March 7, 2023
Finance Department
DATE: March 7, 2023
TO: Mayor Martinez and Members of the City Council
FROM:
Shasa Curl, City Manager
Nickie Mastay, Deputy City Manager-Internal Services
LaShonda White, Deputy City Manager-Community
Services
Delmy Cuellar, Director of Finance
Mubeen Qader, Deputy Director of Finance
Antonio Banuelos, Accounting Manager
Subject:
Fiscal Year 2022-2023 Mid-Year Review
FINANCIAL IMPACT: The General Fund revenue will increase by $8,260,793 and expenditures will increase by $7,726,484. The Non-
General Fund revenue will increase by $4,179,075 and
expenditures will increase by $1,358,660.
PREVIOUS COUNCIL
ACTION:
June 21, 2022
STATEMENT OF THE
ISSUE:
The Fiscal Year 2022-2023 mid-year budget update is an
opportunity to look back at what has happened between
July 1, 2022, and December 31, 2022, since the current
budget was adopted. It provides the City Council and
public a snapshot of the current Fiscal Year (“FY”) based on the most currently available revenues and
expenditures. It also provides a limited forward-looking component updating the year-end projections should
current estimates of the remaining six months prove to be accurate. Updating the current year budget provides City staff a starting point from which to make future multi-year projections.
AGENDA
REPORT
March 7, 2023
RECOMMENDED ACTION:
REVIEW the FY 2022-2023 mid-year budget which
includes proposed budget adjustments increasing
General Fund revenue by $8,260,793 and expenditures
by $7,726,484, and increasing Non-General Fund
revenue by $4,179,075 and expenditures by $1,358,660;
and PROVIDE DIRECTION to staff – City Manager’s
Office/Finance Department (Shasa Curl/Nickie
Mastay/Delmy Cuellar 510-620-6740).
DISCUSSION:
The purpose of the mid-year budget report is to assist the City in monitoring its revenue and expenditures, as compared to the approved budget. The report also provides the City Council, City staff, and the community the ability to monitor revenue and expenditure trends that impact the budget cycle.
This report represents an overview of the City’s revenues and expenditures for Fiscal Year (FY) 2022-2023 from July 1, 2022, through December 31, 2022. At the mid-point of the fiscal year, City staff members conduct a detailed analysis to determine if the original budget is still viable or if adjustments will be necessary. As of December 31, 2022, the expectation is that most budget categories will be at 50 percent; however, this may fluctuate based on the timing of certain revenue receipts and expenditures.
Revenues are not measured against the same standard due to the seasonality of some major revenue sources, such as property taxes which are received in December, April, and June each of year. The mid-year budget, excluding one-time adjustments, serves as the revised baseline budget for the subsequent fiscal year and longer-term financial forecasts.
City staff is presenting the mid-year budget to City Council for discussion and direction and if needed, will return to a future meeting in March 2023 for City Council adoption of a resolution approving the proposed FY 2022-2023 mid-year budget adjustments (Attachment 1).
At the mid-point of the FY 2022-2023, total revenues are $95,623,350 which is 46 percent of the total budget of $206,642,248. Total expenditures are $84,858,761 which is 41 percent of the total budgeted expenditures. Including encumbrances, total expenditures are at 45 percent.
City staff members are recommending several mid-year adjustments with this agenda item. With the proposed revenue and expenditure budget adjustments, the General Fund budget is structurally balanced with total revenues at $214,903,040 and expenditures at $214,903,040. The total Non-General Fund revenue budget is at $214,182,700 and expenditures are at $303,549,639. See Table 1, Table 2, Table 3, and Table 4 for more detailed information.
March 7, 2023
General Fund
General Fund Revenues
Overall, revenue received totaled approximately $95.6 million (46 percent of budget) for the first half of FY 2022-2023 (July 1, 2022 – December 31, 2022), which is below the threshold of 50 percent. The variance is primarily due to the seasonality of some revenue sources. Table 1 below summarizes the first six months of revenue budgeted as compared to actuals. Attachment 4, General Fund Revenue and Expenditures by Department, provides additional detail.
Table 1: General Fund Revenue, Budget vs. Actual Revenue Received, FY 22-23 Mid-Year
The revenue adjustments described below are reflected in Table3 and Table 4. From July to December 2022, most revenues are trending as expected or better, including:
Property Tax – For the FY 2022-2023 General Fund property taxes, City staff estimated growth of 2.9 percent for Secured Property Taxes and overall growth for this revenue category of 1.8 percent. The County Assessor’s Office released the FY 2022-2023 Assessment Roll in July 2022 which indicated growth of the Assessed Valuation (AV) at 8.15 percent for Secured Property Taxes. This is the main component in changes to secure property taxes year to year. Other significant impacts include the sale of properties and tax increment allocations.
