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HomeMy WebLinkAboutD-1 Staff Report - Mid-Year Budget Review FY 2019-20SCHEDULED ITEM D-1 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL VIA: SERGIO GONZALEZ, CITY MANAGER FROM: TALIKA M. JOHNSON, DIRECTOR OF ADMINISTRATIVE SERVICES DATE: MARCH 2, 2020 SUBJECT: FISCAL YEAR 2019-20 GENERAL FUND MID-YEAR BUDGET REVIEW AND ADJUSTMENTS BACKGROUND: This report provides the City Council a mid-year budget and financial update for the General Fund Fiscal Year 2019-20 adopted budget in preparation for the upcoming budget process. The report also makes recommendations for budget amendments, both to estimated revenues and expenditures for the current budget year. RECOMMENDATIONS: Staff recommends that the City Council take the following actions: 1)Receive, review and file Fiscal Year 2019-20 second quarter budget-to-actual report ending December 31, 2019; and 2)Adopt Resolution No. 2020-C07 approving the listed proposed budget amendments; and 3) Approve a $150,000 amendment for Transtech Engineers, Inc. PO 032223 to continue plan checking consulting services. ANALYSIS: The Fiscal Year (FY) 2019-20 budget was adopted on June 17, 2019 with a projected General Fund budget deficit of $2.1 million (excluding carry forward projects from the FY 2018-19 budget year and other adjustments). Public safety, general government, internal support services, APPROVED CITY COUNCIL 3/2/2020 FY 2019-20 Mid-Year Budget Review March 2, 2020 Page 2 community resources, such as youth and senior recreational services and library activities, and parks and facilities maintenance services make up the majority of the General Fund budget. While the City has a diverse revenue base, current General Fund budget forecasts project deficits ranging from $1.3 to $2.7 million annually in fiscal years 2021 through 2024. Staff has been diligent in presenting to Council strategies to mitigate impacts of projected deficits for guidance on how to best address the forecasted shortfalls. Through ongoing fiscal sustainability exercises, Staff: identified and implemented operational efficiencies and cost cutting measures resulting in $324,000 in annual savings; identified a revenue enhancement opportunity which is estimated to result in annual revenue increases of up to $1 million over the next five years; and proposed placement of a three-quarter cent (3/4¢) sales tax measure (Measure Z) on the March 3, 2020 ballot for voter consideration, which if passed, would generate an additional $4.5 million in direct local returns to the City of Azusa. During the annual budget preparation process, Staff utilizes the best information available at the time to inform Council and request appropriations to provide the most efficient and cost effective services to the Community. While budget proposals adopted are based on best available presumptions, presentation of the mid-year budget review is to identify and explain fiscal impacts to the Council and to seek direction with respect to both the remainder of the current fiscal year and preparation of the budget for the upcoming year. Attached for review is the second quarter financial report for FY 2019-20 ending December 31, 2019 for the major non-utility funds to provide the City Council and public an update on the City’s financial position. Included in the report are the statuses of the General Fund, Gas Tax and Fire Safety Special Revenue Funds, Sewer Enterprise Fund, and Risk Management/Liability and Information Technology Internal Services Funds. However, not included in this report are Staff recommendations for mid-year budget adjustments to the General Fund. Those recommended changes are discussed further in this report. General Fund Budget Overview: The General Fund adopted budget projected a deficit of $2.1 million. Adoption of the annual budget includes resolutions which allows Staff to carry forward remaining budget amounts for projects and major activities not completed in the prior year. Carryovers from FY 2018/19 into FY 2019/20 amounted to $912,477. Additionally, throughout the budget year, needs and priorities may result in amendments to the budget, in both, revenues and expenses. Altogether, the adopted budget, budget carryovers, periodic amendments within Staff authority, and recommended mid-year adjustments (if adopted by Council) result in a projected budget deficit of $2.1 million. While most of the