FY 2023-24
Mid Year Review &
General Fund
Financial Forecast
GROVERBEACH.ORG
Nick Szamet
Administrative Services Director
GF Summary – FY 2023-24
GROVERBEACH.ORG
FY2023-24
Budget Projected
Beginning Reserves 5,053,965 5,053,965
Revenues/Transfers In 19,434,800 19,288,000
Expenditures/Transfers Out 18,170,000 18,162,000
Surplus/Deficit 1,264,800 1,126,000
Ending Reserves 6,318,765 6,179,965
Reserves as Percent of Operating 39% 38%
Does not include midyear requests.
• Projecting slightly
less revenues than
budgeted.
• Additionally,
projecting slightly
less expenditures.
• Overall, surplus is
driven by debt issue
and slight surplus of
revenues.
• This does not
include midyear
requests outlined
later in the
presentation.
GF Revenue – Top 5
GROVERBEACH.ORG
Budget Projected
Over/
(Under)
Percent of
Budget
1 Sales Tax 6,144,000 6,257,000 113,000 102%
2 Property Tax 5,720,000 5,949,000 229,000 104%
3 Cannabis Tax 1,326,000 1,200,000 (126,000) 90%
4 Service Charges 985,000 953,000 (32,000) 97%
5 Transient
Occupancy Tax 900,000 918,000 18,000 102%
Totals 15,075,000 15,277,000 202,000 101%
41%
39%
8%
6%
6%
Top Five Revenue Sources
General Fund Expenditures
GROVERBEACH.ORG
Budget Projected Variance
Salaries and Benefits 9,103,000 9,103,000
Supplies and Services 7,215,000 7,215,000
Minor Capital 85,000 85,000
Debt Service 34,000 168,000 (134,000)
CIP (Fund 11) Transfers Out 1,591,000 1,591,000
Total 18,028,000 18,162,000 (134,000)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Budget Projected
Water Fund - 601
GROVERBEACH.ORG
Revenues
• Have been Increased resulting from Rate Study.
• Rate increase corrects existing shortfall from ongoing cost escalation. • Finances Capital Projects and long-term costs for Central Coast Blue Expenditures
• Running Deficit for needed infrastructure this Fiscal Year. • O&M as well as City CIP Projects are programmed to increase capacity and replace aging infrastructure.
Bottom Line
• With the rate increase, the fund can maintain fiscal solvency. • If the rate increase is removed, expenditures will need to be reduced. $0
$1
$2
$3
$4
$5
$6
$7
$8
$9
FY 22-23FY 23-24FY 24-25FY 25-26FY 26-27FY 27-28
Millions
Water Fund - 601
Total Revenue Requiremens Total Revenues
Wastewater Fund - 603
GROVERBEACH.ORG
Revenues
• Have been Increased resulting from Rate Study.
• Rate increase corrects existing shortfall from ongoing cost escalation. • Finances Capital Projects through planned debt issue 3.6M this year and another 1.4M in FY27-28.
Expenditures
• O&M as well as City CIP Projects are programmed to increase capacity and replace aging infrastructure.
Bottom Line
• Like Water Fund, with the rate increase, the fund can maintain fiscal solvency.
$0
$1
$1
$2
$2
$3
$3
$4
$4
FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28
Millions
Wastewater Fund - 603
Total Revenue Requirements Total Revenue
Midyear appropriations requests
GROVERBEACH.ORG
101 - General Fund 601 - Water Fund 603 - Wastewater
City Manager's Office -
Community Center Improvements 15,520.00
Salary Savings (15,520.00)
Police Department 310,000.00
Dispatch Services 310,000.00
Overhire 61,000.00
PD Patrol Vehicle Computers 76,000.00
Salary Savings (257,000.00)
PD Facilities (51 Newport Storage Facility) 120,000.00
Public Works 28,987.84 10,000.00 50,000.00
Hillcrest Water Tank Drainage
Improvements 10,000.00 10,000.00
Income Survey 10,000.00
Storm Drain Inlet and Outlet Cleaning 30,000.00
Tire Balancing Machine 6,000.00
Valve Truck 22,987.84
Grand Total 338,987.84 10,000.00 50,000.00
• City departments have
attempted to keep midyear
requests neutral from a
budget impact.