With the 8.15 percent AV and growth in the Successor Agency Surplus and Pass-through revenue streams, City staff is expecting additional Property Tax revenue of $2.6 million more than was budgeted.
Sales & Use Tax – Post COVID’s shelter–in-place and the associated downturn in the economy, the sales tax revenue stream has significantly increased over
ACCOUNT DESCRIPTION ORIGINAL
APPROP ADJSMTS REVISED
BUDGET YTD ACTUAL ENCUMB. AVAILABLE
BUDGET
W. ENUMB.
% USED
30 PROPERTY TAXES (46,056,962) - (46,056,962) (22,393,586) - (23,663,376) 48.60% 31 SALES & USE TAX (55,282,200) - (55,282,200) (14,997,474) - (40,284,726) 27.10% 32 UTILITY USERS TAX (49,963,589) - (49,963,589) (28,763,607) - (21,199,982) 57.60% 33 OTHER TAXES (21,638,449) - (21,638,449) (5,994,224) - (15,644,225) 27.70% 34 LICENSES,PRMITS&FEES (11,129,402) - (11,129,402) (3,712,692) - (7,416,710) 33.40% 35 FINES & FORFEITURES (475,275) - (475,275) (85,022) - (390,253) 17.90% 36 USE OF MONEY&PROPRTY (236,079) - (236,079) (198,950) - (37,129) 84.30% 37 CHARGES FOR SERVICES (3,571,292) - (3,571,292) (1,964,022) - (1,607,270) 55.00% 38 OTHER REVENUE (187,500) - (187,500) (162,537) - (24,963) 86.70% 39 RENTAL INCOME (874,506) - (874,506) (536,066) - (338,440) 61.30% 3A INTERGOV STATE TAXES (125,000) - (125,000) - - (125,000) 0.00% 3C INTERGOV STATE GRANT (175,000) - (175,000) (97,988) - (77,012) 56.00% 3D INTERGOV OTHER GRANT (253,569) (10,000) (263,569) (157,631) - (105,938) 59.80% 60 PROC FR SLE PROP (100,000) - (100,000) (120) - (99,880) 0.10% 61 LOAN/BOND PROCEEDS - - - (39,400) - 39,400 100.00% 90 OPER XFERS IN (16,563,424) - (16,563,424) (16,520,032) - (43,392) 99.70% Revenue Total (206,632,248) (10,000) (206,642,248) (95,623,350) - (111,018,897) 46.27%
March 7, 2023
the last two years, and the trend is expected to continue through the current fiscal year. The City’s internal forecast, as well as the updated forecast from the City’s financial consultants, project a modest increase of $272,000 more than what is currently budgeted for FY 2022-2023.
Utility Users Tax (UUT) – This revenue stream, including the maximum cap amount paid by Chevron, has been received as expected. The cap amount was expected to grow by 13.1 percent and ended up being 13.12 percent. UUT for cable and telecommunications, tied to long-term industry trends, continued to decrease and City staff is proposing a reduction of $865,000. UUT for gas and electricity, on the other hand, has increased higher than expected. City staff members are proposing an increase of $1.8 million. The net change for this revenue stream is a total increase of $898,000.
Other Taxes – Other revenues of note include the documentary transfer tax which is collected by Contra Costa County on the sale of properties. The City has received the July through December 2022 payments, totaling $4.4 million (33 percent of budget). Of the major revenue streams, this is the most volatile and hardest to predict with significant monthly variances. For example, one or two large sales can have a huge impact on the tax amount. City staff is proposing an upward adjustment of $614,000 which, as stipulated in the City Council-approved Guiding Fiscal Policy document, is tied to the average monthly collection since the voter-approved tiered structure was implemented in January 2019.
Licenses, Permits, & Fees – This revenue stream includes the business tax revenue. Through December 2022, the full revenue is at 33 percent of the budgeted amount. There is an increase of approximately $1.6 million when comparing the first half of FY 2021-2022 with the first half of FY 2022-2023. The increase stems from the collection of business tax after the adoption of Measure U.
