RESPONSE TO COUNCIL QUESTIONS RE: 5/23/23 AGENDA
Agenda Item 2.C 23-337: Action on Monthly Financial Status and Investment Reports for February and March 2023 and Approve the Related Budget Amendments
Council Question:
I see for March 31, 2023, Actual Revenue through 3/31/2023 of $224.89M and Actual Expenses of $204.93M.
Does it seem like we will have a surplus of over $20M if revenues and expenses track roughly the same rates for the rest of the year or are there some large anticipated expenses before the end of FY2023? Do I see in attachment #5 that we are adding $7.19M to the BSR?
Staff Response:
While the tracking is impacted by timing of revenues and expenses (e.g., transfers to and from the General Fund occur at the beginning of the year and the payment schedule for property taxes which occur twice a year), General Fund revenues are tracking to end the year above the budget and expenditure savings are also projected, which is expected to generate additional fund balance that will be brought forward after the close of FY 2022/23. Attachment 5 includes the increase of the Budget Stabilization Reserve of $7.2 million from higher projected Property Tax revenues based on the latest information from the County. This action is necessary to align to the assumptions in the Proposed Budget which included an increase of $5.0 million in FY 2022/23 from excess Property Tax revenues in order to maintain the 15% reserve level for FY 2023/24 and FY 2024/25.
Council Question:
Why did the appropriations for capital expenditures for the current year change from Feb to March from $62.9M to $69.6M? Shouldn’t the appropriation be fixed based on planned projects or what Council approves? Did Council approve an additional appropriation of $7M in March?
2 Staff Response:
As part of the January Monthly Financial Report approved on March 21, 2023 (RTC 23-316), Council approved the appropriation of $6.0 million to the Parkland Acquisition Project and $0.6 million to the Park Impact Fees Monitoring Project which account for the increase in the Parks and Recreation Capital Fund.
Council Question:
If the appropriation is $69.6M but our actual through 3/31 is only $26.8M then we will continue to increase our carryforward which is already $84.5M. It seems to me that we should be spending more on getting projects done. Is this due to lack of staffing to plan the projects? I see Community Development is tracking at only 58.5% of budget versus par of 75%.
Staff Response:
In addition to the $26.8 million expended through March 31st, $33.9 million has been encumbered for projects, for a total of $60.7 million committed for the projects (39% of the amended budget of $157 million). Project funds are encumbered when design and construction contacts are awarded, and these contracts may span multiple years; encumbrances will carry over from year to year. While additional project expenditures are expected to occur from April – June, an unspent balance is expected at year end. To ensure these funds are available to complete projects, capital carry over requests will be brought forward as part of the June 27th budget adoption as well as the FY 2022/23 budgetary year-end report that will be brought forward in the November/December 2023 timeframe.
It is important to note that capital project funds are generally allocated up front, but the project design and construction can take several years for large projects. Capital projects can also experience delays due to challenges during the design and engineering of a project, coordination with other agencies, and staffing.
Community Development’s General Fund operating expenditures were at 58.5% of the budget through March mainly due to lower personnel and contractual services spending.
3 Agenda Item 2.J 23-1247: Action to Adopt a Resolution of the City of Santa Clara, California Amending the Administrative Penalty Schedule to Add Penalties for Violations of “The Code of the City of Santa Clara, California” Chapter 8.26 (Edible Food Recovery)
Council Question:
I don’t like fees or penalties that set a fixed amount without accounting for COLA. Are these values set by the State or by the City? How often do we expect to revisit the fees? Clearly the round numbers are convenient but often the same numbers remain decades later.
WHEREAS, the edible food recovery regulations developed by CalRecycle authorize local jurisdictions to implement certain enforcement standards which include administrative civil penalties assessed as follows: up to $100 for a first violation, up to $200 for a second violation, and up to $500 for a third violation;
Staff Response:
Penalty provisions in the edible food recovery regulations were established by Cal Recycle and the agencies in the Countywide Program are consistent in implementing the penalties at the top of the range. The City does not have any information from CalRecycle about how often they will be revisiting the penalty provisions.