Hesperia City Council
March 7, 2023

FISCAL YEAR 2022-23
MI

D-YEAR BUDGET REVIEW
M
arch 7, 2023
Attachment 1
2022-23 MID-YEAR BUDGET REVIEW REPORT
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T A B L E O F C O N T E N T S

Page
Executive Summary ............................................................................................................................ 3 Status of FY 2022-23 Budget, Budget Amendments, and Reserves:

General Fund .......................................................................................................................... 5 Water District .......................................................................................................................... 6 Streets Maintenance ............................................................................................................... 7 FY 2022-23 December 31, 2022 Year-To-Date Revenue Review:

Major Funds Revenue Summary ............................................................................................ 8 General Fund Revenues ......................................................................................................... 9 Community Development Block Grant Revenue ..................................................................... 11 Hesperia Housing Authority Revenue ..................................................................................... 11 Street Related Funds Revenue ............................................................................................... 12 Other City Funds Revenue ..................................................................................................... 14 Water District Revenue ........................................................................................................... 15 Department FY 2022-23 Budget Expenditure Status Summary ........................................................... 17 Total Expenditures By Department and Program ................................................................................. 17 Proposed Budget Amendments – Summary ........................................................................................ 22 Proposed Budget Amendments – Narrative ......................................................................................... 22 2022-23 Mid-Year Budget Salaries and Positions ................................................................................ 24 2023-24 Tentative Budget Calendar ................................................................................................ .... 25

2022-23 MID-YEAR BUDGET REVIEW REPORT
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EXECUTIVE SUMMARY
The following chart compares the FY 2022-23 Budget and December 2022 year-to-date (YTD) revenue and expenditure totals. The percentage comparisons for revenues and expenditures are based on comparing the December 2022 YTD to the FY 2022- 23 Amended Budget. The Amended Budget is used to accurately reflect any changes to the adopted budget that occur from City Council approving budget amendments during the first six months of the fiscal year.

Status of Overall City Fiscal Year 2022 -23 Budget

• R evenue : Based upon the analysis of the revenue performance through December 2022, total revenue collected is $56.4 million, which is $4.5 million or 9% more than December 2021 YTD revenue of $51.8 million. Overall, 39% of the budgeted revenue has been collected through December 2022, which is typical due to the timing of payments related to some larger revenue sources , such as several tax -based revenues, Development Impact Fees, and reimbursements for Capital Improvement Projects. Additional details are provided further within the report.

• Expenditures: As referenced in the chart above, expenditures are 31% of the amended budget through December 2022. Operating expenditures are 45% expended which is typical for the first half of the fiscal year. Non-operating expenditures are 15% expended YTD, which is due to multiple capital improvement projects (CIP) funds that have minimal expenditures through the second quarter and will increase as projects move forward. It should be noted that there are four (4) budget amendments totaling $141,714 included in this report.

• R eserves : The General Fund and Water District (operating and capital) exceed the City Council’s R eserve Policy which established that a minimum of two (2) months of the annual expenditures be held in cash. Th e following estimated reserve calculations are based on the June 30, 2022 ending cash balances included in the June 30, 2022 audited Annual Comprehensive Financial Report (ACFR). Using the ACFR audited data assures that the estimated reserves are based on actual information. In addition, the four (4) Mid-Year Budget Amendments, totaling $141,714, are reflected below where appropriate:

2022-23 2022-23 December Revised %
Budget Revised 2022 YTD Received/Expended
Revenue 144,010,399$ 146,141,441$ 56,352,723$ 39% Use of Reserves 13,088,386 13,157,081
Net Transfers 0 0
Total Resources 157,098,785 159,298,522
Expenditures 133,605,549 137,564,958 42,793,024 31% Difference 23,493,236$ 21,733,564$
10% Cash Reserves 4,442,793$ 10% 3,561,426$ 10%
Cash Reserves Above 10% Reserve 13,115,901 30% 21,629,945 61% Total Estimated Cash Reserves 17,558,694 $ 40% 25,191,371$ 71% Months of Cash 4.7 8.5
Water DistrictGeneral Fund
2022-23 MID-YEAR BUDGET REVIEW REPORT
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EXECUTIVE SUMMARY (Continued)

Proposed Budget Amendments – 4 Budget Amendments are proposed for $141,714 The FY 2022-23 Mid-Year Budget Review includes four (4) items as proposed budget amendments totaling $141,714.

The proposed budget amendments are included in the fund balance analyses where appropriate:

Revenues and Expenditures through December 31, 2022 for the City’s main funds are summarized as follows:

General Other
F
Y 2022-23 Mid-Year Budget Requests Fund Funds Totals

1. Justice Assistance Grant (JAG) 2017/Homeland Security $ 18,603 $ 7,969 26, 572$ Grant (HSG)

2. Contract Inspection Services 50,000 0 50,000

3. Bridge Rail Repair-Caliente Road 0 45,142 45,142

4. C.O. 7901 Cataba Road Basin 0 20,000 20,000 Total Mid-Year Amendment Requests $ 68,603 $ 73,111 141, 714$ General Fund Revised Budget December
% of Revised
Received
Amended
Budget December
%
Expended
City Council 798,121$ 400,193$ 50%
City Manager 3,906,794 2,062,252 53%
Management Services 6,554,383 3,637,232 55% Economic Development 371,111 206,697 56% D.S.-Community Development 2,237,565 1,145,551 51% D.S.-Code Compliance 4,777,822 2,127,008 45% D.S.-Public Works (G.F.) 2,326,856 1,058,154 45% Police 20,613,786 10,121,860 49%
Total General Fund 44,845,907$ 14,232,195$ 32% 41,586,438$ 20,758,947$ 50% Community Development Block Grant 1,582,620 80,274 5% 5,005,770 44,393 1% Hesperia Housing Authority 551,416 420,397 76% 72,586 35,920 49% D.S.-Public Works 67,086 21,179 32% 3,996,331 1,623,750 41% Streets CIP Funds 49,006,698 9,501,695 19% 47,573,744 6,728,379 14% Other City Related Funds 3,109,355 699,488 22% 2,585,012 1,804,277 70% D.S.-Water Operating and Capital 28,848,988 16,042,241 56% 25,701,021 8,069,366 31% D.S.-Sewer Operating and Capital 6,151,444 3,415,642 56% 9,913,241 2,634,787 27% Fire District 45,036 44,376 -1% 1,130,815 1,093,205 97% Sub -Total 134,208,550$ 44,457,487$ 33% 137,564,958$ 42,793,024$ 31% American Rescue Plan Act Grant 11,932,891 11,895,236 100% 0 0 n/a Total 146,141,441$ 56,352,723$ 39% 137,564,958$ 42,793,024$ 31% 2022-23 Revenue 2022-23 Expenditures
2022-23 MID-YEAR BUDGET REVIEW REPORT
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STATUS OF CITY GENERAL FUND 2022-23 BUDGET, BUDGET AMENDMENTS, AND RESERVES

2022-23 2022-23
Budget Revised D ollars Percent

RESOURCES
General Fund Operating Revenue 44,295,907$ 44,845,907$ 550,000$ 1% Transfers In

1. Fund 255 - AB 3229 COPS Grant 200,000 200,000 Total Transfers In 200,000 200,000
Budgeted Reserves

1. Budgeted Reserves 0$ 0$

2. First Quarter Approved Budget Amendment Reserves 0 50,000

3. Mid-Year Budget Amendment Reserves 0 0 Total Budgeted Reserves 0$ 50,000$
Total General Fund Resources 44,495,907$ 45,095,907$ 600,000$ 1%

EXPENDITURES
Total General Fund Operating Expenses 41,748,438$ 41,736,438$ Transfers Out

1. Fund 210 - HFPD CalPERS 1,130,815 1,130,815
1,442,075 1 ,442,075
Total Transfers Out 2,572,890 2,572,890
First Quarter Budget Amendments - Approved 0 50,000 Total General Fund Expenditures & Transfers Out 44,321,328$ 44,359,328$ 38,000$ 0% Mid-Year Budget Amendment Requested

1. Justice Assistance Grant (JAG) 2017 0$ 18,603$

2. Contract Inspection Services 0 50,000 Total Mid-Year Budget Amendments - Requested 0 68,603 Total Expenditures and Amendments 44,321,328$ 44,427,931$ 106,603$ 0% DIFFERENCE TOTAL RESOURCES/TOTAL EXPENDITURES 174,579$ 667,976$ 493,397$ 283% Fund Balance
July 1 Beginning Balance 22,105,355$ 29,446,557$
Total Budgeted Reserves 0 ( 50,000) Difference Total Resources/Total Expenditures 174,579 667,976 Estimated June 30 Ending Fund Balance 22,279,934$ 30,064,533$ Months of Cash to Pay Expenditures and Transfers Out
Beginning Cash July 01, 14,287,923$ 16,940,718$
Estimated Resources Less Budgeted Reserves 44,495,907 45,045,907 Estimated Expenditures (44,321,328) (44,427,931)
14,462,502$ 1 7,558,694$
Months of Cash to Pay Expenditures and Transfers Out 3.9 4.7 Estimated Cash Reserves Percentage 33% 4 0%
Estimated Ending Cash June 30,
Change

