November 19, 2024
Finance Department
DATE: November 19, 2024
TO: Mayor Martinez and Members of the City Council
FROM:
Andrea Miller, Director of Finance
Mubeen Qader, Deputy Director of Finance
Jerry Gurule, Accounting Manager
Antonio Banuelos, Accounting Manager
SUBJECT:
Fiscal Year 2024-25 Quarter 1 Budget Report
FINANCIAL IMPACT: The fiscal impact is an increase to the General Fund Revenue by $544,600 and an increase to General Fund
Expenditures by $879,064. There is also an increase in
Non-General Funds Revenue by $523,400 and an
increase to Non-General Funds Expenditures by
$12,432,033.
PREVIOUS COUNCIL
ACTION:
June 24, 2024
STATEMENT OF THE
ISSUE:
Finance staff is presenting the Fiscal Year 2024-25
Quarter 1 (Q1) budget report to provide an overview of
the City’s Q1 operating revenue and expenditures which
covers financial activity from July 1, 2024, through
September 30, 2024.
RECOMMENDED ACTION:
RECEIVE the Fiscal Year 2024-25 Quarter 1 budget
report for the period of July 1, 2024, through September 30, 2024; and ADOPT a resolution approving proposed
budget adjustments – Finance Department (Andrea Miller
510-620-6790 / Mubeen Qader 510-412-2077 / Jerry
Gurule 510-620-6591).
AGENDA
REPORT
November 19, 2024
DISCUSSION:
City staff prepares the quarterly budget report to assist in monitoring revenue and expenditures as compared to the approved budget. The report also provides City staff, the City Council, and the community with the ability to monitor trends that impact the budget cycle.
This report presents an overview of the City’s quarter 1 (Q1) operating revenue and expenditures for Fiscal Year (FY) 2024-25 which covers financial activity from July 1, 2024, through September 30, 2024. The threshold for the first three months of the fiscal year is 25 percent, meaning, on average, 25 percent of the adopted budget is expected to be spent, and 25 percent of revenue should be received. Revenues can vary due to the seasonality of some of the major revenue sources, such as property taxes, which are received in December, April, and June of each year.
General Fund
General Fund Revenues
Overall, revenue received totaled $51.2 million (20.6 percent of budget) for Q1 of FY 2024-25. This is slightly below the threshold of 25 percent, but the variance is primarily due to the seasonality of the revenue sources. For example, the first secured property tax installment (55 percent) is received in December. Table 1 below summarizes the first quarter revenue budget-to-actuals. See Attachment 1 for the breakdown by department.
Table 1: General Fund Revenue, FY2024-25, Quarter 1
GENERAL FUND
FY 2024-25
ORIGINAL
BUDGET
FY 2024-25
REVISED
BUDGET
YTD
ACTUALS ENCUMB.
% USED
W/O
ENCUMB
% USED
W.
ENCUMB.
PROPERTY TAXES 57,597,487 57,597,487 - - 0.0% 0.0% SALES & USE TAX 60,456,550 60,456,550 3,696,443 - 6.1% 6.1% UTILITY USERS TAX 62,092,359 62,092,359 16,880,289 - 27.2% 27.2% OTHER TAXES 23,405,397 23,405,397 4,483,079 - 19.2% 19.2% LICENSES, PERMITS & FEES 16,252,770 16,252,770 1,029,245 - 6.3% 6.3% FINES & FORFEITURES 176,438 176,438 32,891 - 18.6% 18.6% USE OF MONEY&PROPRTY 1,796,421 1,796,421 742,246 - 41.3% 41.3% CHARGES FOR SERVICES 3,255,703 3,255,703 1,526,733 - 46.9% 46.9% OTHER REVENUE 142,830 142,830 98,210 - 68.8% 68.8% RENTAL INCOME 777,478 777,478 222,488 - 28.6% 28.6% INTERGOV STATE TAXES 125,000 125,000 - - 0.0% 0.0% INTERGOV STATE GRANT 130,000 130,000 181,236 - 139.4% 139.4% INTERGOV OTHER GRANT 250,000 250,000 9,228 - 3.7% 3.7% PROC FR SLE PROP 15,000 15,000 434 - 2.9% 2.9% LOAN/BOND PROCEEDS 40,400 40,400 - - 0.0% 0.0% OPER XFERS IN 22,421,539 22,421,539 22,356,469 - 99.7% 99.7% TOTAL REVENUES 248,935,372 248,935,372 51,258,991 - 20.6% 20.6%
November 19, 2024
For many of the General Fund revenues, it is too early in the fiscal year to determine if adjustments will be needed. City staff will have a better understanding of the local revenue trends by mid-year. From the data points observed for the first quarter of FY 2024-25, most revenues are trending as expected or better. Property Tax – FY 2024-25 property tax revenue adopted budget includes estimated Assessed Valuation growth of 3.15 percent for Secured Property Taxes. Contra Costa County (County) released 2024-2025 Assessment Roll in July 2024 which indicated growth of the Assessed Valuation (AV) at 4.67 percent for Secured Property Taxes. This is the main component in changes to secure property taxes year-to-year. Other significant impacts include sale of properties and tax increment allocation. If the 4.67 percent AV increases hold, that would translate to additional revenue of close to $800,000 above the original budget.
