QUARTERLY
FINANCIAL
REPORT
FIRST QUARTER ENDED
SEPTEMBER 30, 2024
ATTACHMENT A
1 MAYOR
Alice Patino
MAYOR PRO TEM
Gloria Soto
COUNCIL
Carlos Escobedo
Maribel Aguilera-Hernandez
Mike Cordero
ACTING CITY MANAGER
Chuen Wu
REPORT PREPARED BY
Xenia Bradford
Interim Director of Finance
206 East Cook Street
Santa Maria, CA 93454
(805)925-0951 Ext. 2215
www.cityofsantamaria.org
Q U A R T E R L Y
F I N A N C I A L
R E P O R T
CITY OF SANTA MARIA, CA
V
TABLE OF CONTENTS
ECONOMIC INDICATORS ................................ ........................... 1 GENERAL FUND ................................ ................................ ..... 2 MEASURE U FUND ................................ ................................ . 6 ENTERPRISE FUNDS ................................ ................................ 7
WATER/WASTEWATER FUND
SOLID WASTE FUNDS
PUBLIC TRANSIT FUNDS
FY 2024-26 BIENNIAL BUDGET................................ ................. 8 FUND BALANCE ................................ ................................ ..... 8
GENERAL FUND
MEASURE U FUND
Quarterly Financial Report: First Quarter Ending September 30, 2024
1 ECONOMIC INDICATORS
The U.S. economy grew at a vigorous 3 percent annual pace from April through June, boosted by consumer spending and business investment. A forecasting tool from the Federal Reserve Bank of Atlanta points to slower but still healthy 2.5 percent annual growth in the just-ended July-September quarter.
Economists had long expected that the Federal Reserve’s aggressive campaign to subdue inflation - it jacked up interest rates 11 times in 2022 and 2023 - would cause a recession. It did not. The economy kept growing even in the face of ever- higher borrowing costs for consumers and businesses. Across the economy, though, most indicators look solid, y et consumers are concerned about inflation and rising insurance premiums.
Inflation rose 2.4 percent in September from a year earlier, down from a peak inflation rate of 9.1 percent in June 2022 and now barely above the Federal Reserve’s 2 percent target. With prices coming under control, the Fed cut its benchmark interest rate recently for the first time in four years by a larger -than-usual half point. By year’s end, economists expect two additional Fed rate cuts, of smaller quarter-point increments, which should help ease borrowing costs over time.
Employers added a surprisingly strong 254,000 jobs in September, easing concerns about a weakening labor market and suggesting that the pace of hiring is still solid enough to support a growing economy. That ga in was far more than economists had expected, and it was up sharply from the 159,000 jobs that were added in August. The 10-year median is about 243,000 jobs added each month.
Sales of previously owned homes slowed to their lowest rate in nearly 14 years. Existing home sales retreated 1.0 percent from August to September, reaching an annual rate of 3.84 million, seasonally adjusted, said the National Association of Realtors. In California, sales of existing, single -family home sales totaled 253,010 in Sept ember on a seasonally adjusted annualized rate, down 3.4 percent from 262,050 in August and up 5.1 percent from 240,840 in September 2023. The statewide median home price was $868,150, down 2.3 percent from August and up 2.9 percent from $843,500 in September 2023.
After rising for most of 2024, the unemployment rate dropped for a second straight month, from 4.2 percent in August to
4.1 percent in September. The latest figures suggest that many companies are still confident enough to fill jobs despite the continued pressure of high interest rates.
California’s unemployment rate of 5.3 percent in September was unchanged from August. California’s job market expansion officially entered its 53rd month, according to the State Employment Development Department. S even of California's 11 industry sectors gained jobs in September with the largest increase in Private Education & Health Services (+9,600) led by gains in Health Care and Social Assistance.
Santa Barbara County’s unemployment rate was 4.1 percent in September compared to 3.8 percent a year ago, and Santa Maria was at 5.1 percent compared to 4.3 percent one year ago.
Insurance premiums continue to rise for auto coverage and for health insurance in California. The average annual cost of full car insurance in California was $2,417 as of June, up from $1,666 the year before, according to Insurify.
