Item Number: 3
City Council / Board of Directors
Public Hearing(s)
Meeting of: February 18, 2025
Submitted By:
Carmen Cun, Finance Director / City Treasurer
Subject:
Mid-Year Budget Review and Amendment Request to the Fiscal Year 2024-2025 Revised Fiscal Budget
Recommendation:
That the Honorable City Council and Board of Directors approve the changes reflected in this agenda item along with the included attachments by adopting:
(1) Resolution No. 25-013 of the City Council of the City of Victorville amending Resolution 24-037, as amended, the budget resolution for the City of Victorville for Fiscal Year 2024-2025, relating to an appropriation of funds. (2) Resolution No. VWD-25-003 of the Board of Directors of the Victorville Water District amending Resolution VWD-24-006, as amended, the budget resolution for the Victorville Water District for Fiscal Year 2024-2025, relating to an appropriation of funds.
(3) Resolution No. SCLAA-25-003 of the Board of Directors of the Southern California Logistics Airport Authority amending Resolution SCLAA-24-003, as amended, the budget resolution for the Southern California Logistics Airport Authority for Fiscal Year 2024-2025, relating to an appropriation of funds.
(4) Resolution No. CHAS 25-001 of the City Council of the City of Victorville as the Housing Asset Successor to the Victorville Redevelopment Agency amending Resolution CHAS 24-003, as amended, the budget resolution for the City as the Housing Asset Successor for Fiscal Year 2024-2025, relating to an appropriation of funds.
(5) Resolution No. LBT 25-001 of the Library Board of Trustees amending Resolution No. LBT 24-002, as amended, the budget resolution for the Victorville Library for Fiscal Year 2024-2025, relating to an appropriation of funds. 3 9
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Fiscal Impact:
Approval of this agenda item would result in an increase of $3,229,874.87 in the total citywide expenditures and an increase of $2,973,106.64 in the total revenue budget for the Fiscal Year 2024-2025.
A summary of the Mid-Year budget changes are as follows (Attachment A):
•City of Victorville – An appropriation of funds, increasing the expenditures by $3,346,555.67 and increasing the revenue by $1,183,172.60. •Victorville Water District – An appropriation of funds, decreasing the expenditures by $144,632.91 and increasing the revenue by $1,898,894.32. •Southern California Logistics Airport Authority – An appropriation of funds, decreasing expenditures by $60,666.52 and decreasing the revenue by $108,960.28.
•Housing Asset Successor – An appropriation of funds, increasing the expenditures by $65,745.53.
•Library – An appropriation of funds, increasing the expenditures by $22,873.10.
Strategic Plan Goal:
A.Financial Sustainability Goal – foster disciplined long-term planning, cost control, increased revenues, and cost recovery.
•Updated multi-year cash flows were presented to the Executive Team to ensure current year actions were sustainable and planning and forethought were put into the current and future City needs. Staff continues thinking of ways to sustain and improve programs while protecting the City against unexpected expenses or economic fluctuations.
B.Public Safety Goal – implement strategies to support a growing community. •Measure P funding continues to support the Public Safety Plan and increase staffing and resources for Police, Fire, Code Compliance and Animal Control.
This includes funding a reserve for the continued replacement of aging fire apparatus, improvements to the fire stations, additional medical and fire equipment, reserve funding for the new police station, and continued funding of additional code compliance and animal control staff to support a pro-active approach for our community.
C.Reduce Homelessness Goal – implement effective solutions to reduce Homelessness.
•The City continues to address the issues of homelessness through our new Wellness Center and working with external agencies toward integrated solutions for our business and residential communities.
D.Invest in Infrastructure Goal – create a healthy-livable community by investing in infrastructure and innovations.
•The City is focusing on infrastructure projects for FY 2024-2025 that include several roof replacements, upgrading booster stations and valve replacements to ensure continuous water availability, and several road pavement projects.
E.Organizational Effectiveness and Sustainability Goal – provide high-quality services utilizing local government best practices, employee development, support, and retention.
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•The City continues to focus on its employees through promotion of the core values of customer service, transparency, integrity, and accountability. A focus on training and education reflect the continued desire to invest in the development, support, and retention of our growing staff. This enables the City to continue our priorities to provide the best access to city services as well as continuous improvements in customer service for our residents and businesses.
Background:
The Fiscal Year 2024-2025 Budget, effective July 1, 2024, was adopted by the City Council/Board of Directors on June 4, 2024. The Mid-Year Budget Review provides the City with an opportunity to assess the overall performance of its revenues and expenditures, with the intent to proactively respond to unforeseen changes and emerging trends. It also allows departments to re-evaluate their operations, identify any unanticipated needs and propose necessary budget amendments to ensure the continued efficient operation of the City.
