City Council Agenda Report
Meeting Date: April 18, 2023
From: Scott Williams, Director of Finance
Department: Finance
Submitted by: Angela Melgar, Finance Manager
Subject
Fiscal Year 2022-23 Mid-Year Financial Update
Recommendation
Adopt Resolution No. 2023-06 authorizing and approving mid-year budget appropriations and amending the Annual Operating and Capital Budget for Fiscal Year 2022-23.
Background
The Finance Department will provide a briefing to the City Council to report budget to actual results for the General Fund and Vernon Public Utilities (VPU) as of December 31, 2022 and propose budget adjustments for additional appropriations in FY 2022-23.
General Fund
At the mid-year point of the current fiscal year, almost half of the cumulative budgeted revenues were received as opposed to about 41% of budgeted expenditures cumulatively. Due to the timing of disbursements, some revenue streams are not linear throughout the year. For example, property and parcel taxes were below the midpoint budgeted total. Conversely, at the mid-year point, utility user tax, franchise and agreements, and license and permits revenue categories received over 50% of the budgeted amounts for FY 2022-23. Investment income also exceeded budgeted expectations due to the rapid increase of interest rates. Intergovernmental revenues were at only 15% of budget; however, these revenues reimburse corresponding approved Public Works expenditures that have been deferred. Salaries and benefits and maintenance and operations expenditure categories were at about the 50% level; however, the capital projects and equipment category was only at 8% of the budgeted amount due to deferred projects, limited availability of equipment, and other postponed capital expenditures.
Enterprise Funds
As of December 31, 2022, Electric revenues were at 61%, Gas revenues were at 57%, and charges for services in the Water Fund were at 48% of budgeted amounts. Fiber Optic revenues were at 30% of budgeted revenue due to the timing of billing. VPU continues to look for opportunities to operate its systems efficiently while at the same time addressing infrastructure needs and rising energy costs. As of mid-year, Fiber and Water Funds were below 50% of budgeted expenditures, Gas was at about 50%, and Electric was at 64% of budgeted expenditures.
Cash Position
Approximately 77% of the City’s cash funds are unrestricted, with Electric utility reserves exceeding 180 days of operating expenses. The General Fund unassigned fund balance has increased to over $20 million.
Proposed Budget Adjustments
Due to rising costs of materials, supply chain constraints, and expenditures not known or expected at the adoption of the FY 2022-23 Budget, adjustments are being presented to Council to appropriate funds for unexpected costs in the General and VPU Funds.
Fiscal Impact
Approval of this action would require an additional appropriation of $534,875 in General Fund, City Attorney, Fire, Police, and Public Works Departments per Resolution No. 2023-06 from available General Fund Unassigned Fund Balance. Approval of this action would also require an additional appropriation of $16,097,155 in Electric Fund, $717,800 in Fiber Optics Fund, $59,462 in Gas Fund, and $500,654 in Water Fund per Resolution No. 2023-06 from their respective available Fund Balances.
Attachments
1. Resolution No. 2023-06