Additionally, Successor Agency Surplus and Pass-through revenues that flow into the General Fund were higher than expected in FY 2023-24 meaning that those revenues are expected to be higher in FY 2024-25 as well. City staff will have a better understanding of actual property tax revenue after the City receives the December payment from the County and will recommend mid-year adjustments.
Sales & Use Tax – The sales tax revenue stream has seen steady growth over the last few years and the trend is expected to continue for the duration of the current fiscal year. The updated forecast from the City’s financial consultants and the internal forecast tie to what is currently budgeted for FY 2024-25.
Utility Users Tax (UUT) – This revenue stream, including the maximum cap amount paid by Chevron, has been received close to expected in Q1. The cap amount was expected to grow by 11.4 percent from FY 2023-24 and the actual result was 11.0 percent. City staff will continue monitoring the various revenue streams that make up this category to determine if a mid-year adjustment is necessary.
Other Taxes – The Other Taxes category is comprised of various taxes and franchise fees including the Transient Occupancy Fee (Hotel Tax) and Documentary Transfer Tax on the sale of properties in Richmond. Overall, this category has received a total of $4.5 million, which corresponds to 19.2 percent of the budgeted amount. The largest revenue stream within this category is the Transfer Tax for which the City has received the July, August, and September payments totaling $3.7 million. Of the major revenue streams, this is the most volatile and hardest to predict with month-to-month amounts varying significantly and one or more sales having huge impacts on the tax amount.
Licenses, Permits, & Fees – This revenue stream includes the business tax revenue. Through September 2024, the full revenue is at 6.3 percent of the budgeted amount. With the adoption of Measure U all businesses have a December 31 expiration date. Therefore, most of this revenue will be received
November 19, 2024
between January and April of 2025.
Use of Money and Property – This revenue stream represents interest earned on cash in the City’s bank accounts. Total interest earned through Q1 of FY2024-25 is $742,246 or 41.3 percent. US Treasury yields as of September 30, 2024, were
3.81 percent.
Charges for Services – This revenue stream includes various charges for services such as fire prevention services, public works and engineering services, and passport service fees. Total charges collected through Q1 are $1.5 million or 46.9 percent.
Intergovernmental State Grant – This revenue stream includes Motor Vehicle Fees received from the state. A portion of prior year receipts is included. Total receipts through Q1 are $181,236 or 139.4 percent.
Operating Transfers In – Operating transfers are processed once adopted by City Council in most cases. Total operating transfers through Q1 are $22.4 million or
99.7 percent.
General Fund Expenditures
Overall, General Fund expenditures totaled $59.0 million (23.7 percent of budget) for the first quarter of FY 2024-25. Actuals are trending slightly lower than the approved budget without encumbrances. Including encumbrances, the percentage used is 26.5 percent. Encumbrances are funds earmarked through purchase orders for specific operating expenditures, such as copier leases. Table 2 below summarizes the first quarter expenditure budget-to-actuals. See Attachment 1 for the breakdown by department.
November 19, 2024
Table 2: General Fund Expenditure, FY2024-25, Quarter 1
Salaries & Wages – This category includes base salaries for full-time and part-time staff, overtime, and other pay types. Actual expenditures total $21.4 million (22.5 percent of budget). This category is lower than the threshold primarily due to vacant positions.
Benefits – This category includes medical, dental, workers compensation, CalPERS pension costs, other post-employment benefits (OPEB), and other fringe benefits.