Discussion:
The following chart compares the City-wide Fiscal Year 2024-2025 adopted budget, revised budget and December 2024 year-to-date (YTD) totals for revenue and expenditures. The column labeled “FY 2024-2025 Revised Budget” reflects the Council- approved budget including any Council-approved resolutions for additional appropriations through December 31,2024.
Citywide
FY 2024-2025
Adopted
Budget
FY 2024-2025
Revised Budget
Actuals Through
12/31/24
% Received /
Expended
Revenue $354,521,440 $361,654,062 $151,100,983 42%
Expenditures $377,874,602 $456,052,571 $129,595,604 28% *Note: FY 2024-2025 Adopted Budget includes $59.7 million in Capital Improvement Projects.
As of December 31, 2024, the City has received $151,100,982.88 in revenue across all funds, representing 42% of the total revised revenue budget of $361,654,062.
Expenditures to date total $129,595,603.56, or 28% of the revised expenditure budget of $456,052,571. Revenue collection is currently in line with projections while expenditures are below budget expectations.
To accurately align with the current operational needs of the various departments, several budget adjustments are necessary. These adjustments will result in an approximate increase of $2,973,106.64 in revenue and $3,229,874.87 in expenditures across all funds.
A detailed breakdown of each major change, categorized by fund type (General Fund, Measure P Fund, Special Revenue Funds also known as Other Governmental Funds, and Enterprise Funds) is provided herein.
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Overview of Major Changes and Recommended Adjustments by Fund Type:
General Fund (100):
General Fund FY2024-2025
Revised Budget
Request Increase
(Decrease)
Mid-Year
Proposed Budget
Revenue $101,065,518 $ 720,955 $101,786,473
Expenditures $107,009,469 $2,794,591 $109,804,060
General Fund revenues are projected to increase by $720,954.60 driven by several key factors, including the following:
•Engineering revenue is projected to increase by $697,000 reflecting the current level of development activity. This increase is primarily attributed to a rise in demand for services such as Traffic Studies, Drainage Studies, Improvement Plan Check Fees, and Inspection Fees, all of which are driven by ongoing new tract development within the city.
•Police Towed Vehicles Administration Fee revenue is expected to increase by $90,000, significantly exceeding initial projections. In the first 6 months, this revenue source has already surpassed expectations, averaging approximately $20,000 per month.
•Animal License revenue is projected to increase by $10,000. This increase is attributed to the effects of the passage of Urgency Ordinance No. 2439, Section 2, which waived the license fee for adopted animals during the first year 2023-2024.
This waiver encouraged more pet adoptions, resulting in a higher number of licenses now due for renewal.
•Based on the recently adopted fee study, a reduction in revenue is projected for Plumbing Permit Fees ($40,000), Electrical Permit Fees ($45,000), and Mechanical Permit Plan Check Fees ($45,000) due to the elimination of these respective fees. It is anticipated that this revenue stream will be fully eliminated by the next fiscal year.
General Fund expenditures are projected to increase by $2,794,590.63 for the following reasons:
•The Fire Department's budget has increased by $2,200,000 due to several contributing factors. The most significant of these factors is an oversight on the part of staff to budget for retiree expenses of approximately $1.3 million. While this retiree expense continues to be a responsibility of the City, it is a cost that is directly associated with the former Victorville fire department. Another major contributing factor is increased personnel costs in the amount of $900,000. Over half of these costs will be offset by State reimbursements for strike team events the Fire department has participated in. Staff anticipates that these reimbursements will be made in the following fiscal year.
•The Parks Department's budget has increased by $109,425 to accommodate two essential needs: the replacement of a malfunctioning water meter and the funding required for vehicle repairs.
•Information Technology is requesting an increase of $140,000 in Contract Services to support essential projects, including enhancements to Munis software 3 9
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workflows, the development of a Munis API for integration with CivicPlus, and the acquisition of additional Munis TCM storage.
•The remaining increase in expenditures is distributed across various other departments that rely on the General Fund.
With the recommended adjustments, the cash flow is projected to be at 57% of the General Fund Reserve, well above the required 17%.
Projected $63,128,830
Required $18,666,690
Overall, the Mid-Year report projects a General Fund year-end budgetary deficit of approximately $7,017,587.03 which will be offset by fund reserves. The original Fiscal Year 2024-2025 budget was adopted with a projected deficit of $3,177,609 after taking into account the annual Victorville Municipal Utilities Services (VMUS) loan repayment.
The difference between the original deficit and the projected Mid-Year deficit is attributed to an increase in expenditures for $4,602,455.24, partly due to an estimated $1.8 million in budget amendments previously approved by Council, and an increase of $762,477.60 in unanticipated revenue for the current Fiscal Year 2024-2025. Given that the City has significantly exceeded its General Fund Reserve requirement in recent fiscal years, this unforeseen deficit can be covered by reserve funding, which is specifically designated for such situations.
