May 6, 2025
Finance Department
DATE: May 6, 2025
TO: Mayor Martinez and Members of the City Council
FROM:
Shasa Curl, City Manager
Nickie Mastay, Deputy City Manager – Internal Services
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 3 Budget Report
FINANCIAL IMPACT: There is no fiscal impact for receiving this item
PREVIOUS COUNCIL
ACTION:
June 24, 2024
November 19, 2024
April 22, 2025
STATEMENT OF THE
ISSUE:
City staff are presenting the Fiscal Year (FY) 2024-25
Quarter 3 Budget Report for all funds, and the Capital
Improvement Projects Quarter 3 Report. The purpose of
this report is to monitor revenue and expenditure, as
compared to the approved budgeted amounts.
RECOMMENDED ACTION:
RECEIVE the Fiscal Year 2024-25 Quarter 3 budget
report for the period of July 1, 2024, through March 31, 2025 – Finance Department (Shasa Curl 510-620-
6512/Andrea Miller 510-620-6790/ Mubeen Qader 510-
412-2077/Jerry Gurule 510-620-6591).
AGENDA
REPORT
May 6, 2025
DISCUSSION:
The purpose of the quarterly budget report is to assist the City in monitoring revenue and expenditures, compared to the approved budgeted amounts. The report also allows staff, the City Council, and the community to monitor trends that impact the budget cycle.
This report presents an overview of Quarter 3 (Q3) operating, capital revenue, and expenditure for Fiscal Year (FY) 2024-25. The period covers budget activity from July 1, 2024, through March 31, 2025. The threshold through the first three quarters of the fiscal year is 75 percent, meaning that it is expected that 75 percent of the Revised Budget will be expended. Revenues are not necessarily measured against the same standard due to the seasonality of major revenue sources, such as property taxes, which are received in December, April, and June each year.
General Fund
Table 1: FY 2024-25 General Fund Revenue and Expenditure Summary, Q3
General Fund Revenues
Overall, revenue received totaled $166.7 million (66.6 percent of budget) for Quarter 3 of FY 2024-25. This is below the threshold of 75 percent; the variance is primarily due to the seasonality of some revenue sources. For example, the City receives the Sales Tax revenue from the State with a two-month delay. Final Sales Tax payment will not be received until August, when it will be accrued and accounted for in the year it was earned.
Based on the current year’s actuals, prior year trends, extraordinary uncertainty and volatility, due to external factors such as federal and state fiscal policy, tariff-related impacts on the local and regional economy, and slower economic growth, City staff members project total FY 2024-25 revenue to remain at the current revised budget amount of approximately $250 million.
Table 1 above and Table 2 below summarize the Quarter 3 revenue budget-to-actuals and year-end projection (Attachment 1). Table 1 reflects that the original adopted FY 2024-25 budget was balanced, with current revenue equal to current year expenditures.
Although a deficit of $10,735,644 and use of fund balance is projected, this is covered by unspent funds appropriated by the City Council on March 11, 2025, Agenda Report Table 1 and Resolution No. 23-25, Resolution No. 128-24, and Resolution No. 133-24 (Attachment 4).
GENERAL FUND
FY 2024-25
ORIGINAL
BUDGET
FY 2024-25
REVISED
BUDGET
YTD
ACTUALS Q3 % USED
FY 2024-25
YEAR END
PROJECTION
TOTAL REVENUES 248,935,372 250,327,835 166,669,697 66.6% 250,327,835 TOTAL EXPENSES 248,935,372 266,672,389 180,529,826 70.5% 261,063,479
GENERAL FUND NET
+SURPLUS/(-DEFICIT) - (16,344,554) (13,860,130) (10,735,644)
May 6, 2025
Table 2: General Fund Revenue, FY 2024-25, Quarter 3
Changes weren’t recommended for the General Fund revenues at Mid-Year. Although some revenue streams are expected to exceed projections and others to fall short, the overall anticipation is that revenues are estimated to align with or slightly exceed the budgeted figures. However, due to ongoing global volatility and Executive Orders targeting Sanctuary Jurisdictions, the City of Richmond’s revenues and expenditures could quickly change. As such, at this point, no changes to the General Fund are recommended for Quarter 3.
Property Tax - FY 2024-25 Property Tax revenue adopted budget includes estimated Assessed Valuation (AV) growth of 4.6 percent for Secured Property Taxes and matched Contra Costa County’s 2024-2025 Assessment Roll released in July 2024, which also indicated growth of the AV at 4.6 percent for Secured Property Taxes. No changes are proposed for this category.