Operating Transfers – These transfers into the General Fund happen when other funds have excess revenues over expenses. The adjustment of $2.9 million corresponds to additional revenue in the Pension Tax Override Fund (PTO), stemming from the 2022 Pension Obligation Bond Refunding which occurred in August 2022. The refunding reduced the expenditures in FY 2022-2023. Cash will be set aside accordingly in the PTO Fund when the new payment schedule begins in July 2023.
General Fund Expenditures
General Fund expenditures totaled $84.9 million (41 percent of budget) at the mid-point of the FY 2022-2023. Actuals are trending lower than the approved budgeted amounts.
Table 2 summarizes the mid-year expenditure budget as compared to actuals.
Attachment 4, General Fund Revenue and Expenditures by Department, provides additional detail.
March 7, 2023
Table 2: General Fund Expenditure, Budget vs. Actual Expenditures, FY 22-23 Mid-Year
Salaries & Wages – This category includes base salaries, overtime, and other pay types for full-time and part-time staff. Actual expenditures total $33.96 million (43 percent of budget). This category is lower than the threshold primarily due to vacancies. Total mid-year adjustments are increased by $352,000 mainly due to overtime resulting from the Fire Academy within the Fire Department.
Benefits – This category includes medical, dental, workers compensation, CalPERS pension costs, other post-employment benefits (OPEB), and other benefits. Actual expenditures total $28.58 million (43 percent of budget) and is below the threshold due to vacancies.
Professional & Admin Services – Included in this category are professional and consulting services and contractual obligations, such as animal control services.
Actual expenditures total $4.6 million (26 percent of budget) and are below the threshold. Factoring in purchase order encumbrances of $4.56 million, the total expenditure amount is $9.19 million (52 percent of budget). The total mid-year budget adjustment is $582,000 mainly due to professional services in the Fire and Information Technology (IT) departments.
Other Operating – This category includes copier leases, office supplies, and other items. Actual expenditures total $2.56 million (34 percent of budget). Factoring in purchase order encumbrances of $1.96 million, the total expenditure amount is $4.52 million (59 percent of budget).
Utilities – This category includes gas, electricity, water, refuse, telephone, and internet services. Actual expenditures total $2.08 million (38 percent of budget).
Factoring in purchase order encumbrances of $771,000, the total expenditure
ACCOUNT DESCRIPTION ORIGINAL
APPROP ADJSMTS REVISED
BUDGET YTD ACTUAL ENCUMB. AVAILABLE
BUDGET
W. ENUMB.
% USED
40 SALARIES AND WAGES 78,761,868 (283,662) 78,478,206 33,953,034 - 44,525,172 43.30% 41 PYRLL/FRINGE BENEFIT 66,929,804 (41,976) 66,887,828 28,575,517 - 38,312,311 42.70% 42 PROF & ADMIN 16,977,138 629,595 17,606,733 4,634,865 4,480,000 8,491,868 51.40% 43 OTHER OPERATING 7,970,902 (367,541) 7,603,361 2,558,095 1,958,724 3,086,542 59.40% 44 UTILITIES 5,399,957 3,565 5,403,522 2,075,143 771,078 2,557,301 52.70% 45 EQPT & CONTRACT SVCS 2,731,448 43,038 2,774,486 1,219,835 439,255 1,115,395 59.80% 46 PROVISN FOR INS LOSS 25,725 3,916 29,641 28,641 - 1,000 96.60% 47 COST POOL 15,277,766 - 15,277,766 7,638,878 - 7,638,888 50.00% 48 ASSET/CAPITAL OUTLAY 3,172,136 477,375 3,649,511 234,740 77,981 3,336,790 8.60% 49 DEBT SVC EXPENDITURE 1,037,009 - 1,037,009 530,970 - 506,038 51.20% 4A A87 COST PLAN REIMBS (3,531,610) - (3,531,610) (1,754,649) - (1,776,961) 49.70% 50 GRANT EXPENDITURES 2,500 80,000 82,500 (1,694) 8,000 76,194 7.60% 91 OPER XFERS OUT 11,877,605 - 11,877,605 5,165,386 - 6,712,219 43.50% Expense Total 206,632,248 544,309 207,176,557 84,858,761 7,735,039 114,582,757 44.69%
March 7, 2023
amount is $2.85 million (53 percent of budget).
Equipment & Contract Services - This category includes equipment and maintenance/repair services. Actual expenditures total $1.22 million (44 percent of budget). Factoring in purchase order encumbrances of $439,000, the total expenditure amount is $1.66 million (60 percent of the budget).