• Aside from the unforeseen
dispatch costs, the total
additional amounts are for
equipment items under
Public Works.
• The income survey was
requested by Council.
GF Summary – FY 2023-24
GROVERBEACH.ORG
General Fund Summary
FY 2023-
2024
Budget
FY 2023-
2024
Projection
Variance
Amount
Variance
Percent
of Budget
(A) (B) (B-A)
Revenues/Transfers In 19,434,800 19,288,000 -146,800 99.24% Expenditures/Transfers Out 18,028,000 18,162,000 134,000 100.74% Surplus/Deficit 1,406,800 1,126,000 -280,800 80.04%
Beginning Reserves 7,410,465 7,410,465 0 100.00%
FY2023 Carryover -2,356,500 -2,356,500 0 100.00%
Wastewater Fund Repayment -142,000 -142,000 0 100.00%
Midyear Requests -338,988 -338,988 100.00%
Ending Reserves 6,318,765 5,698,977 -619,788 95.30%
• Adjusting the General Fund for
midyear requests and
changes to the outlook on
revenues, it is expected to end
the year with slightly less
reserves than budgeted
($619K).
• This is driven by the midyear
of ($338K); and debt service.
• In addition, slightly less
revenue of $146K.
• Estimated ending of 95%
percent of budget target.
Five Year GF Forecast - Benefits
GROVERBEACH.ORG
Planning tool for building a financially resilient
government
Open communication and transparency
encourages involvement
Provide context for goal-setting and the budget
process
Improves long-term financial sustainability
Forecast Drivers
GROVERBEACH.ORG
• National, State, and Local conditions. Economic Trends and Outlook
City Top 5 Revenues • Taxes and Fees
• UAL
• Workforce
CalPERS Investment
Yield
• New Debt Debt
Service/Repayments
• Investments in our community Capital Improvement
Plan
Inflation and Interest Rates
GROVERBEACH.ORG
• U.S inflation has increased
substantially in the last four
years moving to a high of 8%
in 2022 and moderating in
2023 to four percent.
• This is higher than the
Federal Reserve’s target of
2%.
• No clear indication of lower
interest rates but markets are
pricing them into outlook.
3%
2%
4%
8%
4%
0%
1%
2%
3%
4%
5%
6%
7%
8%
2018 2019 2020 2021 2022 2023
Annualized Inflation for US Pacific Region
U.S. Unemployment Rate
GROVERBEACH.ORG
• U.S. unemployment rate
has risen by three basis
points since last year at
3.7%.
• This has been the
continued norm since the
easing of pandemic.
• SLO County tracks to the
national average 3.6%.
0 1
2 3
4 5
6 7
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Unemployment Rate (January)
Rate (January)
Housing Market
GROVERBEACH.ORG
0.0 2.0
4.0 6.0
8.0 10.0
12.0 14.0
16.0 18.0
Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21 Jan-22
Percent Change in SLO County Housing Price
Index Year-Over-Year.
• SLO County has seen
sizable increases in the
last three years for yearover-year gains through
2022.
• From January 2023 to
December 2023, homes
saw 21% increase in list
price.
Latest Sales Tax Forecast
GROVERBEACH.ORG
3rd Quarter 2022 Review (September 2023)
• Sales tax revenue compared with previous year:
• Statewide – down 3.2%
• Central Coast – down 1.4%
• Business Activity
• Transportation – up 2.7%
• Construction – up 26%
• Drug Stores (including cannabis – down 15%
Sales tax projection
• Moderate increase in the remainder of this year.
• With average of less than 2% increase in FY24-25.