Actual expenditures total $17.8 million (25.3 percent of budget) which is slightly above the threshold due to Pension Prefunding Contribution to Section 115 Trust at the beginning of the fiscal year.
Professional & Admin Services – This expenditure includes professional and consulting services, and contractual obligations, such as animal control and professional consulting services. Actual expenditures total $2.6 million (12.9 percent of budget) and is below the threshold. Factoring in purchase order encumbrances of $3.6 million, the total is $6.2 million (30.7 percent of budget).
Other Operating – This category includes copier leases, office supplies, and other items. Actual expenditures total $815,322 (9.4 percent of budget). Factoring in purchase order encumbrances of $1.1 million, the total is $1.9 million (22.0 percent of budget).
Utilities – This expenditure includes gas, electricity, water, refuse, telephone, and internet services. Actual expenditures total $1.7 million (30.9 percent of budget).
Factoring in purchase order encumbrances of $1.1 million, the total is $2.8 million (50.5 percent of budget). The increased expenditure is due to an increase in PG&E rates.
GENERAL FUND
FY 2024-25
ORIGINAL
BUDGET
FY 2024-25
REVISED
BUDGET
YTD
ACTUALS ENCUMB.
% USED
W/O
ENCUMB
% USED
W.
ENCUMB.
SALARIES AND WAGES 95,236,672 95,257,157 21,405,267 - 22.5% 22.5% PYRLL/FRINGE BENEFIT 70,666,262 70,546,262 17,883,474 - 25.3% 25.3% PROF & ADMIN 20,378,340 20,384,758 2,629,574 3,635,134 12.9% 30.7% OTHER OPERATING 8,862,886 8,665,090 815,322 1,093,650 9.4% 22.0% UTILITIES 5,594,204 5,611,745 1,736,112 1,099,784 30.9% 50.5% EQPT & CONTRACT SVCS 4,315,665 4,328,423 914,246 665,458 21.1% 36.5% PROVISN FOR INS LOSS 35,500 37,042 34,392 - 92.8% 92.8% COST POOL 23,400,598 23,450,598 5,850,156 - 24.9% 24.9% ASSET/CAPITAL OUTLAY 2,502,328 3,055,444 235,099 562,521 7.7% 26.1% DEBT SVC EXPENDITURE 850,905 850,905 - - 0.0% 0.0% A87 COST PLAN REIMBS (3,514,373) (3,514,373) (911,167) - 25.9% 25.9% GRANT EXPENDITURES 49,013 49,013 (1,297) - -2.6% -2.6% OPER XFERS OUT 20,557,373 20,557,373 8,489,338 - 41.3% 41.3% TOTAL EXPENSES 248,935,372 249,279,436 59,080,516 7,056,547 23.7% 26.5%
November 19, 2024
Equipment & Contract Services – This expenditure includes equipment and maintenance/repair services. Actual expenditures total $914,246 (21.1 percent of budget). Factoring in purchase order encumbrances of $665,458, the total is $1.6 million (36.5 percent of budget).
Provision for Insurance – This category includes insurance premiums for various items including Drone Insurance, Fire Apparatus Insurance and Fire Boat Insurance.
Actual expenditures total $34,392 (92.8 percent of budget). Insurance premiums are due annually at the beginning of the Fiscal Year.
Cost Pool – This expenditure includes General Liability Allocation, Vehicle Replacement Program, and Civic Center Allocation. Actual expenditures total $5.8 million (24.9 percent of budget). Cost Pool charges are allocated by the Finance department monthly through a journal entry transaction.
Asset/Capital Outlay – This expenditure includes furniture replacement, computer replacement, radios and other small equipment. Actual expenditures total $235,099 (7.7 percent of budget).
Debt Service – This category includes debt service for loans and bonds. No expenditures have occurred as debt service payments are processed in the second and the fourth quarter of each fiscal year.
A87 Cost Plan Reimbursement – The A87 Cost Plan reimburses departments in the General Fund for internal services provided to other funds. Actual expenditures are shown as a credit in this category totaling $911,167 (25.9 percent of budget).
Grant Expenditures – The negative expenditure is due to a refund of unspent Love Your Block mini grant franchise fee disbursed in the prior fiscal year under the I Heart Richmond Program.