The cost of employer health insurance rose 7 percent for a second straight year, maintaining a growth rate not seen in more than a decade, according to an annual sur vey by the healthcare nonprofit KFF. The back -to-back years of rapid increases have added more than $3,000 to the average family premium, which reached roughly $25,500 this year.
Employers largely absorbed the added expenses
ECONOMIC INDICATORS (CONTINUED)
and spent about $1,880 more in 2024 than they had in 2023, bringing their average cost for family premiums to $19,276, the study found.
KEY STATISTICS
Quarterly Financial Report: First Quarter Ending September 30, 2024
2 GENERAL FUND
Budget:
The table below presents the budget as adopted and amended along with actual expenditures as of September 30, 2024.
General Fund appropriations adopted on June 18, 2024, were $108.72 million compared to budgeted sources of $100.15 million, inclusive of a $8.34 million draw from the Local Economic Augmentation Fund (LEAF) as a revenue source, and the use of $8.57 million of available General Fund balance.
GENERAL FUND
(in thousands)
Adopted
Budget
Current
Budget
2024-25
Actual
Percent of
Current Budget
Revenues & Transfers In
Sales Tax $ 31,872 $ 31,872 $ 8,051 25.3%
Property Tax 26,498 26,498 - 0.0%
Hotel/Bed Tax 4,274 4,274 762 17.8%
Licenses, Permits & Fees 3,196 3,196 1,354 42.4%
All Other Revenues 34,309 34,321 5,858 17.1%
Total Revenues & Transfers In $ 100,149 $ 100,161 $ 16,025 16.0%
Expenses & Transfers Out
Staffing $ 73,048 $ 73,048 $ 13,788 18.9%
Contracts & Services 10,184 10,184 1,807 17.7%
Materials & Supplies 4,257 4,257 1,173 27.6%
Maintenance & Operations 10,835 10,835 2,522 23.3%
Capital Outlay 1,800 1,800 9 0.5%
Debt Service 267 267 - 0.0%
Transfers 8,328 8,328 - 0.0%
Total Expenses & Transfers Out $ 108,719 $ 108,719 $ 19,299 17.8%
GENERAL FUND (CONTINUED)
Year-Over-Year Comparison:
The chart below compares revenue receipts, expenditures, and transfers for the first quarter ending September 30, 2024, versus the first quarter ending September 30, 2023.
Quarterly Financial Report: First Quarter Ending September 30, 2024
3 Major Revenues:
Through the first quarter, receipts for four major General Fund revenue sources (Sales Tax, Property Tax, Hotel Tax, and Licenses, Permits, & Fees) are at 15.4 percent of projections and account for approximately 63 percent of total General Fund revenues. Revenues are slightly less than the first quarter receipts from the prior year primarily due to sales tax; however, hotel tax and licenses, permits & fees are higher.
Revenue Variances:
The following highlights what is driving the variances in these individual revenue sources received through the first quarter:
GENERAL FUND (CONTINUED)
Property Tax: The bulk of these payments are received through Santa Barbara County in December, January, April, and May of each year.
Sales Tax: The chart below, as of the fourth quarter of FY 2023-24, reflects total sales taxes coming in near the same level as those through the fourth quarter of FY 2022-23 for all major business groups ; however, due to
Quarterly Financial Report: First Quarter Ending September 30, 2024
4 concerns about the economy still looming, consumers reduced spending in the Autos and Transportation category.
Receipts for the first quar ter of FY 2024 -25 are 1.5 percent, or $ 118 thousand, more than those for the same quarter last year.
Hotel/Bed Tax: Through September, Transient Occupancy Tax (TOT) receipts are 4.1 percent, or $ 30 thousand, more than last fiscal year but behind estimates by 7.2 percent, or $306 thousand. Licenses, Permits, & Fees: Revenue of $1.35 million through the first quarter exceeds projections by 17.4 percent, or $555 thousand, and is 28.2 percent, or $298 thousand, more than that through the first quarter of FY 2023-24.
