City of Pacifica
Fiscal Year 2023-2024
First Quarter Financial Report
1 OVERVIEW
This First Quarterly Financial Report is an analysis of the unaudited financial status of the City’s General Fund from July 2023 through September 2023. The City of Pacifica has completed the First Quarter of the Fiscal Year 2023-24. The First Quarterly Financial Report will summarize the City’s General Fund and is not meant to be inclusive of all finance and accounting transactions. This report intends to provide the Council and the public with a broad overview of the City’s fiscal condition, as the General Fund is the primary operating fund of the City and is used to account for most operational activities. Information presented in this report is unaudited, and additional adjustments may occur during the year-end process.
GENERAL FUND
General Fund Financial Condition: With one quarter of the year complete, General Fund Expenditures are at 19% of and revenues are at 9% of the FY2023-24 Budget projections. Revenues are typically less than 25% during the first quarter due to the timing of certain key revenues such as property tax, business license taxes, franchise fees, and sales tax. There is a significant drop in revenues from 10.7 million in Q1 of the prior year to $4.1 million in Q1 of the current fiscal year due to one-time revenues of $4.6 in ARPA grant funds and a $2 million Vehicle License Fee backfill revenues received in the first quarter of last year.
Both expenditures and revenues are explained in more detail below:
The General Fund Balance as of September 30, 2023, is estimated to be $17,269,859, based on the unaudited fund balance as of the end of the fiscal year 2022-23, and factoring in year-to-date revenue and expenditure of the first quarter.
Expenditures.
The following chart summarizes year‐to‐date combined expenditures by department as of the First Quarter:
General Fund Expenditures
by Department
Qtr 1
FY2022-23
Qtr 1
FY2023-24
FY20223-24
Budget
% Change
Q1 FY23 vs
Q1 FY24
Qtr 1
% Budget
Expended
General Government 1,642,356 1,143,772 7,155,341 -30% 16% Police Department 2,892,767 2,614,634 12,003,588 -10% 22% Fire Department 2,244,223 1,904,475 7,687,367 -15% 25%
Planning & Building 385,646 402,478 5,831,717 4% 7%
Public Works 1,102,652 956,307 4,901,022 -13% 20%
PB&R 1,377,327 1,260,161 5,862,626 -9% 21%
Non-Departmental 93,567 1,115,617 5,165,600 1092% 22%
Total General Fund
Expenditures 9,738,538 9,397,443 48,607,261 -4% 19%
City of Pacifica
Fiscal Year 2023-2024
First Quarter Financial Report
2 Departmental operating expenditures in General government, Police, Fire, Planning, Public Works and PBR are on target at the end of the First Quarter. The expenditures are slightly lower than 25% of the budget because some contractual payments were accrued back to the previous fiscal year for some July and August payments to match with the services rendering time. The Planning Department’s expenditures are low due to the delay in processing and timing of reconciliation of the cost reimbursable expenses and accounting entries, which is consistent with the last year’s actuals at the end of the first quarter. The Non-departmental expenditures are on track with the FY2023-24 budget, yet displaying a significant variance between Q1 of FY202-23 and Q1 of FY2023-24 due to recording of Q1 transfers in the first quarter of the year, which was not done on a quarterly basis in the prior year.
Revenues: The following table is a summary of revenues as of the end of the First Quarter:
Property Tax: Property Tax is the City’s largest revenue source. The first installment of the Property Tax payment will be remitted to the City by the County of San Mateo in December 2023; The major difference between Q1 in FY2022- 23 and Q1 in FY2023-24 primarily results from less property transfer taxes received this quarter due to fewer houses sold in FY 2023-24 compared to the prior year period.
Sales Tax: As of September 30, 2023, the City has received 7% of its budgeted Sales Tax revenues. There is a two-month lag on the receipt of sales tax revenues,so the amount shown only represents one month of allocation and is consistent with the prior year. The quarter-to-quarter increase in the Sales Tax revenues reflects the receipt of the ½ cent transaction and use tax (TUT) revenues that went into effect in April, 2023.
