City of South San Francisco Page 1 of 14
File#: 24-203 Agenda Date: 02/28/2024
Version: 1 Item #:
Report presenting Fiscal Year (FY) 2023-24 Mid-Year Financial Report as of December 31, 2023, and proposed budget amendments for FY 2023-24 City Operating and Capital Improvement Program (CIP) Budgets (Karen Chang, Director of Finance)
RECOMMENDATION
Staff requests that the City Council of the City of South San Francisco (“City”) approve a resolution acknowledging the mid-year financial update for FY 2023-24 and approving the proposed budget amendments for FY 2023-24 as reviewed by Budget Standing Committee.
BACKGROUND/DISCUSSION
The information contained herein was presented to the Budget Standing Committee (“Committee”) of the City Council on February 8, 2024. We have incorporated the changes recommended by the Committee in this report.
The City Council approved the FY 2023-24 General, Enterprise and Internal Service Fund budgets on June 28, 2023. The approved budgets feature the annual expenditure and resource allocation plan that guides the implementation of City Council budget policies and priorities. The budget provides funding direction for the broad range of services that meet the needs of the community in accordance with City Council policy.
This financial review provides the mid-year budget update to the City Council for the current fiscal year. Analysis of the revenues collected and all expenditures through December 31, 2023 measures operational adherence to the budgetary allocation plan.
The adjusted budget incorporates current estimates for revenue and expenditure appropriations for all funds as of December 31, 2023. The Mid-Year Financial Report as of December 31, 2023, provides comparisons to the prior year and focuses on variances from the revenue and expenditure plans and allocations contemplated in the budget.
I. Current Fiscal Year (FY 2023-24) Update
A. General Fund Revenues – 2
nd Quarter
B. General Fund Expenditures – 2
nd Quarter
C. Additional General Fund Revenue Amendment Request
D. Additional General Fund Appropriations Request
E. Additional Non-General Fund Appropriations Request
City of South San Francisco
Legislation Text
P.O. Box 711
(City Hall, 400 Grand Avenue)
South San Francisco, CA
Government Code Section
54957.5
SB 343 Item Agenda:
02/28/2024
REG CC - Item #15
City of South San Francisco Page 2 of 14
F. Additional Capital Improvement Plan Request (CIP)
G. American Rescue Plan Act (ARPA) Summary
II. Reserves Overview & Considerations
I. CURRENT FISCAL YEAR (FY2023-24) UPDATE
The General Fund finances the operations of the City and pays for basic municipal services. The adjusted FY 2023-24 General Fund budget projects revenues totaling $143.1 million, which included $5 million of one-time resources from the City’s American Rescue Plan Act (ARPA) fund, and expenditures totaling $153.9 million, including purchase order encumbrances from FY 2023-24, approved carryover amounts, $3 million salary attritions, and several City Council approved appropriation amendments prior to December 2023.
The following sections show the revenue and expenditure results as of December 31, 2023.
