City of Pacifica
Fiscal Year 2023‐24
SecondQuarter Financial Report
1 OVERVIEW
This Second Quarterly Financial Report is an analysis of the unaudited financial status of the City’s General Fund from July 2023 through December 2023. The City of Pacifica has completed the Second Quarter of the Fiscal Year 2023‐24.
The Second 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 City’s primary operating fund 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 half the year complete, General Fund revenues are at 43% of the FY2023-24 Budget and expenditures are at 42% of projections. Budgeted operating and capital transfers have been recorded in FY2024 on a quarterly basis, such that transfer-ins are included in the department programs, and transfer-outs are included in the non-department expenditures. Revenues exceeded expenditures by $417,236, which is typical due to the timing of certain revenues such as property tax and sales tax. This quarter’s revenue showed a 20% decrease compared to the prior year’s second-quarter revenues, which included a second allocation of the one-time ARPA stimulus funds. The expenditures represent 42% of the budget and remain consistent with the same quarter last year.
The table below demonstrates both General fund revenues and expenditures in more detail:
The General Fund Balance as of December 31, 2023, was $20,964,706, based on the audited General Fund balance of $20,547,470 as of the end of FY 2022-23 and factoring in year-to-date net revenues over expenditures of $417,236 as of the end of the second quarter.
Expenditures:
Departmental operating expenditures are on target at the end of the Second Quarter. The Police and Fire Departments, as well as non-departmental expenditures, are around 50% of the budget, and Public Works and Parks, Beaches & Recreation departments are at 42% and 43%, respectively. Staff will conduct additional analysis to determine if a midyear adjustment is needed for these departments. The Planning Department’s actual expenditures are consistent quarter to quarter but are low compared to the FY 2023-24 budget due to the delay in processing and reconciling the cost-reimbursable expenses, additional entries will occur in quarters 3 and 4. Noticeably, non-departmental expenditures show higher activity in FY2023-24 compared to last year due to the finance department changing its accounting methodology to record transfers on a quarterly basis compared to booking them at the year's end in prior years.
General Fund
Qtr 2
FY2022-23
Qtr 2
FY2023-24
FY2023-24
Budget
% Change
Q2 FY23 vs
Q2 FY24
Qtr 2
% Budget
Revenues $ 26,302,866 $ 21,044,589 $ 48,941,100 -20% 43% Expenditures 20,781,677 20,627,353 48,607,261 -1% 42%
Net Rev over Exp $ 5,521,190 $ 417,236 $ 333,839
City of Pacifica
Fiscal Year 2023‐24
SecondQuarter Financial Report
2 The following chart summarizes year‐to‐date combined expenditures by department as of the Second Quarter:
Revenues:
The following is a summary of revenues as of the end of the 2 nd Quarter:
Property Tax: Property Tax is the City’s largest revenue source. The first installment of the Property Tax payment was remitted to the City by the County of San Mateo on December 14, 2023. As of December 31, 2023, the City received roughly 51% of the Property Tax revenue, which is slightly above what was expected. Secured property tax is the largest property tax item budgeted at $15.2 million, assuming an increase of 6.3% from the prior year of $14.3 million.
The first property tax installment of $8,365,171 was $323,984 or 4% more than in the second quarter of last year.
Sales Tax: As of December 31, 2023, the City has received 32% of its budgeted Sales Tax revenues. There is a twoGeneral Fund Expenditures by Department
Qtr 2
FY2022-23
Qtr 2
FY2023-24
FY2023-24
Budget
% Change
Q2 FY23 vs
Q2 FY24
Qtr 2
% Budget
General Government $ 3,459,112 $ 2,659,155 $ 7,155,341 -23% 37% Police Department 5,823,824 5,743,606 12,003,588 -1% 48% Fire Department 4,340,735 3,831,807 7,687,367 -12% 50%
Planning & Building 1,298,879 1,411,777 5,831,717 9% 24% Public Works 2,416,058 2,081,048 4,901,022 -14% 42%
PB&R 2,842,143 2,541,646 5,862,626 -11% 43%
Non-Departmental 600,925 2,358,314 5,165,600 292% 46%
Total General Fund
Expenditures $ 20,781,677 $ 20,627,353 $ 48,607,261 -1% 42% General Fund
Revenues by Type
Qtr 2
FY2022-23
Qtr 2
FY2023-24
FY2023-24
Budget
% Change
Q2 FY23 vs
Q2 FY24
Qtr 2
% Budget
Property tax $ 8,041,187 $ 8,365,171 $ 16,411,900 4% 51% Measure Y 725,777 2,800,000 100% 26%
Sales Taxes 1,155,730 1,093,485 3,401,000 -5% 32%
Transient Occupancy Tax 1,743,231 1,504,959 2,669,500 -14% 56% Franchise Tax 458,840 429,517 1,236,200 -6% 35%
Business License Tax 387,982 441,470 500,000 14% 88%
Utility Users Tax 973,204 850,319 2,700,000 -13% 31%
Vehicle License Fee 4,542,948 2,250,300 5,539,200 -50% 41% Cannabis Tax 416,473 436,690 950,000 5% 46%
ERAF 88,000 - 105,000 -100% 0%
Grants 4,824,989 187,484 2,209,700 -96% 8%
Investment Earning 97,796 368,357 500,000 277% 74%
Department Programs 3,572,487 4,391,060 9,918,600
Total General Fund
Revenues $ 26,302,866 $ 21,044,589 $ 48,941,100 -20% 43% City of Pacifica
Fiscal Year 2023‐24
SecondQuarter Financial Report
3 month lag on the receipt of sales tax revenues, so 32% only represents four months of allocation, which is consistent with the prior year and appears to be on track or slightly below the budget.
