FY 2022-23 Financial Report
For the Six Months Ending December 31, 2022
February 21, 2023
OVERVIEW
This report summarizes the City’s financial position for the fiscal year through the second quarter ending December 31, 2022 for the General Fund, Street Fund, and Enterprise Fund. The purpose of this report is to provide City Council, City Management, and the Marysville community an update on the City’s fiscal status based on the most recent financial information available. This report is prepared on a cash basis; therefore, revenue is recognized at the same time revenues are received and expenditures are recognized at the time the payments are made.
GENERAL FUND
The General Fund is the primary operating fund for the City. With 50% of the year complete, General Fund revenues are at 42.3% of budgeted amounts and expenditures are at 37.9%. The FY 2022-23 adopted budget for revenue and operating expenditures is $16.47 million and $17.01 million respectively. The revenue is broken down by major “sources” and expenditures are shown by department.
Revenues
Revenues are below the 50 percent mark at this point in the fiscal year. This is expected for the second quarter and consistent with mid-year results of prior years. This can be attributed to a two-month lag in sales tax has and other large revenue sources such as property taxes and certain franchise tax revenues that are not received until later in the fiscal year. In addition, a number of revenue items received in July and August are related to prior year activity and are therefore, consistent with prior years, accrued back to the prior fiscal year.
Property tax, sales tax, franchise fees, and cannabis taxes are the City’s major tax revenues. They account for approximately 67.7% of the total General Fund revenues.
Source Budget YTD Actual % Received
Property Taxes $ 2,584,480 $ 1,506,016 58.3%
Sales and Use Taxes 6,593,057 2,046,172 31.0%
Cannabis Tax 900,000 316,679 35.2%
Other Taxes 452,557 110,668 24.5%
Franchises 619,500 119,348 19.3%
Licenses and Permits 1,050,710 588,253 56.0%
Fines and Forfeitures 33,200 41,621 125.4%
Use of Money and Property 189,256 131,416 69.4%
Intergovernmental Revenues 1,608,475 135,945 8.5%
Service Charges 356,600 154,935 43.4%
Other Revenues 2,083,810 1,814,220 87.1%
Total $ 16,471,645 $ 6,965,273 42.3%
Property Taxes. The first apportionment of FY 2022-23 property taxes and property taxes in lieu of vehicle license fee both occurred in December 2022. Property Taxes are normally received in two primary installments in December and May each year. Based on total assessed valuations as of January 1, Finance Staff expects that by the end of fiscal year 2022-23, total revenues for property taxes will trend slightly higher than original budgeted revenues. Sales and Use Tax. The City receives two advance payments and a true-up payment for each quarter of sales tax revenue. However, there is a lag time from the end of the quarter revenues and when revenue is received. For example, the advance payments for the 4th quarter (October thru December) of 2022 are received by the City in December and January with the true-up payment in mid-February. Therefore, the year-to-date amount received only covers cash receipts for the first four months of the fiscal year.
Although the larger economy continues to be impacted by the ongoing pandemic, the City has continued to experience strong performance from multiple industries including food and drug stores, fuel and service stations, and restaurants. Further contributing to the receipts are paid online sales that year over year have continued to have steady growth in the countywide use tax pool allocations to the City. There is also continued tax revenue from out-of-state online retailers due to the enactment of AB147 which allows for collection of sales taxes even if the retailer does not have a physical presence in the State.
Franchise Fees. The City receives franchise fees from AT&T, Comcast, PG&E, and Recology; the fees are based on a percentage of the franchisee’s revenue. The receipts for the second quarter are not received until January and PG&E pays theirs annually in April. Therefore, we would not expect franchise fees to be near the 50% mark during the first two quarters of the fiscal year. Cannabis Tax (Measure F). The City has two cannabis dispensaries that allow for both medical and adult use. As we have continued to monitor this somewhat unpredictable and volatile industry, we have seen revenues leveling off and even beginning to decrease slightly over the past few years.
This will be reflected in our mid-year review and future financial projections. Intergovernmental Revenues. Most of the revenues under this source are from grants that are on a cost reimbursement basis. Revenues are recorded once the grantor agency has been billed and the revenues are received. Depending on the grant, it may take between one to four months for the reimbursement to be received.
Miscellaneous Revenue. The City received our second and final installment of $1,539,239.50 in Coronavirus State and Local Fiscal Recovery Funds as part of the American Rescue Plan in October of 2022 to support our response and recovery from the COVID-19 public health emergency. These resources were provided to replace lost public sector revenue, public health and economic impacts, premium pay, and water, sewer, and broadband infrastructure. The total amount received was $3,078,479.
Expenditures
The majority of all operating costs are within budgetary expectations. The information indicates that some departments have exceeded the 50% of amount budgeted half-way through the year, but this is primarily due to one-time costs that were paid for in full at the beginning of each fiscal year and will be summarized and explained in more detail below.