A. General Fund Revenues – 2
nd Quarter
The following table shows actual revenues as of December 31, 2023, with a comparative view of where the City’s revenues were at the same time last year (December 31, 2022):
Table 1: FY 2022-23 vs. FY 2023-24 Revenues as of December 31 FY2022-23 FY2023-24
AdjustedBudget
Actual as of
12.31.22 % of
Budget AdjustedBudget
Actual as of
12.31.23 % of
Budget
REVENUES
Taxes
Property Tax $45,804,769 $25,497,501 55.7% $47,980,000 $26,171,076 54.5% Sales Tax 22,391,018 7,904,924 35.3% 23,351,500 7,901,633 33.8% Transient Occupancy Tax 14,160,752 7,355,525 51.9% 14,910,000 5,641,871 37.8% Other Tax 5,693,252 2,731,923 48.0% 6,950,000 1,672,719 24.1% Franchise Fees 4,600,000 1,202,178 26.1% 4,600,000 1,274,907 27.7% License andPermits 19,425,400 11,827,560 60.9% 16,962,894 6,853,938 40.4% Fines & Forfeitures 710,824 397,865 56.0% 700,000 160,232 22.9% Intergovernmental 4,337,199 882,432 20.3% 4,442,571 2,275,945 51.2% Charges for Services
Planning 250,792 181,919 72.5% 510,000 241,305 47.3%
Fire 2,626,314 1,610,740 61.3% 2,728,000 1,516,191 55.6% Parks & Recreation 2,846,248 1,696,122 59.6% 3,745,254 1,421,925 38.0% Police 979,649 521,250 53.2% 1,246,670 538,855 43.2%
City Admin & Other 1,562,094 830,300 53.2% 1,989,347 1,011,078 50.8% Use of Money & Property 5,453,469 3,496,844 64.1% 3,940,000 1,458,731 37.0% Other Revenues 278,903 157,519 56.5% 337,826 91,563 27.1% Transfers In 6,151,400 2,472,702 40.2% 8,704,289 813,414 9.3% TOTAL REVENUES $137,272,083 $68,767,306 50.1% $143,098,351 $59,045,385 41.3% As shown in the above table, projected revenue for FY 2023-24 is $143.1 million – approximately $6.0 million more than the FY2022-23 adjusted budget. Actual revenue collections for the two quarters ending December 31, 2023 is $10.0 million lower when compared with the prior year.
City of South San Francisco Page 3 of 14
The following highlights the recommended adjustments to the FY2023-24 revenue budget.
1. Property Tax. Bay Area home values experienced a double-digit decline last year as interest rates hit their highest levels since 2000 and tech layoffs rippled through the region.
However, property taxes are expected to remain stable due to the passage of Proposition 13 in 1978. Proposition 13 protects homeowners from massive increases as their home value appreciates by capping the increase in assessed value of properties at the lesser of the change in the California Consumer Price Index (CCPI) or 2% per year. Properties are reassessed at market value only when they are sold or renovated. Property tax comprises almost 40% of the General Fund’s total revenue. Property tax is allocated to the City in two large installments (December and April). Our records show property tax collections have reached 54.5% of our projection as of December 31, 2023. Due to the October 2023 levy letter from the County Controller’s office, the estimated Excess Educational Revenue Augmentation Fund (ERAF) revenue is $1.6 million higher than budgeted. On the other hand, the unsecured and supplemental property taxes are expected to fall short of the adopted budget. Therefore, staff recommends a $1.3 million increase in the projections.
2. Sales Tax. There is a two-month lag from when sales taxes are remitted by businesses to the California Department of Tax and Fee Administration (CDTFA) and when the CDTFA remits the City’s share of sales tax revenues. Similar to the 2nd quarter of FY 2022-23, the City received approximately one-third of the projected sales tax revenue for the entire fiscal year. Since adoption of the FY 2023-24 budget, the City’s sales tax consultant revised their projection to reflect a lower sales tax revenue due to reduced consumer demand, potential recession, a large sales tax-generating business leaving the City, lower gas prices and gas volumes from the increase sales in electric vehicles, and other adjustments/reallocation.
Please see Attachment 7 for a copy of the Sales Tax Forecast from Avenu Insights & Analytics. Staff recommends a $1.4 million decrease to the sales tax category to be aligned with the City’s sales tax consultant’s revised projection.
3. Transient Occupancy Tax (TOT). Post-pandemic travel levels have been strong. As of December 31, 2023, the City recorded TOT revenues of $5.6 million. There is an additional $1.4 million that will be posted later this month. Staff expects business travel to pick up in 2024. However, based on current trends, staff recommends a $0.9 million decrease to the projection.
4. Other Taxes. Other taxes include real property transfer tax, business license, and commercial parking tax. Second quarter year-to-date collection of commercial parking tax and business license tax are in-line with prior year amounts. Business license taxes are due on January 31, 2024, so we expect some large businesses to pay their business license tax in the last week of January. Real property transfer tax is projected lower due to slowdown in the real estate market due to the high interest rate climate. Staff recommends a $0.3 million decrease in our projections.
