Live, Work & Play
in Foster City
City of Foster City
Financial Services Dept.
Positive revenue growth trends for the fiscal year is expected to help alleviate the projected General Fund deficit from $6.32 million to $3.94 million
The FY 23/24 adopted General Fund budget (Funds
001 to 003) included a projected deficit of $6.32
million, inclusive of a $6.0 million transfer out to
the City’s CIP Fund. Improvements in several rev-
enue categories during the three quarters of the
fiscal year as well as a favorable outlook is prompt-
ing a projected reduction of our projected deficit
to $3.94 million.
Total General Fund Revenues (Funds 001 to 003)
for the 9 month period were $40.02 million. Prop-
erty tax revenues including ERAF refunds were
$24.32 million compared to $22.82 million in the
prior year. Having received our 1st installment of
ERAF, the full year projection has been revised to
include the second insta llment payment expected
later this year. Property tax in Lieu of Vehicle Li-
cense Fes declined from $4.45 million to $2.24 mil-
lion as the City received a $2.01 million VLF short-
fall payment from the State via the County in FY
22/23 verses a VLF shortfall payment of $667,557
in the current fiscal year . In addition, since there
are only five non-basic aid school districts this fiscal year compared to six in the prior fiscal year, the
County has less available pr operty tax revenues to
fund this year’s VLF. Hence, this year’s VLF short-
fall is estimated to be $114.39 million (FC’s portion
is $2,285,850) compared to last year’s shortfall of
$70.05 million (FC's portion is $1,398,472). As a
result, staff is reducing this year’s VLF revenue pro-
jection by $652,000 from $4.39 million to $3.78
million. Sales tax experi enced decline by $292,000
to $2.28 million compared to the prior year. Tran-
sient Occupancy Taxes continued its recovery, im-
proving from $2.06 million to $2.70 million. Recre-
ation fees are $1.54 million compared to $1.14 mil-
lion in the prior year, showing an increase of ap-
proximately $400,000. Investment income jumped
$948,000 to $1.83 million as the higher Fed Funds
rate have remained unchanged at 5.25% to 5.50%
since July 2023. Intergovernmental revenues de-
clined by $4.13 million as one-time ARPA
(American Rescue Plan Act) funding ended last
fiscal year.
General Fund expenditures (Funds 001 to 003) to-
taled $39.34 million or 66.2% of the annual budget
compared to last fiscal year’s mark of $39.29 million
with unfilled positions still an ongoing challenge. The wage COLA for FY 2023-24 was 4.2% for the both
the POA bargaining unit and the Management unit.
The AFSCME unit finalized their labor agreement in
October 2023 with a 5% COLA adjustment retroac-
tive July 1, 2023. The City made 3 quarterly pay-
ments to San Mateo Consolidated Fire for its 20%
shared costs for fire protection and prevention ser-
vices.
Expenditures for many of the City’s special revenue
funds, including Measure A, Measure M, SB1, and
Measure W funds are non-linear and commonly pro-
gram and/or project driven. Water and Wastewater
Enterprise operating revenues were 14.7% and 12.2%
ahead of last year’s pace due to a combination of new
rate increases that took effect July 1 and higher in-
vestment income. Water operating expenditure
were 9.2% higher due to higher wholesale water
rates and a general increase in operating and labor
costs. Wastewater expenditures were 2.3% lower.
Notwithstanding, these enterprise fund expenditures
were well within the budget for the nine month peri-
od and are expected to be within full year’s targets
by year-end.
As stated earlier, the City continues to experience
difficulties in filling vacant positions, including human resources manager, and po lice officers. The project-
ed multi-year structural deficits, cost impacts from
two consecutive years of CalPERS underperformance
of investment returns (a ne gative 6.1% return in FY
21/22 and a 5.8% return in FY 22/23 compared to
their 6.8% annual target), annual VLF shortfalls and
the State’s posturing in possibly not backfilling these vital revenues are some of the major challenges as
City staff prepares its FY 24/25 budget and 5-year
financial plan.
Foster City Financial
Update FY 23/24 Q3