Transient Occupancy Taxes (TOT): TOT revenues are remitted approximately 30 days after the end of each month, and revenues are not accrued at quarter‐end (as they are at the end of the fiscal year). The first quarter reflects the TOT receipts for the months of July and August. The revenues are on target and slightly exceed the budget as 26% of the budgeted revenues is received in the first Quarter representing only two months of remittances. This healthy trend General Fund Revenues by Type
Qtr 1
FY2022-23
Qtr 1
FY2023-24
FY20223-24
Budget
% Change
Q1 FY23 vs
Q1 FY24
Qtr 1
% Budget
Received
Property tax 166,730 65,639 16,411,900 -61% 0%
Sales Taxes 306,157 410,926 6,201,000 34% 7%
Transient Occupancy Tax 893,291 702,574 2,669,500 -21% 26% Franchise Tax 121,655 103,701 1,236,200 -15% 8%
Business License Tax 16,199 19,693 500,000 22% 4%
Utility Users Tax 372,036 254,494 2,700,000 -32% 9%
Vehicle License Fee 2,058,371 - 5,539,200 -100% 0%
Cannabis Tax 130,522 107,875 950,000 -17% 11%
ERAF 88,000 - 105,000 -100% 0%
Grants 4,678,448 - 2,209,700 -100% 0%
Investment Earning 35,794 239,140 500,000 568% 48%
Department Programs 1,852,034 2,257,443 9,918,600 22% 23% Total General Fund
Revenues 10,719,237 4,161,485 48,941,100 -61% 9%
City of Pacifica
Fiscal Year 2023-2024
First Quarter Financial Report
3 reflects the recovery of the hospitality industry, as well as recent efforts by Hdl, the City’s tax administrator in identifying short-term rental properties and bringing them to compliance. It is important to note the seasonality of the TOT revenues as first quarter remittances are typically higher due to increased activity during the peak vacation season.
Others Taxes: These include franchise tax, business license, utility users tax, Vehicle License Fees operations taxes and cannabis tax. Payments for Franchise tax and utility users taxes are remitted 30 days after the end of the month.
Therefore, the remittances in these categories represent only 15% of the budget as of September 30, 2023. Business license tax renewal takes place on November 1 annually, as such the majority of these revenues will be recorded in the second quarter. Vehicle License Fee (VLF) remittances are delayed due to the state budget’s processing time expected in December and April. VLF draws from two funding sources: ERAF (Educational Revenue Augmentation Fund) allocations, which non-basic aid school districts are entitled to, and, if necessary, property tax revenues of nonbasic aid school districts. Any funds used by non-basic aid school districts for VLF purposes are reimbursed by the State.
Last year’s large allocation in Q1 represents the prior years’ backfill payment by the state. The this year’s State budget did not include the remaining backfill obligations to cities. Staff will continue monitoring this revenue category and will update the Council at mid-year budget review on any new developments with the State.
Cannabis Tax: shows a slight decline in comparison to the prior year, primarily due to timing issues. Most September payments were not recorded in this quarter and some cannabis providers were late in submitting their August tax remittances. Despite these delays, the cannabis industry seems to be performing in line with the budget projections at the first quarter close.
Excess ERAF: (Excess Educational Revenue Augmentation Fund). Only $105,000 of the ERAF budget is recorded in the FY 2023-24 General Fund, representing the funding for the community grant program to local non-profit organizations.
The majority of these revenues are recorded in the Disaster Accounting and Housing funds, as previously directed by the Council. These revenues are anticipated in the second and forth quarters of the year.
Grants: Last Year’s significant allocation represents the receipt of one-time $4.6 million ARPA grant from the State.
Reimbursement from State for PBR Child Care programs, recorded in this category, are expected in Q2 and Q3 the fiscal year.
Investment Earnings: This category shows a significant increase attributed to the renegotiation of a primary bank contract, which went into effect last fiscal year and resulted in a a better rate of return, in addition to an overall improved performance in the interest rate market.
Department/Programs: This category includes building permits, engineering, and planning fees, and charges related to Parks, Beaches & Recreation programs, and rentals. As of September 30, 2023, the City received 23% of the Budget, which is consistent performance at the end of the first quarter. Overall, permits and planning fees tend to fluctuate based on the timing of projects.
SUMMARY
Overall, staff is pleased to report that the FY2023-24 Budget is on track at the end of the first quarter, with revenues and expenditures performing as expected. The City’s operating expenditures are at 19% of the Budget at the end of the first quarter. Due to the nature and timing of tax collection receipts, it is difficult to fully analyze revenue based on projections after the first quarter alone. It is also important to understand that these are only preliminary numbers as additional booking entries may occur throughout the year and especially during the fiscal year-end that may modify some figures presented in this report.
City of Pacifica
Fiscal Year 2023-2024
First Quarter Financial Report
4 Future reports for this fiscal year, including the mid‐year budget review, will provide a better understanding of the City’s revenue and expenditure transactions and their fiscal impact on the City. Staff will continue monitoring the City’s economic conditions and report to City Council any new information as it becomes available.