Human Resources. The largest expense is for current unfunded liability payments due and our Pension Obligation Bond for past Classic liability which have been paid in full for the current fiscal year and account for 71% of the overall budget. The second largest expense is Workers Compensation which the first two of four installments have been paid. With the POB payment being made in accordance with the amortization schedule, the overall budget remains on track. General Services. Roughly 77% of this budget consists of interfund transfers to the Capital Fund for the General Plan, Gavin Park, digital encryption, engineering of 22nd Street, and deferred maintenance of City Hall. As expenses are incurred, these transfers will be made to the proper department. Any funds not used in this current fiscal year will be budgeted in future fiscal years as need to complete the projects. The remaining items are on track within the approved budget. General Debt. All payments have been made in accordance with the amortization schedules as committed when the debt was issued.
Police. Expenditures to-date are closely tracking budget. Personnel costs, which comprise approximately 80% of the department’s budget are slightly under budget. Salaries are slightly under due to vacancies but somewhat offset due to increases in overtime. Services and supplies expenses are consistent with that which was budgeted.
Public Safety Dispatch. Within this budget is an intrafund transfer from the Police and Fire Departments for a total of $557,775 to cover the internal cost of dispatching functions. This transfer has no impact on the total expenses in the General Fund and is transferred at the sixExpenitures Budget YTD Actual % Expended City Council $ 69,946 $ 14,510 20.7%
City Manager 341,862 145,164 42.5%
City Attorney 227,000 85,167 37.5%
Human Resources 1,528,247 559,263 36.6%
Finance 353,428 151,632 42.9%
Information Technology 409,251 204,471 50.0%
General Services 2,848,452 621,148 21.8%
Grants 725,778 98,018 13.5%
General Debt 910,456 582,878 64.0%
Community Sponsorship 39,750 22,372 56.3%
Homeless Services 16,348 1,814 11.1%
Police 3,644,538 1,604,569 44.0%
Public Safety Dispatch 34,213 (83,203) -243.2%
Animal Services 112,500 35,774 31.8%
Fire 2,541,269 1,109,390 43.7%
Economic Sustainability 318,003 235,363 74.0%
Planning & Zoning 1,011,450 194,859 19.3%
Building 151,537 88,010 58.1%
Public Works Admin/Engineering 199,604 81,242 40.7%
Facilities & Parks 1,004,448 475,730 47.4%
Fleet Maintenance 233,452 67,156 28.8%
Street Maintenance (MOE) 289,769 144,885 50.0%
Total $ 17,011,301 $ 6,440,212 37.9%
month mark and the end of the fiscal year there forth showing a negative expended amount through six months. The remaining budgeted expenses are in line with this review. Fire. There has been a small increase in strike team overtime costs. This expense varies from year to year depending on the severity of the fire season across the state. The Fire Department’s strike team budget will be increased, pending Council approval, during the mid-year budget review. This increase would be offset by additional revenue received. The remaining budgeted expenses are within original projections.
Economic Stability. The majority of this budget contains marketing grants for small businesses and wayfinding signs through a grant from SACOG. With both of these projects being funding during the first half of this budget, the remaining expenses continue to remain on track. Planning. The largest proportion of this budget is the cost of specific and zoning plan which will continue to Fiscal Year 2023-24. It is expected that the remaining items will meet budget expectations at the end of the year.
Building. The Building and Development Engineering budget is expected to be slightly higher than budgeted. The department continues to utilize outside services for building inspection and plan check, however much of the cost is offset by the internal building inspector vacancy held open.
The City continues to examine the possibility of using the County for permitting and inspection services and intends to bring a proposal to Council this fiscal year. Fleet Maintenance. Overall expenses remain on track within the approved budget. The one exception is the funds set aside for the concrete pad to be utilized when larger pieces of City equipment are to be repaired such as a fire engine. With the cost of concrete increasing, additional funding is being requested at mid-year to complete the project.
GAS TAX FUND
The following summarizes the year-to-date revenue and expenditures for the Gas Tax Fund, also known as the Street Fund.
The Gas Tax Fund is a special fund that is required by the State for expenditure of gas tax revenues for streets and road purposes in compliance with the Streets and Highways Code. The City is to be accountable for the efficient and transparent use of the apportioned funds and is subject to an annual audit by the State Controller’s Office.
Operating revenues are below the 50 percent mark at this point in the fiscal year. This is common and consistent with previous years as Road Maintenance and Rehabilitation Program (RMRA) have a twomonth timing lag. However, even with fuel consumption varying, scheduled rate increases stipulated in SB1 are estimated to keep the current projections on track.