City of South San Francisco Page 4 of 14
5. Licenses & Permits. The Federal Reserve Bank raised interest rates by 5.25% over the past two years to tame inflation. The higher interest rates significantly slowed down economic growth in the housing and construction sectors. The Economic and Community Development Department (ECD) is expecting less projectsto apply for permits in FY 2023- 24, which will reduce the amount of permit fees paid to the City. Staff recommends a $4.5 million decrease in our projections.
6. Service Charges. This revenue stream includes fee charges by various departments for services provided to the public. Due to the increase in paramedic call volume and changes to the California Department of Health Care Services supplemental program, the Fire Department anticipates an increase of $1.2 million in paramedic service fees bringing the total to $3.7 million for FY 2023-24. Staff recommends a $1.4 million increase in the projections.
7. Intergovernmental. The City received $2.3 million in grants and program reimbursement from other governmental entities for the 2nd quarter year-to-date. Staff recommends a $1.2 million increase in the projections.
8. Use of Money and Property. With the higher interest rate environment, the City projects additional interest earnings from investments. In FY 2022-23, the City sold two properties (100 Longford & 201 Baden Ave) for a total of $1.8 million. The City does not expect any sale of property in FY 2023-24. Rental income is within budget expectations. Staff recommends a $0.5 million increase to the projections.
If approved by the Council, the above changes would result in decreasing the overall revenue budget for FY 2023-24 by $2.8 million from $143.1 million to $140.3 million.
B. General Fund Expenditures – 2
nd Quarter
The California Public Employees’ Retirement System (CalPERS) offers a discount (3.40% for FY 2023-24) to its contracting agencies if City made a lump-sum prepayment of our annual Unfunded Accrued Liability (UAL) in July. This will allow our contributions to be invested early in the fiscal year to give it a better chance of maximizing potential investment returns. The City took advantage of this discount in FY 2023-24 and recorded the expenditure in July 2023. The following table shows the actual expenditures by Department that have been recorded and the pro-rata estimate for the CalPERS UAL allocated through December 31, 2023:
City of South San Francisco Page 5 of 14
Table 2: FY 2022-23 vs. FY 2023-24 Expenditures as of December 31 FY 2023-24 FY 2023-24
Expenditures
Adjusted
Budget
Actuals as of
12/31
% of
budget
Adjusted
Budget
Actuals as of
12/31
% of
budget
Pro-rata
CalPERS
% of
budget
City Council
Payroll 196,886 63,937 32.5% 189,027 78,338 41.4% 76,679 40.6% Supplies & Services 50,560 29,758 58.9% 36,560 28,483 77.9% 28,483 77.9% Interdepartmental Charges 13,204 6,390 48.4% 43,900 21,455 48.9% 21,455 48.9% Total 260,649 100,084 38.4% 269,486 128,276 47.6% 126,617 47.0% City Clerk
Payroll 909,334 385,086 42.3% 1,001,300 399,151 39.9% 345,136 34.5% Supplies & Services 208,428 51,192 24.6% 208,428 36,637 17.6% 36,637 17.6% Interdepartmental Charges 36,686 17,978 49.0% 55,282 26,789 48.5% 26,789 48.5% Total 1,154,449 454,256 39.3% 1,265,011 462,578 36.6% 408,562 32.3% City Treasurer
