12/6/22 Item #6
Council and
Authorities
Concurrent Meeting
Item #6 - Action on FY
2021/22 Budget Year-End
1852
Report and Approve the
THE MISSION CIT Related Budget Amendments
December 6, 2022
Agenda
• Overview
• Year-End Results
• Next Steps
• Recommended Actions
City of
Santa Clara
POST MEETING MATERIAL
1 Overview
• General Fund revenues of $242.2 million were below General Fund expenditures of $262.6 million as planned; one-time funds used to balance the FY 2021/22 budget
• General Fund ended the year with additional fund balance due to slightly higher revenues and expenditure savings compared to estimates • Transient Occupancy Tax receipts continued to be the most impacted by COVID-19
• Other funds generally ended FY 2021/22 within estimated levels with some adjustments necessary
• Ended FY 2021/22 with heightened economic uncertainty City of
Santa Clara
The Center o Whits Possible
Overview
2021/22 Year-End Report
• Detailed summary of General Fund and other funds performance • General Fund reconciling budget actions and allocation of modest fund balance
• Itemization of FY 2021/22 budget ratifications to address limited number of expenditure overages
• Itemization of FY 2022/23 budget amendments, including reconciliations of CIP carryovers, donations, grants, other fund carryovers, and fund balance adjustments
City of
Santa Clara
The Centerof Whats Possible
2 Year-End Results - General Fund
General Fund
• Revenues of $242.2 million ended 2.2% above budget or $5.2 million • Expenditures of $262.6 million were 5.1% below budget or $14.2 million • Advanced Planning Fee Reserve and Technology Fee Reserve adjustments total $2.0 million (excess revenue and expenditure savings) • Additional fund balance of $19.8 million over the estimate used to develop FY 2022/23 Adopted Budget; allocated to technical adjustments to close out FY 2021/22 ($8.7 million) and to meet Council policies, plan for FY 2023/24, and address high priority needs ($11.1 million)
• No surplus funds available for other reserves (Pension Trust and Budget Stabilization Reserve)
City of
Santa Clara
The Center of Whats Possible
General Fund Revenues
• Revenues above budget by $5.2 million (2.2%)
• Higher revenue performance in the Property Tax, Silicon Valley Power (SVP) Transfer, Transient Occupancy Tax, and Licenses and Permits categories
• Portions of the higher revenues will be allocated to the Advanced Planning Fee Reserve and the Technology Fee Reserve
• Lower revenue performance in the Sales Tax, Fines and Penalties, and Interest categories (lower interest earnings due to losses in the Pension Trust Fund that will result in a reduction to the Pension Stabilization Reserve)
City of
Santa Clara
3 FY 2021/22 General Fund Revenues
FY FY FY FY
2018/19 2019/20 2020/21 2021/22
Actual Actual Actual Actual Outlook
Property Tax $58.4 M $65.5 M $68.8 M $74.6 M
Sales Tax $58.5 M $55.3 M $56.2 M $56.9 M
Silicon Valley Power Transfer $21.3 M $22.7 M $24.5 M $27.3 M 1 Transient Occupancy Tax $22.5 M $16.0 M $2.9 M $10.8 M 1 City of
Santa Clara
The Center of What's Possible
General Fund Expenditures
Expenditures below budget by $14.2 million (5.1%)
• All departments remained within budget
• Salaries and Benefits generated savings of $10.3 million (6.0%) - Cost control measures and vacancy savings
• Non-personnel generated savings of $3.9 million (3.7%) - Savings in the materials/services/supplies category
- Adopted budget assumed carryover of unspent funds ($1.2 million) - Two additional carryovers recommended ($0.5 million)
City of
Santa Clara
4 Year-End Results - Other Funds
Convention Center Fund
• Revenues of $10.4 M ended $0.2 M above budget; expenditures of $9.7 M were $1.7 M below budget
• FY 2021/22 ending balance of $2.6 million exceeded expectations Electric Utility Fund
• Revenues of $542.3 M ended $18.4 M above budget; higher customer service charges and wholesale revenues
• Expenditures of $555.1 M were $46.7 M above budget; higher sales volume required additional market purchases at a higher cost due to an increase in natural gas prices (2-3 times higher than in 2021)
• Required reserves remain at expected levels; infrastructure reserve defunded City of
Santa Clara
The Center of What's Possible
Year-End Results - Other Funds
Sewer Utility Fund
• Revenues of $54 M ended $14.2 M above budget primarily due to return of funding from the City of San José for the Regional Wastewater facility project • Expenditures of $36 M were $0.9 M below budget
• FY 2021/22 ending balance/reserves of $47.7 M exceeded estimate by $15.1 M • Recommendation to use excess fund balance along with additional fund balance to transfer $32.5 M to the Sewer Utility Capital Fund to avoid negative ending balance in the capital fund
• Capital fund below projected levels because debt proceeds not received in FY 2021/22 and technical adjustment to break out restricted/unrestricted balances • Staff is evaluating timing of debt issuance to address sewer capital needs City of
Santa Clara 10
5 Recommended Adjustments
• FY 2021/22 Budget Adjustments
- Appropriations in 12 funds ($47.0 million) that exceeded the appropriation control limit; $46.7 million in Electric Utility Fund due to unanticipated increased costs