Five Year GF Forecast Summary
GROVERBEACH.ORG
2025-26 2026-27 2027-28 2028-29
General Fund Budget Projected Budget Revised Projected Projected Projected Projected Revenues 19,435,000 19,288,000 18,481,000 18,876,000 19,802,000 20,522,000 21,239,000 21,913,000 Total Expenditures 18,028,000 18,162,000 18,761,600 18,765,000 19,404,000 20,147,000 20,805,000 21,268,000 Annual Surplus /(Deficit) 1,407,000 1,126,000 (280,600) 111,000 398,000 375,000 434,000 645,000 Beginning Reserves 5,054,000 5,054,000 5,699,012 5,699,012 5,659,506 5,915,506 6,112,506 6,368,506 Ending Reserves 6,319,000 5,699,012 5,276,412 5,659,506 5,915,506 6,112,506 6,368,506 6,835,506 Reserve as percent of operating. 39% 35% 31% 33% 33% 33% 34% 35% FY 2023-24 FY 2024-25
Projected Bottom Line
GROVERBEACH.ORG
15 16
17 18
19 20
21 22
23 2022-2023
Total Activity
2024-2025
Revised
2026-2027 2028-2029
Millions
Revenues/Sources & Expenditures/Uses
Total Revenues Total Expenditures
• Overall balanced budget over
the next five years.
• Revenue keeps pace with
expenditures.
• Some costs can be throttled to
ensure long-term stability.
0% 20% 40% 60%
2022-2023
Total Activity
2023-2024
Revised
2024-2025
Revised
2025-2026
2026-2027
2027-2028
CalPERS
GROVERBEACH.ORG
0.93 1.41 1.52 1.62 1.71
1.90 1.36 1.28 1.31 1.33
0.00 0.20
0.40 0.60
0.80 1.00
1.20 1.40
1.60 1.80
2.00 Millions
CALPERS COSTS
Normal Contribution UAL
PERPA Misc. 89%
PERPA Safety 87%
Classic Misc. 68%
Classic Safety 73%
FUNDED RATIOS
• A major near-term driver of costs is
pension obligation.
• The Unfunded Accrued Liability
(UAL) suggests significant nearterm impacts.
• The City will need to keep in the
forefront of its financial planning.
• Other drivers to consider are
upcoming labor negotiations, staff
health benefits, and ongoing
increases for the cost of services.
Capital Improvements
GROVERBEACH.ORG
Average,
2.27 0.0
1.0 2.0
3.0 4.0
5.0 6.0
7.0 2016 2017 2018 2019 2020 2021 2022 2023
Millions
Fixed Assets 2016 - 2023 All Funds
• Across all funds the city has averaged
$2.27 Million per year in fixed assets
added to the register each year.
• This is representative of the City’s
investment in its infrastructure and
future.
• It’s also important as a throttle point for
liquidity.
• The 2024-2025 eases constrained
revenues by reducing capital
investment to $1.2 Million a year with
10% increases year-over-year
thereafter to trend with improving
revenues.
Financial Summary
GROVERBEACH.ORG
1. Revenues will moderate in the level of year-over-year increases as inflation continues to contract to targeted amounts identified by the federal reserve.
2. This will have two effects: decrease revenues from sales’ taxes and other volatile goods; lead to decreases in interest rates enabling borrowing and downstream increases to property taxes.
3. Expenditures are keeping pace with revenues and providing little room expansion of spending in the near term after factoring items such as UAL and labor negotiations.
4. Maintaining liquidity via throttling capital investments is important for lingering uncertainty.
Recommendation and Timeline
GROVERBEACH.ORG
• Receive the FY 2023-24 Mid-Year Budget Review including the updated General Fund Financial Forecast; approve mid-year budget augmentations; and provide input and direction to staff. • Timeline:
1/1/2024
6/30/2024
2/1/2024 3/1/2024 4/1/2024 5/1/2024 6/1/2024
2/29/24
COUNCIL GOALS WORKSHOP
3/25/24
CIP REVIEW
4/29/24
FY24-25 BUDGET UPDATE
5/17/24
PROPOSED BUDGET REVISIONS DISTRIBUTED
6/10/24
BUDGET HEARING
6/24/24
BUDGET ADOPTION 2/13/24
MIDYEAR PRESENTATION
Questions and
Comments
GROVERBEACH.ORG