General Fund Financial Report
Fiscal Year End 2022-2023
OVERVIEW
This report reflects the General Fund financial position for Fiscal Year 2022-23.
Beginning Balance
The beginning balance presented in the below schedule reflects the Annual Comprehensive Financial Report (ACFR) for year ended June 30, 2022 (after the Fiscal Year 2020-21 year-end assignments and transfers). This beginning balance includes only non-spendable amounts for prepaid costs; assignments for encumbrances, carryovers, and Fiscal Year 2022-23 appropriations; and undesignated fund balance.
Ending Balance
The Fiscal Year 2022-23 ending balance presented below does not include any year-end assignments or transfers yet to be made by the City Council.
Adjusted Budget
The revenue and expenditure categories include all adjustments made by the City Council during Fiscal Year 2022-23, including carryover appropriations approved in November 2022 and midyear adjustments approved in February 2023.
Year-End Actual
The year-end actual amounts are preliminary and subject to audit adjustments. Staff are nearing the end of the audit, with no major issueshaving been brought to the City’s attention by the auditors to date. While there may be some remaining adjustments, staff is comfortable presenting these amounts as estimates for Fiscal Year 2022-23. As in prior years, staff will present final prior fiscal year-end numbers with FY 2023-24 midyear budget.
FINANCIAL CONDITION
General Fund Financial Condition
As summarized below, FY 2022-23 revenues and expenditures both came in favorably compared to budget – in particular, expenditures were $13.9 million or 13% below budget, and revenues received were $3.1 million, or 3% higher than budgeted. Increased revenues reflect better than expected receipts in Utility Users Tax, related to higher energy prices; better than expected investment returns, related to higher interest rates; more revenue than anticipated from recreation programs; and an unbudgeted claims settlement related to the City of Los Angeles v. Monsanto.
FY 2021-22 FY 2022-23 FY 2022-23 FY 2022-23 Revised Budget to Actual FY 2023-24 General Fund Year-End Adopted Revised Year-End Favorable % Adopted Balance Actual Budget Budget Actual (Unfavorable) Change Budget Beginning Balance 3,400,540 11,953,989 11,953,989 11,953,989 - 0% 2,402,805 Revenues 106,034,346 100,119,290 101,788,167 104,915,290 3,127,123 3% 104,091,394 Expenditures 86,226,444 106,332,914 109,013,695 95,147,724 (13,865,971) (13%) 106,296,879 Transfers In 1,870,082 1,750,927 1,750,927 1,910,931 160,004 9% 1,750,927 Transfers Out 13,463,117 4,068,582 4,068,582 7,776,387 3,707,805 91% 4,004,134 Ending Balance 11,615,406 3,422,710 2,410,806 15,856,099 (6,871,038) (285%) (2,055,887) Each November, in preparation for the issuance of the prior fiscal year’s ACFR, the City Council confirms required and standard commitments of the City’s General Fund total balance (those components are described above in the “Beginning Balance” paragraph and are in addition to those excluded here, such as the 8.33% one-month contingency reserve) and determines the use of the remaining fund balance for such items as departmental carryover requests, carryover donations, and other future expenditure.
General Fund Financial Report Fiscal Year End 2022-23
REVENUES
Top Ten Revenue Sources
The table below shows the City’s top 10 revenue sources as budgeted for Fiscal Year 2022-23. City’s top ten General Fund revenue sources over the years below on average account for 77% of total budgeted General Fund revenues from outside sources (excludes overhead and transfers in). Focusing on these sources helps identify the overall trajectory of City revenues, and in particular will help us to identify any downward trends that could lead us to adjust our forecast or make changes to planned spending.
As shown in the table below, revenue from the City’s major external sources was up 1.6% compared to the revised budget, and up 5% compared to the prior fiscal year actual receipts. Total General Fund revenues performed better than the top 10 sources compared to revised budget, at 3.1%, but overall were down by about 1% from prior year actual receipts.