Sales & Use Tax - Sales Tax revenue in FY 2024-25 is expected to be lower than last year. After several years of significant growth, this revenue stream has slowed down. The decrease is due to several factors, including a slowdown in the economy. The main categories seeing a decrease are Transportation, which includes auto dealerships and service stations, and Business-to-Business, which includes industry and green energy. Staff are not proposing changes at this time.
Utility Users Tax (UUT) - The year-to-date revenue received for UUT is trending as expected. UUT is comprised of gas, electricity, cable, and telecommunications. The revenue streams trending slightly higher are being offset by the revenue streams trending lower; staff does not recommend adjustments at this time.
GENERAL FUND
FY 2024-25
ORIGINAL
BUDGET
FY 2024-25
REVISED
BUDGET
YTD
ACTUALS Q3
AVAILABLE
BUDGET % USED
FY 2024-25
YEAR END
PROJECTION
PROPERTY TAXES 57,597,487 57,597,487 29,333,660 28,263,827 50.9% 57,597,487 SALES & USE TAX 60,456,550 60,901,150 33,489,349 27,411,801 55.0% 60,901,150 UTILITY USERS TAX 62,092,359 62,092,359 47,157,840 14,934,519 75.9% 62,092,359 OTHER TAXES 23,405,397 23,405,397 14,426,687 8,978,711 61.6% 23,405,397 LICENSES, PERMITS & FEES 16,252,770 16,352,770 12,402,168 3,950,602 75.8% 16,352,770 FINES & FORFEITURES 176,438 176,438 208,574 (32,136) 118.2% 176,438 INTEREST INCOME 1,796,421 1,796,421 2,408,691 (612,270) 134.1% 1,796,421 CHARGES FOR SERVICES 3,255,703 3,255,703 2,102,655 1,153,048 64.6% 3,255,703 OTHER REVENUE 142,830 142,830 311,029 (168,199) 217.8% 142,830 RENTAL INCOME 777,478 777,478 780,837 (3,359) 100.4% 777,478 INTERGOVERMENT STATE TAXES 125,000 125,000 182,741 (57,741) 146.2% 125,000 STATE GRANT 130,000 130,000 280,251 (150,251) 215.6% 130,000 OTHER GRANT 250,000 250,000 304,690 (54,690) 121.9% 250,000 PROCEEDS FROM SALE PROPERTY 15,000 15,000 32,814 (17,814) 218.8% 15,000 LOAN/BOND PROCEEDS 40,400 40,400 - 40,400 0.0% 40,400 OPERATING TRANSFERS OUT 22,421,539 23,269,402 23,247,712 21,690 99.9% 23,269,402 TOTAL REVENUES 248,935,372 250,327,835 166,669,697 83,658,139 66.6% 250,327,835
May 6, 2025
Other Taxes - Other Taxes include franchise fees, hotel tax, and documentary transfer tax. Of the major revenue streams, the documentary transfer tax is the most volatile and hardest to predict, as the month-to-month actual varies significantly. One or two sales can have a significant impact on the tax amount.
Gas and Electricity Franchise fees were projected to increase by 130 percent; however, the current actuals only increased by 78 percent or $3.3 million, $2.2 million less than initially forecasted. At this juncture, adjustments are not proposed in this category.
Licenses, Permits, & Fees – This revenue stream includes the business tax revenue. The actual revenue collected through March 2025 is $12.4 million (75.8 percent of the budget). Business tax revenue received year-to-date includes new Richmond businesses that started this fiscal year and delinquent payments from the prior year. With the 2025 due dates of March 1 for rental properties and April 1 for non-rental businesses, the bulk of the business tax for rentals was received in February and March, while for the non-rentals it is received between March and April. No changes to this category are proposed.
General Fund Expenditures
Overall, actual expenditures totaled $180.5 million (67.7 percent of the budget) through Quarter 3 of FY 2024-25. Expenditures are trending lower than the approved revised budgeted amounts due to higher vacancies and several pending unspent encumbrances. Including encumbrances, the expenditures are 70.5 percent of the budget, below the 75 percent threshold. Encumbrances are funds earmarked for specific operating expenditures, such as copier leases. Based on the current year’s actuals and prior year’s trend, City staff project the total FY 2024-25 expenditure to be approximately $261 million by fiscal year-end. Table 3 below summarizes the expenditure budget-to-actuals through March 31, 2025 (Attachment 1).
