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DATE: June 3, 2024
TO: Mayor and Members of the City Council
VIA: Stefan Chatwin, City Manager
FROM: Waqas Hassan, Assistant Finance Director
SUBJECT: 3RD QUARTER FY 2023-24 FINANCIAL UPDATE
RECOMMENDATION
It is recommended that the City Council, by Minute Order, receive and accept the report on the 3rd Quarter FY 2023-24 Financial Update.
EXECUTIVE SUMMARY
City staff has prepared the attached 3rd Quarter FY 2023-24 Financial Update report (Attachment 1). General Fund revenues (Funds 001 to 003) for the nine-month period were $40.02 million. Revenue and expenditures projections for the full year are $61.47 million and $59.40 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 $3.94 million. Property Tax revenues, including ERAF refunds, are projected to reach $37.93 million. FY 2023-24 property tax in lieu of vehicle license fees (VLF) is anticipated to be $3.78 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 would like to note that the State did not include San Mateo County's FY 2022-23 shortfall of $70.05 million (Foster City's portion is $1,398,472) in its proposed FY 2024-25 state budget.
Transient Occupancy Tax (TOT) gains for the nine-month period through March 31, 2024 were encouraging. As a result, full-year projections are now $4.15 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.
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At the 9-month mark, General Fund (Funds 001 to 003) operating expenditures were
66.2% of its amended budget or $39.34 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 $59.40 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.
CEQA
Not applicable.
FISCAL IMPACT
There is no fiscal impact associated with this report.
CITY COUNCIL VISION, MISSION, AND VALUE/PRIORITY AREA
Staff Empowerment and Operational Excellence
Innovation and Sustainability
ATTACHMENTS:
Attachment 1 - Foster City Financial Update FY 2023-24 Q3 (for the nine months ended March 31, 2024)
Attachment 2 – Third Quarter Projections for the Fiscal Year Ended June 30, 2024 Attachment 3 - Comparison of Budget vs. Actual and Prior Year's Revenues (for the nine months ended March 31, 2024)
Attachment 4 - Comparison of Budget vs. Actual and Prior Year's Expenditures (for the nine months ended March 31, 2024