Attachment 2 – General Fund Report
General Fund Financial Report
Fiscal Year End 2023-2024
October 15, 2024
OVERVIEW
This report reflects the General Fund financial position for Fiscal Year 2023-24.
Beginning Balance
The beginning balance presented in the below schedule reflects the balances reports to Council in prior year budget reports, based on audited year-end close figures as available. For FY 2023-24, because audited figures are not yet available, the table uses the projected starting fund balance as presented at the Midyear FY 2023-24 budget. This beginning balance includes only non-spendable amounts for prepaid costs; assignments for encumbrances, carryovers, and Fiscal Year 2023-24 appropriations; and undesignated fund balance.
Ending Balance
The Fiscal Year 2023-24 projected ending balance presented below does not include any year-end assignments yet to be made by the City Council, including for encumbrances and capital carryover.
Revised Budget
The revenue and expenditure categories include all adjustments made by the City Council during Fiscal Year 2023-24, including carryover appropriations approved in December 2023 and midyear adjustments approved in April 2024.
Year-End Actual
The year-end actual amounts are preliminary and subject to audit adjustments. Staff are midway through the audit, with no major issues having 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 2023-24. As in prior years, staff will present final prior fiscal year-end numbers with FY 2024-25 midyear budget.
FINANCIAL CONDITION
General Fund Financial Condition
As summarized below, FY 2023-24 revenues and expenditures both came in favorably compared to budget – in particular, expenditures were $7.7 million or 7% below budget, and revenues received were $2.2 million, or 2% higher than budgeted. Increased revenues reflect better than expected receipts particularly in taxes and charges for service; this includes receipts above projections for Property Tax, for which the City increased projections at midyear.
General Fund
Balance
FY 2022-23 FY 2023-24 FY 2023-24 FY 2023-24 Revised Budget to Actual FY 2024-25 Year-End
Actual Adopted Budget Revised Budget
Year-End
Actual
Favorable/
(Unfavorable) % Change Adopted Budget
Beginning Balance 11,953,989 2,402,805 9,485,191 9,485,191 - 0% 4,264,254 Revenues 104,943,304 104,091,394 109,035,447 111,234,959 2,199,512 2% 114,341,385 Expenditures 88,459,992 106,876,365 104,755,072 96,985,728 7,769,344 7% 103,227,419 Transfers In 1,650,733 1,750,927 1,750,927 1,653,179 (97,748) -6% 4,265,303 Transfers Out 14,343,216 4,004,134 14,857,972 13,973,838 884,134 6% 15,880,783 Ending Balance 15,744,818 (2,635,373) 658,521 11,413,763 10,755,242 1633% 3,762,739 Each fall, 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 described in the Beginning Balance paragraph above 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 recommended allocations for future needs.
General Fund Financial Report October 15, 2024 Fiscal Year End 2023-24 Attachment 2 – General Fund Report
REVENUES
Top Ten Revenue Sources
The table below shows the City’s top 10 revenue sources as budgeted for Fiscal Year 2023-24. City’s top ten General Fund revenue sources over the years below on average account for 74% 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 increased by 1% compared to the revised budget, and by 1% compared to prior fiscal year actual receipts. Total General Fund revenues performed better than the top 10 sources compared to revised budget, at 2%, and overall increased by about 6% over prior year actual receipts.
FY 2022-23 FY 2023-24 FY 2023-24 FY 2023-24 Revised Budget to Actual FY 2024-25 Top Ten Year-End Adopted Revised Year-End Favorable % Adopted Revenues Actual Budget Budget Actual (Unfavorable) Change Budget Property Tax 33,780,269 33,198,162 35,004,142 35,650,799 646,657 2% 36,054,267 Sales and Use Tax 11,036,523 11,507,625 10,917,000 10,822,480 (94,520) (1%) 11,000,000 Property Tax Lieu of VLF 9,214,586 8,933,867 8,933,867 9,716,017 782,150 9% 8,933,867 Utility Users Tax 9,166,031 8,500,000 8,500,000 8,481,267 (18,733) 0% 8,500,000 Transient Occupancy Tax 6,174,326 6,781,822 6,781,822 6,461,497 (320,325) (5%) 8,281,822 Property Transfer Tax 2,238,190 2,900,919 2,300,919 2,368,553 67,634 3% 2,300,919 Parking Meter Fees 2,695,970 2,500,000 2,500,000 2,723,421 223,421 9% 2,960,372 Franchise Fees 2,131,206 2,165,348 2,165,348 1,964,410 (200,938) (9%) 2,165,348 Plan Checking Fees 3,065,509 2,047,770 2,047,770 1,870,880 (176,890) (9%) 2,140,770 Rents and Percentages 1,758,589 1,905,630 1,943,743 1,879,598 (64,145) (3%) 1,911,107 Total 81,261,198 80,441,143 81,094,611 81,938,923 844,312 1% 84,248,472 Total Revenue-General Fund 104,919,722 104,091,394 109,035,447 111,234,959 2,199,511 2% 114,341,385 % Total Revenue-Top 10 77% 77% 74% 74% 74%
Key variances include:
• Sales Tax. FY 2023-24 sales tax revenue fell below prior year revenue, but was near current year expectations reflected in the FY 2023-24 midyear revision. This trend is consistent with regional and statewide trends, reflecting the ongoing shift to online sales and inflation and its ongoing impact to consumer spending. 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 and food and drug sales tempered the losses.