Table 3: General Fund Expenditure, FY2024-25, Quarter 3 - Table
Salaries & Wages - include base salaries for full-time and part-time staff, overtime, and other pay types. Actual expenditures totaled $66.0 million (69.2 percent of the budget). This category is lower than the threshold primarily due to vacant positions. Benefits - include medical, dental, workers' compensation, CalPERS pension costs, other post-employment benefits (OPEB), and other benefits. Actual expenditures
GENERAL FUND
FY 2024-25
ORIGINAL
BUDGET
FY 2024-25
REVISED
BUDGET
YTD
ACTUALS Q3 ENCUMB. AVAILABLE
BUDGET
% USED
W/O
ENCUMB
% USED
FY 2024-25
YEAR END
PROJECTION
SALARIES AND WAGES 95,236,672 95,303,620 65,985,292 - 29,318,327 69.2% 69.2% 88,547,507 PYRLL/FRINGE BENEFIT 70,666,262 70,548,062 51,358,767 - 19,189,295 72.8% 72.8% 71,695,265 PROFESSIONAL & ADMINISTRATIVE 20,378,340 23,163,189 10,900,394 3,720,062 8,542,733 47.1% 63.1% 23,163,189 OTHER OPERATING 8,862,886 8,623,649 4,264,314 1,617,989 2,741,346 49.4% 68.2% 8,623,649 UTILITIES 5,594,204 5,626,060 4,797,531 440,891 387,638 85.3% 93.1% 5,626,060 EQUIPMENT & CONTRACT SVCS 4,315,665 4,495,781 2,085,143 837,186 1,573,452 46.4% 65.0% 4,495,781 PROVISN FOR INSURANCE LOSS 35,500 37,042 34,392 - 2,650 92.8% 92.8% 37,042 COST POOL 23,400,598 24,750,598 18,525,451 - 6,225,146 74.8% 74.8% 24,750,598 ASSET/CAPITAL OUTLAY 2,502,328 3,284,099 855,181 746,760 1,682,158 26.0% 48.8% 3,284,099 DEBT SERVICE EXPENDITURE 850,905 850,905 423,262 - 427,643 49.7% 49.7% 850,905 A87 COST PLAN REIMBS (3,514,373) (3,514,373) (2,733,463) - (780,910) 77.8% 77.8% (3,514,373) GRANT EXPENDITURES 49,013 52,246 (1,297) - 53,543 -2.5% -2.5% 52,246 OPERATING TRANSFERS OUT 20,557,373 33,451,511 24,034,858 - 9,416,652 71.8% 71.8% 33,451,511 TOTAL EXPENSES 248,935,372 266,672,389 180,529,826 7,362,887 78,779,675 67.7% 70.5% 261,063,479
May 6, 2025
totaling $51.4 million (72.8 percent of the budget) are below the threshold due to vacant positions.
Professional & Admin Services - include professional and consulting services, and contractual obligations, such as animal control services. Actual expenditures total $10.9 million (47.1 percent of the budget) and are below the threshold. Factoring in encumbrances of $3.7 million, the total is $14.6 million (63.1 percent of the budget). Other Operating - includes copier leases, office supplies, and other items. The actual expenditure totals $4.3 million (49.4 percent of the budget). Factoring in encumbrances of $1.6 million, the total is $5.9 million (68.2 percent of the budget). Utilities - include gas, electricity, water, refuse, telephone, and internet services.
Actual expenditure totals $4.8 million (85.3 percent of the budget). Factoring in the purchase order encumbrance of $440,891, the total is $5.2 million (93.1 percent of the budget).
Equipment & Contract Services - equipment and maintenance/repair services.
Actual expenditure totals $2.1 million (46.4 percent of the budget). Factoring in encumbrances of $837,186, the total is $2.9 million (65.0 percent of the budget). Cost Pool - includes vehicle replacement, general liability, and Civic Center debt allocation, since these charges are distributed equally through monthly journals, the expenditures are at the threshold of 75 percent.
Asset/Capital Outlay - includes capital purchases and major facility and infrastructure upgrades. Total expenditures, including encumbrance, are 48.8 percent of the threshold.
Debt Service - includes debt payments per the debt service schedule, and total expenditures are 49.7 percent of the budget.