Payroll 63,351 11,805 18.6% 31,230 11,680 37.4% 11,680 37.4% Supplies & Services 102,060 21,198 20.8% 102,060 44,708 43.8% 44,708 43.8% Interdepartmental Charges 2,493 1,246 50.0% 138 69 50.0% 69 50.0% Total 167,904 34,249 20.4% 133,428 56,457 42.3% 56,457 42.3% City Attorney
Supplies & Services 937,808 489,962 52.2% 1,100,717 377,391 34.3% 377,391 34.3% Interdepartmental Charges 2,482 1,191 48.0% 8,108 3,939 48.6% 3,939 48.6% Total 940,290 491,153 52.2% 1,108,825 381,330 34.4% 381,330 34.4% City Manager
Payroll 2,863,694 1,513,695 52.9% 3,243,094 1,248,628 38.5% 1,069,143 33.0% Supplies & Services 2,344,542 392,169 16.7% 1,633,659 282,160 17.3% 282,160 17.3% Interdepartmental Charges 116,360 57,574 49.5% 144,372 70,771 49.0% 70,771 49.0% Total 5,324,597 1,963,437 36.9% 5,021,126 1,601,560 31.9% 1,422,074 28.3% Finance
Payroll 3,172,557 1,413,781 44.6% 3,333,330 1,323,979 39.7% 1,141,731 34.3% Supplies & Services 1,096,083 101,111 9.2% 1,047,941 80,267 7.7% 80,267 7.7% Interdepartmental Charges 136,445 66,605 48.8% 138,463 65,456 47.3% 65,456 47.3% Total 4,405,085 1,581,496 35.9% 4,519,734 1,469,702 32.5% 1,287,454 28.5% Non expense/Dept
Payroll 608,000 - 0.0% - - -
Supplies & Services 1,544,698 903,046 58.5% 1,394,367 485,196 34.8% 485,196 34.8% Transfers 700,000 250,000 35.7% 500,000 - 0.0% - 0.0%
Total Non-Expense/Dept. 2,852,698 1,153,046 40.4% 1,894,367 485,196 25.6% 485,196 25.6% Human Resources
Payroll 2,104,444 914,366 43.4% 2,365,049 1,110,781 47.0% 975,636 41.3% Supplies & Services 513,299 204,604 39.9% 575,111 100,143 17.4% 100,143 17.4% Interdepartmental Charges 66,366 32,618 49.1% 55,192 26,276 47.6% 26,276 47.6% Total 2,684,109 1,151,588 42.9% 2,995,351 1,237,200 41.3% 1,102,055 36.8% FY 2022-23
City of South San Francisco Page 6 of 14
FY 2023-24
Expenditures
Adjusted
Budget
Actuals as of
12/31
% of
budget
Adjusted
Budget
Actuals as of
12/31
% of
budget
Pro-rata
CalPERs
% of
budget
Economic & Comm Development
Payroll 5,749,215 2,930,605 51.0% 5,487,087 3,139,924 57.2% 2,680,128 48.8% Supplies & Services 9,477,181 2,381,792 25.1% 6,469,550 2,004,384 31.0% 2,004,384 31.0% Capital Outlay 113,400 - 0.0% 113,381 - - 0.0%
Interdepartmental Charges 269,834 131,222 48.6% 368,615 175,685 47.7% 175,685 47.7% Total 15,609,630 5,443,619 34.9% 12,438,633 5,319,993 42.8% 4,860,197 39.1% Fire
Payroll 27,312,449 17,439,241 63.9% 28,172,922 17,482,689 62.1% 15,014,506 53.3% Supplies & Services 3,657,640 632,209 17.3% 2,825,938 1,076,913 38.1% 1,076,913 38.1% Capital Outlay 400,000 - 400,000 - - 0.0%
Interdepartmental Charges 2,054,628 943,235 45.9% 2,250,984 1,101,398 48.9% 1,101,398 48.9% Total 33,424,717 19,014,685 56.9% 33,649,844 19,661,000 58.4% 17,192,817 51.1% Police
Payroll 30,438,959 17,656,629 58.0% 32,464,166 18,209,039 56.1% 15,654,095 48.2% Supplies & Services 1,690,477 616,307 36.5% 1,857,124 730,501 39.3% 730,501 39.3% Interdepartmental Charges 2,381,864 1,177,860 49.5% 2,630,415 1,284,708 48.8% 1,284,708 48.8% Total 34,511,300 19,450,797 56.4% 36,951,705 20,224,247 54.7% 17,669,303 47.8% Public Works