Asset Capital Outlay – Expenditures include maintenance and capital improvement project-related costs. The year-to-date actual with encumbrances is 8.6 percent. The proposed mid-year adjustment of $2.4 million is mainly due to the additional investment in the City’s Paving Index.
Transfers Out – This category includes transfers out from the General Fund to non- General Funds, mostly for operating subsidies and a portion of debt service. Actuals total $5.17 million (43 percent of budget). The total mid-year adjustment is $155,000, mainly due to equipment needs in the IT department.
General Fund Mid-Year Budget Adjustments
As shown in Table 3, City staff propose General Fund total revenue adjustments of $8,260,793 and total expenditure adjustments of $7,726,484. Table 4 categorizes all the revenue and expenditure adjustments presented in Table 3 by account type.
Table 3: Proposed General Fund Adjustments, FY 22-23 Mid-Year
Proposed
Mid-Year
Adjustment
Description
(2,551,967) Property Taxes: Successor Agency surplus and passthrough. (271,937) Sales Tax: Revenue is trending higher than expected.
(897,690)
Utility Users Tax: Chevron payment is being received one month in advance. Increase budget to reflect additional revenue.
(613,738) Other Taxes: Documentary transfer tax trending higher than expected. (1,554) Licenses Permits and Fees: Business Tax revenue trending better than expected. (784,968) Use of Money and Property: Revenue trending better than expected. 2,500 Charges for Services: Passport services revenue lower than expected. (4,565) Miscellaneous revenue.
(480) Miscellaneous revenue.
(39,400) Loan/Bond Proceeds revenue.
(2,946,531) Operating Transfer In: Pension Tax Override transfer, part of the revenue will be used to pay Pension Obligation Bond refinancing costs.
(210,463) Operating Transfer In: Garfield pension trust fund close out.
50,000
Licenses Permits and Fees: Revenue trending lower than expected due to delinquent cannabis businesses, and illegal/unpermitted operators.
(150,000) Fines and Forfeitures: Parking enforcement revenue
March 7, 2023
160,000 Fines and Forfeitures: Correction to adjust budget for a duplicate receipt. (8,260,793) Total General Fund Revenue Adjustments
1,500,000
Operating Transfer Out: Payoff Pension Obligation Bond refinancing costs through Pension Tax Override fund proceeds. These are costs that were not paid from the bond proceeds (Per agenda item 7/26/22).
20,380
Salaries and Benefits: Additional budget needed for overtime, Code Enforcement Officers need to conduct after hour inspections and attend community meetings.
241,550
Professional Services: Mark43 Fire CAD upgrade and hardware cost were not included in the original budget because the department was in the early stages of the intended upgrade.
291,499
Salaries and Benefits: The overtime for the fire academy cadets was not included in the original budget because the Fire Department was in the early stages of the recruitment process.
12,058
Other Operating Costs: Personal Protective Equipment cost for the firefighter recruits was not included in the original budget, because the Fire Department did not have the final number of personnel vacancies until December 2022.
3,170
Salaries and Benefits: Reallocation of an Office Specialist position to an Administrative Aide position to support the changes that have occurred within the Community Services Department and the Recreation Division.
25,000
Salaries and Benefits: An additional Recreation Program Specialist position is requested. This position will support the Recreation Program Coordinator at two sites: the Richmond Recreation Complex and Booker T. Anderson Community Center (once reopened).
200,000
Professional Services: The current IT Network and Systems Security Officer is managing the City’s network and providing Cyber Security management and defense. An additional resource is needed to support the City’s expanding infrastructure and to help manage and secure the City’s systems against Cyber Security threats.
300,000
Asset Capital Outlay: This additional funding is essential to upgrade and repair the critical security access system included in the City of Richmond Network Operating Systems.
265,000
Professional Services: Emergency Operations Center equipment upgrade including Radio Communication, Kray Cabling, Computers, Printers, Plotters, Cell Phones, Cellular hot spots, and Portable Radios.
147,828
Equipment and Contracts: Contractual obligation for the City’s ERP purchase of software and support services needed for the upgrade, training, and an investment assessment that is essential in ensuring City staff is operating at peak efficiency and has the knowledge to meet the evolving software needs of the City of Richmond.
12,195 Salary and Benefits: Position Reallocation of GIS Administrator to IT Manager job classification 6,000 Professional Services: City Council miscellaneous and travel related expenditures.