• Transient Occupancy Tax. The City’s Transient Occupancy Tax receipts were 5% above the prior year, reflecting continuing recovery from lows seen during the pandemic, but below expected budget by about 5%. • Property Transfer Tax. The City received approximately 3% greater than projected following a midyear reduction to the budget that took into account continued mortgage rate impacts on home buying. Staff will continue to monitor this revenue in view of interest rate cuts projected this year.
• Property Tax Lieu of VLF. The City received Property Tax Lieu of VLF receipts 9% higher than budget and 5% higher than prior year’s receipts. This is consistent with increases to the City’s assessed valuation. Note that while staff increased Property Tax projections at midyear, this budget remained the same.
General Fund Financial Report October 15, 2024 Fiscal Year End 2023-24 Attachment 2 – General Fund Report
EXPENDITURES
The total of all operating costs combined showed a favorable balance of 5% for the fiscal year as summarized below:
Key variances by type include:
Expenditures
FY 2022-23 FY 2023-24 FY 2023-24 FY 2023-24 Revised Budget to Actual FY 2024-25 Year-End Adopted Revised Year-End Favorable % Adopted
Actual Budget Budget Actual (Unfavorable) Change Budget Regular Salaries 34,949,271 42,909,181 42,849,605 38,156,795 4,692,810 11% 43,818,271 Overtime Salaries 5,576,951 1,525,486 1,521,486 5,597,446 (4,075,960) 268% 2,599,195 Medical Insurance 4,759,915 5,455,620 5,455,620 5,079,652 375,968 7% 5,702,558 Retirement 5,558,024 6,448,849 6,448,849 6,389,301 59,548 1% 6,727,493 Other Benefits 3,561,235 3,551,101 3,551,101 3,833,849 (282,748) (8%) 3,478,952 Total Personnel 54,405,396 59,890,237 59,826,661 59,057,043 769,618 1% 62,326,469 • 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 1% of budget, with regular salary savings offset by overtime overages.
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 manning obligations. Staff continues to monitor overtime and work to more accurately budget needs, taking into consideration the unpredictability inherent in Police and Fire operations and staffing. Note that while overtime spending was over budgeted amounts; actual spending increased by less than one percent over the prior fiscal year. • Maintenance/Operations: The favorable variance in the maintenance/operations category is primarily due to contracts and professional services not spent during the fiscal year. Including requested carryover for donations ($177,112) and department requests ($701,284), the favorable variance for this category would decrease to approximately $935,428. • Capital Outlay. Almost 100% of unspent capital outlay represent capital spending which the City expects to carry forward to FY 2024-25.
• Internal Service Fund (ISF) Allocations. Expenditures reflect the allocations based on actual activity, and are balanced by formula.
We would not expect to see variance in this funding category at the end of the fiscal year. • Transfers Out. Fiscal Year 2023-24 transfers out reflect the year-end Street Landscaping and Lighting fund subsidy ($1.0 million), the annual 2019 lease revenue bond debt service payment (reimbursed with a transfer in from the Harbor Uplands Fund), and 2021A lease revenue bond debt service payment.
FY 2022-23 FY 2023-24 FY 2023-24 FY 2023-24 FY 2023-24 FY 2023-24 Revised Budget vs.
