QUARTERLY
FINANCIAL
REPORT
SECOND QUARTER ENDED
DECEMBER 31, 2024
ATTACHMENT B
1 MAYOR
Alice Patino
MAYOR PRO TEM
Carlos Escobedo
COUNCIL
Gloria Soto
Maribel Aguilera-Hernandez
Gloria Flores
CITY MANAGER
David W. Rowlands
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
QUARTERLY
FINANCIAL
REPORT
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: Second Quarter Ending December 31, 2024
1 ECONOMIC INDICATORS
The year 2024 finished with a stable labor market, low unemployment, and tamer inflation, although there were increases in mortgage rates, insurance premiums, and in prices for vehicles, food and housing.
Over the four quarters of 2024, real GDP growth was 2.5 percent, moderating from 3.2 percent over the four quarters of the previous year. The economy grew 2.5 percent in 2022, 2.9 percent in 2023.
Inflation rose 2.9 percent during 2024, yet the cost of many staples such as food, cars, vehicle insurance and housing is much higher now compared to four years ago. Inflation has declined significantly from its pandemic- era peak of 9.1 percent in J une 2022, following a scant 1.4 percent level in January 2021. However, it remains above the Federal Reserve's target of 2 percent.
Employers added 2.2 million jobs in 2024, an average of 186,000 jobs per month, according to the Bureau of Labor Statistics. That was less than the increase of 3.0 million in 2023, an average monthly gain of 251,000. Most forecasters expected a sharper slowdown, believing that inflation and high interest rates would take a bigger toll.
For 2024, employment trended up in health care, government, and social assistance.
The unemployment rate held steady around 4 percent throughout the year, ending at 4.1 percent through December, or 6.9 million people. This compares to a jobless rate of 3.6 percent for 2023. The country has added jobs for 48 months in a row.
California’s unemployment rate of 5. 5 percent in December was one-tenth of a point higher than November .
California’s job market expansion officially entered its 5 6th month, according to the State Employment Development Department. Seven of California's 11 industry sectors gained jobs in December with the largest increase in Leisure and Hospitality (+7,500). Santa Maria’s jobless rate in December was 7.6 percent (3,700 people), and Santa Barbara County’s unemployment rate was 4.5 percent.
Housing affordability across most of the country is elusive for many but not all as prices increase and more buyers enter the market as the economy continues to add jobs. Consumers are getting used to a new normal range of mortgage rates near 7 p ercent. The median existing -home sales price rose to a record $407,500 , the 18 th consecutive month of year-over-year price increases, the National Association of Realtors reported. It also said U.S. home sales have not been this slow since 1995. Housing costs eat up about 45 percent of a median family’s income, well above the 30 percent considered normal according to an Atlanta Federal Reserve report.
California’s housing market closed the year with sales up 4.3 percent from 2023, and the median price up 6.3 percent to $861,020. Santa Barbara County’s median sold home price was $1.27 million for the year, down 6.8 percent compared to 2023. The Santa Maria home market remained strong, according to the Santa Maria Association of Realtors. The median sale pri ce in 2024 in zip code 93458 was $584,500, up 14.6 percent from $510,000 for 2023. The median sale price in 2024 in zip code 93454 was $600,000, up 11.1 percent from $540,000 for 2023.
KEY STATISTICS
Quarterly Financial Report: Second Quarter Ending December 31, 2024
2 GENERAL FUND
Budget:
The table below presents the budget as adopted and amended along with expenditures through December 31, 2024. General Fund appropriations adopted on June 18, 2024, were $108.72 million compared to budgeted sources of $100.15 million, inclusive of an $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 . At the end of FY 2023 -24 there were several projects, contracts, and transactions that were not yet complete d. The remaining appropriations for those have been carried forward into FY 2024-25.
GENERAL FUND
(in thousands)
Adopted
Budget
Current
Budget
2024-25
Actual
Percent of
Current Budget
Revenues & Transfers In
Sales Tax $ 31,872 $ 31,872 $ 16,048 50.4%
Property Tax 26,498 26,498 8,619 32.5%
Hotel/Bed Tax 4,274 4,274 1,777 41.6%
Licenses, Permits & Fees 3,196 3,196 2,559 80.1%
All Other Revenues 34,309 35,446 11,878 42.6%
Total Revenues & Transfers In $ 100,149 $ 101,286 $ 40,881 40.4%
Expenses & Transfers Out
Staffing $ 73,048 $ 73,097 $ 33,083 45.3%
Contracts & Services 10,184 12,277 4,469 36.4%
Materials & Supplies 4,257 4,367 2,558 58.6%
Maintenance & Operations 10,835 10,854 5,109 47.1%
Capital Outlay 1,800 2,340 67 2.8%
Debt Service 267 267 134 50.0%
Transfers 8,328 8,403 - 0.0%
Total Expenses & Transfers Out $ 108,719 $ 111,605 $ 45,420 40.7%
Year-Over-Year Comparison:
The chart below compares revenue receipts, expenditures, and transfers through the second quarter ending December 31, 2024, versus the second quarter ending December 31, 2023.