A87 Cost Plan Reimbursement - includes the administrative overhead credit from non-General Fund programs, which are booked monthly journals; hence, the expenditures are at 77.8 percent of the budget due to reimbursement from the Successor Agency, which was not budgeted.
Grant Expenditures - includes Recreation’s I Heart Richmond grant expenditures.
Year-to-date actuals are showing a negative expenditure amount due to a returned grant balance from a grantee.
Transfers Out - include transfers from the General Fund to non-General Funds for operating subsidies and a portion of debt service. Actual expenditures total $24.0 million (71.8 percent of the budget). City staff continue to monitor Non-General funds financial activity to assess if additional General Fund subsidies are needed to cover the funding gap. Based on the analysis below several funds listed may need additional subsidies to prevent negative fund balances at the end of FY 2024-25:
o Hilltop Landscape Maintenance District: The current budgeted operating subsidy is $243,068. However, revenue growth is insufficient to cover the increase in operating expenditures, and the fund will require reductions in services and/or an additional subsidy of approximately $300,000 by the end of the current fiscal year.
May 6, 2025
o KCRT—Cable TV: The fund is experiencing a decline in revenue from the Utility User Tax due to a decreasing trend in cable subscriptions. There is no current budgeted subsidy from the General Fund for FY 2024-25.
However, the expected revenue appears insufficient to cover expenditures, and a subsidy will likely be required to balance the fund by the end of the fiscal year.
o Richmond Housing Authority: the program has a $351,927 General Fund subsidy for the current fiscal year. However, the program requires up to $3,500,000 in capital funding to renovate 17 fire/structural units. This funding may be considered for allocation from the unspent funds at the end of FY 2024-25 as part of the Q4 update.
o
Non-General Funds
Non-General Fund Revenues
Overall, 51.3 percent of Non-General Fund revenues have been collected and are trending as expected. The timing of receipts varies among 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 4 below summarizes the revenue budget-to-actuals for Non-General Funds (Attachment 2).
Table 4: Non-General Fund Revenues, FY 2024-25, Quarter 3
Major fund types include the following:
Capital Improvement Funds - total revenue is 39.0 percent of the budget. A large part of the variance is due to the grants that are pending reimbursement. Debt Service Funds – transfer in revenue is 88.9 percent of the budget, which is consistent with the debt service payment schedules.
Enterprise Funds - total revenue is 63.1 percent of the budget because revenue in these funds is received in the last quarter of the fiscal year. Housing Funds - total housing funds are 53.2 percent of the budget. Major funds in this category include the housing in-lieu fee, Community Development Block Grant, and Neighborhood Stabilization Funds.
Richmond Housing Authority - total revenue is 65.8 percent of the budget; a FUND
FY 2024-25
ORIGINAL
BUDGET
REVISED
BUDGET ACTUALS AVAILABLE
BUDGET
% USED W.
ENCUMB.
Total Capital Improvement Fund 63,990,718 81,358,013 31,712,719 49,645,294 39.0% Total Debt Service Funds 16,161,500 16,161,500 14,363,299 1,798,201 88.9% Total Enterprise Funds 39,394,502 39,394,502 24,862,402 14,532,100 63.1% Total Housing Funds 2,702,120 2,718,720 1,446,091 1,272,628 53.2% Total Housing Authority Funds 4,676,806 4,676,806 3,079,559 1,597,247 65.8% Total Internal Service Funds 36,850,188 38,150,188 30,656,842 7,493,345 80.4% Total Other Operations Funds 27,524,024 28,621,524 16,374,361 12,247,163 57.2% Total Special Revenue Funds 62,708,434 86,697,840 30,311,934 56,385,906 100.0% Total All Funds 254,008,291 297,779,092 152,807,208 144,971,884 51.3%
May 6, 2025
major part of the revenue is received in the last quarter of the fiscal year. Internal Service Funds - total revenue is 80.4 percent of the budget due to an interest earned allocation, which is an unbudgeted line item. Other Operations Funds - total revenue is 57.2 percent of the budget. The variance is due to pending grant revenue reimbursements. Special Revenue Funds - total revenues are 35.0 percent of the budget. A large part of the variance is due to the Transformative Climate Community and Encampment Resolution Grants, with a total revenue budget of $19.6 million.
These grants are on a reimbursement basis, and revenue reimbursements are pending.