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. The actuals total $8.5 million (41.3 percent of budget). Major driver for the variance is $4.082 million transfer out for the Paving program that was booked in the first quarter of the fiscal year.
Non-General Funds
Non-General Fund Revenues
Overall, 15.5 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, grant funds are typically received after expenditures are incurred and reimbursement requests are submitted to grantors. Table 3 below
November 19, 2024
summarizes the revenue budget to actuals for non-general funds. See Attachment 2 for revenue budget to actuals by individual fund.
Table 3: Non-General Fund Revenues, FY 2024-25, Quarter 1
Capital Improvement Funds – The total actual revenue is below the budget threshold of 25 percent and a major source of the variance is due to the grants’ revenue, since the entire grant award is appropriated as budget; however, the actual revenue is based on the expenditures submitted for reimbursement to the grantor.
Debt Service Funds – Revenues are above the budget threshold due to the transfer in from General Fund and Secured Pension Override Fund for the Pension Obligation Bond debt service payment due in July.
Enterprise Funds – Actual revenue is below the threshold mainly due to the Wastewater fund. The sewer drain fee allocation from the County has not been received yet.
Housing Funds – Actual revenue is above the budget threshold due to the Housing In Lieu Developer Fee coming in higher than the budget.
Housing Authority Funds – The revenue is below the budget mainly due to the Capital Grant fund allocations for operations and administration. Revenue will be received pending approval of Calendar Year 2023 Capital Grant.
Internal Service Funds – This revenue stream is above the threshold due to interest income not budgeted. The revenue for these funds are received monthly.
FUND
FY 2024-25
ORIGINAL
BUDGET
FY 2024-25
REVISED
BUDGET
YTD ACTUALS ENCUMB.
% USED
W/O
ENCUMB
% USED
W.
ENCUMB.
Total Capital Improvement Fund 63,990,718 67,930,475 11,214,258 - 16.5% 16.5% Total Debt Service Funds 16,161,500 16,161,500 6,196,980 - 38.3% 38.3% Total Enterprise Funds 39,394,502 39,394,502 1,896,305 - 4.8% 4.8% Total Housing Funds 2,702,120 2,718,720 912,150 - 33.6% 33.6% Total Housing Authority Funds 4,676,806 4,676,806 712,443 - 15.2% 15.2% Total Internal Service Funds 36,850,188 36,850,188 9,806,517 - 26.6% 26.6% Total Other Operations Funds 27,524,024 27,524,024 3,751,366 - 13.6% 13.6% Total Special Revenue Funds 62,708,434 62,858,434 5,396,928 - 8.6% 8.6% Total All Funds 254,008,291 258,114,648 39,886,947 - 15.5% 15.5%
November 19, 2024
Other Operation Funds – The actual revenue is below budget and the major source of the variance is from Transportation and Employment and Training Funds due to grants revenues received after expenditures have occurred. The other major driver behind the variance is Hilltop and Marina special district funds as the property tax revenue is received in December, April and June each year.
Special Revenue Funds – The variance is due to the tax assessment in the Secured Pension Tax Override fund and the Transformative Climate Communities Grant fund due to tax assessment allocation and grant revenue timing respectively.
Non-General Fund Expenditures
Overall, 18.5 percent of non-general fund budget appropriations have been expended.
Spending patterns in other funds are like those in the General Fund and trending as expected. Most of the actual expenditures are either at or below the threshold of 25 percent. Amounts over the threshold are primarily due to purchase order encumbrances. The table below summarizes the expenditure budget-to-actuals for non- general funds. See Attachment 2 for expenditure budget to actuals by individual fund.
Table 4: Non-General Fund Expenditures, FY2024-25, Quarter 1
Capital Improvement Funds – Actual expenditures are below budget due to the projects’ phases spanning throughout the year.
Debt Service Funds – Debt service expenditures are incurred per the debt service schedules.
Enterprise Funds – A major source of the variance is Wastewater fund; the fund includes budgets for several capital projects and the variance is due to the timing of the project completion.
Housing Funds – A major source of the variance is lower than expected expenditures in the Housing In Lieu Developer Fee fund.
FUND
FY 2024-25
ORIGINAL
BUDGET
FY 2024-25
REVISED
BUDGET
YTD ACTUALS ENCUMB.
% USED
W/O
ENCUMB
% USED
W.
ENCUMB.
