City of Redondo Beach
Midyear Review
2023-24
April 2, 2024
Introduction
Provide financial performance updates across major funds; emphasis on General Fund revenue and expenditures
Review year-end budget projections
Review financial forecast following Internal Service Fund Adjustments Timeline for preparation of next year’s budget
The purpose of the Fiscal Year 2023-24 Mid-Year Budget Review is to provide the City Council and the public with a summary of the City’s overall financial performance across all major funds (with an emphasis on the General Fund’s core revenues and expenditures) through the first six months of the fiscal year ending December 31, 2023. This review also provides an update on reserve balances, projected year-end figures, and a summary of economic trends.
Objective:
Total City Revenue
• Total City revenue is on track with prior year
+$3.9 million (5%) increase over prior year
• Collecting revenue at a slightly lower rate than
prior year (74% collected to date vs. 75%)
• Reflects that current year budget is higher than
prior year
Actual receipts compared to budget through Dec 31, 2023 Budget To Actual Performance
• Revenue is up; % received consistent with prior year
• +$1.9 million (5%) increase over prior year receipts
through December
• 38% of General Fund revenue received vs. 37% prior
year
General Fund Revenue
Budget To Actual Performance
Actual receipts compared to budget through Dec 31, 2023 General Fund Tax Revenue
• Tax revenue is ahead of prior year; expect this trend to slow but meet or exceed budget after including anticipated adjustments Revenue Source Inc / (Dec) Comments
Property Tax +$0.7M (5%) Ahead of prior year and budget Transient Occupancy Tax
(TOT)
+$1.2M (55%) Doesn’t reflect expected adjustments
Sales Tax +$0.6M (21%) Prior year timing; actuals flat/ down Utility Users Tax (UUT) +$0.3M (9%) Actuals are ahead; % received down Franchise Fees -$46k (-20%) Consistent with economic
uncertainty
Actual receipts compared to budget through Dec 31, 2023 Budget To Actual Performance
• Non-tax revenue is approximately $1 million (7%) below prior year receipts; still on track to meet budget
• Decreases are consistent with general economic trends – decreased business activity compared to an exceptionally high FY 2022-23.
Revenue Source Relevant
#s
Notes
Licenses &
Permits
-$0.2M
(14%)
Reflects decrease in building, plumbing,
electrical, and mechanical permits
Charges for
Service
-$0.7M (7%) Plan Check Fees (-$0.4M) and overhead
revenue decreases (-$0.6M) offset by
Recreation Programs (+$0.2M); Inspection
fees (+$0.1M); Police Fees ($73k)
General Fund Non- Tax Revenue
Budget To Actual Performance
Actual receipts compared to budget through Dec 31, 2023 • Revenue of all other funds is about $2.0 million (5%) greater than prior year receipts through Q2
• Largest contributor is Enterprise Fund revenue (+$1.0M) led by Transit-Measure M/ Local Transit Article IV
• Other fund types are on track with prior year
Other Funds Revenue
Budget To Actual Performance
Actual receipts compared to budget through Dec 31, 2023 General Fund Revenue Adjustments Summary
• FY 2023-24 Adopted Revenues = $104,091,394
• Midyear Adjusted Revenues = $108,824,736
• General Fund Increase = $4,773,342
Property Tax
Sales and Use Tax
Utility Users’ Tax
Transient Occupancy Tax
Property Transfer Tax
Other Taxes
Overhead
Other General Fund Revenue
General Fund Revenue Adjustment Details
Property Tax
Sales and Use Tax
Utility Users’ Tax
Transient Occupancy Tax
Property Transfer Tax
Other Taxes
Overhead
Other General Fund Revenue
License and Permits
Fines & Forfeitures
Charges for Services
Use of Money and Property
Intergovernmental
Misc. Revenue
11,507,625 10,917,000 (590,625)
33,198,162 35,004,142 1,805,980
8,500,000 8,500,000 -
6,781,822 6,781,822 -
2,900,919 2,300,919 (600,000)
13,575,546 13,575,546 -
8,747,688 13,809,642 5,061,954
2,372,809 2,412,452 39,643
1,446,200 1,312,392 (133,808)
9,369,827 8,509,683 (860,144)
3,155,630 3,243,743 88,113
160,000 195,000 35,000
2,375,166 2,262,393 (112,773)
Adopted Midyear Inc / (Dec)
General Fund Revenue Summary
Taxes $615,355
Overhead $5,061,954
Other Revenue -$943,968
Total Revenue Adjustment $4,733,342
Taxes
Property Tax: 5.44% assessed valuation increase
Property Transfer Tax: high borrowing rates
Sales Tax: federal rate hikes; drop from unusually high 2022-23 Overhead
Methodology change to centralize Emergency Communications fund costs Personnel & other internal service charges cost increases Other (charges for service)
Delayed fee implementation
• Total City spending and % spent above prior year
• Spending is in line with regular operations; increase driven by grants
• +$5.6M (6%) increase over prior year
