
FISCAL IMPACT
There is no fiscal impact associated with this report.
CITY COUNCIL VISION, MISSION, AND VALUE/PRIORITY AREA
Innovation and Sustainability
Attachments:
•Attachment 1 - Foster City Financial Update FY 2023-24 Q2 (for the six months ended December 31, 2023)
•Attachment 2 – Second Quarter Projections for the Fiscal Year Ended June 30, 2024
•Attachment 3 - Comparison of Budget vs. Actual and Prior Year's Revenues (for the six months ended December 31, 2023)
•Attachment 4 - Comparison of Budget vs. Actual and Prior Year's Expenditures (for the six months ended December 31, 2023)