Budget YTD Actual %
Highway User Tax (HUTA) $ 356,139 $ 148,385 41.7%
RMRA (SB 1) 278,118 97,132 34.9%
Other Revenues 45,865 8,613 18.8%
Total Revenues $ 680,122 $ 254,130 37.4%
Salaries and Benefits $ 388,890 $ 143,697 37.0%
Services and Supplies 291,085 101,318 34.8%
Capital Outlay 50,000 - 0.0%
Net Transfers 44,337 (102,102) -230.3%
Total Expenses $ 774,312 $ 142,913 18.5%
Current operating expenses are overall on track for a six month period. There is a small savings in salaries and benefits due to past vacancies and service and supplies. With spring and the improvement with weather, these funds will be needed for annual and possible unexpected maintenance within the City streets. Any funds not expended will stay within the fund and roll into the next fiscal year for future use.
ENTERPRISE FUND
The following summarizes the year-to-date revenue and expenditures for the Enterprise Fund, also known as the Wastewater Fund.
The Enterprise Fund is used to account for all revenues and expenses for operation, maintenance, and capital improvement funding of the Marysville wastewater facilities and collection system. Costs are financed or recovered primarily through user charges.
Operating revenues collected through sewer service fees are at 53.4% of the amount budgeted and are on track to slightly exceed budget projections at the end of the fiscal year. Fees collected through assessments are received in December (sometimes January) and May each year with property tax receipt collections through Yuba County. About half of the first payment received in July is accrued back to June when the revenue was earned. Achieving targeted revenues is a fiscal priority as the City’s bond covenants require the City to raise rates in order to continue meeting a 1.2% debt coverage ratio for as long as bond debt is outstanding.
Operating expenses are at 45.6% at the mid-point of the fiscal year. With the principal payment for the 2021 Sewer Bonds being paid in the first half of the year as amortized, this category remains in line.
The first two quarterly payments due to Linda County Water District (LCWD) for our connection agreement will be paid in February, as LCWD was completing their audit prior to finalize the billing to the City. This delay is the reason services and supplies are well under budget. Staff expects the billings to catch up by the end of the fiscal year, and when all four payments have been posted the actual expenses will approximate budgeted amounts.
BUDGET AMENDMENTS – ALL FUNDS
On May 3, 2022, the City Council approved a supplemental appropriation of $27,000 ($18,000 for FY22- 23) in the General Fund for recruitment of Fire Chief. (5-0 vote) On July 5, 2022, the City Council approved a supplemental appropriation of $16,000 in the General Fund for additional music entertainment for the 2022 Peach Festival. (4-0 vote) On August 16, 2022, the City Council approved a supplemental appropriation of $148,344 in the General Fund to the salary and benefits accounts associated with the Marysville Firefighters’ IAFF. (4-0 vote)
Budget YTD Actual %
Sewer Service Fees $ 3,890,000 $ 2,044,474 52.6%
Other Revenues 11,500 40,119 348.9%
Total Revenues $ 3,901,500 $ 2,084,593 53.4%
Salaries and Benefits $ 431,687 $ 186,677 43.2%
Services and Supplies 1,749,636 335,360 19.2%
Debt, Cont. & Other Charges 989,138 770,032 77.8%
Capital Outlay 170,000 169,975 0.0%
Net Transfers (130,805) - 0.0%
Total Expenses $ 3,209,656 $ 1,462,044 45.6%
On July 19, 2022, the City Council approved a supplemental appropriation of $389,431 ($314,683 in General Funds) in the appropriate funds to the salary and benefits accounts associated with the Marysville MPOA – both sworn and non-sworn, and Teamsters. (5-0 vote) On August 16, 2022, the City Council approved a supplemental appropriation of $63,499 in the appropriate funds to the salary and benefits accounts associated with the Marysville MPOA – both sworn and non-sworn, Teamsters, and Mid-Management and Executive . (4-0 vote) On October 18, 2022, the City Council approved a supplemental appropriation of $19,162.82 in the General Fund to replace portable radios and waterproof lapel microphones through a Volunteer Fire Capacity Grant. (5-0 vote)
On November 15, 2022, the City Council approved a supplemental appropriation of $10,000 in the General Fund to Yuba-Sutter Economic Development Corporation to administer the Business Façade/Marketing Grant Program. (4-0 vote)
On December 6, 2022, the City Council approved a supplemental appropriation of $5,000 in the General Fund to sponsor a bronze statue of Cotton Rosser in recognition of his contributions to the Marysville Community. (5-0 vote)
On December 6, 2022, the City Council approved a supplemental appropriation of $60,000 in the General Fund for a continued legal retainer with Ellen Garber of Shute, Mihaly & Weinberger LLP for legal services to assist the City with existing litigation with the California Department of Transportation. (5-0 vote)