March 28, 2023
Finance Department
DATE: March 28, 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 $8,460,793 and expenditures will increase by $7,926,484. The Non-
General Fund revenue will increase by $4,350,887 and
expenditures will increase by $1,530,472.
PREVIOUS COUNCIL
ACTION:
June 21, 2022
March 7, 2023
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 28, 2023
RECOMMENDED ACTION:
REVIEW the Fiscal Year 2022-2023 mid-year budget
which includes proposed budget adjustments increasing
General Fund revenue by $8,460,793 and expenditures
by $7,926,484 and increasing Non-General Fund
revenue by $4,350,887 and expenditures by $1,530,472;
and ADOPT a Resolution for Fiscal Year 2022-2023 Mid-
Year budget adjustments in Attachment 2 – 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 adopted 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 presented the Mid-Year budget on March 7, 2023, and the City Council provided the following direction to staff:
Delineate line items that have already been approved by the City Council and/or are related to some other City Council approved action. (Attachment 2) The City Council also asked if there was a possibility of expanding the library hours.
The revised Mid-Year budget review incorporates the City Council provided direction on March 7, 2023. City staff is recommending adopting 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.
March 28, 2023
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 $215,103,040 and expenditures at $215,103,040. The total Non-General Fund revenue budget is at $214,354,512 and expenditures are at $303,721,451. See Table 1, Table 2, Table 3, and Table 4 for more detailed information.
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 Table 3 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
ACCOUNT DESCRIPTION ORIGINAL
APPROP ADJSMTS REVISED BUDGET YTD ACTUAL 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 28, 2023
Assessed Valuation (AV) at 8.15 percent for Secured Property Taxes. This is the main component in changes to secured 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 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, includes the maximum cap amount paid by Chevron, which 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 – Included within this category is 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). Documentary Transfer Tax is one of the most volatile revenue streams and hard 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 $814,000 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. Total Mid-Year adjustment is $3.2 million and the major part of the adjustment, $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
March 28, 2023
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 approximately $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.
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 $540,367 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 $4.48 million, the total expenditure amount is $9.11 million (51 percent of budget). The total mid-year budget adjustment is $610,768mainly due to professional services in the Fire and
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 28, 2023
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 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). The total mid-year adjustment is $155,469 mainly due to equipment needs in the IT department.
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 $4.2 million, mainly due to the payment of the 1999 Pension Obligated Bond and contribution to the risk reserve.
General Fund Mid-Year Budget Adjustments
As shown in Table 3, City staff proposes General Fund total revenue adjustments of $8,460,793 and total expenditure adjustments of $7,926,484. Table 4 categorizes all the revenue and expenditure adjustments presented in Table 3 by account type. Please note that the yellow highlighted items are encumbrances from prior year or are associated with other City Council approved actions (see Attachment 2).
Table 3: Proposed General Fund Adjustments, FY 22-23 Mid-Year (E-2) Category
(F-2)
Proposed
Mid-Year
Adjustments
March 21,
2023
(G)
Description
Property Taxes
(2,551,967) Property Taxes, Successor Agency surplus and passthrough Sales & Use Tax
(271,937) Sales Tax is trending higher than expected
Utility Users Tax
(897,690)
Utility Users Tax, Chevron payment is being received one month in advance. Increase budget to reflect additional revenue.
March 28, 2023
Other Taxes
(813,738) Other Taxes; Documentary transfer tax trending higher than expected.
Licenses, Permits & Fees
(1,554) Licenses Permits and Fees; Business Tax revenue trending better than expected.
Use Of Money & Property
(784,968) Use of Money and Property; Interest income is trending better than expected Charges For Services
2,500 Charges for Services; Passport Services revenue lower than expected Other Revenue
(4,565) Miscellaneous revenue.
Other Revenue
(480) Miscellaneous revenue.
Loan/Bond Proceeds
(39,400) Loan/Bond Proceeds revenue.
Operating Transfers In
(2,946,531)
Operating Transfer In; Pension Tax Override transfer, part of this revenue will be used to pay Pension Obligation Bond refinancing costs.
Operating Transfers In
(210,463) Operating Transfer In; Garfield pension trust fund close out.
Licenses, Permits & Fees
50,000
Licenses Permits and Fee; Revenue trending lower than expected due to delinquent cannabis businesses, and illegal/unpermitted operators.
Fines & Forfeitures
(150,000) Fines and Forfeitures; parking enforcement revenue.