Measure P Fund (105):
Measure P FY2024-2025
Revised Budget
Request Increase
(Decrease)
Mid-Year Proposed
Budget
Revenue $37,083,408 $ (558,056) $36,525,352
Expenditures $55,765,553 $ 104,290 $55,869,843
•Revenue for Measure P is projected to decrease by $558,056 primarily due to lower-than-expected bed fee revenue from the Wellness Center’s recuperative care program, which has experienced reduced occupancy rates. •Expenditures are projected to increase by $104,289.75. This increase is primarily driven by higher expenses within the Fire Department, and greater-than- anticipated electricity consumption at the Wellness Center.
With the recommended adjustments, the cash flow is projected to be at 51% of the Measure P Fund Reserve, well above the required 17%.
Projected $25,381,145
Required $ 8,490,653
Special Revenue Funds: The following outlines the most significant adjustments to the City’s special revenue funds.
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•The increase in revenue of $138,799 is mostly attributed to the latest Highway Users Tax Account (HUTA) estimates for Gas Tax from January 2025. •Funds 202, 250, and 370 have been allocated to support three projects: the acquisition of a front-end sweeper, the purchase of a Stencil truck for the Traffic Control Division, and the City's beautification program. These combined projects result in a total expenditure increase of $143,000 across these funds. •Fund 205 expenditures have increased by $192,494.31 to support ongoing remediation efforts at the Nuway Site, in compliance with the Lahontan Water Board’s requirements.
•The expenditures for Public Works have increased by $157,000 for electricity cost primarily due to an unanticipated increase in usage of the CNG stations.
Enterprise Funds:
Victorville Water (Funds 410-414,416):
•The Water Fund (Fund 410) has experienced a revenue increase of $1,418,662.32 primarily driven by higher-than-expected revenue from the High Desert Power Plant (HDPP) reimbursements, water permit fees, penalty late fees, plan check fees, and service call fees.
•The Industrial Wastewater Treatment Plant (IWWTP) Capacity Charge (Fund 416) and the Water Capacity Charges (Fund 414) have collectively experienced a revenue increase of $417,000, largely attributed to anticipated interest income expected to be received in the remaining quarters of Fiscal Year 2024-2025. •Water Capacity Charges (Fund 414) expenditures have been reduced by $1,312,467. This decrease is due to a pipeline turnout project that will be spanning over more than one fiscal year.
•Water Fund (Fund 410) capital expenditures have decreased by $455,460 due to the cancellation of three projects: the SCADA communication tower, the SCADA Fiber Extension, and the replacement of the roof on modular building D1. •Reclaimed Water Fund (Fund 413) contract services have been reduced by $200,000 due to the removal of the recycled water master plan from this fiscal year's budget.
•Although some reductions have been noted, they are offset by $608,469 increase in the Water Fund (Fund 410) expenditures, primarily allocated to infrastructure repairs, including the Solitude Circle pavement repair and the Mojave/Village repair project.
Solid Waste Management (Funds 425-427):
•The Solid Waste Division has experienced a revenue increase of $881,475 primarily due to an increase in late fees, special service fees and interest income. •Expenditures for the Sanitary Division are projected to increase by $251,007.80 primarily due to a higher-than-anticipated volume of sewer lateral repairs, driven by increased infrastructure demands.
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Southern California Logistics Airport (Funds 450-457):
•Airport Operations (Fund 450) has experienced a revenue decrease of $200,000 primarily due to the delayed occupancy of building 686; tenancy is now expected between April and June 2025.
•While revenues are being adjusted downward in the amount of $108,960.28, this has been partially offset by a revenue increase of $61,372.24. This positive variance is the result of new leases signed for buildings 553, 728, and 15B after the adoption of the annual budget.
•Total expenditures have decreased by $60,666.52, primarily due to the elimination of the Airport Leasing Technician position.
Conclusion
While the General Fund is currently experiencing a deficit, the City's overall financial position remains strong. The Enterprise Funds are exceeding expectations with an increase in revenue over expenditures in the amount of $2,634,842.74. This positive performance significantly contributes to the City's overall financial stability.
Although it is necessary to utilize fund reserves to address the General Fund deficit, ongoing monitoring and potential adjustments throughout the remainder of the fiscal year will be essential to ensure long-term financial sustainability. Additionally, the City continues to actively seek new revenue sources to support the community, maintain fiscal stability, and secure resources for future needs.
Staff remain available for any questions the Council may have.
Attachments: A. Mid-Year Budget Summary
B. Resolution No. 25-013
C. Resolution No. VWD-25-003
D. Resolution No. SCLAA-25-003
E. Resolution No. CHAS 25-001
F. Resolution No. LBT 25-001