Payroll 4,496,168 2,219,275 49.4% 4,765,838 2,612,909 54.8% 2,285,387 48.0% Supplies & Services 2,885,962 809,356 28.0% 7,020,350 1,280,217 18.2% 1,280,217 18.2% Capital Outlay 312,000 - 271,564 - - 0.0%
Interdepartmental Charges 909,575 451,538 49.6% 1,763,775 874,306 49.6% 874,306 49.6% Total 8,603,705 3,480,169 40.4% 13,821,528 4,767,432 34.5% 4,439,910 32.1% Library
Payroll 5,930,595 2,838,554 47.9% 6,505,083 3,032,800 46.6% 2,702,626 41.5% Supplies & Services 1,078,235 367,191 34.1% 1,057,204 553,497 52.4% 553,497 52.4% Interdepartmental Charges 264,914 118,771 44.8% 743,808 339,970 45.7% 339,970 45.7% Total 7,273,745 3,324,516 45.7% 8,306,095 3,926,266 47.3% 3,596,092 43.3% Parks and Recreation
Payroll 16,382,265 7,959,678 48.6% 19,171,702 8,664,587 45.2% 7,784,474 40.6% Supplies & Services 5,384,639 1,836,880 34.1% 6,556,908 2,013,711 30.7% 2,013,711 30.7% Capital Outlay - - 79,112 108,750 108,750 137.5%
Interdepartmental Charges 1,106,247 550,569 49.8% 1,301,683 644,880 49.5% 644,880 49.5% Total 22,873,152 10,347,127 45.2% 27,109,406 11,431,928 42.2% 10,551,815 38.9% CIP
Transfers 3,833,270 161,864 4.2% 4,375,873 - 0.0% - 0.0% Total 3,833,270 161,864 4.2% 4,375,873 - 0.0% - 0.0%
143,919,299 68,152,087 47.4% 153,860,411 71,153,164 46.2% 63,579,879 41.3% Information Technology*
Payroll 2,127,121 918,632 43.2% 2,298,886 1,039,228 45.2% 905,176 39.4% Supplies & Services 3,104,214 766,050 24.7% 2,726,025 1,016,296 37.3% 1,016,296 37.3% Interdepartmental Charges 10,469 5,235 50.0% 12,889 6,444 50.0% 6,444 50.0% Total 5,241,804 1,689,917 32.2% 5,037,801 2,061,968 40.9% 1,927,916 38.3% * Non-General Fund: budgeted as internal service fund in Fund 785 Tota General Fund
Expenditures
FY 2022-23 FY 2023-24
City of South San Francisco Page 7 of 14
C. ADDITIONAL GENERAL FUND REVENUE AMENDMENT REQUEST
The following are additional General Fund revenue amendment requests totaling $1,426,238 • Economic and Community Development $150,000
▪ Increase in Building Permit collected fee (Master Fee No. 6.57) • Fire Department $1,275,000
▪ Paramedic Service Fee Increase- $1,200,000
▪ Fire Plan Check Fee $75,000
• Transfer In from ARPA $ 1,238
▪ Residual balance for revenue loss category
D. ADDITIONAL GENERAL FUND APPROPRIATIONS REQUEST
The following are additional General Fund expenditure appropriations requests totaling $1,049,600:
• Economic and Community Development $75,000
▪ Construction Coordination Consultant (2-year contract)- $75,000 • Fire Department $689,600
▪ Contracts for Fire Plan Reviews- $175,000
▪ Department of Health Care Services program- $506,000
▪ Ambulance billing fees- $8,600
Payroll (position change request):
▪ Upgrade 1.0 FTE Administrative Assistant I to Management Analyst I with no fiscal impact in FY2023-24.
• Parks and Recreation Department $285,000
▪ One-Time Contractual landscape services (Oakmont Dr. & Olympic Dr.) $125,000 ▪ Ongoing Contractual landscape services (Oakmont Dr. & Olympic Dr.) $10,000 ▪ Police Department building window washing services $40,000 ▪ Purchase of Westborough Blvd privately owned parcels along eastbound shoulders $110,000
The ongoing impact of the mid-year requests beyond FY2023-24 has been estimated to be an additional $639,600 in supplies and professional services.