2. Fund 402 - 2012 Water Rights Acquisition Debt Service 2022-23 MID-YEAR BUDGET REVIEW REPORT
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STATUS OF WATER DISTRICT 2022-23 BUDGET, BUDGET AMENDMENTS, AND RESERVES

2022-23 2022-23
Resources Budget R evised Dollars Percent
Revenue
Water Operating and Capital 28,411,024$ 28,471,024$ Sewer Operating and Capital 6,099,444 6,151,444 Reclaimed Water Operations 377,964 377,964
Total Revenue 34,888,432 35,000,432 112,000 0% Budgeted Reserves 3,815,097 3,815,097
Total Water District Resources 38,703,529$ 38,815,529$ 112,000$ 0% Expenditures by Program
Water Operating and Capital and Transfer Out 25,445,365$ 25,445,365$ 0$ 0% Sewer Operating and Capital 9,913,241 9,913,241 Reclaimed Water Operations 255,656 255,656
Total Water District Expenditures & Transfers Out 35,614,262$ 35,614,262$ 0$ 0% Establishment of Reserve Balances
Permanent Water Rights $ 1,146,888 1 ,146,888$
Total Reserve Balances 1,146,888 1 ,146,888
Total Water Expenditures & Reserve Balance Funding $ 36,761,150 $ 36,761,150 Difference Total Resources/Total Expenditures 1,942,379$ 2,054,379$ July 1 Beginning Balance 109,340,730$ 111,118,741$
Budgeted Reserves (3,815,097) (3,815,097)
Difference Resources/Expenditures 1,942,379 2,054,379 Reserve Balances 1,146,888 1,146,888
Estimated June 30 Ending Fund Balance 108,614,900$ 110,504,911$ Months of Cash to Pay Expenditures
Beginning Cash July 01, 23,309,829$ 25,805,201$
Estimated Resources Less Budgeted Reserves 34,888,432 35,000,432 Estimated Expenditures (35,614,262) (35,614,262)
22,583,999$ 2 5,191,371$
Months of Cash to Pay Expenditures and Transfers Out 7.6 8.5 Total Estimated Cash Reserves Percentage 63% 7 1%
Estimated Ending Cash June 30,
Change
2022-23 MID-YEAR BUDGET REVIEW REPORT
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STATUS OF STREETS MAINTENANCE FUND 2022-23 BUDGET, FUND BALANCE, AND RESERVES

2022-23 2022-23
RESOURCES Budget R evised Dollars Percent
Street Maintenance Operating Revenue 1,944$ 67,086$ 65,142$ 3351% Transfers In
Fund 100 - General Fund 0$ 0$
Fund 204 - Measure I - Renewal 1,750,000 1, 750,000
Fund 205 - Gas Tax Fund 1,400,000 1, 400,000
Fund 206 - Gas Tax Swap 595,794 595,794
Total Transfers In 3,745,794 3, 745,794
Total Revenues 3,747,738 3, 812,880
Budgeted Reserves

1. Budgeted Reserves 229,898$ 229,898$

2. First Quarter Budget Amendment Reserves 0 18, 695

3. Mid-Year Amendment Reserves 0 0
Total Budgeted Reserves 229,898$ 248,593$
Total Street Maintenance Resources 3,977,636$ 4, 061,473 $ EXPENDITURES 3,977,636$ 3, 977,636 $ 0$ 0% First Quarter Budget Amendments - Approved 0$ 18,695$ Mid-Year Budget Amendments - Requested

1. Bridge Rail Repair-Caliente Road 0$ 45,142$ Total Mid-Year Budget Amendments - Requested 0 45,142 Total Expenditures and Amendments 3,977,636$ 4, 041,473 $ 63,837$ 2% DIFFERENCE RESOURCES/EXPENDITURES 0$ 20,000$ 20,000$ n/a Fund Balance
July 1 Beginning Balance 289,130$ 454,211$
Total Budgeted Reserves (229,898) ( 248,593)
Difference Resources/Expenditures 0 20,000 Estimated June 30 Ending Balance 59,232$ 225,618$ Change
2022-23 MID-YEAR BUDGET REVIEW REPORT
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FISCAL YEAR 2022-23 DECEMBER 31, 2022 YEAR-TO-DATE REVENUE REVIEW

Overall – Through December 2022, total revenue is $56.4 million, or 39% percent of the total budgeted revenue of $144.0 million. It should be noted that changes in the local, state, and national econo mic environments can impact these revenue sources and trends; however, in this section, discussions will pertain to the revenue activity through the 2nd quarter of FY 2022-23.

As of December 31, 2022, the General Fund received revenues of $14.2 million , which is 32% of the annual budget.

This is typical as several major revenues such as Vehicle License Fees and Franchise Fees are primarily received in the second half of the Fiscal Year. However, development related revenue collections are currently performing above original budget estimates due to the timing of payments of fees for Industrial-related development.

Revenue from Street Related Funds is at $9.5 million, or 20% of the $48.4 million originally budgeted, which is expected since the majority o f the budgeted revenue is attributed to Street related CIP projects which are reimbursed as construction of the projects progresses. Development Impact Fees for streets and storm drains is another aspect of this revenue group. Several of these revenue sources have exceeded their original budget due to the timing in the progression of large projects occurring within the City.

As a whole, Water District revenue is performing as anticipated through December 2022 with 56% of budgeted revenue received to date.

The following pages will detail the current revenue collections for each fund.

December Change From
2022-23 2022-23 Percent 2022-23 Budget To
Budget Actual Received Revised Revised
General Fund 44,295,907$ 14,232,195$ 32% 44,845,907$ 550,000$ Community Development Block Grant 1,528,620 80,274 5% 1,582,620 54,000 Hesperia Housing Authority 121,416 420,397 346% 551,416 430,000 Street Related Funds 48,422,742 9,522,874 20% 49,073,784 651,042 Other City Related Funds 3,020,391 743,864 25% 3,154,391 134,000 Water Operating 26,330,124 14,940,135 57% 26,342,124 12,000 Water Capital 2,075,000 868,245 42% 2,075,000 0 Water Reserves 5,900 52,395 888% 53,900 48,000 Reclaimed Water 377,964 181,466 48% 377,964 0 Total Water Operating & Capital 28,788,988 16,042,241 56% 28,848,988 60,000 Sewer Operating 5,539,344 2,971,329 54% 5,543,344 4,000 Sewer Capital 558,800 435,608 78% 598,800 40,000 Sewer Reserves 1,300 8,705 670% 9,300 8,000 Total Sewer Operating & Capital 6,099,444 3,415,642 56% 6,151,444 52,000 Water District 34,888,432 19,457,883 56% 35,000,432 112,000 Sub-total 132,277,508 44,457,487 34% 134,208,550 1,931,042 American Rescue Plan Grant 11,732,891 11,895,236 101% 11,932,891 200,000 Total All Funds 144,010,399$ 56,352,723$ 39% 146,141,441$ 2,131,042$

MAJOR FUNDS REVENUE SUMMARY
2022-23 MID-YEAR BUDGET REVIEW REPORT
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FISCAL YEAR 2022-23 DECEMBER 31, 2022 YEAR-TO-DATE REVENUE REVIEW (Continued)

General Fund Revenue Comments:

General Fund Revenue – Through December 2022, total General Fund revenue of $14,232,195 is 32% of the budgeted estimate. Overall, General Fund revenues are performing as anticipated. Several large revenue sources such as Sales Tax, Vehicle License Fees and Franchise Fees are expected to increase later in the fiscal year due to the timing in the receipt of the revenue.

Sales and Use Tax – Through December 2022, the City received $4.7 million which is $0.2 million or 5% more than the December 2021 YTD revenue of $4.5 million. This increase can be largely attributed to increased fuel prices compared to the prior fiscal year. Due to timing in the receipt of revenue, the State has remitted tax payments through October 2022. Tax payments received from this revenue source are trending as expected but will continue to be monitored.

Vehicle License Fee (VLF) – This revenue is based on the City’s assessed valuation of the properties within the City.

