City of San José
2021-2022
Mid-Year Budget Review
February 8, 2022
Jim Shannon Claudia Chang
Budget Director Deputy Budget Director
Selena Ubando Bryce Ball
Financial Status Coordinator Operating Budget Coordinator Bonny Duong Chris Yi
Assistant Budget Director Capital Budget Coordinator
2021-2022 Mid-Year Budget Review
Overview
Operating and capital funds are generally performing
as expected, with a few significant exceptions
Though the pandemic has had disparate impacts in the
community, recovery in many areas has been swift and
revenue growth has rebounded more quickly than
expected
Budget actions recommended in various operating and
capital funds
2021-2022 Mid-Year Budget Review Report Slide 1
Economic Conditions: Employment Levels
2021-2022 Mid-Year Budget Review Report Slide 2
Economic Conditions: Real Estate
2021-2022 Mid-Year Budget Review Report Slide 3
Economic Conditions: Hotel Activity
• Hotel activity continues to rebound from historic lows, but not as quickly as anticipated in the 2021-2022 forecast.
2021-2022 Mid-Year Budget Review Report Slide 4
$129.65
$145.49 $159.59
$176.42 $183.48
$195.08 $191.50
$101.70
$120.31
$94.45
$112.14
$121.12
$136.69 $142.08
$153.10
$141.96
$37.30
$67.68
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
2013 2014 2015 2016 2017 2018 2019 2020 2021
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Average Hotel Room Rate & Occupancy (as of December)
Room Rate RevPAR Occupancy Rate
Average Room Rate, RevPAR ($)
Occupancy Rate (%)
Economic Conditions: General Sales Tax
2021-2022 Mid-Year Budget Review Report Slide 5
General Sales Tax Revenue Economic Performance
Comparing First Quarter Payment between 2020-2021 and 2021-2022 Category
% Change of
Revenue Received
by Category
General Retail 34.3%
Transportation 31.2%
Food Products 28.2%
Business–to–Business 19.8%
Construction 4.2%
Miscellaneous 21.0%
County Pool 7.9%
Total 20.2%
General Fund Assessment
Revenue growth in the first six months of the fiscal year is strong; anticipated to exceed budgeted levels by approximately $100 million by year-end. Of this amount:
– $50 million is due to growth of Real Property Transfer Tax (Measure E) revenues and is allocated to corresponding Measure E reserves – $30 million is allocated to a Revenue Loss Reserve
Expenditures currently tracking to end the year with savings of approximately $5 - $7 million
Establishing a 2021-2022 Ending Fund Balance Reserve of $12 million, which will be used as a funding source for the 2023-2027 Five-Year Forecast and 2022-2023 Proposed Budget
2021-2022 Mid-Year Budget Review Report Slide 6
Summary of General Fund Adjustments
2021-2022 Mid-Year Budget Review Report Slide 7
Category Source of Funds Use of Funds
Urgent Fiscal/Program Needs (Net-Zero)
• Recruitment and Retention
• Budgeting Software Upgrade
$0 $0
Required Technical/Rebalancing Actions $98,304,000 $98,261,000 Grants/Reimbursements/Fees $11,297,000 $11,297,000
Clean-Up Adjustments ($83,000) ($40,000)
Total Recommended Adjustments $109,518,000 $109,518,000 Major General Fund Adjustments -
Revenue
2021-2022 Mid-Year Budget Review Report Slide 8
Category
Source of
Funds
Use of
Funds
Required Technical/Rebalancing Actions
Real Property Transfer Tax/Measure E Reserves $50,000,000 $50,000,000 Sales Tax $20,000,000
Property Tax (ERAF and General Secured) $11,000,000
Business Taxes (Cardroom, Cannabis, and DFT) $8,000,000 Fees, Rates, and Charges (PRNS Fee Activity) $4,000,000 Transfers and Reimbursements (C&C, ARP, Jet Fuel) $4,900,000 Transient Occupancy Tax Revenue ($1,000,000)
Major General Fund Adjustments -
Expenses
Category
Source of
Funds
Use of
Funds
Required Technical/Rebalancing Actions
Revenue Loss Reserve $0 $30,000,000
2021-2022 Ending Fund Balance Reserve $0 $12,000,000
Community and Economic Recovery Reserve $0 $8,762,000
Workers’ Compensation Adjustments $0 $2,040,000
Hazard Mitigation Grant Program/Revenue from Federal Government $1,050,000 $1,400,000 Office of Equality Assurance Labor Compliance System $0 $1,400,000 Janitorial Services Adjustments $0 $384,000
Consulting and Planning Support (Pandemic Response and Recovery) $0 $300,000 Property Leases $0 $246,000
Human Resources Department (Employee Health Services Contract) $0 $173,000 City Manager's Office (Redistricting Communications) $0 $100,000 Fire Department (Reallocation of EMS Costs to Coronavirus Relief Fund) $0 ($9,062,000) Other Miscellaneous Adjustments $195,000 $405,000
Other Net-Zero Adjustments $113,000 $113,000
2021-2022 Mid-Year Budget Review Report Slide 9
Status of Selected Capital Funds
2021-2022 Mid-Year Budget Review Report Slide 10
0 10
20 30
40 50
60 70($ in Millions)
Actual Annual Collections
and 2021-2022 Estimate
Building & Structure
Construction Excise
Construction & Conveyance
Construction and Conveyance
Tax Funds:
• Strong real estate activity is
leading to strong revenue gains
• Budget estimate increases to $60
million, a new peak
Building and Structure /
Construction Excise Tax
Funds:
• Private sector construction
activity below previous year and
below estimated levels
• No actions currently, but revenues
are trending lower
• Building & Structure < $1 million
• Construction Excise < $2 million
Status of Selected Special Funds
2021-2022 Mid-Year Budget Review Report Slide 11
Airport Funds:
Passenger enplanements
up from last year
Takeoffs and landings are
also up from last year,
though well below pre-
pandemic levels
Airport continues to provide financial relief to concessionaires; agreements recently extended through December 31, 2023.
Further, a total of $59.6 million of federal relief funding is allocated in 2021-2022
16.8% 12.3%
9.3%
-80.2%
192.1%
-
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
FY18 FY19 FY20 FY21 FY22
Airport YTD Passenger Comparison
DEC YTD Passengers FY YTD Passenger Growth %
Looking Forward – 2021-2022 Budget
February 2022
• 2022-2023 City Manager’s Request and 2023-2027 Five-Year Forecast Released
March 2022
• City Council Review and Approval of Mayor’s March Budget Message April/May 2022
• 2022-2023 Proposed Capital/Operating Budgets/2023-2027 Proposed CIP/2022-2023 Fees and Charges Released
• City Council Budget Study Sessions and Initial Budget Public Hearing • Community Budget Meetings
June 2022
• Final Budget Public Hearing
• Mayor’s June Budget Message & Final Review of Budgets • 2022-2023 Capital/Operating Budgets and Fees & Charges Approval 2021-2022 Mid-Year Budget Review Report Slide 12
2021-2022
Mid-Year Budget Review
City Council Meeting – February 8, 2022; Item 3.3
Jim Shannon Selena Ubando
Budget Director Financial Status Coordinator
Bonny Duong Bryce Ball
Assistant Budget Director Operating Budget Coordinator
Claudia Chang Chris Yi
Deputy Budget Director Capital Budget Coordinator