Total Capital Improvement Fund 69,582,572 91,657,555 2,686,813 24,171,864 2.9% 29.3% Total Debt Service Funds 16,261,836 16,261,836 4,219,863 - 25.9% 25.9% Total Enterprise Funds 73,915,051 78,923,673 13,599,411 9,412,054 17.2% 29.2% Total Housing Funds 5,821,825 5,838,425 119,852 5,959 2.1% 2.2% Total Housing Authority Funds 4,685,856 4,685,856 527,725 115,558 11.3% 13.7% Total Internal Service Funds 42,736,426 45,787,951 15,177,963 4,214,783 33.1% 42.4% Total Other Operations Funds 30,507,007 33,952,759 4,650,514 5,762,991 13.7% 30.7% Total Special Revenue Funds 88,567,660 101,310,763 28,938,253 17,075,584 28.6% 45.4% Total All Funds 332,078,233 378,418,818 69,920,394 60,758,794 18.5% 34.5%
November 19, 2024
Housing Authority Funds – These funds are trending below the threshold due to Richmond Village One, Richmond Village Two, and Richmond Village Three being pass-through funds.
Internal Service Funds – The variance is due to the Insurance Reserve Fund expending for annual Insurance premiums in July and August.
Other Operations Funds – The variance is due to grant expenditures in Planning & Building and Employment & Training funds.
Special Revenue Funds – The variance is due to the transfer out of the Secured Pension Tax Override fund into the General Fund and the Debt Service Fund.
American Rescue Plan Act (ARPA) is also in this category attributing to the variance as projects are expended.
Quarter 1 Budget Adjustments:
City staff propose an increase to General Fund Revenue by $544,600 and an increase to General Fund Expenditures by $879,064. Additionally, it is proposed that the City increase Non-General Funds Revenue by $523,400 and an increase Non-General Funds Expenditures by $12,432,033 in several funds as mentioned below and set forth in the Resolution (Attachment 4).
General Fund Adjustments
General Fund: Revenue Expenditure
$544,600 $879,064
Revenue adjustments of $444,600 for Sales tax update from Consultant, Avenu Analytics, and $100,000 for 2 percent administrative fee collected from credit card transactions, administrative adjustments for mid-year purchase orders carried forward for I.T.
Expenditure adjustments of $344,064 for infrastructure, $100,000 appropriation for Property Tax bills to Contra Costa County and Richmond Main Street, $80,000 appropriation for mandatory Code Enforcement Radios, and Transfer Out $355,000 to General Capital for CCTV Cameras.
Non-General Fund Adjustments
Rent Program: Revenue Expenditure
$10,000 $10,000
Administrative adjustment to match Rent Board Approved Budget for Fiscal Year 2024-25, as the Rent Board removed 360 Evaluation which would result in a reduction in the Rental Housing Fee.
November 19, 2024
Engineering Grants: Revenue Expenditure
$178,400 $178,400
Appropriate revenue and expenditure for TDA Grant for Downtown Point Richmond Bicycle Connectivity Project.
General Capital Fund: Revenue Expenditure
$355,000 $3,733,239
Revenue adjustment of $355,000 for the transfer in from General Fund for CCTV Cameras
Expenditure adjustments to appropriate an expenditure for $355,000 for CCTV Cameras, appropriate expenditures from fund balance of $3,000,000 for Main Library Remodel Project, $110,739 from fund balance to close out Santa Rita Road Stabilization Project, and $267,500 from fund balance for Downtown Point Richmond Bicycle Connectivity Project.
Wastewater: Revenue Expenditure
$0 $8,530,394
Expenditure adjustment to appropriate expenditures of $732,938 for Wastewater Treatment Plant Dichlorination and $7,797,456 for Wastewater Treatment Plant Sludge Thickener Project.
Next Steps
City staff will continue to monitor revenues and expenditure trends in the current fiscal year to determine if adjustments will be needed during the mid-year budget review which will be presented to the City Council in February 2025.
DOCUMENTS ATTACHED:
Attachment 1 – General Fund – Quarter 1 Budget Report
Attachment 2 – Non - General Funds – Quarter 1 Budget Report Attachment 3 – Capital Improvement Projects Quarter 1 Report Attachment 4 – Resolution FY2024-25 Quarter 1 Budget Report Attachment 5 – Draft Presentation