As the assessed valuation changes from the prior year, this revenue changes by the same percentage. There is no revenue reported through December 2022, as the first installment of the VLF of $5.6 million, or 53% of the budget, was received in January 2023. The second installment expected to be received in May 2023.

Franchise Fees – Franchise fees fo r Cable TV, Advance Disposal, Southwest Gas, Southern California Edison, and Water through December 2022 YTD total $771,654, which is $25,895 or a 3% increase over December 2021 $745,759 YTD. As mentioned, the majority of franchise fees are received in the second half of the fiscal year.

Transient Occupancy Tax (TOT) – Through December 2022, YTD revenue is $748,175, which is $42,977 more than the December 2021 YTD of $705,198. TOT tax es received through December have been collected at 50% of the budgeted amount and are currently anticipated to meet the originally budgeted estimate of $1.5 million by the fiscal year- end.

December Change From
2022-
23 2022-23 Percent 2022-23 Budget To
Budget Actual Received Revised Revised
Sales and Use Tax 13,900,000$ 4,761,472$ 34% 13,900,000$ 0$ Vehicle License Fee (VLF) 10,463,724 0 0% 10,463,724 0 Franchise Fees 4,090,296 771,654 19% 4,090,296 0 Sub-Total Top Three Revenues 28,454,020 5,533,126 19% 28,454,020 0 General & Administrative Recovery 3,085,930 1,542,965 50% 3,085,930 0 Transient Occupancy Tax 1,500,000 748,175 50% 1,500,000 0 Property Transfer Tax 400,000 135,560 34% 400,000 0 Secured Property Tax 1,033,459 544,268 53% 1,033,459 0 Business License 783,600 426,624 54% 783,600 0 Commercial Cannabis Tax 481,000 195,994 41% 481,000 0 Community Facilities District 2005-1 324,734 180,564 56% 324,734 0 Leased Water Rights 2,063,685 0 0% 2,063,685 0 Development Related Revenues
Planning 358, 773 369,248 103% 508,773 150,000 Building & Safety 2,352,208 1,681,650 71% 2,352,208 0 Engineering 667,700 679,707 102% 1,067,700 400,000 Sub-Total Development Related Revenues 3,378,681 2,730,605 81% 3,928,681 550,000 Sub-Total Top 12 Revenue Sources 41,505,109 12,037,881 29% 42,055,109 550,000 All Other General Fund Revenues 2,790,798 2,194,314 79% 2,790,798 0 Total General Fund Revenues 44,295,907$ 14,232,195$ 32% 44,845,907$ 550,000$

GENERAL FUND REVENUES
2022-23 MID-YEAR BUDGET REVIEW REPORT
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FISCAL YEAR 2022-23 DECEMBER 31, 2022 YEAR-TO-DATE REVENUE REVIEW (Continued)

General Fund Revenue Comments (Continued):

Property Transfer Tax – This re venue is based on the change in property valuation upon change of owne rship of property within the City . T he December 2022 YTD total of $135,560, represents a decrease of $103,288 from the December 2021 YTD of $ 238,848. This 43% decrease is due to receiving four receipts compared to the five receipts received through December 2021 YTD. When comparing the first four installments through December 2022 to the four received through December 2021, the FY 2022 -23 is $50,850 or 27% less, representing a slowdown in the housing market due to increased mortgage interest rates.

Secured Property Tax – Through December 2022 , YTD revenue is $544,268, which is $26,715 more than the December 2021 YTD $517,553. This revenue is on track through December 2022 with 53% of budgeted amount received.

Business License – Entities transacting business within the City must obtain and maintain a valid business license.

YTD December 2022 collections of $426,624 is $101,783, or 31%, more than the December 2021 YTD of $324,841.

The increase is primarily due to the implementation of the self -certification component of the existing Rental Housing Business License and Inspection Program approved by City Council at the June 7, 2022 Council meeting. Additionall y, the total number of business license collections have increased, as 3,267 business licenses were paid during the first six months of FY 2022-23 compared to the 3,050 paid December 2021 YTD.

Commercial Cannabis Tax – All commercial cannabis businesses o perating within the City pay a 4% tax, on gross receipts from business operations. The December 2022 YTD receipts of $195,994 is 33% less than the December 2021 YTD of $294,382. The decrease in revenue is due to fewer cannabis businesses operating within the City. There are currently eleven (11) active businesses compared to the twenty-one (21) businesses as of December 2021.

Community Facilities District 2005-1 – This special assessment district, (generally west of Maple Avenue and south of Main Street), was formed to refinance the bonds of CFD 91 -3, and assesses the properties within the district to repay the bonds. Part of the annual assessment includes a public safety portion to offset some of the costs that residential development places on the City’s public safety providers. The December 2022 YTD of $180,564, which is 15 % more than December 2021 YTD of $157,592, is trending as expected.

Leased Water Rights – The permanent water rights owned by the General Fund can be leased annually and the lease revenue is used to pay for the 2012 Bonds, which financed the purchase of the water rights. The leasing of water rights revenue is collected at the end of the year and will be recorded in June 2023.

Development Related Revenue – This revenue category accounts primarily for development related fees from Planning, Building and Safety , and Engineering. As of December 31 , 2022, YTD actual receipts of $2.7 million represents a 22% or $0.5 million increase from the prior year receipts of $2.2 million. This increase is mainly due to the Building and Safety permit Fees and Engineering Inspection Fees collected for Hesperia Commerce Center 1 -Buildings 2 & 3, as well as fees collected for Pacific Communities tract homes and Sunset View Apartments. As a result, the Planning revenue estimates have increased by $150,000 and Engineering revenue estimates have increased by $400,000 to reflect the higher than anticipated collections.

2022-23 2022-23
Division Budget Revised Amount Percentage
Planning 358,773$ 508,773$ 150,000$ 42% Building & Safety 2,352,208 2,352,208 0 0% Engineering 667,700 1,067,700 400,000 60% Total 3,378,681$ 3,928,681$ 550,000$ 16% Change
2022-23 MID-YEAR BUDGET REVIEW REPORT
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FISCAL YEAR 2022-23 DECEMBER 31, 2022 YEAR-TO-DATE REVENUE REVIEW (Continued)

General Fund Revenue Comments (Continued):

All Other General Fund Revenue – The numerous all other general fund revenue accounts are $2.2 million or 79% collected through December 2022. Compared to the December 2021 YTD of $1.6 million collected, this revenue reflects a $ 0.6 million or 39% increase, which includes various revenues such as Animal Control and Code Enforcement Administrative Fines, Vehicle Code Fines, and Police Service Fees.

Community Development Block Grant Revenue Comments:

These revenues are grant reimbursements that promote economic and housing development and rehabilitation projects, with an emphasis on activities that create jobs, build or enhance infrastructure, and provide affordable housing to Hesperia residents. This grant must be spent prior to submitting for reimbursements. The FY 202 2-23 Budget revenue estimates represent anticipated reimbursements that are primarily expected to be received during the third and fourth quarters of the fiscal year.

CDBG Neighborhood Stabilization Program (NSP) – The CDBG NSP program is no longer active and is in the process of being finalized during FY 2022-23.

All Other CDBG Revenues – This revenue includes CDBG program income and interest revenue for the HOME Grant fund and the CDBG Revolving Loan fund. These revenues are more one -time in nature and are not received on a time schedule as other revenue. December 2022 YTD revenue of $65,462 has been received, which consists of loan repayments related to the Housing Rehabilitation Loan Program , the 1999 HOME repayment program, and interest related income. The FY 2022-23 Revised has been increased to reflect the revenue received through December 2022.

Hesperia Housing Authority (HHA) Revenue Comments:

This program was developed to promote projects that improve the City’s housing stock and provide affordable housing opportunities. The budgeted revenues primarily consist of loan repayments and interest income. As of December 31, 2022, revenue exceeded the budget primarily due to two (2) loan interest payments totaling $322,122 from Eagle Hesperia 55 LP. The FY 2022 -23 Revised reflects the receipt of the loan repayments and investment income.

