City Council Meeting – October 18, 2022; Item 3.3
2021-2022
Annual Report
2 2021-2022 Budget: Overall Performance Met
Revised Expectations
• Revenues generally performed as expected
• Overall expenditures ended the year within or below budget • General Fund had a surplus and most other funds ended the year with balances at or above estimated levels
– After rebudgets and clean-ups, GF fund balance variance of 1.6% compared to Modified Budget
• Recommended actions close out 2021-2022, adjust 2022-2022 as necessary and in accordance with City Council Policy 1-18, recognize grants and reimbursements, and address several urgent needs in the General Fund and Special/Capital Funds.
3 Economic Conditions: Unemployment Rate
4 Economic Conditions: Real Estate
5 Major General Fund Revenue Trends
6 Major General Fund Revenues:
Year-Over-Year Comparison
Revenue Category
2020-2021
Actuals
($ Million)
2021-2022
Actuals
($ Million)
$ Change
($ Million)
%
Change
Property Tax 390.9 414.1 23.2 6%
Sales Tax 284.0 323.1 39.1 14%
Utility Taxes 107.0 103.6 (3.4) (3%)
Business Tax 70.0 85.4 15.3 22%
Fees, Rates and Charges 7.4 22.1 14.7 197%
Fines, Forfeitures and Penalties 9.8 15.0 5.2 53%
Transient Occupancy Tax (TOT) 5.4 10.5 5.1 94%
Real Property Transfer Tax
(Measure E)
50.5 110.0 59.5 118%
7 General Fund: Additional Fund Balance
• General Fund ended the year with a gross fund balance of $559.0 million; $51.4 million above the estimate used to develop the 2022-2023 Adopted Budget (2.4% of the Modified Budget)
• Net of required adjustments to close out 2021-2022, the Ending Fund Balance variance was $33.7 million (1.6% of the Modified Budget) • Additional fund balance was primarily generated by:
– Stronger than anticipated revenue performance amongst several categories at the end of the fiscal year (e.g., Fees, Rates and Charges; Utility Tax; Cardroom Business Tax; TOT) – Expenditure savings in all categories (Personal Services, Non-Personal/Equipment, City- Wide, Capital)
8 General Fund: Proposed Allocation of
Additional Fund Balance
Recommended 2022-2023 General Fund Adjustments ($000s)
Additional 2021-2022 Ending Fund Balance $51,379
Clean-Up/Rebudget Actions ($17,637)
Fund Balance Available After Clean-up/Rebudget Actions $33,742 Recommended Budget Adjustments
Required Technical/Rebalancing Actions ($18,842)
Grants/Reimbursements/Fee Activities ($0)
(Sources = ($125,000); Uses = ($125,000))
Urgent Fiscal/Program Needs ($4,500)
Total Recommended Budget Adjustments ($23,342)
Remaining Fund Balance After Clean-up/Recommended Adjustments $10,400 Distribution of Remaining Fund Balance Per City Council Policy I-18 Budget Stabilization Reserve ($7,600)
Information Technology Sinking Fund Reserve ($2,800)
Total Fund Balance Distributed Per Council Policy I-18 ($10,400) 9 General Fund: Recommended Budget
Adjustments
Required Technical/Rebalancing Actions ($ in 000s)
Contingency Reserve ($5,000)
Fire Station and FF&E Reserve ($3,800)
Transfer to the City Hall Debt Service Fund ($3,780)
Community and Economic Recovery Reserve ($1,388)
City Hall Rehabilitation Projects (Lease Revenue Bond Savings) ($1,250) Fire Station 8 Garage Demolition and Site Clean-up ($750) Police Helicopter Engine Overhaul Reserve ($700)
Business Tax (Net-Zero Adjustments) $0
10 General Fund: Recommended Budget
Adjustments
Urgent Fiscal/Program Needs ($ in 000s)
Homelessness Management Services ($3,000)
Fire Department Personal and Non-Personal/Equipment (Lateral Firefighter/Paramedic Academy) ($1,500)
Recommended Distribution of Remaining Fund Balance per City Council Policy 1-18 ($ in 000s)
Budget Stabilization Reserve ($7,600)
Information Technology Sinking Fund Reserve ($2,800)
11 Special/Capital Funds
Performance in Selected Funds
Airport Operating Funds
• Passenger activity significantly up by 132.2% from 4.2 million to 9.8 million; overall revenue performance exceeded budgeted estimates by $6.2 million (3.1%); projected passenger activity for 2022-2023 is 12.0 million passengers
9.06 9.55 10.21
11.51 13.49
14.95 11.33
4.23 9.81
12.00 0.00
2.00 4.00
6.00 8.00
10.00 12.00
14.00 16.00
2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 est.
Mineta San José International Airport
Annual Passengers (Millions)
12 Special/Capital Funds
Performance in Selected Funds
San José Clean Energy Fund
• Rate adjustments enacted by the City Council in December 2021 and lower Power Charge Indifference Adjustment charges beginning in early 2022 significantly improved the budgetary position of the San José Clean Energy Fund
Unrestricted Ending Fund Balance
2019-2020
Actual
2020-2021
Actual
2021-2022
Actual
2022-2023
Modified Budget
$23,519,000 $8,124,000 $80,614,000 $170,986,000
13 Special/Capital Funds
Performance in Selected Funds
14 Special/Capital Funds
Recommended Budget Adjustments
• Clean-Up Actions
− Fund Balance Reconciliations
− Rebudget Adjustments
− Technical Adjustments (e.g., Net-Zero Transfers/Reallocations) • Recommended Adjustments
− Recognize Grants and Reimbursements
− Update Cost/Revenue Estimates and Project Timing
− Urgent Needs for Projects and Programs
2021-2022
Annual Report
Jim Shannon Selena Ubando
Budget Director Financial Status Coordinator
Bonny Duong Bryce Ball
Assistant Budget Director Operating Budget Coordinator
Claudia Chang Stewart Patri
Deputy Budget Director Capital Budget Coordinator