Fines & Forfeitures
160,000 Fines and Forfeitures; to adjust budget for a duplicate receipt.
(8,460,793)
-
Operating Transfers Out
1,478,112
Operating Transfer Out; Payoff Pension Obligation Bond refinancing costs through Pension Tax Override fund proceeds. These costs were not paid from the bond proceeds.
Staff - Salaries and Wages
20,380
Salaries and Benefits; Additional budget needed for overtime, Code Enforcement Officers need to conduct after hour inspections and attend community meetings.
Prof & Admin, Software
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.
Staff - Salaries and Wages
143,345
2 Additional Fire Inspector II positions
Staff - Salaries and Wages
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.
Other Operating, Personal
Protection Equipment
12,058
Other Operating; Personal Protection 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.
Staff - Salaries and Wages
3,170
Salaries and Benefits; Reallocate an Office Specialist position to an Administrative Aide position in order to support some of the changes that have occurred within the Community Services Department and the Recreation Division.
Staff - Salaries and Wages
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.
Staff - Salaries and Wages
-
Reallocate Administrative Librarian to Head of Reference to expand Library services, no fiscal impact in current fiscal year due to vacancy savings
Staff - Salaries and Wages
-
One additional Librarian I/II position to expand Library services, no fiscal impact in current fiscal year due to vacancy savings
Staff - Salaries and Wages
-
Two additional Library Assistant I/II positions to expand Library services, no fiscal impact in current fiscal year due to vacancy savings
Prof & Admin, Software
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.
March 28, 2023
Asset/Capital Outlay
300,000
Asset, Capital Outlay; additional funding is essential to upgrade and repair the critical security access system included in the City of Richmond Network Operating Systems.
Prof & Admin, Emergency
Operations Center
265,000
Professional Services; Emergency Operations Center equipment upgrade including Radio Communication, Kray Cabling, Computers, Printers, Plotters, Cell Phones, Cellular hot spots, and Portable Radio.
Equipment & Contract Svcs,
Software/Hardware
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 assessment that is essential ensuring City staff is operating at peak efficiency and has the knowledge to meet the evolving software needs of the City of Richmond.
Staff - Salaries and Wages Position reclass of GIS Administrator to IT Manager job classification, no fiscal impact due to vacancy saving
Prof & Admin, General Operating
33,700
Operating expenditures for the Mayor’s Office
Staff - Salaries and Wages
44,777
One Management Analyst II for the Mayor’s Office
Staff - Salaries And Wages
12,195
One Assistant Administrative Analyst for the City Council Office Prof & Admin, Travel and Training
6,000 Professional Services, City Council miscellaneous and travel related expenditures Operating Transfers Out
11,530
Operating Transfer Out, transfer out to Marina district to reimburse for prior year maintenance costs, it was determined the City was responsible for the signage work that was paid from the district's fund. The adjustment is to reimburse the district for those expenditures.
Asset/Capital Outlay
2,065,1811
Asset Capital Outlay, additional funding for street paving activities. The City's paving index 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 managing the streets and roads paving condition
Operating Transfers Out
2,500,000 1
Transfer Out; to Risk Reserve towards targeted 80% Confidence Level, current Confidence Level is around 55%.
Prof & Admin, Consulting
45,000
Professional Services, acquiring consulting services to pursue various grants available for Emergency Response and Public Safety. The current resources are not sufficient, and the City can potentially bring additional funding sources through pursuing grants Prof & Admin, Legal
37,388
Professional Services; Campus Bay litigation related expenditures, these expenditures are passthrough, developer fees were collected in prior year.
Prof & Admin, Consulting
50,000
Professional Services, GovInvest contract to address State Auditor Recommendations on financial projections, retirement costs, Other Post Employment Benefits funding, and labor cost projections.
Staff - Salaries and Wages
-
Reallocate Accountant I/II position into Budget Analyst I/II to provide higher level of analysis, no fiscal impact due to current vacancy savings
Prof & Admin, Legal
(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.
Equipment & Contract Svcs,
Supplies
7,641
Equipment and Contract Services, carry forward encumbrances for equipment and contract services created a budget amendment. The adjustment will reverse the amendment.
Prof & Admin, Legal
(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.
Prof & Admin, Consulting
35,000 Professional Services, Strategic Planning Contract Operating Transfers Out
91,122 Operating Transfer Out; due to Nevin Plaza revenue decrease Operating Transfers Out
161,878 Emergency expenditures due to storms in 2023
Total Expenditures Requests
7,926,484
Revenue over Expenditures
(534,309)
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 28, 2023
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.