This quarter’s revenue includes the issuance of 663 building permits including 16 new single-family dwellings and 111 Accessory Dwelling Units (ADUs). This is an increase compared to the same quarter of FY 2023-24, which included the issuance of 551 building permits. Permit activity continues to exceed projections due to ADU permit applications and overall development activity in Santa Maria.
Expenditures:
Through the first quarter, operating expenditures, excluding debt service and transfers, are at 19.3 percent of total budget.
Expenditures, as shown above in the Expenditure Categories chart above on t he right, are trending within budget with the exception of Materials & Supplies.
GENERAL FUND (CONTINUED)
Expenditure Variances:
Financial Reporting policies require explanation of variances greater than 5 percent of major categories and departmental variances greater than 10 percent.
Quarterly Financial Report: First Quarter Ending September 30, 2024
5 Staffing: Under budget by 6.1 percent through the first quarter, due to vacancies mostly experienced in the Police Department and overtime savings for the Fire Department, mostly due to the over hire of Firefighter positions in anticipation of staffing new Engine 6 . Recruitments of lateral and entry positions continue to be the Police Department’s focus to fill 26 vacancies.
Contracts & Services: Under budget by 7.3% through the first quarter due to timing of the payment for contractual services with Santa Barbara County for Animal Control Services. Transfers Out : Transfers from the General Fund to other funds as approved in the adopted budget will be evaluated in the second quarter.
The chart below presents the percentages of expenditures by department. No departmental variances are greater than 10 percent as of the first quarter.
Quarterly Financial Report: First Quarter Ending September 30, 2024
6 MEASURE U FUND
The table below presents the budget as adopted and amended along with actual expenditures as of September 30, 2024.
Measure U Fund appropriations adopted on June 20, 202 4, were $31.1 million compared to budgeted sources of $26. 7 million and the use of $4.41 million of available Measure U Fund balance.
MEASURE U FUND
(in thousands)
Adopted
Budget
Current
Budget
2024-25
Actual
Percent of
Current Budget
Revenue $ 26,716 $ 26,716 $ 6,876 25.7%
Expenses
Community Development $ 824 $ 824 203 24.6%
City Manager’s Office 1,435 1,435 275 19.1%
Finance 3 3 - 1.5%
Library 1,015 1,015 231 22.8%
Recreation & Parks 3,071 3,071 619 20.2%
Fire 11,946 11,946 2,819 23.6%
Police 12,836 12,836 3,172 24.7%
Total Expenses $ 31,130 $ 31,130 $ 7,319 23.5%
Revenues received through the first quarter are at 25.7 percent of budget, or $ 6.88 million. Expenditures are at 23.5 percent of budget, or $463 thousand under budget, primarily due to capital project activity and a delay in the operation of Regional Dispatch noted below.
The City Manager’s Office budget includes costs of maintaining the City’s mass notification system database , a position for the Public, Education, and Government (PEG), and the Motorola Backhaul Refresh and Refresh of CAD/RMS capital projects. The Finance budget is for the annual independent audit of Measure U financial activity. The Fire Department budget includes the City’s proportional cost of participating in the Regional Dispatch, which is anticipated to begin in early 2025.
Through September, Measure U expended 86.8 percent on Public Safety, 5.4 percent on Youth Services, and 7.8 percent on Quality of Life.
Quarterly Financial Report: First Quarter Ending September 30, 2024
7 ENTERPRISE FUNDS
The Statement of Revenues and Expenses through the first quarter ending September 30, 2024, for the three enterprise funds, are shown in the table below.
ENTERPRISE FUNDS
(in thousands)
Water /
Wastewater
Solid
Waste
Public
Transit
Revenues
Charges for Service $ 16,380 $ 8,604 $ 124
Interest Income 989 485 120
Other Revenue 551 27 1,035
Total Revenues $ 17,920 $ 9,116 $ 1,279
Expenses
Operating $ 3,938 $ 6,773 $ 1,008
Capital 599 1,486 152
State Water Payment 6,177 - -
Debt Service 696 - -
Total Expenses $ 11,410 $ 8,259 $ 1,160
Revenues/Expenses $ 6,510 $ 857 $ 119
Water/Wastewater Funds:
Revenues exceeded expenditures by $ 6.5 million, which is $ 1.0 million more than last year.