Non-General Fund Expenditures
Overall, 49.0 percent of Non-General Fund budget appropriations have been expended, including encumbrances. Spending patterns in other funds are like those in the General Fund and are trending as expected. Most of the actual expenditures are below the threshold of 75 percent, except for Debt Service funds. Those amounts that exceed the threshold are primarily due to encumbrances. Table 5 below summarizes the expenditure budget-to-actuals for Non-General Funds (Attachment 2).
Table 5: Non-General Fund Expenditures, FY 2023-24 Quarter 3 - Table
Capital Improvement Funds - total expenditures without encumbrance is 16.3 percent, and with encumbrances is 36.3 percent. The reason for this variance is that several projects are fully appropriated in the current fiscal year via the General Capital Fund, even though the projects are multi-year (Attachment 3). Debt Service Funds - total expenditures are 88.9 percent of the budget due to the debt service schedules.
Enterprise Funds - total expenditure without encumbrance is 36.7 percent, and with encumbrance is 46.6 percent. The primary reason for the positive variance is that the capital projects in the Wastewater Fund are moving more slowly than expected.
Housing Funds - total expenditure without encumbrance is 13.1 percent and with encumbrances, 16.5 percent. The primary source of the positive variance is the Community Development Block Grants fund.
Richmond Housing Authority Funds - total expenditure without encumbrance is
57.6 percent of the budget and 62.9 percent with encumbrance. The major FUND
FY 2024-25
ORIGINAL
BUDGET
FY 2024-25
REVISED
BUDGET
YTD
ACTUALS Q3 ENCUMB. AVAILABLE
BUDGET
% USED
W/O
ENCUMB
% USED
W.
ENCUM
Total Capital Improvement Fund 69,582,572 108,788,861 17,766,494 21,747,388 69,274,978 16.3% 36.3% Total Debt Service Funds 16,261,836 16,261,836 14,455,010 - 1,806,826 88.9% 88.9% Total Enterprise Funds 73,915,051 87,954,067 32,295,247 8,722,711 46,936,110 36.7% 46.6% Total Housing Funds 5,821,825 6,098,867 800,732 204,728 5,093,408 13.1% 16.5% Total Housing Authority Funds 4,685,856 4,685,856 2,698,172 250,939 1,736,745 57.6% 62.9% Total Internal Service Funds 42,736,426 47,087,951 24,747,806 3,492,039 18,848,106 52.6% 60.0% Total Other Operations Funds 30,507,007 34,165,219 16,495,543 4,842,217 12,827,459 48.3% 62.5% Total Special Revenue Funds 88,567,660 126,391,074 43,610,742 19,487,756 63,292,576 34.5% 49.9% Total All Funds 332,078,233 431,433,732 152,869,746 58,747,779 219,816,207 35.4% 49.0%
May 6, 2025
source of the positive variance is expenditures trending lower than budgeted in Nevin Plaza and Hacienda divisions.
Internal Service Funds - total expenditure is 52.6 percent without encumbrances and 60.0 percent with encumbrances. A major driver of the variance is the pending procurement of vehicles.
Other Operations Funds - total expenditure without encumbrances is 48.3 percent of the budget and 62.5 percent with encumbrances. A major source of the positive variance is the grant expenditure on several funds. Special Revenue - total expenditure is 34.5 percent of the budget without encumbrance and 49.9 percent with encumbrance. A major source of the positive variance is the Transformative Climate Community and Encampment Resolution Fund grants.
Next Steps
The Q3 budget review projects the FY 2024-25 year-end General Fund revenue at $250,327,835 and expenditures at $261,063,479. Although a deficit of $10,735,644 and use of fund balance is projected, this is covered by unspent funds appropriated by the City Council on March 11, 2025, Agenda Report Table 1 and Resolution No. 23-25, Resolution No. 128-24, and Resolution No. 133-24 (Attachment 4). These projections are based on current actuals and anticipated results. City staff will monitor revenues and expenditures closely as we finalize the current fiscal year, to determine if further adjustments are necessary during the Q4 budget review.
DOCUMENTS ATTACHED:
Attachment 1 – FY 2023-24 Q3 Budget Review – General Fund by Department Attachment 2 – FY 2023-24 Q3 Budget Review – Non-General Fund by Type Attachment 3 – Capital Improvements Project by Fund
Attachment 4 – March 11, 2025 Staff Report and Resolution No. 23-25, Resolution No. 128-24, and Resolution No. 133-24