General Fund revenues (“Revenues”) and expenditures (“Expenditures”) are on track to achieve its budget, there are some Revenues and Expenditures budgets that will need to be adjusted. The following net budget adjustments totaling an increase to projected reserves of $815,720 are recommended: FY 2019-20 Mid-Year Budget Review March 2, 2020 Page 3 Revenue Highlights Overall, a $134,280 decrease in adopted revenues is anticipated. Revenues contributing to the projected adjustments are: 1) parking citation volumes continue to be steady with the onboard of a parking enforcement contractor; 2) City owned commercial property, Promenade, has been in negotiations for a long–term lease(s). A long-term tenant has been secured, but negotiations took longer than anticipated; 3) interest rates and cash balances have steadily increased, thus yielding higher earnings; 4) plan check revenues are lower than budgeted, but revenues are higher than contract service costs; 5) permits from building and public works projects activities are pacing lower than budgeted; and 6) relocation of L&G Crushing, a mining company, has land excavation taxes pacing lower than anticipated. Expenditure Highlights Based on the analysis of mid-year expenditures, Staff proposes a net decrease in General Fund budgeted expenditures for a total of $950,000 for two budget line items: 1. Salary and Benefits Savings - There are positions funded by the General Fund that remain unfilled or have been partially unfilled in the current year resulting in net salary savings. Staff has identified approximately $1.1 million in estimated savings from vacancies. This amount includes savings from temporarily freezing positions and restructuring departments. 2. Plan Checking – In June of 2019 Council awarded consulting contracts to both Transtech and Wildan for contract plan review and inspection services. The annual amounts Proposed Mid-Year Adjustments for Fiscal Year 2019-20 Revenues Expenditures Department Description Increase/(Decrease)Increase/(Decrease)Justification for Adjustment City-wide Salary Savings (1,100,000) Savings from vacant positions City-wide Rental Income (44,280) City negotiaitng lease agreement and tenant improvements for Promenade property City-wide Interest Income 200,000 Higher interest rate earnings and cash balances Econ & Comm Dev Plan Checking 150,000 Plan check services outsourced due to Building Inspector II Econ & Comm Dev Permits/Building (120,000) Based on year-to-date activity Econ & Comm Dev Plan Check Fees (120,000) Based on year-to-date activity. Revised revenue forecasts covers cost of Plan Check Contract(s). Econ & Comm Dev Land Excavation Tax (100,000) L&G Crushing left the City. Anticipating another mining company to come on board next year. Safety Parking Enforcement 100,000 Based on parking enforcement activities Public Works Public Works Permits (50,000) Based on year-to-date activity Totals (134,280)$ (950,000)$ FY 2019-20 Mid-Year Budget Review March 2, 2020 Page 4 awarded were specifically $90k to Transtech and $60k to Willdan, with the agreements expiring on June 30, 2021. While plan check volume hasn't necessarily increased, the bulk of expenditures have come from a vacancy in the Building Inspector series. Due to departure of the Building Inspector II, and difficulty finding qualified inspectors industry- wide, the City has had to rely on contracted inspection services to fill the void. The City originally envisioned using the contract(s) for standard plan check services, but only using them on an as needed basis for inspection services (ex: city inspector on vacation, large project, etc.). However, consulting services may need to be used longer than anticipated, as both cities and consulting firms are having difficulty finding qualified inspectors. Currently, firms either have overly qualified, or under qualified inspectors, not a large talent pool at the Inspector II level. An amendment of $150,000 for the Trantech contract is needed to keep up with the demand of plan checks. Revenues from plan check services are sufficient to cover the cost of consultant activities. Based upon the direction received from Council, Staff will prepare necessary actions to implement any changes. Reserves Overview and Future Budget Considerations The General Fund Reserve Policy consists of four categories to mitigate risk in high liability exposure areas: 1) Budget Stabilization and