Revenues increased 5.8 percent, or $983 thousand, compared to the prior year due to higher revenues generated through sales of metered water. Expenses are $60 thousand less than last.
Through the first quarter, Water and Wastewater operational expenses are under budget by
18.7 percent due to personnel savings from vacant positions and timing of maintenance and contractual agreements.
Solid Waste Funds:
The Solid Waste Fund reports refuse collection and disposal activities. Through the first quarter, Solid Waste revenues exceeded expenditures by $ 857 thousand. Operational costs are under budget by 12.1 percent, or $6.4 million.
Public Transit Funds:
The City operates the Santa Maria Regional Transit (SMRT) and Breeze Transit systems, which are funded by a combination of Federal grants, State transportation funds, and user fares. Fare revenue through the first quarter is approximately $124 thousand, which is about $ 18 thousand less than last year. This difference is attributed to a decrease in ridership. The farebox ratio through September 30, 2024, is 12.3 percent based on fares received and operating expenses recorded to date.
FY 2024-26 BIENNIAL BUDGET
Quarterly Financial Report: First Quarter Ending September 30, 2024
8 The final budget was presented with a public hearing at the City Council meeting held on June 18, 2024. Public engagement occurred during the City Council’s meetings in May and June along with budget presentations and discussion s with department directors. Get the latest information on the public meetings related to the development of the FY 2024 -26 biennial budget by visiting the City’s we bsite at: https://www.cityofsantamaria.org/services/departments/city-clerk- records/agendas-reports-meeting-videos.
GENERAL FUND & MEASURE U FUND BALANCE SUMMARY
General Fund:
The General Fund Fiscal Year 2023-24 year-end audited results will be presented in February with the Quarter 2 Financial Report. The audited financial statements will reflect final results for actual receipts for revenues and will encompass all expenditures including carryovers per Council adopted policies and accounting principles. The table below shows revenues are at 16.0 percent of projections while expenditures are at 17.8 percent of appropriations for the fi rst quarter of the Fiscal Year 2024-25.
GENERAL FUND
(in thousands) Adopted
Budget
1st Quarter Percent
Beg. Fund Bal. $ 8,570
Revenues* 100,149 16,025 16.0%
Expenditures* 108,719 19,299 17.8%
Rev/Exp $ (8,570) $ (3,274)
Measure U Fund:
The table below shows revenues are at 25.7 percent of projections while expenditures are at 23.5 percent of appropriations. Carryover requests are being evaluated at an estimated amount of $6.2 41 million. Majority of the carryover funds will be due to funding allocated toward Capital Improvement Program within the Measure U fund in prior years.
MEASURE U FUND
(in thousands) Adopted
Budget
1st Quarter Percent
Beg. Fund Bal. $ 4,414
Revenues* 26,716 6,876 25.7%
Expenditures* 31,130 7,319 23.5%
Rev/Exp $ (4,414) $ (443)
It is important to note these are only estimates because the City’s annual audit for FY 2023-24 is not finalized.
This Page Intentionally Left Blank
MAYOR & COUNCIL
Gloria Soto
Councilmember
District 3
Maribel Aguilera-
Hernandez
Councilmember
District 4
Alice Patino
Mayor
At-Large
Carlos Escobedo
Councilmember
District 1
Mike Cordero
Councilmember
District 2
City of Santa Maria, California
110 E. Cook Street
Santa Maria, CA 93454
cityofsantamaria.org
EXPLORE
the City’s budget online at
www.cityofsantamaria.org/services/departments/city-manager-s-office/city-budget
CITY OF SANTA MARIA DISTRICTS
DISTRICT 2
Mike Cordero
DISTRICT 1
Carlos Escobedo
DISTRICT 3
Gloria Soto
DISTRICT 4
Maribel Aguilera-Hernandez