11,530
Operating Transfer Out: Transfer out to Marina District (District) to reimburse for prior year maintenance costs. The City was determined to be responsible for the signage work that was paid from the District's fund. The adjustment is to reimburse the District for those expenditures
*2,065,1811
Asset Capital Outlay: Additional funding for street paving, sidewalks, and traffic calming activities.
The City's paving index is 58 which is poor and the current annual allocation of $4M to $5M is not sufficient to either maintain or enhance the index. This additional amount will be a step towards improving the streets and roads paving condition.
*2,500,0001
Transfer Out: This transfer to the Risk Reserve will help move towards a targeted 80% Confidence Level. The current Confidence Level is ~55% for short-term liabilities (1 year). With additional funding, the Confidence Level could reach ~70% for short-term liability. For long-term liabilities, the current Confidence Level is ~16%, and with additional funding it could reach ~21%.
1 City staff is proposing a $2,065,181 allocation to support street paving, sidewalks and traffic calming activities, as well as $2,500,000 to transfer out to the Risk Reserve to increase the confidence level. While these two entries, totaling $4,565,181, reflect staff’s recommendation for proposed expenditures, Table 5 provides two additional options for City Council consideration.
March 7, 2023
50,000
Professional Services: Acquiring consulting services to pursue various grants available for Emergency Response and Public Safety. The current resources are insufficient and the City can potentially bring additional funding sources through pursuing grants.
37,388
Professional Services: Campus Bay litigation related expenditures are a passthrough, and developer fees were collected in prior year for this item.
50,000
Professional Services: GovInvest contract to address State Auditor recommendations on financial projection, retirement costs, Other Post-Employment Benefits funding, and labor cost projections.
(276,881)
Professional Services: Carry forward encumbrances for legal services created a budget amendment in the City's financial system. The requested adjustment will reverse the budget amendment.
7,641
Equipment and Contract Services: Carry forward encumbrances for equipment and contract services created a budget amendment. The adjustment will reverse the amendment.
(25,989)
Professional Services: Carry forward encumbrances for legal services created a budget amendment in the City's financial system. The requested adjustment will reverse the budget amendment. 35,000 Professional Services: Strategic Planning Contract. 247,934 Operating Transfer Out: Transfer needed due to Nevin Plaza revenue decrease. 7,726,484 Total General Fund Expenditure Adjustments
(534,309) Net Mid-Year Adjustments
295,229
Prior Year Encumbrances for Legal Services, Equipment Services and Professional Services created budget amendments.
239,080
Recruitment Services and Segal contracts were appropriated by the City Council between July and December.
0 Net General Fund
March 7, 2023
Table 4: General Fund Proposed Budget, FY 22-23 Mid-Year
As shown in Table 3 and Table 4, City staff proposed General Fund total revenue adjustments of $8,260,793 and total expenditure adjustments of $7,726,484. Part of the proposed expenditures includes a total of $4,565,181 in adjustments to support street paving, sidewalks and traffic calming activities ($2,065,181), and funds to transfer out to the Risk Reserve to increase the confidence level ($2,500,000). While these two items reflect staff’s recommendation for proposed expenditures, Table 5 below provides three (3) options for the City Council’s consideration.
March 7, 2023
Table 5: Options to fund Risk Reserve and Street & Sidewalk-Related Projects City Council Options
Option A (Staff’s Recommendation: Included in Table 3)1 Risk Reserve 2,500,000
City-wide paving, sidewalks, and traffic calming 2,065,181 Total 4,565,181
Option B
Risk Reserve 2,250,000
Remote meetings for boards, commissions, committees (additional staffing, equipment, and training, city-wide hybrid ~ June 1, 2026/1/23)
1,000,000
City-wide paving, sidewalks, and traffic calming 1,315,181 Total 4,565,181
Option C
Risk Reserve 2,250,000
City Council Preference 2,315,181
Total 4,565,181
City staff’s recommendation of Option A will allow the City to increase the Risk Reserve Confidence Level consistent with the City Council-approved Resolution No. 69-08 adopted on May 17, 2022 ($2,250,000). Additionally, Option A will allow for a necessary investment to enhance the City’s paving index, while also improving sidewalks and traffic calming measures, all of which are City and community priorities ($2,065,181).
While Option B and Option C both provide allocations to increase the Risk Reserve Confidence Levels, Option B also includes funding to support staffing and technological investment ($1,000,000) to allow for boards and commissions to transition to hybrid meetings, and also includes a reduced allocation for paving and sidewalks ($1,315,181). Finally, Option C allows for funding for unique City Council preferences ($2,315,181).