City of South San Francisco Page 8 of 14
E. ADDITIONAL NON-GENERAL FUND APPROPRIATIONS REQUEST
The following are the additional non-General Fund expenditure appropriations requests totaling $2,514,908 from various sources.
1. American Rescue Plan Act Fund (201) $1,238
▪ Transfer the residual balance for Revenue Loss category to General Fund
2. West Park Maintenance District Fund (Fund 231) $370,700 ▪ Adjustment to full-time payroll salaries calculation- $159,800 ▪ Adjustment to part-time payroll salaries calculation- $11,100 ▪ Adjustment to benefit calculation- $199,800
3. Stonegate Ridger Maintenance Fund (Fund 232) $20,170 ▪ Adjustment to full-time payroll salaries calculation- $630 ▪ Adjustment to benefit calculation- $19,540
4. Willow Gardens Maintenance Fund (Fund 233) $4,350
▪ Adjustment to full-time payroll salaries calculation- $1,450 ▪ Adjustment to benefit calculation- $2,900
5. West Park Maintenance District 1 & 2 Fund (Fund 234) $21,450 ▪ Adjustment to full-time payroll salaries calculation- $1,240 ▪ Adjustment to benefit calculation- $20,210
6. Developer Deposits Fund (Fund 270) $125,000
▪ ECD- TDM Enforcement and Trip Cap Implementation- $50,000 ▪ ECD- Objective Architectural Standards Updates- $75,000
7. Sewer Enterprise Fund (Fund 710) $999,000
▪ Adjustment to full-time payroll salaries calculation- $573,800 ▪ Adjustment to benefit calculation- $425,200
8. Parking District Fund (Fund 720) $ 69,000
▪ Adjustment to full-time payroll salaries calculation- $40,000 ▪ Adjustment to benefit calculation- $29,000
9. Commercial Linkage Fee (Fund 823) $300,000
▪ ECD-Preparing sites for housing suitability-$100,000
▪ ECD-Property acquisition due diligence and negotiations- $200,000 City of South San Francisco Page 9 of 14
10. Storm Water Fund (Fund 740) $449,000
▪ Public Works- Storm line repairs identified in Storm Drain Master Plan- $150,000 ▪ Adjustment to full-time payroll salaries calculation- $172,000 ▪ Adjustment to benefit calculation- $127,000
11. Park Acquisition Fund (Fund 805) $100,000
▪ Parks and Rec-Parkland acquisition due diligence- $100,000
12. PEG Equipment & Access Fund (Fund 786) $55,000
▪ Upgrade City Manager conference room for Special City Council meetings- $30,000 ▪ Closed caption services for City Council meetings- $25,000 City of South San Francisco Page 10 of 14
F. MID-YEAR CAPITAL IMPROVEMENT PLAN REQUEST (CIP)
The following are the additional CIP project appropriation requests with their corresponding funding sources, amounting to ($610,668):
1. SSF Shoreline Protection and Connectivity (New project sd2402) $30,000 Funding Source: East of 101 Traffic Impact Fee
Funding request is for the pre-design phase of this project to fund consultant for Caltrans grant application.
2. Storm Drain Master Plan (Existing project sd2301) $500,000 Funding Source: Infrastructure Reserve
These funds are needed for additional storm drain cleaning required for conditional assessment.
3. Parking District Lot Rehabilitation (Existing project pf2402) $100,000 Funding Source: Parking District Fund
Additional funds to rehabilitate parking lots based on engineering estimates. This is for rehabilitation (surface seal asphalt pavement treatment and new striping) of six (6) City Public Parking lots in the downtown area.
4. Adaptive Traffic Control System (Existing project tr1901) $100,000 Funding Source: Citywide Traffic Impact Fee
Additional funds requested for plan, design, and implementation of adaptive traffic control in West of 101.
5. Junipero Serra Class 4 Bike Lanes (New project tr2414) $50,000 Funding Source: Citywide Traffic Impact Fee
Additional funding is required for the TDA Grant match.