• FY 2022/23 Budget Adjustments
- Adjustment of Beginning and Ending Fund Balances for all funds - Complete critical city projects and contracts (carryovers) - Close-out of projects
- True-up revenues/appropriations to reflect anticipated activity levels City of
Santa Clara
The Center of What's Possible
Recommended Adjustments
• General Fund Adjustments
- Beginning Fund Balance and Reserves Reconciliation
- Advanced Planning Reserve ($1.5 million) and Technology Reserve ($0.5 million) reconciliation
- Recommended technical adjustments to close out FY 2021/22 ($8.7 million) - Recommended allocation of $11.1 million in fund balance • CIP, Grants, Donations, and Other Funds Reconciliation - CIP carryover true-up - reduction of $2.4 million
- Grants carryover - $4.1 million
- Donations and reimbursements carryover funds - $1.7 million - Other expenditure carryovers - $7.7 million
City of
Santa Clara 12
6 Recommended Adjustments
Unrestricted
General Fund Ending Fund
Recommended Use of Fund Balance Balance
Fund Balance Reconciliation (adjusts for FY 2021/22 $19.8 M year-end revenues and expenditures)
FY 2021/22 Close-Out: Required Technical Adjustments $8.7 M Recommended Adjustments $11.1 M
Available Fund Balance After Recommended
$0.0 M
Adjustments
City of
Santa Clara 13
The Center of What's Possibic
Recommended Adjustments
Impact on
General Fund Fund
Recommended Use of Fund Balance Balance
FY 2021/22 Close-Out: Required Technical Adjustments
BSR Reconciliation to FY 2022/23 beginning estimate assumed in the Adopted Budget and other adjustments to close out FY $0.4 M 2021/22, including funding carryover)
Land Sale Reserve: replenish reserve used to cover additional labor costs in FY 2022/23 from bargaining unit agreements $4.2 M (intended to replenish with FY 2021/22 savings)
Development Fee Reserves: sets aside funding to establish new $2.0 M
development fee funds (Fire, Public Works, Planning)
City of 14
Santa Clara
The Center of What's Possible
7 Recommended Adjustments
Impact on
General Fund Fund
Recommended Use of Fund Balance Balance
FY 2021/22 Close-Out: Required Technical Adjustments
Non-Departmental: Property Tax excess ERAF contingency funds to address potential legal challenge from school districts $1.7 M Police contractual services carryover due to delayed invoicing for $0.3 M
Axon Body Worn Cameras
Non-Departmental - IT cost/benefit organizational analysis $0.1 M carryover
Total Required Technical Adjustments $8.7M
City of 15
Santa Clara
The Centero What's Posuble
Recommended Adjustments
Impact on
General Fund Fund
Recommended Use of Fund Balance Balance
Recommended Adjustments
Capital Projects Reserve (bring Reserve to Council policy level of $5 M; separate actions will return project savings to CPR to $4.8 M bring to $5 M)
Union Pacific Railroad Capital Project (design and construction) - storm drain portion of project (set aside funds in CPR $1.7 M Fire Truck Purchase $2.0 M
City of 16
Santa Clara
The Centerof Whats Possible
8 Recommended Adjustments
Impact on
General Fund Fund
Recommended Use of Fund Balance Balance
Recommended Adjustments
City Council Priorities (sets aside funding to address Council- approved priorities) $0.3 M
FY 2023/24 Budget Balancing Reserve $2.0 M
Budget Stabilization Reserve $0.3 M
Total Recommended Adjustments $11.1 M
City of
Santa Clara 17
The Center of What's Possible
Summary of Select General Fund Reserves
FY 2022/23 FY 2022/23
Current Ending Recommended Amended
General Fund Reserve Balance Adjustment Balance
Budget Stabilization Reserve $40.4 M $0.4 M $40.8 M
Capital Projects Reserve* $0.0 M $6.7 M $6.7 M
Land Sale Reserve $7.2 M $5.7 M $12.9 M
Development Fee Reserve $0.0 M $2.0 M $2.0 M
FY 2023/24 Budget Balancing Reserve $0.0 M $2.0 M $2.0 M * The CPR adjustment includes $5.0 M to restore reserve to Council policy level and $1.7 M for the Union Pacific Railroad capital project
City of
18 Santa Clara
9 Next Steps
1. Provide 10-Year General Fund Forecast Update in February; to be discussed during Priority Setting Session
2. Priority Setting Session discussion of budget priorities/budget balancing actions
3. Release FY 2023/24 and FY 2024/25 Proposed Operating Budget in May 2023 and Council deliberation on the Proposed Budget for action by June 30, 2023
City of
19 Santa Clara
The Center of What's Possible
Next Steps
Three-Pronged Approach to Solving Projected Ongoing General Fund Deficit One-Time
New Budget Funds/ Future
Revenues Balancing Economic
($7 M) Growth
($27 M)
($8 M)
Position/
Service
Reductions
($12 M)
City of
20 Santa Clara
10 Recommendations
1. Note and file the FY 2021/22 Budget Year-End Report
2. Approve the FY 2021/22 Budget Amendments to address
necessary budget ratifications (five affirmative Council votes required for revenue actions and use of unused balances
3. Approve the FY 2022/23 Budget Amendments (five
affirmative Council votes required for revenue actions and use of unused balances)
City of
Santa Clara
The Center of What's Possible
Council and
Authorities
ATTA CLARIONA Concurrent Meeting
CITY OF
Item #6 - Action on FY
2021/22 Budget Year-End
1852 Report and Approve the
THE MISSION CIT Related Budget Amendments
December 6, 2022