• General Fund in line with prior year; +$1.4 million (3%) • Other funds +$4.2 million (10%) increase over prior year, driven by grant funds
Total City Expenditures
Budget To Actual Performance
Actuals compared to budget through Dec 31, 2023
• General Fund spending through Mid-year is in line with budget and consistent with prior year
• Personnel spending is consistent with prior year trend and below budget (88% indicates 12% savings from personnel
budget)
• Equipment M&O, Contracts/ Services, and Capital Outlay all slightly high compared to prior year; likely due to project timing
General Fund Expenditures
Budget To Actual Performance
Actuals compared to budget through Dec 31, 2023
Expenditure Adjustments
• Appropriations Adjustments
ISF/Overhead Annual Update
Administrative changes with no net impact
Information Technology Fund correction
• Decision Packages
Staffing reorganization (Information Technology) – no net increase Sewer Fund rate adjustment – no net increase
Legal costs (General Fund)
User pay classes (Community Services) – no net increase FY 2023-24 Midyear ISF / Overhead
Vehicle
Replacement
(Maintenance &
Replacement Cost)
Information
Technology
(Maintenance &
Replacement Cost)
Emergency
Communications
(Operations & Equipment
Replacement)
Self-Insurance
(Workers’ Compensation &
Liability)
Building
Occupancy
Major
Facilities
Repair
City Facility
Sewer Fee
Overhead
(General Fund Admin
Costs)
General Fund
Revenue &
Expenditures
Internal Service Funds 23-24 Adopted Budget
(Based on 21-22 Actuals)
23-24 Adopted Budget
(Based on 22-23 Actuals) % Inc/Dec
Vehicle Maintenance 2,112,806 2,553,282 21%
Vehicle Equipment Replacement 1,865,180 2,310,034 24%
Information Technology Maintenance 3,282,799 3,730,112 14% Information Technology Equipment Replacement 412,465 513,080 24% Communications Equipment Replacement 492,427 489,430 -1% Workers' Compensation Insurance 2,655,880 1,822,738 -31% Liability Insurance 5,823,530 4,938,347 -15%
Building Occupancy 3,684,114 3,316,655 -10%
Major Facilities Repair 110,545 110,544 0%
City Facility Sewer Fee 38,936 40,203 3%
Emergency Communications Operations 2,829,280 2,064,985 -27% Overhead 8,745,517 13,809,642 58%
Totals $32,053,479 $35,699,053 11%
FY 2023-24 Midyear ISF / Overhead
FY 2023-24 Midyear ISF / Overhead
Name
FY 22-23
Adopted
FY 22-23
Midyear
FY 23-24
Amount
Delta to
Prior Year
% Delta
vs. Prior Year
550000-VEHICLE MAINTENANCE 2,062,256 2,112,806 2,553,282 440,476 21% 550010-VEHICLE EQUIPMENT REPLACEMENT 1,115,601 1,865,180 2,310,034 444,854 24% 550020-INFORMATION TECH EQUIP MAINT 3,758,050 3,282,799 3,730,112 447,313 14% 550030-INFORMATION TECH EQUIP REPLACE 496,659 412,465 513,080 100,615 24% 550040-COMMUNICATION EQUIP REPLACE 492,422 492,427 489,430 (2,997) -1% 550050-WORKERS COMPENSATION INSURANCE 2,371,524 2,655,880 1,822,738 (833,142) -31% 550060-LIABILITY INSURANCE 4,007,047 5,823,530 4,938,347 (885,183) -15% 550080-BUILDING OCCUPANCY 3,110,802 3,684,114 3,316,655 (367,459) -10% 550090-MAJOR FACILITIES REPAIR 107,071 110,545 110,544 (1) 0% 550110-CITY FACILITY SEWER FEE 40,638 38,936 40,203 1,267 3% 550120-OVERHEAD 10,034,055 8,745,517 13,809,642 5,064,125 58% 550130-EMERGENCY COMM OPERATIONS 3,656,204 2,829,280 2,064,985 (764,295) -27% Grand Total 31,252,329 32,053,479 35,699,053 3,645,574 11% Overhead
• What is the net General Fund impact? The General Fund receives revenue reflecting the total overhead cost, and incurs expense for all General Fund portions of the allocated costs. The net is shown below.
FY 2023-24 Midyear ISF / Overhead
Overhead Revenue Increase $5,061,954
Overhead Expenditure Increase
(General Fund portion) -$3,606,624
Net General Fund Impact $1,455,330
Overhead: Indirect costs
• $5,061,954 delta = this year’s total overhead costs ($13,809,642)-last year’s overhead costs ($8,747,688) • Total costs come from the City’s Administrative divisions (City Clerk, City Treasurer, City Manager, Human Resources, Financial Services, Police Administration, Fire Administration, Community Services Administration, Public Works Administration). These costs include internal service fund charges for all eight plans (vehicle, information tech, liability, etc.) • Drivers
Emergency Communications ISF methodology change: Prior to FY 2022-23, Emergency Communications Operations ISF charges were split across Police and Fire divisions. In FY 2022-23, the City made the logical change to center the ISF charges in Police and Fire’s Administration divisions – this means that all of those costs are allocated citywide, where previously only a small fraction was allocated (for example, Emergency Communications ISF charges in Police Admin went from approximately $45,000 to $2.5 million in FY 2022-23).