Total Net
0 Chart 1: FY2022-2023 Revenue Budget
-
10,000,000
20,000,000
30,000,000
40,000,000
50,000,000
60,000,000
Revenue
Category
ORIGINAL APPROP REVISED BUDGET PROPOSED
MID-YEAR BUDGET
March 28, 2023
Chart 2:FY2022-2023 Expenditure Budget
Table 4: General Fund Proposed Budget, FY 22-23 Mid-Year
(10,000,000)
-
10,000,000
20,000,000
30,000,000
40,000,000
50,000,000
60,000,000
70,000,000
80,000,000Expenditures
Category
ORIGINAL APPROP REVISED BUDGET PROPOSED…
ACCOUNT DESCRIPTION ORIGINAL
APPROP ADJSMTS REVISED BUDGET YTD ACTUAL MID-YEAR
ADJUSTMENTS
PROPOSED
MID-YEAR
BUDGET
Percentage
of Total
Budget
30 PROPERTY TAXES (46,056,962) - (46,056,962) (22,393,586) (2,551,967) (48,608,929) 22.60% 31 SALES & USE TAX (55,282,200) - (55,282,200) (14,997,474) (271,937) (55,554,137) 25.83% 32 UTILITY USERS TAX (49,963,589) - (49,963,589) (28,763,607) (897,690) (50,861,279) 23.65% 33 OTHER TAXES (21,638,449) - (21,638,449) (5,994,224) (813,738) (22,452,187) 10.44% 34 LICENSES,PRMITS&FEES (11,129,402) - (11,129,402) (3,712,692) 48,446 (11,080,956) 5.15% 35 FINES & FORFEITURES (475,275) - (475,275) (85,022) 10,000 (465,275) 0.22% 36 USE OF MONEY&PROPRTY (236,079) - (236,079) (198,950) (784,968) (1,021,047) 0.47% 37 CHARGES FOR SERVICES (3,571,292) - (3,571,292) (1,964,022) 2,500 (3,568,792) 1.66% 38 OTHER REVENUE (187,500) - (187,500) (162,537) (5,045) (192,545) 0.09% 39 RENTAL INCOME (874,506) - (874,506) (536,066) - (874,506) 0.41% 3A INTERGOV STATE TAXES (125,000) - (125,000) - - (125,000) 0.06% 3C INTERGOV STATE GRANT (175,000) - (175,000) (97,988) - (175,000) 0.08% 3D INTERGOV OTHER GRANT (253,569) (10,000) (263,569) (157,631) - (263,569) 0.12% 60 PROC FR SLE PROP (100,000) - (100,000) (120) - (100,000) 0.05% 61 LOAN/BOND PROCEEDS - - - (39,400) (39,400) (39,400) 0.02% 90 OPER XFERS IN (16,563,424) - (16,563,424) (16,520,032) (3,156,994) (19,720,418) 9.17% Revenue Total (206,632,248) (10,000) (206,642,248) (95,623,350) (8,460,793) (215,103,040) 100.00% 40 SALARIES AND WAGES 78,761,868 (283,662) 78,478,206 33,953,034 540,367 79,018,572 36.74% 41 PYRLL/FRINGE BENEFIT 66,929,804 (41,976) 66,887,828 28,575,517 - 66,887,828 31.10% 42 PROF & ADMIN 16,977,138 629,595 17,606,733 4,634,865 610,768 18,217,500 8.47% 43 OTHER OPERATING 7,970,902 (367,541) 7,603,361 2,558,095 12,058 7,615,419 3.54% 44 UTILITIES 5,399,957 3,565 5,403,522 2,075,143 - 5,403,522 2.51% 45 EQPT & CONTRACT SVCS 2,731,448 43,038 2,774,486 1,219,835 155,469 2,929,955 1.36% 46 PROVISN FOR INS LOSS 25,725 3,916 29,641 28,641 - 29,641 0.01% 47 COST POOL 15,277,766 - 15,277,766 7,638,878 - 15,277,766 7.10% 48 ASSET/CAPITAL OUTLAY 3,172,136 477,375 3,649,511 234,740 2,365,181 6,014,692 2.80% 49 DEBT SVC EXPENDITURE 1,037,009 - 1,037,009 530,970 - 1,037,009 0.48% 4A A87 COST PLAN REIMBS (3,531,610) - (3,531,610) (1,754,649) - (3,531,610) -1.64% 50 GRANT EXPENDITURES 2,500 80,000 82,500 (1,694) - 82,500 0.04% 91 OPER XFERS OUT 11,877,605 - 11,877,605 5,165,386 4,242,642 16,120,247 7.49% Expense Total 206,632,248 544,309 207,176,557 84,858,761 7,926,484 215,103,041 100.00% Net Variance (+)/- - 534,309 534,309 (10,764,589) (534,309) 0 0
March 28, 2023
As shown in Table 3 and Table 4, City staff proposed General Fund total revenue adjustments of $8,460,793 and total expenditure adjustments of $7,926,484. 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.