December Change From
2022-
23 2022-23 Percent 2022-23 Budget To
Budget Actual Received Revised Revised
CDBG Administration Reimbursement 1,509,086$ 14,812$ 1% 1,509,086$ 0$ CDBG Neighborhood Stabilization Prog. (NSP) 7,632 0 0% 7,632 0 Sub-Total 1,516,718 14,812 1% 1,516,718 0$ All Other CDBG Revenues 11,902 65,462 550% 65,902 54,000 Total CDBG Revenues 1,528,620$ 80,274$ 5% 1,582,620$ 54,000$

COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) REVENUE
December Change From
2022-23 2022-23 Percent 2022-23 Budget To
Budget Actual Received Revised Revised
Interest Income 23,832$ 342,080$ 1435% 373,832$ 350,000$ Loan Repayments 91,084 0 0% 91,084 0 M
iscellaneous Income 3,000 49,279 1643% 53,000 50,000 Sub-Total HHA Revenue 117,916 391,359 332% 517,916 400,000 VVEDA Housing Authority Revenue 3,500 29,038 830% 33,500 30,000 Total HHA Revenues 121,416$ 420,397$ 346% 551,416$ 430,000$

HESPERIA HOUSING AUTHORITY (HHA) REVENUE
2022-23 MID-YEAR BUDGET REVIEW REPORT
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FISCAL YEAR 2022-23 DECEMBER 31, 2022 YEAR-TO-DATE REVENUE REVIEW (Continued)

Street Related Funds Revenue Comments:

Measure I - Renewal – This fund is used to account for the renewed Measure I sales tax based on revenue generated from the ½ cent added tax on sales tax. Measure I Renewal is received from San Bernardino County Transportation Authority (SBCTA). Through December 2022, a total of $1.2 million from three (3) monthly payments has been collected, which is $0.2 million or 20% higher than the December 2021 total of $1.0 million. At this time, there are no revisions to this revenue source.

Gas Tax – Monthly apportionments are received throughout the fiscal year and can vary from year-to-year due to timing differences of the State’s schedule of monthly apportionments. The City’s apportionments through December 2022 total $607,579 from four (4) monthly apportionments , which is 1% less than the December 2021 total of $613,880 from five (5) month apportionments. When comparing the four (4) remittances in FY 2022-23 to the first four (4) remittances in the prior year of $491,713, the FY 2022- 23 remittances are $115,866 or 23% higher, which reflects increased fuel prices. FY 2022-23 Gas Tax revenue is at 33% received with remittances trending as originally budgeted.

Gas Tax S wap – Through December 2022, combined apportionments of $321,203 from four (4) apportionments is $29,749 or 8% less than the December 2021 YTD of $350,952 from five (5) apportionments. When comparing the first four (4) distribution through December 2022 to the four (4) received through December 2021, YTD FY 2022- 23 is $10,549 or 4 % more, representing an increase in fuel prices. This revenue source is at 34% of the budget, with apportionments being received as expected.

Local Transportation – The December 2022 YTD of $908,027 includes an apportionment from SBCTA and a portion of interest income received. As reported in the First Quarter Budget Review, the City received its annual apportionment of $872,556 in October 2022. The revised revenue estimate has been increased to reflect current revenue. This revenue source will decrease in future years due to the importance placed and funding reserved for public transportation.

December Change From
2022-23 2022- 23 Percent 2022-23 Budget To
Budget Actual Received Revised Revised
204 Measure I - Renewal 3,598,916$ 1,207,518$ 34% 3,598,916$ 0$ 205 Gas Tax Fund 1,854,203 607,579 33% 1,854,203 0 206 Gas Tax Swap Fund 947,632 321,203 34% 947,632 0 207 Local Transportation Fund 877,402 908,027 103% 908,402 31,000 209 Gas Tax - RMRA 2,193,113 775,911 35% 2,193,113 0 254 AQMD Fund 61 370 607% 461 400 263 Public Works Street Maintenance Fund 1,944 21,179 1089% 67,086 65,142 Sub-Total 9,473,271 3,841,787 41% 9,569,813 96,542 DIF Streets & Storm Drain
300 Development Impact Fee-Streets 148,890 163,457 110% 163,890 15,000 301 Development Impact Fee-Storm Drain 27,358 66,362 243% 66,858 39,500 306 Development Impact Fee 2018-Streets 11,055,223 2,247,365 20% 11,055,223 0 307 Development Impact Fee 2018-Drainage Facilities 1,032,902 200,336 19% 1,032,902 0 313 Development Impact Fee-A-04 Drainage 210,780 643,903 305% 710,780 500,000 Sub-Total DIF Streets & Storm Drain 12,475,153 3,321,423 27% 13,029,653 554,500 504 City Streets CIP 26,474,318 2,359,664 9% 26,474,318 0 Total Street Related Funds 48,422,742$ 9,522,874$ 20% 49,073,784$ 651,042$

STREET RELATED FUNDS REVENUE
2022-23 MID-YEAR BUDGET REVIEW REPORT
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FISCAL YEAR 2022-23 DECEMBER 31, 2022 YEAR-TO-DATE REVENUE REVIEW (Continued)

Streets Related Funds Revenue Comments (Continued):

Gas Tax RMRA – This source of revenue, which took effect in November 2017 during FY 2017-18, is used to repair and maintain roads, freeways, and bridges. SB 1, the Road Repair and Accountability Act of 2017, increased the gas tax by 12 cents and 20 cents for diesel. The vehicle registration fee also increased depending on the value of the vehicle. As of December 2022, revenue received from the State is $775,911, and is trending as anticipated. When compared to the prior year through the same period, the current fiscal year is 18%, or $119,161 higher.

AQMD (AB2766 Transit) – The revenue in this fund is interest earnings from retained cash.

Public Works -Street Maintenance – The estimated revenues are primarily interest earnings. This fund will occasionally receive miscellaneous reimbursements on an inconsistent basis . The revenue received YTD of $21,179, includes $10,738 proceeds from sale of equipment and rei mbursements for damaged city property and equipment.

Revenue through December 2022 is higher than projected, and as a result, the revised estimates have been increased by $65,142 to reflect the unanticipated revenue.

Development Impact Fees for Streets and Storm Drain – Through December 2022 YTD, the combined revenue received of $3.3 million is 27% of the annual budget of $12.5 million. The collections on this revenue source can vary depending on the timing of the completion of projects. The FY 2022 -23 Budget of $12.5 million primarily consist of $4.8 million for Hesperia Commerce Center 1 -Bld 2 and a $6.0 million dollar payment related to Silverwood Tapestry that have not been received yet but are expected to be received later in the fiscal year. Revenue estimates have been provided for several Development Impact Fee funds to reflect current collections through December 2022 for completed projects subject to those specific fees.

City Streets CIP – This fund tracks grant and developer funded projects such as the Ranchero Road Improvements (7 th
Avenue to Mariposa Road), the Traffic Signal at Main Street and Sultana Street/Timberlane Avenue, Ranchero Aqueduct crossing, and Walnut St H -01 Retention Basin . Through December 2022 , a total of $2.4 m illion has been received from the California Department of Transportation (Caltrans), San Bernardino County Transportation Authority (SBCTA), and grant reimbursements for the Ranchero Road Improvements, the Ranchero Road Aqueduct project, and the Retention Basin project . The bulk of the budgeted revenue is for reimbursement for the Ranchero Road improvements and the Ranchero Road Aqueduct crossing projects. With these projects experiencing construction delays, staff anticipates the need to carryover in th e FY 2023-24 Budget. This carryover will be analyzed and included in the CIP budget presentation during June 2023.

2022-23 MID-YEAR BUDGET REVIEW REPORT
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FISCAL YEAR 2022-23 DECEMBER 31, 2022 YEAR-TO-DATE REVENUE REVIEW (Continued)

Other City Funds Revenue Comments: Many of these funds only receive interest income during the fiscal year.

Pension Obligation Trust – This fund was established to manage and mitigate the unfunded pension liability and other post-employment benefits liabilities through a Section 115 Trust.

HFPD (PERS) Interest Income – This revenue is the interest income related to funds the held for the CalPERS obligations of the former Hesperia Fire Protection District.

AB3229 Supplemental Law Fund – The passage of Senate Bill (SB) 89 allowed for the continued funding of the Supplemental Law Enforcement Funding (SLE SF). Through December 2022, $160,891 or 68% of the budgeted revenue has been received as expected.

Environmental Programs Grant – This fund tracks grant reimbursements for various environmental events. Throug h December 2022, $9,327 or 15% has been received. Reimbursements are largely received later in the Fiscal Year.

Disaster Preparedness Grant – The revenue in this fund is interest earnings from retained cash.

Development Impact Fees -Fire, Police, Public Services, City Hall, Animal Control, and Records Storage – Halfway through the fiscal year, a total of $419,671, or 16% of the budgeted revenue, has been received for this revenue group. The combined $2.7 million revenue budgeted for this category includ es combined DIF fees of $2.2 million from the completion of Hesperia Commerce Center 1- Bldg 2, which is expected to be received before the end of the Fiscal Year.

2012 Water Rights and 2013 Refunding Debt Service – The revenue in these funds is interest earnings from cash held with the fiscal agent. The revised budget has been increased to reflect current revenue amounts.