Catastrophic Event (15% of budget or $6.3 million); 2) Capital and Infrastructure Replacement ($1.5 million); 3) Insurance ($1.0 million); and 4) Retiree Benefits ($1.5 million). City Council authorization is required for use of these reserves. Recommended mid-year adjustments forecasts and ending available reserve balance of $11.4 million. Fiscal Year 2019-20 Mid-Year expenditure projections includes cost savings measures implemented in the current year amounting to $324,000. Table 1: Five-Year Budget Forecast and Reserves Analysis Deficit spending means the City must tap into reserves to bridge revenue shortfalls. In addition to a budget policy, the City has a General Fund Reserve Policy which is used as a benchmark tool to assess financial performance. The recommended amended budget, with a status quo revenue base, projects reserves will be over the $10.6 million target by $790,354 in the current year. However, future year projections forecasts reserves being below target by $2.1 to $6.7 million annually. Actual FY 17-18 Revised FY 18-19 ADOPTED FY 19-20 MID-YEAR FY 19-20 ESTIMATED FY 20-21 ESTIMATED FY 21-22 ESTIMATED FY 22-23 ESTIMATED FY 23-24 Total Revenues 42,208,830 44,653,924 44,755,099 44,694,820 42,702,543 45,153,801 45,605,339 46,061,393 Total Expenses 44,849,887 42,336,440 46,871,180 46,833,657 46,003,554 47,636,594 48,112,960 48,594,090 Operating Surplus or (Deficit)(2,641,057)$ 2,317,484$ (2,116,081)$ (2,138,837)$ (3,301,011)$ (2,482,793)$ (2,507,621)$ (2,532,697)$ Add: Cost Savings Measures 324,000 324,000 324,000 324,000 324,000 Add: Contract/Franchise Enhancements 250,000 500,000 687,500 875,000 Revised Operating Surplus or (Deficit)(1,792,081)$ (2,138,837)$ (2,727,011)$ (1,658,793)$ (1,496,121)$ (1,333,697)$ Beginning Available Reserves Balance 12,484,905 9,843,848 12,161,332 13,554,443 11,415,606 8,688,595 7,029,802 5,533,682 Ending Available Reserves Balance 9,843,848 12,161,332 10,369,251 11,415,606 8,688,595 7,029,802 5,533,682 4,199,985 Reserves Target 6,265,725 10,265,725 10,625,252 10,625,252 10,825,533 10,734,120 10,829,267 10,911,308 Above/(Below) Reserves Target 3,578,123$ 1,895,607$ (256,001)$ 790,354$ (2,136,938)$ (3,704,318)$ (5,295,585)$ (6,711,323)$ *Beginning Available Reserves Balance for Adopted FY 19-20 was estimated, Mid-Year FY 19-20 is based on audited financial results. FY 2019-20 Mid-Year Budget Review March 2, 2020 Page 5 Addressing forecasted budget deficits requires consideration of the following options which can be implemented individually or as a combination based upon Council input and policy direction: 1) Using reserves on hand 2) Making budget cuts 3) Enhancing revenues, including consideration of voter-approved local funding options In order to maintain targeted reserve levels in accordance with the adopted policy, revenues will either need to be increased or significant service cuts will need to be considered. On an ongoing basis, Staff has performed and presented to Council findings from a budget sustainability assessment in which all three of the aforementioned options have been examined and applied: • Reserves on hand are being used to stabilize the current year budget. • Staff identified and implemented operational efficiencies and cost cutting ideas which included freezing a vacant position in the City Manager’s office and restructuring the Finance and Human Resources departments into one department, resulting in $324,000 in annual savings. • Staff identified a revenue enhancement opportunity (an increase to the City’s hazardous materials facilities tax rate) which is estimated to result in annual revenue increases of up to $1 million over the next five years. • After engaging the Azusa Community on their service needs and priorities, Council approved placement of a three-quarter cent (3/4¢) sales tax measure (Measure Z) on the March 3, 2020 ballot for voter consideration, which if passed, would generate approximately an additional $4.5 million in direct local returns to the City of Azusa to address community identified priorities including: o Continuing police anti-gang enforcement programs o Addressing homelessness o Maintaining police patrols of neighborhood schools o Maintaining police patrols of neighborhoods, parks and recreations areas o Preventing reductions to police officer staffing levels o Maintaining city services o Repairing streets and potholes Although passage of Measure Z would