6. Colma/SSF: El Camino Real Bicycle and Pedestrian Improvement Project (PSR_PDS) and (PAED) (New project tr2415) $100,000
Funding Source: Citywide Traffic Impact Fee
Opportunity to follow through on part of the Bike/Ped Master Plan. Colma is leading the project and has secured a TA Grant. Caltrans asked to further previous project extends to Hickey Blvd & ECR for project effectiveness/continuity.
7. Caltrain Station Enhancement/Karyl Matsumoto Plaza
(Existing project st1603) $120,000
New Funding Source: Park Construction Fees
Benefits Agreement for 200 Airport. It includes ongoing maintenance of the new plaza and contributions to construction that included $120,000 payment for plaza improvements.
City of South San Francisco Page 11 of 14
8. Sewer Master Plan (Existing Project ss1801) $100,000 Funding Source: East of 101 Sewer Impact Fees
These funds will be used for additional design costs to update sewer model and report.
9. Broadband Fiber Optic Expansion (Existing Project pf2210) $289,332 Funding Source: American Rescue Plan Act (ARPA)
These funds will be used for installation of fiber optic cables in new City-owned conduits from 550 North Canal to Skyline Blvd in the Westborough Area to provide the middle mile for the carriers to connect to the last mile in the Westborough area.
The following is a request for consolidating projects:
10. Citywide School Traffic Calming Improvement Project ($600,000) Original- existing project tr2405
Funding Source: Citywide Traffic Impact Fee
This project will be combined with existing project st2402. The funding source will still be Citywide Traffic Impact Fee. This will be an additional funding source to existing project st2402 (2024 Surface Seal Project).
11. 2024 Surface Seal Project (Existing project st2402) $600,000 New/Additional Funding Source: Citywide Traffic Impact Fee Requesting Citywide Traffic Impact Fee as an additional funding source for this project.
Combining tr2405 (Citywide School Traffic Calming Improvement project) to st2402. The funds will be utilized for the traffic calming improvements and tracked accordingly.
The following is a request to remove funding from existing project:
12. Transit Village Park (Existing project pk2101) ($2,000,000) Funding Sources: Park Land Acquisition Fee and Park Land Construction Alternative sites for a park are still being considered. Funding is not needed currently.
Should a site be found, funding will be requested from the City Council separately.
G. AMERICAN RESCUE PLAN ACT (ARPA)
In June 2022, the City received the second half tranche of its $12.3 million American Rescue Plan Act financial award. The first half was received in June 2021. Table 3 below shows the progress of allocation of these funds to various projects and purposes:
City of South San Francisco Page 12 of 14
Table 3: ARPA Funded Project Summary
The table above shows that, to date, $11.99 million of ARPA funds has been appropriated. The cells highlighted in yellow is the request for the mid-year review – 1) to allocate $1,238 to General Government services to fully utilize the $10 million under the Revenue Loss Category and 2) to add $289,332 ARPA funding to the Broadband Expansion project.
II. RESERVES OVERVIEW & CONSIDERATIONS
In FY 2022-23, General Fund revenues, excluding Measure W, were $146.5 million. In keeping with the City’s Reserve Policy of maintaining a minimum of 20 percent of operating revenues and following the Government Finance Officers Association’s (GFOA) best practice, the City’s General Fund reserves levels were increased by approximately $4.2 million, from $25.1 million to $29.3 million. This General Reserve amount does not change during the fiscal year. The Pension Stabilization Reserve was established by Council and does not change unless further action is taken. It remains invested and managed by the City’s third-party investment manager.