Non-General Funds
Non-General Fund Revenues
Overall, 41 percent of non-general fund revenues have been collected and are trending as expected. The timing of receipts varies amongst the funds based on the source of funding. For instance, funds receiving grants are typically received after expenditures are incurred and reimbursement requests are submitted to grantors. Table 6 summarizes the revenue budget as compared to actuals for non-general funds. See Attachment 5 – Non-General Fund Revenues and Expenditures by Fund for additional information.
Capital Improvement Project (CIP) funds’ major variance is due to grant-funded
March 7, 2023
projects, as the revenues are received after the expenditures are incurred and reimbursements are submitted to the grantors.
Debt service funds’ activity is based on the debt schedule that varies from equal monthly transactions.
Enterprise funds’ variance is due to Wastewater Fund’s pending Bond Proceeds revenue.
Pension funds’ variance is due to Fair Value adjustment entry of one of the pension trust funds.
Special funds’ revenue variance is due to advance revenue received from the American Rescue Plan Act (ARPA).
Table 6: Non-General Fund Revenues, FY 22-23 Mid-Year
Non-General Fund Expenditures
Overall, 50 percent of non-general fund budget appropriations have been expended.
Spending patterns in other funds are trending as expected. See Attachment 5, Non- General Fund Revenues and Expenditures by Fund, for detailed information. Table 7 reflects all funds listed within the non-general fund.
CIP Funds’ variance is due to projects moving at a different pace than expected. Debt service funds are based on a pre-determined schedule. Housing funds’ variance is due to expenditures lower than expected in housing- in-lieu funds.
Internal Service funds’ variance is due to the insurance reserve fund making annual premium payments earlier in the fiscal year.
Pension and trust funds’ expenditures are historically not budgeted.
ACCOUNT DESCRIPTION ORIGINAL
APPROP
TRANFRS/ADJ
SMTS
REVISED
BUDGET YTD ACTUAL AVAILABLE
BUDGET % USED
Total Capital Improvement Funds (31,852,226) (3,225,360) (35,077,586) (5,742,506) (29,335,080) 16% Total Other Operations Funds (27,276,353) (6,473,361) (33,749,714) (9,402,699) (24,347,015) 28% Total Special Revenues (29,253,674) (284,164) (29,537,838) (31,332,081) 1,794,242 106% Total Housing Funds (2,161,415) - (2,161,415) (1,196,982) (964,433) 55% Total Debt Service Funds (20,629,090) - (20,629,090) (4,287,851) (16,341,239) 21% Total Enterprise Funds (58,991,980) - (58,991,980) (20,403,290) (38,588,690) 35% Total RHA Funds (4,880,044) - (4,880,044) (1,142,758) (3,737,286) 23% Total Internal Service Funds (24,730,653) - (24,730,653) (12,905,328) (11,825,325) 52% Total Trust Funds - (80,000) (80,000) (1,475,402) 1,395,402 1844% Total Pension Funds (165,305) - (165,305) 1,347,463 (1,512,768) -8 Total All Funds (199,940,740) (10,062,885) (210,003,625) (86,541,434) (123,462,191) 41%
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Table 7: Non-General Fund Expenditures Budget vs. Actual, FY 22-23 Mid-Year
Capital Improvement Project (CIP) Funds’ Highlights
The CIP funds have a total revised budget of $51.1 million in several funds. Total expenditures at the mid-point of FY 2022-2023 equal 38 percent. Table 8 shows the total budget as compared to actuals by the capital funds; however, a comprehensive report of capital improvement projects is in Attachment 7 – Capital Improvement Projects. Please note that Table 5 only shows CIP budget in the Capital Improvement funds. The city-wide CIP budget also includes the capital improvement projects budgeted in several enterprise funds, such as Port Operations and Wastewater fund.