Actual + Encumbrances FY 2024-25
Year-End Adopted Revised Year-End Year-End Year-End Favorable % Adopted Expenditures Actual Budget Budget Expenditures Encumbrances Actual +
Encumbrances (Unfavorable) Change Budget
Personnel
54,405,396
59,890,237
59,826,661
59,057,043 - 59,057,043
769,618 1%
62,326,469
Maintenance/Operations
8,888,546
10,714,269
12,882,994
9,317,948 1,751,221 11,069,169
1,813,824 14%
12,561,712
ISF Allocations
24,696,556
24,707,415
28,314,128
28,314,128 - 28,314,128 - 0%
28,314,128
Capital Outlay
469,494
357,000
3,731,289
296,592 379,134 675,726
3,055,564 82%
25,110
Bond Debt
-
11,207,444
- - - - - n/a
-
Total Expenditures
88,459,992
106,876,365
104,755,072
96,985,711 2,130,355 99,116,066
5,639,006 5%
103,227,419
Transfers Out
14,343,216
4,004,134
14,857,972
13,973,838 - 13,973,838
884,135 6%
15,880,783
Total
102,803,209
110,880,499
119,613,044
110,959,548 2,130,355 113,089,903
6,523,141 5%
119,108,202
General Fund Financial Report October 15, 2024 Fiscal Year End 2023-24 Attachment 2 – General Fund Report
EXPENDITURES (Continued)
The total of all operating expenditures combined showed a favorable balance of 3% by department as shown below:
Expenditures
FY 2022-23 FY 2023-24 FY 2023-24 FY 2023-24 FY 2023-24 FY 2023-24 Revised Budget to Actual FY 2023-24 Year-End Adopted Revised Year-End Year-End Year-End Favorable % Adopted Actual Budget Budget Expenditures Encumbrances Actuals + Encumbrances
(Unfavorable) Change Budget
Mayor & City Council 691,918 792,845 853,179 729,052 - 729,052 124,126 15% 763,249 City Clerk 1,584,077 1,401,653 1,507,463 1,078,204 64,914 1,143,118 364,345 24% 1,974,976 City Treasurer 312,872 359,136 413,783 320,398 26,880 347,279 66,504 16% 401,286 City Attorney 3,324,583 4,109,286 4,392,104 3,828,762 1,429 3,830,192 561,913 13% 5,021,015 City Manager 1,045,121 1,083,087 1,225,121 1,097,457 98,788 1,196,245 28,876 2% 1,226,715 Human Resources 2,129,596 4,269,843 3,616,791 2,255,398 19,980 2,275,378 1,341,413 37% 2,537,135 Financial Services 2,390,765 2,992,073 3,143,312 2,577,747 291,358 2,869,105 274.208 9% 3,183,717 Police 37,648,095 39,406,238 42,906,890 43,885,143 13,632 43,898,776 (991.886) (2%) 46,118,918 Fire 17,626,588 17,623,498 19,452,271 18,933,867 760,188 19,694,055 (241,784) (1%) 18,509,232 Public Library 4,366,823 4,526,703 4,493,997 4,388,800 - 4,388,800 105,198 2% 4,355,632 Community Services 6,114,053 6,313,328 6,677,659 6,688,170 5,802 6,693,973 (16,314) 0% 7,417,704 Community Development 3,123,266 3,527,120 3,713,845 3,174,083 306,653 3,480,736 233,109 6% 3,620,485 Waterfront & Econ Dev 223,531 238,404 213,552 195,425 - 195,425 18,127 8% 211,176 Public Works 7,515,995 8,587,707 8,489,537 7,608,894 161,597 7,770,491 719,046 8% 7,861,071 Total 88,097,282 95,311,921 101,099,504 96,761,402 1,751,221 98,512,623 2,586,881 3% 103,202,309 Key variances by department include:
• Mayor & City Council: Savings largely reflect unpent contracts and professional services budget. Staff recommends carrying over a portion of these funds to support Council priorities, including logo and trademark work and to support local and regional events. • City Clerk. The savings largely reflect a one-time appropriation for anticipated election costs that did not transpire in FY 2023-24. • City Treasurer. Savings reflect budget for a contract for internal audit services, which the Department did not award during the fiscal year.
• Human Resources. Savings reflects one-time funding set-aside for MOU increases in FY 2023-24. This funding will return to fund balance to support ongoing personnel costs.
• Financial Services. Savings largely reflect ongoing personnel vacancies throughout the fiscal year. • Police. The Department’s overage is primarily in overtime: the level of overage partially reflects a low overtime budget, for which the FY 2024-25 budget includes adjustments. On the revenue side, the Police Department brought in about $115,000 more than projected, including in parking meter usage and stand-by fees and overtime reimbursements. • Fire. Excluding encumbrances, the Department budget was approximately $500,000 under budget. Including encumbrances – funds committed for future year use - the Department's total General Fund spending was overbudget by about $242,000 - with overtime accounts being the largest contributors. Overtime budget was also significantly reduced this year. Additionally, the Fire Department brought in approximately $300,000 over its projected budget. Revenue surpassed projections due to 13 months of passthrough fees being collected and increasing call volume ($0.25 million), and about $65,000 related to construction permits in standby fees. • Public Library. Savings are primarily due to personnel; the Department brought in revenue over budget due to room rentals and late fines.
• Community Services: Savings reflects unspent donations and allocated funding for projects yet to be completed. The Department will request funds to be carried over to FY 2024-25. The Department brought in approximately $370,000 in revenue above budget, primarily due to recreation programs and some additional tennis court fee revenue. • Community Development. Savings primarily reflects personnel savings due to staff turnover, and unspent contractual services funds. The Department brought in close to 100% of its significant revenue budget (accounts for over $4 million in revenue from charges for services and fees and permits).
• Waterfront & Economic Development Department: General Fund savings is primarily due to decreased Contracts/ Professional Services spending and more focus on work/invoices pertaining to the Waterfront’s Harbor Tidelands and Uplands funds during this fiscal year.