Table 5: Options to fund Risk Reserve and Street & Sidewalk-Related Projects City Council Options
Option A
Risk Reserve 2,500,000
City-wide paving, sidewalks, and traffic calming
(i.e., 26,477 square feet sidewalk repaired with this amount) 2,065,181 Total 4,565,181
Option B
Remote meetings for boards, commissions, committees (additional staffing, equipment, and training, city-wide hybrid ~ June 1, 2023) 400,000 City-wide sidewalk repairs, ADA access improvements
(i.e., 40,579 square feet of sidewalks repaired with this amount/~300 sites pending)
3,165,181
Risk Reserve 850,000
Storm related costs 150,000
Total 4,565,181
Option C
Risk Reserve 2,250,000
City Council Preference 2,315,181
Total 4,565,181
Option A will allow the City to increase the Risk Reserve Confidence Level consistent with the City Council-approved Resolution No. 69-05 adopted on May 17, 2005 ($2,500,000). 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 to allow for boards and commissions to transition to hybrid meetings ($400,000), includes an increased
March 28, 2023
allocation for city-wide sidewalk repairs and ADA access improvements/~300 sites pending ($3,165,181), and adds funding for storm-related costs ($150,000). 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 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-
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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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.
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; a comprehensive report of capital improvement projects is in Attachment 7 – Capital Improvement Projects. Please note that Table 8 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.
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%
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Table 8: Capital Improvement Funds Highlights, Expenditures
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 $4,350,887 and total Non-General Fund Expenditure adjustments are $1,530,472. Tables 9 and 10 show revenue and expenditure adjustments by fund type.
Table 9: Non-General Fund Revenue, FY 22-23 Mid-Year
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%
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) -156,812 (29,694,650) 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) -15,000 (4,895,044) 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) (4,350,887) (214,354,512)
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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.
Table 11: DRAFT Pending Budget Requests for FY 2023-2024
Amount DRAFT
Pending Budget Requests
15,000,000 Investment in Paving, sidewalks and traffic calming Index improvement
TBD Fire Training Center Predevelopment Costs
15,000,000 Library renovation
1,500,000 Measure U loss due to pending litigations
5,000,000 Terminal 1 cleanup costs
36,500,000 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 and will be adjusted upon the execution of agreements. 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 impact the City’s reserves.
Next Steps
City staff will continue to monitor current year financials and provide a FY 2022-23 Quarter 3 Budget Update in May of 2023.
ACCOUNT DESCRIPTION ORIGINAL
APPROP
TRANFRS/
ADJSMTS
REVISED
BUDGET
YTD
EXPENDED
MID-YEAR
ADJUSTMENTS
PROPOSED MID
YEAR BUDGET
Total Capital Improvement Funds 37,256,854 13,833,087 51,089,941 3,991,113 245,000 51,334,941 Total Other Operations Funds 27,075,053 11,433,784 38,508,836 9,655,270 72,544 38,581,380 Total Special Revenue Funds 39,674,849 4,488,345 44,163,193 19,752,838 156,812 44,320,005 Total Housing Funds 5,458,047 38,814 5,496,861 398,829 0 5,496,861 Total Debt Sevice Funds 21,612,086 - 21,612,086 19,656,716 0 21,612,086 Total Enterprise Funds 70,579,794 38,320,945 108,900,738 29,848,738 236,261 109,136,999 Total RHA Funds 4,880,044 - 4,880,044 1,246,618 35,000 4,915,044 Total Internal Service Funds 25,169,925 2,289,355 27,459,280 9,695,092 574,392 28,033,672 Total Trust Funds - 80,000 80,000 311,274 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 1,530,472 303,721,451
March 28, 2023
DOCUMENTS ATTACHED:
Attachment 1 – 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 – Position Control Listing
Attachment 7 – Capital Improvement Projects
Attachment 8 – Grants Listing