Table 8: Capital Improvement Funds Highlights, Expenditures
ACCOUNT DESCRIPTION ORIGINAL
APPROP
TRANFRS/
ADJSMTS
REVISED
BUDGET
YTD
EXPENDED ENCUMB. AVAILABLE
BUDGET % USED
Total Capital Improvement Funds 37,256,854 13,833,087 51,089,941 3,991,113 15,337,028 31,761,800 38% Total Other Operations Funds 27,075,053 11,433,784 38,508,836 9,655,270 6,596,192 22,257,374 42% Total Special Revenue Funds 39,674,849 4,488,345 44,163,193 19,752,838 4,380,242 20,030,112 55% Total Housing Funds 5,458,047 38,814 5,496,861 398,829 566,558 4,531,474 18% Total Debt Sevice Funds 21,612,086 - 21,612,086 19,656,716 11,050 1,944,320 91% Total Enterprise Funds 70,579,794 38,320,945 108,900,738 29,848,738 22,036,579 57,015,421 48% Total RHA Funds 4,880,044 - 4,880,044 1,246,618 327,945 3,305,481 32% Total Internal Service Funds 25,169,925 2,289,355 27,459,280 9,695,092 7,626,580 10,137,609 63% Total Trust Funds - 80,000 80,000 311,274 1,628 (232,902) 391% Total Pension Funds - - - 655,324 - (655,324) 100% Total All Funds 231,706,650 70,484,330 302,190,979 95,211,814 56,883,801 150,095,365 50%
ACCOUNT DESCRIPTION ORIGINAL
APPROP
TRANFRS/
ADJSMTS
REVISED
BUDGET
YTD
EXPENDED ENCUMB. AVAILABLE
BUDGET % USED
1002 STATE GAS TAX 2,815,755 19,676 2,835,431 1,376,621 662,120 796,691 72% 1004 ASSET SEIZURE FUND 20,000 - 20,000 - - 20,000 0% 1006 OUTSIDE FUNDED SVCS - GRA 8,662,839 4,209,837 12,872,676 934,802 1,778,973 10,158,900 21% 1019 ROAD MAINT & REHAB ACCT ( 2,395,337 2,529,109 4,924,446 10,189 1,091,595 3,822,661 22% 1054 ENGINEERING GRANTS 14,509,778 3,664,515 18,174,293 1,082,173 9,040,778 8,051,342 56% 2001 GENERAL CAPITAL FUND 3,061,487 508,287 3,569,774 126,726 774,625 2,668,423 25% 2002 MEASURE J 3,786,947 1,432,959 5,219,906 278,841 918,013 4,023,052 23% 2110 IMPACT FEE - PARKS 15,000 - 15,000 15,000 - - 100% 2111 IMPACT FEE - TRAFFIC 263,639 106,795 370,434 7,168 102,447 260,819 30% 2113 IMPACT FEE - FIRE 89,383 - 89,383 - - 89,383 0% 2114 IMPACT FEE - POLICE 0%
2116 IMPACT FEE - PARKS/OPEN 373,264 269,519 642,783 80,520 188,999 373,264 42% 2117 IMPACT FEE - LIBRARY 469,295 250,000 719,295 5,521 10,638 703,136 2% 2120 IMPACT FEE - WASTEWATER 794,130 842,391 1,636,521 73,551 768,840 794,130 52% Total Capital Improvement Funds 37,256,854 13,833,087 51,089,941 3,991,113 15,337,028 31,761,800 38%
March 7, 2023
Non-General Fund Mid-Year Adjustments
Mid-year adjustments for non-General Fund revenue and expenditures are listed in Attachment 2 – Mid-Year Budget Adjustments. Total Non-General Fund Revenue adjustments are $4,179,075 and total Non-General Fund Expenditure adjustments are $1,358,660. Tables 9 and 10 show revenue and expenditure adjustments by fund type.
Table 9: Non-General Fund Revenue, FY 22-23 Mid-Year
Table 10: Non-General Fund Expenditures, FY 22-23 Mid-Year
Pending Budget Requests for FY 2022-2023, Labor Negotiations and Looming Recession
Table 11 lists some of the major budget requests that were not included in the mid-year adjustments due to lack of funding in the City’s existing resources for the current fiscal year. However, it is important to note that some or all these line items should be the top priority in the FY 2023-2024 budget.