December Change From
2022-23 2022- 23 Percent 2022-23 Budget To
Budget Actual Received Revised Revised
105 Pension Obligation Trust 0$ 28,859$ n/a 0$ 0$ 210 HFPD (PERS) Interest Income 8,036 44,376 552% 45,036 37,000 255 AB3229 Supplemental Law Fund 237,584 160,891 68% 237,584 0 256 Environmental Programs Grant 63,525 9,327 15% 63,525 0 260 Disaster Preparedness Grant 117 684 585% 717 600 262 SB 1383 Local Assistance Grant 0 979 n/a 0 0 DIFs 302-304, 308-312
302 Development Impact Fee-Fire 25,181 43,839 174% 45,181 20,000 303 Development Impact Fee-Police 6,205 6,244 101% 6,405 200 304 Development Impact Fee-Public Services 16,537 16,650 101% 16,737 200 308 Development Impact Fee 2018-Fire Suppression 1,315,090 162,402 12% 1,315,090 0 309 Development Impact Fee 2018-City Hall Facilities 1,196,058 130,197 11% 1,196,058 0 310 Development Impact Fee 2018-Animal Control 65,455 51,229 78% 65,455 0 311 Development Impact Fee 2018-Records Storage 58,510 6,629 11% 58,510 0 312 Development Impact Fee 2018-Police Facilities 22,573 2,481 11% 22,573 0 Sub-Total DIFs 302-304, 308-312 2,705,609 419,671 16% 2,726,009 20,400 402 2012 Water Rights Debt Service 1,454 39,708 2731% 41,454 40,000 403 2013 Refunding Debt Service 4,066 39,369 968% 40,066 36,000 261 American Rescue Plan Act Grant 11,732,891 11,895,236 101% 11,932,891 200,000 Total Other City Funds 14,753,282$ 12,639,100$ 86% 15,087,282$ 334,000$

OTHER CITY FUNDS REVENUE
2022-23 MID-YEAR BUDGET REVIEW REPORT
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FISCAL YEAR 2022-23 DECEMBER 31, 2022 YEAR-TO-DATE REVENUE REVIEW (Continued)

Other City Funds Revenue Comments (Continued):

American Rescue Plan Act (ARPA) Grant – Coronavirus State and Local Fiscal Recovery Funds – This revenue is the Coronavirus State and Local Fiscal Recovery Funds in which the City received a total amount of $23.4 million in two installments of $11.7 million. The first allocation was received in September 2021, and the second allocation was received in September 2022. This ARPA funding must be spent on eligible costs incurred d uring the period that began on March 3, 2021, and ending on December 31, 2024 . Eligible costs include expenditures for necessary improvements to water infrastructure to improve access to clean drinking water, wastewater treatment infrastructure, projects that address the impacts of climate change, projects for managing and treating storm water or subsurface drainage water, facilitating water reuse, and securing publicly owned treatment works. The FY 2022 -23 Revised has been increased to reflect revenue as of December 2022, which includes interest income.

Water District Revenue Comments:

Effective August 1, 2022, the Hesperia Water District began applying liens to properties with outstanding water bills.

Failure to pay within 60 days from the original bill due date, results in the Water District mailing the tenant and property owner a notice of lien. If the bill remains outstanding after an additional 10 days, the Water District will apply a lien on the property. During May of each year, all outstanding property liens will be converted to property tax liens. By doing so, the County will collect outstanding balances as part of property tax collections during the following year. As of December 31, 2022, the Water District has collected $70,396 from $164,955 placed on the tax roll. The Water District is utilizing such liens in lieu of water disconnections and traditional collection services as the primary mechanism for collections.

December Change From
2022-
23 2022-23 Percent 2022-23 Budget To
Budget Actual Received Revised Revised
Water Operating Revenue
Water Sales 24,864,250$ 13,757,864$ 55% 24,864,250$ 0$ Interest Income 19,420 30,937 159% 31,420 12,000 Property Taxes 538,254 331,548 62% 538,254 0 Sub-Total 25,421,924 14,120,349 56% 25,433,924 12,000 All Other Water Operating Revenues 908,200 819,786 90% 908,200 0 Water Arrearages Grant 0 0 n/a 0 0 Total Water Operating Revenues 26,330,124$ 14,940,135$ 57% 26,342,124$ 12,000$ Capital Facilities Charges 2,000,000 868,245 43% 2,000,000 0 Grant Reimbursement 75,000 0 0% 75,000 0 Total Water Capital Revenues 2,075,000 868,245 42% 2,075,000 0 Reclaimed Water 377,964 181,466 48% 377,964 0 All Other Water Reserves Revenues 5,900 52,395 888% 53,900 48,000 Total Water Operating & Capital Revenues 28,788,988$ 16,042,241$ 56% 28,848,988$ 60,000$ Sewer Operating Revenue
Sewer Billing 5,301,042$ 2,729,758$ 51% 5,301,042$ 0$ All Other Sewer Operating Revenues 238,302 241,571 101% 242,302 4,000 Total Sewer Operating Revenue 5,539,344 2,971,329 54% 5,543,344 4,000 Sewer Connections 550,000 387,264 70% 550,000 0 All Other Sewer Capital Revenues 8,800 48,344 549% 48,800 40,000 Total Sewer Capital Revenue 558,800 435,608 78% 598,800 40,000 All Other Sewer Reserves Revenues 1,300 8,705 670% 9,300 8,000 Total Sewer Operating & Capital Revenues 6,099,444$ 3,415,642$ 56% 6,151,444$ 52,000$ Total Hesperia Water District Revenue 34,888,432$ 19,457,883$ 56% 35,000,432$ 112,000$

WATER DISTRICT REVENUE
2022-23 MID-YEAR BUDGET REVIEW REPORT
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FISCAL YEAR 2022-23 DECEMBER 31, 2022 YEAR-TO-DATE REVENUE REVIEW (Continued)

Water District Revenue Comments (Continued):

Overall Water District Revenue – Revenue through December 2022, is $19.5 million, which is $1.7 million, or 10% more than December 2021 YTD of $17.7 million. The increase can be attributed to a combination of overall Water Sales, tax lien collections, Rec laimed Water Sales, and Sewer Billing. Overall Water District revenue is progressing as anticipated with 56% of the budgeted amount received.

Water Sales – Water sales t hrough the second quarter of FY 2022 -23 were $13.8 million, which is $674,182, or 5%, higher than the December 2021 YTD of $13.1 million. The increase over the prior year is partially due to the implementation of the final annual water rate change in December 2021 from the approved water rate study. Another factor for the increase is the implementation of the Water District lien process and the Low Income Household Water Assistance Program (LIHWAP). On December 2020, Congress funded a program to help low -income households pay down their outstanding residential water or wastewater bills. This new federal program provides financial assistance to low income Californians to help manage their residential water and wastewater utility costs to up to $2,000 per qualifying low-income household. The City started collecting these payments at the b eginning of Fiscal Year 2022 -23 and as of December 31, 2022, has collected $61,902. As part of the Water District lien process, property owners who receive the notice of lien are submitting payments on behalf of tenants in order to avoid a property lien and subsequently having the balance applied to the tax roll. Overall, Water sales have been collected at 55% of projection and are proceeding as anticipated.

Property Taxes – Property tax revenue is normally received from November through July each year . Through December 2022, the YTD of $331,548 is $29,411 or 10% more than the December 2021 YTD of $302,137. Property tax revenue is on track at Mid-Year with 62% of the budgeted amount received.

All Other Water Operating Reven ue – Through December 2022, total revenue collected is $819,786, which is 47% more than December 20 21 YTD of $ 557,314. This increase includes County Property Tax c ollections of delinquent water bills, along with service fees and charges . Revenue through December 2022 is 90% of the original budget and will be monitored moving forward as additional County payments are received.

Capital Facilities Surcharge – Revenue through December 2022 YTD is $ 868,245, which is 43% of the budgeted amount. The revenue received through the second quarter of FY 2022-23 primarily consists of payments related to the Eagle Hesperia 55 LP Affordable Housing expansion, fire service meters for Hesperia Commerce Center 1, and payments for single family residential water meters.

Reclaimed Water – In FY 2022-23, the District began budgeting for the use of reclaimed (recycled) water to be used at the Hesperia Golf Course and the Township area. As of December 31, 2022, the Water District has collected $181,466, which is 48% of the budgeted amount. Current Re claimed Water customers are the Golf Course, Hesperia Township (NW corner of 5
th & Smoke Tree) , and Hesperia Recreation and Parks District (HRPD). In the future, t he District anticipates that additional customers, such as Hesperia City Hall, Hesperia Civi c Park, Hesperia Police Station, The High Desert Government Center, and 8th Avenue Paseo will begin utilizing the reclaimed water system.