After meeting the reserves requirement noted above, Table 4 below shows a summary of the City’s official reserves as of June 30, 2023:
Table 4: City Reserves Summary as of 6-30-2023
General Reserves (20%) $29,298,000
Pension Stabilization Reserves 5,596,000
Infrastructure Reserves 8,194,000
Total Reserve Levels $43,088,000
Available Unassigned GF Fund Balance 20,344,000
Reserves & Surplus Fund Balance $63,432,000
Projects
Total
Appropriations
to date
Expenditures
to date thru
12-31-2023
Remaining
Unspent
Funds
(appropriated)
FY2023-24 Mid
Year Proposed
budget Total
General Government Services 9,517,373 9,380,645 136,728 1,238 9,518,611 Guaranteed Income Program 1,000,000 1,000,000 1,000,000 Broadband Expansion - Westborough Neighborhood (CIP) 1,000,000 10,391 989,609 289,332 1,289,332 The Spit/Oyster Point Sea Level Rise Protection (CIP) 110,000 110,000 110,000 SAMCEDA Restaurant Grants 260,000 260,000 260,000
Jobs for Youth Program (summer 2021) 36,495 36,495 36,495 Shop Local Gift Cards 64,503 64,503 64,503
TOTAL 11,988,371 10,862,034 1,126,337 290,570 12,278,941 City of South San Francisco Page 13 of 14
Table 5 below shows a breakdown of FY 2023-24 Infrastructure Reserve appropriations to date as well as inflows of revenues. It also includes additional mid-year requests, detailed in previous sections of this report:
Table 5: FY2023-24 Infrastructure Reserve Activities & Balance Item Amount
FY2022-23 Balance $20,229,000
Add: Developer Contributions 250,000
Total $20,479,000
Less: YTD Appropriation
FY 2023-24 CIP project funding $4,050,000
Downpayment Assistance Program 1,617,000
Previously funded CIP projects 10,186,000
Mini-Sweeper 250,000
Restroom at the Park 200,000
Total appropriation $16,303,000
Mid-year Requests $500,000
Net IR activities after Mid-year $16,803,000
Available Reserve Balance after Mid-Year $3,676,000
Table 6 below shows the impact of the General Fund budget for FY 2023-24, the effect of yearto-date budget amendments already approved by Council, the mid-year appropriations requests and revenue updates detailed in this report. The recommended revenue and expenditure budget updates are projected to result in a deficit of approximately $2.1 million.
Table 6: Projected General Fund Revenue and Expenditure Summary Reserve for Encumbrances rollover $8,661,000
Reserve for Capital Projects $3,776,000
Adopted Budget Surplus $9,000
- FY 2023-24 Net Budget Adjustments (10,771,000)
+ Mid-Year Revenue Adjustments (2,749,000)
- Mid-Year Appropriation Requests (1,050,000)
Total Adjustments (14,561,000)
FY 2023-24 Projected Deficit $(2,124,000)
City of South San Francisco Page 14 of 14
Conclusion
The Federal Reserve bank continues to raise interest rates to tame inflation and slow-down economic spending. With the higher interest rate environment, the City is experiencing a decrease in General Fund revenues in the 1st half of FY 2023-24. Revenues from licensing and permits, sales tax, and transient occupancy tax are significantly lower than projected while other categories are coming in-line or slightly better than expected. As a result, staff consider it necessary to reduce the overall revenue budget for FY 2023-24 by $2.8 million from $143.1 million to $140.3 million by making the adjustments detailed in this report.
Economists are projecting the Federal Reserve Bank will start cutting rates as soon as May 2024.
Staff remains cautiously optimistic and believe some revenue streams may level off somewhat from the current continued downward trajectory, particularly in TOT and sales tax. Finance has communicated to the other departments to close purchase orders for projects that have already been completed, review existing encumbrances, and use salary savings from vacancies to monitor department expenditures.
The City has healthy financial reserves, as well as an unassigned fund balance available in the General Fund which can be used to fund one-time projects and the short-term shortfall. Staff will continue to closely monitor the revenue and expenditure status in the coming months. Finance will further evaluate the business license tax revenue enhancement option as directed by the City Council during its retreat in January 2024 and cost cutting measures that can help to achieve longterm fiscal sustainability. Staff will incorporate the findings into the FY 2024-25 budget preparation.
Staff recommends that the City Council accept the FY 2023-24 Mid-year financial update and budget amendment requests.