FY 2021-22 FY 2022-23 FY 2022-23 FY 2022-23 Revised Budget to Actual FY 2023-24 Top Ten Year-End Adopted Revised Year-End Favorable % Adopted Revenues Actual Budget Budget Actual (Unfavorable) Change Budget Property Tax 31,864,830 32,313,229 33,198,162 33,780,269 582,107 1.8% 33,198,162 Sales and Use Tax 11,813,896 11,839,338 11,392,689 11,036,523 (356,166) (3.1%) 11,507,625 Prop Tax Lieu of VLF 8,653,149 9,094,480 8,933,867 9,214,586 280,719 3.1% 8,933,867 Utility Users Tax 8,024,511 7,072,150 8,639,703 9,166,031 526,328 6.1% 8,500,000 Transient Occupancy
Tax
5,419,197 5,800,000 6,781,824 6,174,326 (607,498) (9.0%) 6,781,822 Property Transfer Tax 3,745,270 3,000,000 2,900,919 2,238,190 (662,729) (22.8%) 2,900,919 Parking Meter Fees 2,790,872 2,500,000 2,500,000 2,695,970 195,970 7.8% 2,500,000 Franchise Fees 1,864,336 1,775,000 2,165,348 2,131,206 (34,142) (1.6%) 2,165,348 Rents and Percentages 1,456,280 1,760,396 1,760,396 1,758,589 (1,807) (0.1%) 1,905,630 Plan Checking Fees 2,095,408 1,690,000 1,690,000 3,065,509 1,375,509 81.4% 2,047,770 Total 77,727,750 76,844,593 79,962,908 81,261,198 1,298,290 1.6% 80,441,143 Total-General Fund 106,034,346 100,119,290 101,788,167 104,915,290 3,127,123 3.1% 104,091,394 % Total Revenue-Top 10 73% 77% 79% 77% 77%
Key variances include:
• Sales Tax. FY 2022-23 sales tax revenue fell below both prior year revenue and current year expectations. This trend is consistent with regional and statewide trends, reflecting high inflation, federal reserve rate increases, and changes in consumer spending that shifted to essential needs. The categories of restaurants and hotels, general consumer goods, autos and transportation, and fuel and service stations were the major contributors to the decline in revenue while business-industry, food and drug sales tempered the losses. • Transient Occupancy Tax. The City’s Transient Occupancy Tax receipts were 14% above the prior year, reflecting continuing recovery from the pandemic, but below expected budget by about 9%. • Property Transfer Tax. A decreased number of home sales contributed to Fiscal Year 2022-23 revenues at lower levels than both prior year revenue and current year expectations. The number of home sales decreased due to the significant increase in mortgage rates.
Staff will monitor this revenue source for a possible midyear adjustment. • Utility Users Tax. As noted in the FY 2023-24 budget, the City received greater than expected returns in Utility Users Tax, reflecting higher energy prices. Staff will continue to monitor this source. • Plan Checking Fees. The significant revenue above expectations is related to greater than expected construction activity following pandemic recovery.
General Fund Financial Report Fiscal Year End 2022-23
EXPENDITURES
The total of all operating costs combined showed a favorable balance of 7.9% for the fiscal year as summarized below:
Expenditures
FY 2021-22 FY 2022-23 FY 2022-23 FY 2022-23 FY 2022-23 FY 2022-23 Revised Budget to Actual FY 2023-24 Year-End Adopted Revised Year-End Year-End Year-End Favorable % Adopted Actual Budget Budget Expenditure Encumbrances Actual (Unfavorable) Change Budget Personnel 50,754,865 56,010,087 56,293,087 54,674,229 - 54,674,229 1,618,858 3.0% 59,310,751 Maintenance/Operations 7,625,449 10,730,280 13,043,021 8,866,442 1,550,341 10,416,783 2,626,237 29.6% 10,673,532 ISF Allocations 25,276,088 25,283,973 24,696,556 24,696,556 - 24,696,556 - 0.0% 24,707,415 Capital Outlay 2,570,042 3,101,130 3,773,587 469,494 471,512 941,006 2,832,582 603.3% 397,737 Bond Debt - 11,207,444 11,207,444 6,441,003 - 6,441,003 4,766,441 74.0% 11,207,444 Total Expenditures 86,226,444 106,332,914 109,013,695 95,147,724 2,021,853 97,169,577 11,844,118 12.4% 106,296,879 Transfers Out 13,463,117 4,068,582 4,068,582 7,776,387 - 7,776,387 (3,707,805) (47.7%) 4,004,134 Total 99,689,561 110,401,496 113,082,277 102,924,111 2,021,853 104,945,964 8,136,313 7.9% 110,301,013 Key variances by type include:
• Personnel. Personnel expenditures account for over 50% of the General Fund’s Total Expenditures, with details shown in a further breakdown below. Overall, personnel expenses were within approximately 3% of budget, with regular salary savings attributed to staff vacancies offset, partially, by increased overtime.
Expenditures
FY 2021-22 FY 2022-23 FY 2022-23 FY 2022-23 Adjusted Budget to Actual FY 2023-24 Year-End Adopted Adjusted Year-End Favorable % Adopted
Actual Budget Budget Actual (Unfavorable) Change Budget Regular Salaries 31,593,181 37,468,802 37,751,802 34,257,422 3,494,380 9.26% 41,980,462 Overtime Salaries 4,876,759 3,077,334 3,077,334 5,566,784 (2,489,450) (80.90%) 1,046,000 Medical Insurance 4,469,120 5,079,015 5,079,015 4,759,915 319,100 6.28% 5,455,620 Retirement 5,501,219 5,921,129 5,921,129 5,558,024 363,105 6.13% 6,448,849 Other Benefits 4,314,586 4,463,807 4,463,807 4,532,084 (68,277) (1.53%) 4,379,820 Total Personnel 50,754,865 56,010,087 56,293,087 54,674,229 1,618,858 2.88% 59,310,751 o Overtime stands out as the category most significantly exceeding the target. In this category are overtime costs necessary to backfill vacant positions or leave times in the Police Department and to meet Fire Department constant staffing obligations. Staff is closely monitoring overtime in these departments and is working to more accurately reflect true overtime costs, taking into consideration the unpredictability of Police and Fire operations and the extended time needed to hire and train new personnel.