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 Second Quarter reflects the TOT receipts for the months of July through November. Even though the actual revenue shows some decline over the same quarter last year, the City collected 56% of the budget as of December 31, 2023. Economy-driven revenues like TOT are very sensitive to the market and economy. The second quarter’s TOT performance is certainly a positive trend, demonstrating the full recovery of the hospitality industry and continuing efforts in identifying short-term rentals and bringing them to compliance.
Other Taxes: These include franchise tax, business license, utility users tax, Vehicle License Fee, and cannabis operations tax. Payments for most of these taxes are remitted 30 days after the end of the month. As such, only 40% of the Budget has been received as of December 31, 2023. Included in this category is the Vehicle License Fee (VLF) in Lieu (property tax in lieu of VLF). This revenue includes a one-time backfill payment of $681,567 from the state for the VLF shortfall in FY 21-22 and 50% of the FY2023-2024 distribution of $1,568,733. These revenues will likely come in below budget, but staff will do additional analysis for the midyear budget analysis.
Utility Users Tax is the second largest revenue source in the Other Taxes category with a budget of $2.7 million but is only 31% collected as of December 2023. Last year, we collected a total of $3.3 million; considering the one-month lag in filing and remittance from utility companies, we are confident of meeting our budget for FY2024.
Franchise Tax is the third largest source with a $1.2 million budget, but only 35% is collected due to the timing of when this revenue is remitted. The larger franchisee payers, such as PG&E, typically remit in the middle of April on a yearly basis, so 35% collected as of the second quarter is above the expected budget. However, as described during the budget process, a portion of Recology’s Franchise Tax revenues will be reclassified and moved to the street improvement fund to factor in the Recology truck’s impacts on the city streets. Overall, these revenues are on track with the budget.
Cannabis Tax is also generally on track, with about 46% collected from the five cannabis business providers as of the end of the second quarter.
Business License Tax is at 88% collected this quarter because our annual business license renewal is set for November 1 each year and was recorded in the second quarter. These revenues are projected to meet the budget by the end of the year, as additional revenues will be collected from new businesses and delinquent payments.
Excess ERAF: (Excess Educational Revenue Augmentation Fund). The FY2023-24 General Fund Budget only included $105,000 to fund the community grant program to local non-profit organizations as previously directed by the Council.
These revenues will be booked in the next quarter when they are received. The remainder of the FY 2023-24 Excess ERAF Allocation is reported in the Disaster Accounting and Housing Funds as per Council approval.
Grants: These include police grants, as well as PBR child care and senior grants that are projected to come through in the second half of the year once the childcare audit is completed. The grant revenues showed a decrease over the prior year due to the one-time $4.6 million American Rescue Plan Act allocation from the State received last year.
Investment Earnings: Investment earnings such as interest income continue to be doing well in the current economy, with favorable interest rate returns on bank deposits strategically managed by staff.
City of Pacifica
Fiscal Year 2023‐24
SecondQuarter Financial Report
4 Department/Programs: These include building permits, engineering and planning fees, fees related to Parks, Beaches & Recreation programs, and rentals, and the first two quarterly transfer-ins from other funds for cost recovery needs.
As of December 31, 2023, the City received 44% of the Budget, which is reasonable and on track, with few late payments expected to be collected in the next quarter, and the same level of activity is projected through the rest of the year. Permits and planning fees tend to fluctuate based on the timing of projects. Permits are at 50% of the budget. The short-term rental application fees increased by $207K due to a new STR Permit fee that went into effect in August 2023. However, planning-related legal, consultant, and application fees are only 10% of the budget due to the timing of the cost recovery process of billing for the revenue.
SUMMARY
Overall, staff is pleased to report that the FY2023-24 Budget is on track, with revenues and expenditures performing as expected and, in certain cases, a little better than expected. The City’s total general fund expenditures are at 42% of the Budget at the end of the Second Quarter, and the City’s total general fund revenues are at 43% of the Budget at the end of the Second Quarter.
It is also important to understand that these are only preliminary numbers as additional booking entries may occur throughout the year and during the fiscal year-end, which may modify some of the figures presented in this report.
However, it is encouraging to see that the budget appears to be on target at the end of the second quarter. Staff will use the data in this report for a more in-depth FY 2023-24 Mid-Year Budget Review analysis that is currently underway and is scheduled to be presented to the Council in March.