City Council Meeting – October 17, 2023; Item 3.3
2022-2023
Annual Report
2 2022-2023 Budget: Overall Performance Met
Revised Expectations
• Revenues generally performed as expected
• Overall expenditures ended the year within or below budget • General Fund had a very small 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 0.5% of Modified Budget revenues and expenditures
• Recommended actions close out 2022-2023, adjust 2023-2024 as necessary and in accordance with City Council Policy 1-18, recognize grants and reimbursements, and address several urgent needs in Special and Capital Funds.
3 Economic Conditions: Employment
San Jose MSA
Unemployment Rate
June 2022 2.7%
June 2023 3.7%
4 Economic Conditions: Real Estate
FY 2022 FY 2023
Median
SFH
Price
(Jun)
$1.56 M $1.60 M
Average
Sales
per
Month
716 476
5 Major General Fund Revenues:
Year-Over-Year Comparison
Revenue Category
2021-2022
Actuals
($ Million)
2022-2023
Actuals
($ Million)
$ Change
($ Million)
%
Change
Property Tax 414.1 440.0 34.9 8%
Sales Tax 323.1 343.5 20.3 6%
Utility Taxes 103.6 124.3 20.7 20%
Real Property Transfer Tax
(Measure E) 110.0 56.3 (53.7) (49%)
Business Tax 85.4 89.6 4.3 5%
Fees, Rates and Charges 22.1 23.6 1.5 7%
Use of Money and Property 9.1 19.2 10.0 110%
Transient Occupancy Tax (TOT) 10.5 14.9 4.4 42%
6 General Fund: Additional Fund Balance
• General Fund ended the year with a gross fund balance of $639.4 million; $9.7 million above the estimate used to develop the 2023-2024 Adopted Budget (0.3% of the Modified Budget for revenues and expenditures) • Net of required adjustments to close out 2022-2023, the Ending Fund Balance variance was $18.6 million (0.5% of the Modified Budget for revenues and expenditures)
• Additional fund balance was primarily generated by:
– Stronger than anticipated revenue performance amongst several categories at the end of the fiscal year (e.g., Sales Tax, Utility Tax, Property Tax, Business Taxes) – Expenditure savings within the City-Wide Expenses category 7 General Fund Performance:
Comparing Estimates to Actuals
($ Million)
Category
2022-2023
Budget
2022-2023
Estimate
2022-2023
Actuals
Actuals
Less
Estimate
Adopted
Budget Net-
Zero Adj.
Annual
Report
Rebud/
Clean-Up
Net
Variance
Total Sources 2,321.6 2,322.1 2,316.1 (6.0) 5.6 12.7 12.4 Departmental 1,119.6 1,079.9 1,082.7 2.7 0.1 1.5 4.3
City-Wide 748.7 538.8 518.5 (20.1) 5.5 1.5 (13.0)
Capital 73.6 36.5 37.7 1.2 0 1.5 2.7
Transfers 37.8 37.8 37.8 0 0 0.1 0.1
Reserves 341.9 (0.5) 0 0.5 0 (0.8) (0.3)
Total Uses 2,321.6 1,692.5 1,676.7 (15.7) 0 3.8 (6.2)
Fund Balance 0 629.6 639.4 9.7 8.9 18.6
8 General Fund: Proposed Allocation of
Additional Fund Balance
Recommended 2023-2024 General Fund Adjustments ($000s)
Additional 2022-2023 Ending Fund Balance $9,732
Clean-Up/Rebudget Actions $8,857
Fund Balance Available After Clean-up/Rebudget
Actions $18,589
Recommended Budget Adjustments
Required Technical/Rebalancing Actions ($18,589)
Grants/Reimbursements/Fee Activities ($0)
(Sources = ($3.0 million); Uses = ($3.0 million))
Total Recommended Budget Adjustments ($18,589)
9 General Fund: Recommended Budget
Adjustments
Required Technical/Rebalancing Actions ($ in 000s)
Emergency Interim Housing Construction and Operation ($15,000) Community and Economic Recovery Reserve ($1,350)
Contingency Reserve ($1,000)
Solid Waste Code Enforcement Program Reserve ($680)
City Attorney’s Office Outside Litigation Reserve ($510) Unanticipated/Emergency Maintenance
(Civic Center Elevator Repairs and Assessment) ($400)
Public Works Non-Personal/Equipment
(City-Owned Property Management and Maintenance) ($375) Transfers and Reimbursements
(Transfer from American Rescue Plan Fund) $2,244
10 Selected Special/Capital Fund
Performance
11 Selected Special/Capital Fund
Performance
Airport Operating Funds
• Passenger activity significantly up by 23.6% from 9.8 million to 12.1 million • Projected passenger activity for 2023-2024 is 13.2 million passengers
12 Selected Special/Capital Fund
Performance
San José Clean Energy Fund
• Recent shift to new cost-of-service model and lower Power Charge Indifference Adjustment (PCIA) charges beginning January 2023 have resulted in a strong budgetary position
• Still working on building a 180-day operating reserve (approx. $240 million) Ending Fund Balance ($ Million)
2019-2020
Actual
2020-2021
Actual
2021-2022
Actual
2022-2023
Actual
2023-2024
Modified Budget
Estimate*
23.5 8.1 80.6 173.7 219.3
* Includes the newly created Operating and Maintenance Reserve of $136.0 million 13 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
2022-2023
Annual Report
Jim Shannon Selena Ubando
Budget Director Assistant to the City Manager
Bonny Duong Bryce Ball
Assistant Budget Director Assistant to the City Manager Claudia Chang William Yu
Deputy Budget Director Assistant to the City Manager