• Maintenance/Operations and Capital Outlay. The favorable variance in the maintenance/operations category is primarily due to contracts and professional services not expended to their budgeted amount. When including requested carryover for donations ($0.2 million) and capital carryover ($2.8 million), the favorable variance for the total of these two categories would decrease to approximately $2.4 million.
• Internal Service Fund (ISF) Allocations. Expenditures reflect the allocations based on actual activity, and are balanced by formula.
We would expect to see variance only in the case that we make changes to the allocation formula during the year. • Transfers Out. Fiscal Year 2022-23 transfers out reflect the year-end street landscaping and lighting subsidy ($1.3 million), the annual 2019 lease revenue bond debt service payment (reimbursed with a transfer in from the Harbor Uplands Fund), and the 2021A lease revenue bond debt service payment. The savings in bond debt offset the overage in transfers out related to 2021A lease revenue bonds.
General Fund Financial Report Fiscal Year End 2022-23
EXPENDITURES (Continued)
The total of all operating expenditures combined showed a favorable balance of 8.5% by department as shown below:
Expenditures
FY 2021-22 FY 2022-23 FY 2022-23 FY 2022-23 FY 2022-23 FY 2022-23 Adjusted Budget to Actual FY 2023-24 Year-End Adopted Adjusted Year-End Year-End Year-End Favorable % Adopted Actual Budget Budget Expenditures Encumbrances Actual (Unfavorable) Change Budget Mayor & City Council 651,871 944,757 963,291 708,060 91,167 799,227 164,064 17.03% 820,932 City Clerk 1,008,618 1,538,955 1,856,734 1,622,596 93,343 1,715,939 140,795 7.58% 1,468,677 City Treasurer 310,592 432,462 457,338 328,125 36,880 365,006 92,332 20.19% 385,677 City Attorney 3,224,360 3,998,085 4,088,008 3,486,238 - 3,486,238 601,770 14.72% 4,510,030 City Manager 955,049 1,247,483 1,381,019 1,105,265 174,923 1,280,188 100,831 7.30% 1,187,739 Human Resources 2,187,134 2,706,306 2,660,633 2,164,345 19,980 2,184,324 476,309 17.90% 4,330,307 Financial Services 2,434,039 3,020,113 3,157,797 2,519,388 126,976 2,646,363 511,433 16.20% 3,215,849 Police 36,899,250 45,479,394 45,333,592 41,431,987 78,154 41,510,141 3,823,451 8.43% 45,585,190 Fire 17,236,357 21,732,944 21,665,188 19,326,935 617,730 19,944,665 1,720,523 7.94% 20,077,406 Public Library 3,916,507 4,465,314 4,757,370 4,452,654 13,674 4,466,327 291,043 6.12% 4,676,050 Community Services 7,267,603 5,629,356 5,954,700 6,299,078 5,802 6,304,880 (350,180) (5.88%) 6,497,814 Community Development 2,905,163 4,013,660 4,140,721 3,310,005 163,320 3,473,324 667,396 16.12% 3,852,048 Waterfront & Econ Dev 259,484 301,314 382,376 227,642 946 228,588 153,788 40.22% 246,337 Public Works 6,914,994 7,721,641 8,553,222 7,802,266 147,208 7,949,474 603,747 7.06% 9,085,823 Total 86,171,022 103,231,784 105,351,987 94,784,584 1,570,103 96,354,686 8,997,300 8.5% 105,939,879 Key variances to note include:
• All Departments. Balances include budget for payment on 2021A bond debt (lease revenue bonds for issued in 2021 to pay off pension unfunded liability) that were charged to transfers out rather than to individual department budgets, resulting in budget savings unrelated to operations. This particularly impacts Police and Fire Department Budgets, as each pays a larger percentage of the payment. Excluding savings related to this item decreases overall savings from budget to $4.2 million, or 4%. Police and Fire savings excluding this payment were $1.2 million and $0.5 million, respectively. • Community Services. While the Department showed an overage of $0.35 million, it brought in $0.56 million in additional revenue, more than offsetting the expense. Both overages are consistent with increased community use of class service offerings.