City Council Meeting – February 14, 2023; Item 3.3
2022-2023
Mid-Year Budget Review
2 Operating and capital funds are generally performing as expected, with a few exceptions
Most economic indicators are strong through the first half of the fiscal year, though softening conditions are expected in the future
Budget actions recommended in various operating and capital funds The City is relatively well-positioned entering for the 2023-2024 budget development process
2022-2023 Mid-Year Budget Review
Overview
3 Economic Conditions: Employment
4 Economic Conditions: Hotel Occupancy
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
Monthly Occupancy Rate
FY19 FY20 FY21 FY22 FY23 Median
5 Economic Conditions: Real Estate
6 General Fund Assessment
Revenue growth in the first six months of the fiscal year is strong; anticipated to exceed budgeted levels by approximately $30 million by year-end. – Revenue growth is anticipated to slow in the second half of the fiscal year Expenditures currently tracking to end the year with savings of at least $15 million Limited adjustments recommended at this time
Establishing a 2022-2023 Ending Fund Balance Reserve of $9.4 million, which will be used as a funding source for the 2024-2028 Five-Year Forecast and 2023- 2024 Proposed Budget
7 General Fund Recommended Budget Adjustments
Recommended 2022-2023 General Fund Adjustments ($ in Millions) Source Use
Urgent Fiscal/Program Need $0 $0
Recruitment Centralization Pilot
Required Technical/Rebalancing Actions ($61.722) ($61.722) Grants/Reimbursements/Fee Activities $2.032 $2.032
(Sources = ($2.0M); Uses = ($2.0M))
Clean-Up Actions $0 $0
Total Recommended Budget Adjustments ($59.690) ($59.690) 8 General Fund Recommended Budget Adjustments Highlights Required Technical/Rebalancing Actions ($ in Millions)
Source Use
Property Tax Revenue $10.000
Utility Tax Revenue $7.000
Revenue from the Use of Money/Property $4.500
Transfers and Reimbursements $0.263
Other Revenue/Transfers from Other Funds/TRANs Debt Service ($83.501) ($79.000) 9 General Fund Recommended Budget Adjustments Highlights Required Technical/Rebalancing Actions ($ in Millions)
Source Use
2022-2023 Storm Response and Recovery (Transfer to Emergency Reserve Fund) $5,000
Storm Evacuee Transition Facilities $2,000
Measure E – 15% Homelessness Programs Support Reserve ($2,000) Pandemic Response Non-Reimbursable Expenses $3,000
FEMA Non-Reimbursable Expenses Reserve ($3,000)
2022-2023 Ending Fund Balance Reserve $9,400
10 Status of Selected Special Funds
Airport Operating Funds
• Passenger enplanements up 32%
from last year
• Takeoffs and landings are up 26%
from last year
• Financial relief available to
concessionaires through December
31, 2023
• $28.9 million of federal American
Rescue Plan Act funding allocated in
2022-2023
11 Status of Selected Special Funds
San José Clean Energy Fund
• Improved financial position enables partial
pay back of Commercial Paper in 2022-
2023, with remaining paid back in 2023-
2024
• Mid-Year actions include an increase to
Cost of Energy by $72 million and an
increase to Sale of Energy by $94 million
due to high market energy prices and
increased load demand
• On pace to build 180-day reserve by
December 2023
• 2023 rates estimated at 1-3% below PG&E
12 Status of Selected Capital Funds
0 10
20 30
40 50
60 70
($ in Millions)
Actual Annual Collections
and 2022-2023 Estimate
Building & Structure Construction Excise Construction & Conveyance Construction and
Conveyance Tax Funds:
• Declining real estate activity
is leading to lower revenue
• Revenue estimate is reduced
by $5 million, from $50
million to $45 million
Building and Structure /
Construction Excise Tax
Funds:
• Commercial and Industrial
development activity has
been higher than anticipated
while residential
development has slowed
• Building & Structure = No
Change
• Construction Excise < $2
million
13 Looking Forward: 2023-2024 Budget
February 2023
2023-2024 City Manager’s Request and 2024-2028 Five-Year Forecast Released March 2023
City Council Review and Approval of Mayor’s March Budget Message April/May 2023
2023-2024 Proposed Capital/Operating Budgets/2024-2028 Proposed CIP/2023-2024 Fees and Charges Released
City Council Budget Study Sessions and Initial Budget Public Hearing Community Budget Meetings
June 2023
Final Budget Public Hearing
Mayor’s June Budget Message & Final Review of Budgets
2023-2024 Capital/Operating Budgets and Fees & Charges Approval 2022-2023
Mid-Year Budget Review
Jim Shannon Selena Ubando
Budget Director Financial Status Coordinator
Bonny Duong Bryce Ball
Assistant Budget Director Op erating Budget Coordinator Claudia Chang Stewart Patri
Deputy Budget Director Capital Budget Coordinator