Sewer Billing – Revenue through December 2022 is $2.7 million, which is $ 0.2 million, or 9% more than the revenue received through the Second Quarter of FY 2021-22. This increase is associated with the final 6% sewer rate increase, which took effect in December 20 21, along with the addition of new sewer residential and commercial customers over the past yea r. Revenue received through December 2022 is at 51% of the budgeted amount and is trending as expected.

Sewer Connections – Revenue through t he second quarter of FY 2022 -23 is $387,264, or 70% of the budget. This revenue is driven by the completion of development projects in areas served by Sewer. This revenue will continue to be monitored in the second half of the fiscal year, as ongoing development projects progress.

2022-23 MID-YEAR BUDGET REVIEW REPORT
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DEPARTMENT FY 2022-23 BUDGET EXPENDITURE STATUS SUMMARY

Total City Expenditures – With the exception of the four (4) mid-year budget amendments totaling $141,714 , the overall assessment of the City’s expenditures through mid-year of the fiscal year is that expenditures are exp ected to stay within the FY 2022-23 Amended Budget.

TOTAL EXPENDITURES BY DEPARTMENT AND PROGRAMS

The City Council Department is 50% expended through December 2022. The City Council Division has expended 40%, which is due to budgeted items that are typically expended later du ring the fiscal year, such as annual memberships, conferences, seminars, community outreach programs, and events. The City Attorney Division is 58% expensed at the end of December 20 22, which is slightly above projections for the first half of the fiscal year. Staff will continue to monitor the program through the remainder of the fiscal year for any needed adjustments.

The City Manager Department expenditures are on track staying within the 2022- 23 Budget at 53% expended. At the July 19, 2022 City Council Meeting, an amendment was approved to transfer $12,000 in dedicated funds for food recovery services related to SB 1383 Local Assistance Grant Program from Fund 100 to Fund 262. Overall, both the City Manager and the Information Technology Divisions are proceeding as expected.

December Amended
2022-23 2022-23 2022 YTD Percent
Expenditure Summary Budget Amended Expenditures Expended City Council 798,121$ 798,121$ 400,193$ 50% City Manager 3,918,794 3,906,794 2,062,252 53% Management Services 6,554,383 6,554,383 3,637,232 55% Development Services - Community Development 2,182,132 2,237,565 1,145,551 51% Development Services - Code Compliance 4,783,822 4,777,822 2,127,008 45% Development Services - Public Works 6,303,925 6,323,187 2,681,904 42% Development Services - Water 21,876,021 21,876,021 8,060,335 37% Development Services - Sewer 6,068,241 6,068,241 2,566,114 42% Economic Development 527,784 527,784 276,182 52% Police 20,613,786 20,613,786 10,121,860 49% Sub-Total Operating 73,627,009 73,683,704 33,078,630 45% Economic Development 1,354,600 4,921,683 10,828 0% Streets Capital Improvement Project (CIP) Funds 47,348,744 47,573,744 6,728,379 14% Water Capital 3,825,000 3,825,000 9,031 0% Sewer Capital 3,845,000 3,845,000 68,673 2% Other City Related Funds 2,474,381 2,585,012 1,804,277 70% Fire District 1,130,815 1,130,815 1,093,205 97% Sub-Total Others 59,978,540 63,881,254 9,714,393 15% TOTAL CITY EXPENDITURES 133,605,549$ 137,564,958$ 42,793,024$ 31% December Amended
2022-23 2022-23 2022 YTD Percent
City Council Budget Amended Expenditures Expended
100 100 City Council 348,121$ 348,121$ 139,947$ 40% 100 102 City Attorney 450,000 450,000 260,246 58% Total City Council 798,121$ 798,121$ 400,193$ 50% December Amended
2022-23 2022-23 2022 YTD Percent
City Manager Budget Amended Expenditures Expended
100 200 City Manager 1,573,041$ 1,522,622$ 740,124$ 49% 100 215 Information Technology 2,345,753 2,384,172 1,322,128 55% Total City Manager 3,918,794$ 3,906,794$ 2,062,252$ 53% 2022-23 MID-YEAR BUDGET REVIEW REPORT
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TOTAL EXPENDITURES BY DEPARTMENT AND PROGRAMS (Continued)

The Management Services Department is currently at 55% expended. The Finance Division is 5 6% expended and proceeding as planned. Th e Human Resources Division is 7 3% expensed due to the lump sum payment to CalPERS for the unfunded accrued liability and annual insurance premiums that were paid at the beginning of the fiscal year.

Non-Departmental is 29% expended, with the majority of consultant and user fee study expenses occurring later in the fiscal year.

As a whole, the Economic Development Department is 5% expended through the Second Quarter. This department is made up of three (3) Divisions: Economic Development, Community Development Block Grant (CDBG), and Hesperia Housing Authority (HHA) funds.

The Economic Development Division performs the economic development functions for the City. Funded by the General Fund, Economic Development is 56% expended due in lar ge part to the Division’s lump sum portion of the annual unfunded accrued liability assessed by CalPERS.

Community Development Block Grant is 1% expended of the adopted budget. This fund administers the City’s CDBG program and related activities. FY 202 2-23 includes $1,354,600 in budgeted funds for two street improvement projects (C.O. 7158 FY 2019-20 CDBG Street Improvements and C.O. 7166 FY 2021-22 CDBG Street Improvements). Through December 31, 2022, $44,393 has been expended on these Capital Improvement Projects (CIP). During the November 15, 2022 City Council meeting, the FY 2021-22 CDBG Street Improvements project was amended by $3.5 million with the use of repurposing program income from the Neighborhood Stabilization Program (NSP) Fund, bringing the project total to $3.9 million. The majority of CIP expenditures will be expended during the third and fourth quarters.

The Hesperia Housing Authority (HHA) funds oversee the affordable housing within the City. Through the end of December, the HHA funds are proceeding as expected with 49% of the budget expended.

The Community Development Division is 51% expended overall through the Second Quarter. Planning is 46% expended and Building & Safety is 55% expended, both proceeding as expected. During the December 6, 2022 First Quarter Budget Review, the budget was amended by $50,000 for contract inspection services. One budget amendment for $50,000 has been requested for additional contract inspection services.

December Amended
2022-23 2022-23 2022 YTD Percent
Management Services Budget Amended Expenditures Expended 100 220 Finance 2,103,642$ 2,192,572$ 1,231,115$ 56% 100 225 Human Resources/ Risk Mgmt. 2,578,569 2,578,569 1,882,319 73% 100 229 Non-Departmental 1,872,172 1,783,242 523,798 29% Total Management Services 6,554,383$ 6,554,383$ 3,637,232$ 55% December Amended
2022-23 2022-23 2022 YTD Percent
Economic Development Budget Amended Expenditures Expended 100 Economic Development 371,111$ 371,111$ 206,697$ 56% 251 Community Development Block Grant (CDBG) 1,438,687 5,005,770 44,393 1% 370 Hesperia Housing Authority 72,586 72,586 35,920 49% Total Economic Development 1,882,384$ 5,449,467$ 287,010$ 5% December Amended
2022-23 2022-23 2022 Y TD Percent
D. S. - Community Development Budget Amended Expenditures Expended 100 3000 Planning 979,314$ 972,262$ 448,728$ 46% 100 3020 Building & Safety 1,202,818 1,265,303 696,823 55% Total D. S. - Community Development 2,182,132$ 2,237,565$ 1,145,551$ 51% 2022-23 MID-YEAR BUDGET REVIEW REPORT
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TOTAL EXPENDITURES BY DEPARTMENT AND PROGRAMS (Continued)

The Code Compliance Division expenditures are trending as expected at 45% through mid -year. As shown by the table above, Code Enforcement is 43% expended, while Animal Control is 46% expended.

As shown by the table above, th e overall Public Works Division is 42% expended through December 2022 and trending as expected . Engineering, Building Maintenance, and Street Maintenance are trending as expected . The Traffic program is 36% expended due in large part to invoices pending for street sweeping and striping services for the end of the calendar year 2022. Also, at the December 6, 2022 Council Meeting, the budget was amended to include $ 18,695 for the purchase and installation of a left turn traffic signal head at the intersection of Mariposa Road and Ranchero Road. One budget amendment request is included to repair the bridge on Caliente Road for $45,142.

Streets Capital Improvement Project (CIP) related expenditures is 1 4% expended through December 2022.

Expenditures will increase a s progress continues on projects such as the FY 202 1-22 Street Improvement Project , Ranchero Road Improvements and Aqueduct Crossing , and other streets related projects. As these projects move forward, the percentage of actual expenses to budget will increase. Please note that at the December 6, 2022 City Council meeting, the budget was amended to appropriate $ 225,000 in Local Transportation Funds to the FY 2019-20 CDBG Street Improvement Project C.O. 7158. A budget amendment to start design for C.O. 7901 Cataba Road Basin is also being requested.