Quarterly Financial Report: Second Quarter Ending December 31, 2024
3 GENERAL FUND (CONTINUED)
Major Revenues:
Through the second quarter, receipts for four major General Fund revenue sources (Sales Tax, Property Tax, Hotel Tax, and Licenses, Permits, & Fees) are at 44.1 percent of projections and account for approximately 71 percent of total General Fund re venues. Revenues are higher than the second quarter receipts from the prior year primarily due to property tax and licenses, permits & fees; however, hotel tax and sales tax are lower.
Revenue Variances:
The following highlights what is driving the variances in these individual revenue sources received through the second quarter:
Property Tax : The bulk of these payments are received through Santa Barbara County in December, January, April, and May of each year. Property Tax received is 3.6 percent, or $298 thousand more than that received in the same period last fiscal year.
Sales Tax: The chart below, as of the first quarter of FY 2024-25, reflects total sales taxes coming in 3.3 percent, or $269 thousand, less than the first quarter of FY 2023-24 for all major business groups. Due to
Quarterly Financial Report: Second Quarter Ending December 31, 2024
4 concerns about the economy, consumers are continuing to reduce spending in the Autos and Transportation category.
GENERAL FUND (CONTINUED)
Receipts through the second quarter of FY 2024-25 are 3.2 percent, or $527 thousand, less than those for the same period last year.
Hotel/Bed Tax : Through September, Transient Occupancy Tax (TOT) receipts are 3.1 percent, or $ 56 thousand, less than last fiscal year and behind estimates by 8.4 percent, or $359 thousand. Licenses, Permits, & Fees : Revenue of $ 2.56 million through the second quarter exceeds projections by
30.1 percent, or $961 thousand, and is 38.3 percent, or $709 thousand, more than that through the second quarter of FY 2023-24. This is due to a marked increase in development, including strong commercial activity as well as Accessory Dwelling Units (ADUs) and Junior Accessory Dwelling Units (JADUs). ADUs have continued to increase in popularity, with the number of permits issued outpacing those issued last year by 25 percent. The proliferation of ADUs in Santa Maria is among the highest in the state on a per- capita basis, with unit counts exceeding those of cities with much larger populations. Permit activity is anticipated to continue to exceed projections throughout the current fiscal year as development remains strong and housing prices remain high, driving residents to seek more affordable alternatives.
Expenditures:
Through the second quarter, operating expenditures, excluding debt service and transfers, are at 44.0 percent of total budget. Expenditures, as shown above in the Expenditure Categories chart above on the right, are trending within budget except for Materials & Supplies.
Expenditure Variances:
Quarterly Financial Report: Second Quarter Ending December 31, 2024
5 Financial Reporting policies require an explanation of variances greater than 5 percent of major categories and departmental variances greater than 10 percent.
Staffing: Under budget by 4.7 percent, or $3.47 million, due to vacancies mostly experienced in the Police and Fire departments, as well as 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 29 vacancies. Contracts & Services: Under budget by 13.6 percent, or $1.67 million, due to timing of the General Plan Update project and the payment for contractual services with Santa Barbara County for Animal Control Services.
Capital Outlay: Under budget by 47.2 percent, or $1.1 million , due to the timing of the General Fund contribution to be provided to the Capital Projects – General Fund for the Enhanced Roadway Maintenance project, which will be made in the third quarter. Transfers Out: Transfers from the General Fund to other funds as approved in the adopted budget will be evaluated in the third quarter.
GENERAL FUND (CONTINUED)
Materials & Supplies: Over budget by 8.6 percent, or $375 thousand, due to a significant increase in water rates and the amount of watering required of the Recreation & Parks Department necessitated by Senate Bill (SB) 1383, which requires the spreading of a pre-defined amount of compost each year. Once placed at appropriate depths the compost needs to be watered regularly until it has been locked into the ground.