ACCOUNT DESCRIPTION ORIGINAL
APPROP
TRANFRS/ADJ
SMTS
REVISED
BUDGET YTD ACTUAL MID-YEAR
ADJUSTMENTS
PROPOSED MID
YEAR BUDGET
Total Capital Improvement Funds (31,852,226) (3,225,360) (35,077,586) (5,742,506) -1,605,377 (36,682,963) Total Other Operations Funds (27,276,353) (6,473,361) (33,749,714) (9,402,699) -11,530 (33,761,244) Total Special Revenues (29,253,674) (284,164) (29,537,838) (31,332,081) 0 (29,537,838) Total Housing Funds (2,161,415) - (2,161,415) (1,196,982) -62,168 (2,223,583) Total Debt Service Funds (20,629,090) - (20,629,090) (4,287,851) 0 (20,629,090) Total Enterprise Funds (58,991,980) - (58,991,980) (20,403,290) 0 (58,991,980) Total RHA Funds (4,880,044) - (4,880,044) (1,142,758) 0 (4,880,044) Total Internal Service Funds (24,730,653) - (24,730,653) (12,905,328) -2,500,000 (27,230,653) Total Trust Funds - (80,000) (80,000) (1,475,402) 0 (80,000) Total Pension Funds (165,305) - (165,305) 1,347,463 0 (165,305) Total All Funds (199,940,740) (10,062,885) (210,003,625) (86,541,434) (4,179,075) (214,182,700)
ACCOUNT DESCRIPTION ORIGINAL
APPROP
TRANFRS/
ADJSMTS
REVISED
BUDGET
YTD
EXPENDED ENCUMB. MID-YEAR
ADJUSTMENTS
PROPOSED MID
YEAR BUDGET
Total Capital Improvement Funds 37,256,854 13,833,087 51,089,941 3,991,113 15,337,028 245,000 51,334,941 Total Other Operations Funds 27,075,053 11,433,784 38,508,836 9,655,270 6,596,192 72,544 38,581,380 Total Special Revenue Funds 39,674,849 4,488,345 44,163,193 19,752,838 4,380,242 0 44,163,193 Total Housing Funds 5,458,047 38,814 5,496,861 398,829 566,558 0 5,496,861 Total Debt Sevice Funds 21,612,086 - 21,612,086 19,656,716 11,050 0 21,612,086 Total Enterprise Funds 70,579,794 38,320,945 108,900,738 29,848,738 22,036,579 236,261 109,136,999 Total RHA Funds 4,880,044 - 4,880,044 1,246,618 327,945 20,000 4,900,044 Total Internal Service Funds 25,169,925 2,289,355 27,459,280 9,695,092 7,626,580 574,392 28,033,672 Total Trust Funds - 80,000 80,000 311,274 1,628 0 80,000 Total Pension Funds - - - 655,324 - 210,463 210,463 Total All Funds 231,706,650 70,484,330 302,190,979 95,211,814 56,883,801 1,358,660 303,549,639
March 7, 2023
Table 11: Pending Budget Requests for FY 2023-2024
Amount Pending Budget Request
15,000,000 Investment in Paving, sidewalks and traffic calming Index improvement
TBD Fire Training Center Predevelopment Costs
10,000,000 Library renovation
1,500,000 Measure U loss due to pending litigations
5,000,000 Terminal 1 cleanup costs
31,500,000 Total Pending Budget Requests
The City is in labor negotiations with several bargaining units regarding labor contracts and the implementation of the Classification and Compensation study. The results of these negotiations will impact the expenditure trends in the next three quarters. The global economy is also indicating early signs of a recession in the 2023 calendar year.
Due to these pressures on the City’s expenditures and revenues, there is a potential for fiscal headwinds in the coming years that could deplete the City’s reserves. The City is self-insured for General Liability and Worker’s Compensation claims. The City adopted Resolution No. 69-08 on May 17, 2022, which required the Risk Reserve Fund to be funded at the 80 percent Confidence Level. During the FY 2022-2023 budget development process, the City did not fund the reserve adequately per the actuarial report; hence, the current reserve level is estimated to be lower than 65 percent. City staff would like to remind the City Council that funding at the lower Confidence Level may impact the City’s ability to pay liabilities emerging from General Liability and Workers Compensation related incidents.
Next Steps
Based on City Council direction, City staff will return to the next meeting in March 2023 for City Council’s approval of the Mid-Year budget agenda item. City staff will continue to closely monitor the revenues and expenditure trends in the current fiscal year to determine if adjustments are needed during the Quarter 3 budget review.
DOCUMENTS ATTACHED:
Attachment 1 – DRAFT Mid-Year Budget Resolution
Attachment 2 – Mid-Year Budget Adjustments
Attachment 3 – General Fund Summary of Revenue and Expenditures Attachment 4 – General Fund Revenues and Expenditures by Department Attachment 5 – Non-General Fund Revenues and Expenditures by Fund Attachment 6 – Multi-Year Position Listing
Attachment 7 – Capital Improvement Projects
Attachment 8 – Grants Listing