A large portion of this classication is the budgeting of the principal and interest payments for the 2012 Water Rights Acquisition and 2013 Refunding Lease Revenue Bonds. Principal payments occur in October of each fiscal year, explaining the 7 0% expended percentage through December 2022. An amendment for $19,401 was approved at the July 19, 2022 City Council Meeting to allocate funds for the CalRecycle Waste Tire Amnesty Grant Program, which is a reimbursable grant. In June 2022, the City received $136,396 in grant funds to be used for the SB 1383 Local Assistance Grant Program. Due to the timing of the grant award and budget adoption, the total grant award was not included in the budget; therefore staff received approval from the City Council on July 19, 2022 to amend the budget by transferring $15,000 in dedicated funds for education and outreach and food recovery services from Fund 100 and Fund 256 to Fund 262, a newly created fund specifically for the state mandated program and for the appropriation of an additional $79,230 for record keeping and reporting software.

December Amended
2022-23 2022-23 2022 Y TD Percent
D. S. - Code Compliance Budget Amended Expenditures Expended 100 3010 Code Enforcement 2,467,764$ 2,469,764$ 1,070,908$ 43% 100 5000 Animal Control 2,316,058 2, 308,058 1,056,100 46% Total D. S. - Code Compliance 4,783,822$ 4,777,822$ 2,127,008$ 45% December Amended
2022-23 2022-23 2022 YTD Percent
D. S. - Public Works Budget Amended Expenditures Expended 100 3100 Engineering 967,725$ 968,417$ 421,007$ 43% 100 3110 Building Maintenance 1,358,564 1,358,439 637,147 47% 263 3150 Street Maintenance 2,098,161 2,085,161 927,077 44% 263 3170 Traffic 1,879,475 1,911,170 696,673 36% Total D.S. Public Works 6,303,925$ 6,323,187$ 2,681,904$ 42% December Amended
2022-23 2022-23 2022 Y TD Percent
Budget Amended Expenditures Expended
Streets Capital Improvement Project (CIP) Funds 47,348,744$ 47,573,744$ 6,728,379$ 14% December Amended
2022-23 2022-23 2022 Y TD Percent
Budget Amended Expenditures Expended
Other City Related Funds 2,474,381$ 2,585,012$ 1,804,277$ 70% 2022-23 MID-YEAR BUDGET REVIEW REPORT
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TOTAL EXPENDITURES BY DEPARTMENT AND PROGRAMS (Continued)

Overall, the Water Operating and Capital funds are 28% expended through December 31, 2022. The following narrative details the progression of each program.
• The primary responsibility of Source of Supply is to secure make- up water lease rights to remedy overproduction.

At Mid-Year, Source of Supply is only 5 % expended. Expenditures will increase significantly in the later part of the fiscal year due to the recording of leased water rights to offset the Alto and Centro Subarea replacement obligation. • Production, which is responsible for drawing the groundwater, has expended 43% of the budget by the end of the Second Quarter and is proceeding as expected.
• Distribution has utilized 50% of its allocated budget and is proceeding as planned. • Through December 31, 2022, Pipeline Maintenance has expended 43% of the budget and will increase as material (pipe) is purchased for the pipeline replacement program, as identified in the FY 2022-23 Budget. • Engineering is currently 34% expended, which is primarily due to the timing of invoices. Expenditures are expected to increase in the second part of the fiscal year, as invoices are received for contractual professional engineering services, and annual storm water program expenses.
• Customer Service is 44% expended and proceeding as planned , with the Advanced Metering Infrastructure (AMI) programs progress on schedule (66% of City on AMI).
• Utility Billing is 59 % expended and the increased percentage is due to document recording costs related to the implementation of the property lien process for delinquent accounts. • Administration is 50% expended and proceeding as planned. • Property Managem ent is 42 % e xpended at mid -year and will increase as maintenance projects are completed throughout the fiscal year.
• Reclaimed Water Operations expenditures will increase later in the second half of the fiscal year when Debt Service payment is due.
• Projects in Water and Sewer Capital have $7.7 million allocated in capital funds and are 2 % expended.

Expenditures will increase as projects such as the I -15 Corridor water and sewer, Recoating the exterior of water tank at Plant 23, Plant 5 & 18 Roof Replacement and Repair, FY 2019- 20 Water Service Line Relocation, Maple Avenue sewer line replacement, Township Wastewater Improvements, and Hesperia Wastewater Treatment Plant projects progress.

December Amended
2022-23 2022-23 2022 Y TD Percent
D.S. Water Operating & Capital Budget Amended Expenditures Expended 4010 Source of Supply 4,825,015$ 4,825,015$ 244,182$ 5% 4020 Production 4,596,134 4,524,782 1,965,812 43% 4030 Distribution 1,847,563 1,922,415 964,303 50% 4035 Pipeline Maintenance 1,000,419 969,545 413,363 43% 4040 Engineering 1,019,812 1,020,851 343,473 34% 4050 Customer Service 2,504,758 2,494,758 1,096,606 44% 4060 Utility Billing 1,302,662 1,302,662 769,887 59% 4070 Administration 4,064,384 4,068,114 2,041,667 50% 4080 Property Management 459,618 492,223 204,367 42% 720 Reclaimed Water Operations 255,656 255,656 16,675 7% Total Water Operations 21,876,021$ 21,876,021$ 8,060,335$ 37% 701 Water Capital 3,825,000 3,825,000 9,031 0% 711 Sewer Capital Projects 3,845,000 3,845,000 68,673 2% Total D.S. Water Operating & Capital 29,546,021$ 29,546,021$ 8,138,039$ 28% 2022-23 MID-YEAR BUDGET REVIEW REPORT
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TOTAL EXPENDITURES BY DEPARTMENT AND PROGRAMS (Continued)

The Sewer Operating Funds overall are 42% expended.

• Sewer Operations expenditures are 42 % expended, which is primarily due to receiving invoices for Victor Valley Wastewater Reclamation Authority (VVWRA) sewer treatment fees through November 2022. • Sewer Engineering is currently 25 % expended and is expected to increase in the second part of the fiscal year, as invoices are received for contractual professional engineering services, along with feasibility study expenses for the Silverwood Project.
• Sewer Utility Billing is 44% expended, which is expected for the first half of the fiscal year. • Sewer Administration is proceeding as planned with 50% expended and mainly due to the monthly general and administrative re-payment for the annual indirect cost allocation.

The Police Department budget is 4 9% expended, which is expected for the first half of the fiscal year with the Cou nty contract invoices paid through December 2022. In addition, there is a budget amendment included in the Mid -Year totaling $26,572 ( $7,969 for the City’s match contribution for the Homeland Security Grant and $18,603 for the use of the Edward Byrne Justice Assistance Grant JAG 17).

During FY 2018- 19, the City transferred all Hesperia Fire Protection District (Fire District) assets and liabilities to San Bernardino County Fire, with the exception of the former personnel obligations, for which the Fire District will continue to function with dedicated funding. The Fire District is 97 % expended, which is due to paying the annual contractual retirement obligations related to the former Fire District employees at the beginning of the fiscal year. The $37,610 in savings will be used to retain the funds in a trust for the payment of former Fire District personnel obligation.

December Amended
2022-23 2022-23 2022 YTD Percent
D. S. - Sewer Operating Budget Amended Expenditures Expended 4200 Operations 4,809,563$ 4,809,563$ 2,021,015$ 42% 4240 Engineering 267,166 267,166 66,084 25% 4260 Utility Billing 243,465 243,465 107,344 44% 4270 Administration 748,047 748,047 371,671 50% Total D.S. Sewer Operating 6,068,241$ 6,068,241$ 2,566,114$ 42% December Amended
2022-23 2022-23 2022 YTD Percent
Budget Amended Expenditures Expended
Police 20,613,786$ 20,613,786$ 10,121,860$ 49%
December Amended
2022-23 2022-23 2022 YTD Percent
Budget Amended Expenditures Expended
Fire District 1,130,815$ 1,130,815$ 1,093,205$ 97% 2022-23 MID-YEAR BUDGET REVIEW REPORT
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PROPOSED BUDGET AMENDMENTS – SUMMARY

The FY 2022-23 Mid-Year Budget Review includes four (4) budget amendments totaling $141,714. The following listing categorizes the proposed budget amendments, with the following pages providing detail on each request:

PROPOSED BUDGET AMENDMENTS – NARRATIVE

Police
 2017 JAG Grant for Operational Overtime and Training $18,603 (100-51-510-0000-8000) – New On August 15, 2017, the City Council authorized the submission of the 2017 Edward Byrne Justice Grant (JAG) Application to the U.S. Department of Justice (DOJ) . In June 2022 , the City received the grant funds and was notified of the award on July 7, 2022 . The 2017 JAG Grant is to be used for operational overtime, specialized training, and training conferences through September 30, 2022 . Due to the timing of the grant award and budget adoption, the grant award was not included in the budget; therefore staff is requesting an amendment in the amount of $18,603.
 HSG Grant Match Requirement Mobile License Plate Reader 4 -Camera System purchase $7,969 ( 312) – Unanticipated
The FY 2022-23 Budget included $24,875 for the Homeland Security Grant (HSG) funds. The Homeland Security Grant is used to enhance public safety and the grant requires that the purchase be made first and then the required documentation submitted for reimbursement. Additional ly, as part of the grant regulations, the City is required to match a percentage of the awarded funds. Staff is requesting approval to use DIF funds in the amount of $7,969 for the City’s grant match requirement for the purchase of one Mobile License Plate Reader (LPR) camera system unit.