As of December 31, irrigation has been shut off at a ll parks, except for those areas with new vegetation that will require ongoing irrigation.
The chart below presents the percentages of expenditures by department. Community Development: Under budget by 16.5 percent, or $1.18 million, due to timing of the General Plan Update project and the payment for contractual services with Santa Barbara County for Animal Control Services.
Public Works: Under budget by 17.1 percent, or $1.23 million, due to a transfer from the General Fund to the Capital Projects – General Fund for the Enhanced Roadway Maintenance project, which will be evaluated in the third quarter.
Quarterly Financial Report: Second Quarter Ending December 31, 2024
6 Quarterly Financial Report: Second Quarter Ending December 31, 2024
7 MEASURE U FUND
The table below presents the budget as adopted and amended along with actual expenditures as of December 31, 2024. Measure U Fund appropriations adopted on June 20, 2024, 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 $ 13,648 51.1%
Expenses
Community Development $ 824 $ 824 406 49.2%
City Manager’s Office 1,435 1,435 335 23.3%
Finance 3 3 - 2.9%
Library 1,015 1,015 485 47.8%
Recreation & Parks 3,071 3,384 1,349 39.9%
Fire 11,946 17,939 5628 31.4%
Police 12,836 12,870 6362 49.4%
Total Expenses $ 31,130 $ 37,470 $ 14,565 38.9%
Revenues received through the second quarter are at 51.1 percent of budget, or $13.65 million. Expenditures are at 38.9 percent of budget, or $4.17 million 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 88.1 percent on Public Safety, 5.5 percent on Youth Services, and 6.4 percent on Quality of Life.
Quarterly Financial Report: Second Quarter Ending December 31, 2024
8 ENTERPRISE FUNDS
The Statement of Revenues and Expenses through the second quarter ending December 31, 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 $ 32,785 $ 17,860 $ 319
Interest Income 959 449 56
Other Revenue 1,058 219 4,303
Total Revenues $ 34,803 $ 18,528 $ 4,678
Expenses
Operating $ 8,605 $ 15,066 $ 3,229
Capital 1,781 8,213 1,394
State Water Payment 12,355 - -
Debt Service 695 - -
Total Expenses $ 23,436 $ 23,279 $ 4,623
Revenues/Expenses $ 11,367 $ 4,751 $ 55
Water/Wastewater Funds:
Revenues exceeded expenditures by $11.4 million, which is $4.6 million more than last year. Revenues increased 19.0 percent, or $5.57 million, compared to the prior year due to higher revenues generated through sales of metered water (+20.2%, or $4.0 million) and sewer service charges (+30.3%, or $1.7 million). Expenses are $928 thousand more than last year. Water and Wastewater operational expenses are under budget by 14.5 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. Solid Waste revenues were $4.8 million less than expenditures. Operational costs are under budget by
9.3 percent, or $3.5 million due to personnel savings from vacant positions and timing of maintenance and contractual agreements..
Public Transit Funds:
Quarterly Financial Report: Second Quarter Ending December 31, 2024
9 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 is $ 320 thousand, which is about $27 thousand more than last year. The farebox ratio is 9.9 percent based on fares received and operating expenses recorded to date.
FY 2024-26 BIENNIAL BUDGET
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 discussions 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 website 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 May with the Third Quarter 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 40.4 percent of projections while expenditures are at 40.7 percent of appropriations through the second quarter of Fiscal Year 2024-25.
GENERAL FUND
(in thousands)
Adopted
Budget
2nd Quarter
Percent
Beg. Fund Bal. $ 8,570
Revenues* 100,149 40,881 40.4%
Expenditures* 108,719 45,420 40.7%
Rev/Exp $ (8,570) $ (4,539)
Measure U Fund:
The table below shows revenues are at 51.1 percent of projections while expenditures are at 38.9 percent of appropriations.
MEASURE U FUND
(in thousands)
Adopted
Budget
2nd Quarter
Percent
Beg. Fund Bal. $ 4,414
Revenues* 26,716 13,648 51.1%
Expenditures* 31,130 14,565 38.9%
Rev/Exp $ (4,414) $ (917)
It is important to note these are only estimates because the City’s annual audit for FY 2023-24 is not finalized.
Quarterly Financial Report: Fourth Quarter Ending June 30, 2024
10 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
Gloria Flores
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
Gloria Flores
DISTRICT 1
Carlos Escobedo
DISTRICT 3
Gloria Soto
DISTRICT 4
Maribel Aguilera-Hernandez