Live, Work & Play
in Foster City
City of Foster City
Financial Services Dept.
General Fund Unrestricted Reserves Ends Year at $63.1 million including receipt of the Vehicle License Fee (VLF) backfill for approximately $667K.
The City’s General Fund Reserves (Funds 001to
003) ended FY 23/24 with an Unrestricted Reserve
balance of $63.1 million. This balance represents a
reserve level of 100% of FY 24/25 budgeted ex-
penditures of $61.8 million.
Total FY 23/24 General F und Revenues, including
VLF backfill, were $63.5 million, surpassing adopted
budget estimates by $2.0 million. Total expendi-
tures, excluding net Transfers Out were $53.0 mil-
lion. Total transfers out of $6.7 million included
$6.0 million to the City CIP Fund and $63,564 for
Successor Agency loan repayment designated to
the Housing Successor Fund. A transfer in of
$21,948 were from the Foundation Fund for the
summer concerts.
Significant General Fund revenues are discussed
below.
Property Taxes: $38.9 million (includes $3.5 million
of Education Revenue Augmentation Fund “ERAF”
refunds from San Mateo County) or $2.9 million
above budgeted expectation s due primarily to a
$1.9 million variance in ERAF and moderate
growth in organic property tax revenues. ERAF
refunds are expected to have continued volatility
and subject to the State’s potential scrutiny. Real
estate transfer taxes totaled $238,000 and fell
short of budget by $73, 000 as the inventory of
homes available for sale diminished with the rise of
mortgage rates following the profusion of refi-
nancings when 30 year mo rtgage rates were much
lower (3%-4% range).
Property Tax In Lieu of Vehicle License Fees (VLF):
$3.8 million or approximately $608,000 below
budget as the current year short fall was higher
than the State provided backfill for prior period
shortfalls. Since the County’s distribution of VLF
revenues are impacted by the number of non-basic
aid school districts; with declines impacting the
availability of monies for distribution to the cities,
the recovery of any shortfalls from the State has
inherent uncertainty. Thus far, the State has ap-
proved funding 2 years after the occurrence of an-
nual VLF shortfalls, but ha s not been supportive of
a legislative fix to the VLF issue.
Transient Occupancy tax (TOT): $4.3 million or
$725,000 above the adopted budget estimates.
These revenues are now marginally below the level
of the $4.39 million high back in FY 2018-19 and the
recovery trend is promising.
Sales tax revenues: $3.7 million or $229,000 below
budget estimates. The shortfall is primarily due to
the adjustments made by the State for the sales that
did not belong to the City.
Business License Tax (BLT): $1.9 million, bettering
estimates by $313,000.
Interest and rental income: $4.3 million or $1.4 mil-
lion higher than estimates as the Federal Reserve’s
Federal Funds rate continued to be at high level in FY
2023-24 and demand for facility rentals accelerated.
Recreation fees/charges: $1.7 million or $183,000
above budget with solid demand for programing and
classes.
Total General Fund (Funds 001to 003) expenditures
were $53.0 million or $6.5 million below the amend-
ed budget. Personnel rela ted savings accounted for
approximately $4.5 million and supplies and contract
services $2.0 million. While the City was able to fill
some positions, the multitude of staff vacancies and
supply chain disruptions contributed to the unex-
pended employee services budget as well as delays
and postponement of work plans and related pro-
curements.
During the year, the City made strong progress in
the Levee CIP project and completed the project in
February 2024.
Both the Water and Wastewater enterprises had
gains in its overall Net Positions and exceeded its
25% reserve levels for its operating funds and its $2
million minimum level for its capital improvement
projects program.
The City’s overall fiscal health at the conclusion of FY 2022-23 remains positive. However, higher costs
associated with adjustments made from the results of
the classification and compensation studies, new la-
bor agreements, and an increase in head counts ap-
proved in the FY 2024-25 budget are contributing to
anticipated multi-year structu ral deficits to the City’s General Fund.
Foster City Financial
Update FY 23/24 Q4