Development Services
 Community Development Building & Safety – Contract Inspection Services $50,000 (100- 29-300-3020) – Unanticipated
The Fiscal Year 2022- 23 Operating Budget included $50,000 for contract inspection services and during the First Quarter Budger Review an amendment of $50,000 was approved. Due to the high demand of inspections, additional contract inspection services are being requested to ensure that inspections continue to meet the City’s timely standard turnaround.

 Public Works -Street Maintenance/Traffic – Bridge Rail Repair -Caliente Road $45,142 (263 -29-310-3170) – Unanticipated
During August 2022, a San Bernardino County ambulance crashed into a section of the bridge on Caliente Road causing damage to the interlocking rails. Aside from the damage to the rails, there was no other damage to the bridge. The County will reimburse the City the cost of repairs upon completion.

General Other
FY 2022-23 Mid-Year Budget Requests Fund Funds Totals

1. Justice Assistance Grant (JAG) 2017/Homeland Security $ 18,603 $ 7,969 26,572$ Grant (HSG)

2. Contract Inspection Services 50,000 0 50,000

3. Bridge Rail Repair-Caliente Road 0 45,142 45,142

4. C.O. 7901 Cataba Road Basin 0 20,000 20,000 Total Mid-Year Amendment Requests $ 68,603 $ 73,111 141,714$ 2022-23 MID-YEAR BUDGET REVIEW REPORT
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PROPOSED BUDGET AMENDMENTS – Narrative (Continued)

Development Services (Continued)
 Development Impact Fees (DIF) 2018-Drainage Facilities – C.O. 7901 Cataba Road Basin $20,000 (307-7901) – New
During the 2021 calendar year, the City was notified by the State of California Department of Water Resources that a retention basin at Cataba Road would be required. This retention basin will regulate the flow of stormwater and allow the sediment to settle into the basin rather than overflowing into the aqueduct overchute. Since the notification, projects along the Interstate 15 (I -15) freeway such as I -15 Industrial Project and Corridor Improvements have progressed and the design and engineering services for the basin is necessary . An amendment is being requested to start design and will be included in the FY 2023-24 Capital Improvement Program (CIP) Budget.

General Other
Requested: Fund Funds Totals
General Fund
Justice Assistance Grant (JAG) (Police) 18,603$ 0$ 18,603$ Contract Inspection Services (Community Development-Building & Safety) 50,000 0 50,000 Total General Fund 68,603$ 0$ 68,603$ Development Services
Bridge Repair-Caliente Rd (Public Works-Street Maintenance/Traffic) $ 0 45,142$ 45,142$ Total Development Services 0$ 45,142$ 45,142$ Development Impact Fees (DIF)
C.O. 7901 Cataba Road Basin (DIF 2018-Drainage Facilities) 0$ 20,000$ 20,000$ Homeland Security Grant (DIF 2018-Police Facilities) 0 7,969 7,969 Total Development Impact Fee (DIF) 0$ 27,969$ 27,969$ Total City Expenditures 68,603$ 73,111$ 141,714$ Source of Funds:

General Fund - 100 68,603$
Street Maintenance - 263 45,142
DIF 2018 - 307 20,000
DIF 2018 - 312 7,969
Total Source of Funds 141,714$
2022-23 MID-YEAR BUDGET REVIEW REPORT
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2022-23 Mid-Year Budget Salaries and Positions

The following position title and sal ary changes are proposed for more effective management City operations. The increased cost associated with the proposed restructuring is approximately $ 98,000. If approved by the City Council, these changes will also be included in the 202 3-24 Proposed Budget. The proposed changes are summarized as follows:
• Director of Development Services (Non -Represented) – Add one new Director of Development Services position, which will be an Unclassified/At-Will position, with a Salary Range of 52. • Principal Planner Part -Time Retired Annuitant (Part -time) – Add one new position classification title of Principal Planner Part-Time Retired Annuitant, which will be a Non-Represented position at a Salary Range of 44. • Assistant to the City Manager ( Non-Represented) – Convert one vacant Community Relations Specialist position, which is a Professional/Supervisory classification at a salary r ange of 34 to an Assistant to the City Manager position, which will be a Management classification at a Range 43. • Public Relations Analyst (Non -Represented) – Convert one vacant Community Relations Specialist position, which is a Professional/Supervisory classification at a salary range of 34 to a new position of Public Relations Analyst , which will be a Professional/Supervisory classification at a Range 39. • Public Works Inspection Supervisor (Non-Represented) – Retitle the vacant Senior Management Analyst position, which is a Management classification at a salary range of 40 to a new title of Public Works Inspection Supervisor, which will be a Professional/Supervisory classification at a Range 39. • Public Works Inspector ( Non-Represented) – Retitle the vacant Environmental Compliance Inspector position, which will continue to be a General Classification, with the same salary range of 35 to a Public Works Inspector position.
• Senior Project Manager (Non-Represented) – Retitle one Senior Management Analyst position, which is a Management classification at a salary range of 40 to a new title of Senior Project Manager , which will be a Management classification at a Range 43.
• Finance Manager (Non -Represented) – Retitle one Senior Accountant position, which is a Management classification at a salary range of 38 to a new title of Finance Manager, which will be a Management classification at a Range 40.
• Accounting Technician (Non-Represented) – Retitle one vacant Office Assistant position, which is a General classification at a salary range of 26 to an Accounting Technician position, which will co ntinue to be a General classification at a Range 31.
• Animal Control Officer (Represented) – Eliminate one Senior Animal Control Officer position at a range 14, and add one Animal Control Officer position, which is a Represented position, at a Range 12. • Custodian (Part -time) – Eliminate one Facilities Electrician (Part -time) position, which is a N on-Represented position at a range of 35, and add one Custodian (Part-time) position, which will be a Non-Represented position at a Range 8.

2022-23 MID-YEAR BUDGET REVIEW REPORT
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2023-24 Tentative Budget Calendar

While the Mid-Year report is a gauge of the current year’s activity, it does serve as the official start for planning the next year’s budget. Below is the tentative calendar for the FY 2023-24 Budget.

OpenGov Training – FY 2023-24 Proposed Budget and FY 2022-23 Revised Budget February 7-24, 2023 2023-24 Budget Instructions (Intranet) February 24, 2023 Council FY 2022-23 Mid-Year Budget Review March 7, 2023 2023-24 Draft Division and/or Program Narratives March 10, 2023 FY 2022-23 Revised Revenue and 2023-24 Proposed Budget Revenue Estimates to Departments for Review (07/01/2022 thru 02/29/2023)
March 16, 2023 (Review)
March 22, 2023 (Due)
FY 2022-23 Revised Expenditure Estimates, 2023-24 Current Level Proposed Budget Expenditures
March 29, 2023
2023-24 Budget Increments-“Requested Expenditures Above Current Level” April 4, 2023 Budget Review with Departments/Divisions (Finance) Mid-April 2023-24 Final Proposed Budget Division and/or Program Narratives completed End of April Workshop #1 – Current Level Budget to Council (Operating) May 2, 2023 Capital Improvement Program (CIP) Due from Department to Finance May 4, 2023 Workshop #2 – Above Current Levels to Council May 16, 2023 2023-24 Proposed Budget completed May 26, 2023
Council Budget Workshop June 6, 2023
Council Adopts Operating Budget June 6, 2023
Council Adopts CIP Budget June 20, 2023

With this calendar, there are two planned budget workshops prior to requesting the City Council to adop t the operating budget on June 6, 2023 and the CIP Budget on June 20, 2023. • Budget Workshop #1 will highlight the current-level operating budget. • Budget Workshop #2 will highlight the use of reserves for major purchases, as well as the capital improvement program budget.