This change accounts for 80% of the total $5 million overhead cost increase Personnel and Other ISF cost increases: These reflect other prior year ISF changes and any staffing additions occurring in FY 2022-23
• ISF Fluctuation Some change every year is normal as costs change. Major fluctuations like the ones here should only happen if we change methodology, which is what happened last year FY 2023-24 Midyear ISF / Overhead
• Funds Increasing
• Vehicle & Information Technology Replacement: reflect actual cost increases for vehicles, technology and personnel costs
• Funds Decreasing
• Liability (Workers’ Compensation & Liability Insurance): methodology uses a five-year average for claims. The revised calculation ending FY 2022-23 reflected lower claims, reducing this year’s costs • Emergency Communications (Operations & Equipment Replacement): reflects lower utility and maintenance contract costs. This is consistent with drops from peak utility costs in FY 2021-22 • Building Occupancy: reflects lower utility and maintenance contract costs • Funds with Minimal Change (<5%)
• City Facility Sewer Fee & Major Facility Repair: no significant changes in either fund’s costs FY 2023-24 Midyear ISF / Overhead
General Fund
FY 2023-24 Estimated Fund Balance
Estimated Ending Fund Balance
(including capital and carryover unlikely to be spent in the current fiscal year)
-$365,291
Adjustments to Revenue $4,933,342
Adjustments to Appropriations -$3,981,624
Revised Estimated Ending Fund Balance $586,427
General Fund Notes
Capital Spending/ Anticipated Savings
• $3.7 million budgeted for capital in the General Fund; anticipate approx. $3 million savings
• Approximately $0.4 million spent to date
• Parking Structure Critical Repairs Project ($2 million) – no expected charges; active next fiscal year
• Alleyway repairs ($0.6 million) – no expected charges • Other (Traffic Calming, Ave I resurfacing) – approximately $0.3 million through fiscal year-end
Personnel Spending/ Anticipated Savings
• On track for approximately 20% savings from budget, consistent with prior years
Other Fund Balance NotesHarbor Tidelands & Harbor Uplands Harbor
Tidelands (601)
Harbor Uplands
(602)
Revised Estimated Ending Fund Balance -$7.9 million -$3.2 million Adjustment for liabilities not materializing
during the one-year timeframe
$2.2 million $1.0 million
Adjusted Estimated Ending Fund Balance -$5.7 million -$2.2 million Note: The adjusted net mirrors to original budget estimate for fund balance. The pace of capital is being evaluated as part of the FY 2024-25 Budget.
Capital Spending-Harbor Tidelands ($8 million capital budget) Capital projects manager & Fund manager will evaluate capital budget • Harbor Dredging ($4.5 million) – potentially spend closer to $3.5 million • Mole B Project ($2.0 million) – likely no spending current fiscal year • Other Capital ($1.5 million) – active, will evaluate costs Capital Spending-Harbor Uplands ($2.0 million capital budget) • All projects are active; will review with FY 2024-25 budget preparation.
Revenue (both Harbor Tidelands & Uplands)
• Staff will evaluate revenue (most related to leases) to ensure City requirements reflect funding needs
Harbor Tidelands & Harbor Uplands Fund
Highlights: Capital & Revenue
Midyear FY 2023-24 Budget
Core Budget
Personnel, Maintenance & Operations, Internal Service Funds, Capital Outlay Decision Packages
4 Recommended Decision Packages
Represent Modifications to the Core Budget
Recommended Action
A. Receive and File the FY 2023-24 Midyear Budget Report B. Adopt by 4/5 Vote Resolution No. CC-2404-022
Next Steps
• FY 2024-25 Budget Preparation
Budget Calendar
Date Meeting
April 8 Harbor Commission
April 10 Recreation and Parks Commission
April 11 Budget and Finance Commission
April 17 Historical Commission
April 18 Planning Commission
April 22 Public Art Commission
April 22 Public Works and Sustainability Commission
April 22 Library Commission
May 14 City Council: Receive and file Proposed Budget
June 4 City Council Public Hearing No. 1 on Proposed Budget June 11 City Council Public Hearing No. 2 on Proposed Budget June 12 Budget and Finance Commission
June 13 Harbor Commission
June 17 Planning Commission
June 18 City Council Budget Adoption
June 25 Additional City Council Hearing if needed
Committee &
Commission Budget
Input
Proposed Budget
Rec/File &
Hearings
Commission Reviews
Adoption