bridge the projected budget deficits and help mitigate the potential need to reduce services to Azusa residents, as a contingency Staff began to explore options to reduce Department budgets by six to ten percent or $2.7 - $4.6 million. On January 21st, Staff presented potential budget reduction options to Council totaling $3.5 million, which would otherwise not be recommended in light of sufficient revenues being available to sustain current operations. Potential recommendations included, reductions to: emergency service personnel; youth and senior programming; library services; development activities; and maintenance of City facilities. Staff has begun the FY 2020-21 budget development process and will return to Council at a special study session to receive direction and guidance for the budget adoption process. FY 2019-20 Mid-Year Budget Review March 2, 2020 Page 6 FISCAL IMPACT: The recommended FY 2018-19 mid-year actions result in a net budget decrease of $815,720, including an increase in revenues in the amount of $134,280 and a decrease in expenditures in the amount $950,000. Adoption of recommended mid-year adjustments results in an estimated budget deficit of $2.1 million, on par with the adopted projected budget deficit. Fiscal Year 2019-20 budget, including recommended mid-year adjustments, is expected to result in an estimated $11.4 million ending available fund balance, including activities from internally restricted reserve funds. Prepared by: Reviewed and Approved: Talika M. Johnson Sergio Gonzalez Director of Administrative Services City Manager Attachments: 1) FY 2019-20 Budget-to-Actual Report for the second quarter ending December 31, 2019 2) Resolution No. 2020-C07, Adopting FY 2019/20 Mid-Year Budget Adjustments 2019/20 Quarterly Financial Report Second Quarter, Ending December 31, 2019 OVERVIEW This financial report summarizes the City’s General Fund’s position for the 2nd Quarter of Fiscal Year 2019/20 (July 1, 2019 through December 31, 2019). Also, included are the major Special Revenue Funds: Gas Tax and Fire Safety; the Sewer Fund; and the major Internal Services Funds: Risk Management/Liability and Information Technology. The purpose of this report is to provide the City Council, City Management, and the Azusa community with an update on the City’s fiscal status based on the most recent financial information available. GENERAL FUND SUMMARY With the 2nd quarter’s revised data, the projection through the end of the fiscal year for total sources (revenues and transfers-in) are estimated at $44,829,100, and is higher than the adopted revenue amount by $74,000 due to the addition of the Measure H grant. Total uses (expenditures and transfers-out) are estimated to be $912,477 higher than the adopted budget of $46,871,180, primarily due to FY 2018-19 carry forward budgets for: capital equipment replacement projects equaling $622,847; Economic and Community Development projects costs relating to Planning and Economic Development activities of $210,528; and Police IT software for $20,500. The increase in the revised budget from adoption also includes: Measure H grant required matching costs of $79,900; other homelessness related activities of $50,000; the addition of the coyote outreach program of $10,000; and interfund loan interest expense adjustment of $30,523 as a result of higher interest rate returns than anticipated. Table 1 shows the adjusted budget figures: A B C Adopted Budget 2019-20 Revised Budget 2019-20 Variance (B - A) Beginning Unassigned Fund Balance $ 13.55 $ 13.55 * $ - Plus: Revenues 43.26 43.33 ** 0.07 Transfers In 1.50 1.50 - Total 2019-20 Sources 44.76 44.83 0.07 Less: Expenditures 39.91 40.82 ** 0.91 Transfers Out 6.97 6.97 - Total FY 2019-20 Uses 46.88 47.79 0.91 Revenues in excess/(below) Expenditures FY 2019-20 (2.12) (2.96) (0.84) Estimated Unassigned Fund Balance before Reserves 11.43 10.59 Less: Internally Restricted Reserves Budget Stabilization & Catastrophic Events (6.37) (6.37) *** - Capital & Infrastructure Replacement (1.50) (1.50) *** - Insurance (1.00) (1.00) *** - Retiree Benefits (1.50) (1.50) *** - Estimated Ending Unassigned Fund Balance after Reserves $ 1.06 $ 0.22 $ (0.84) *Audited FY 2018/19 CAFR, includes internally restricted reserve accounts **Financial Data as of 12/31/19 ***Established Reserves Per 6/18/18 Council Approval Table 1 Budget vs. Estimated Actual (in millions) Attachment 1 2019-20 Quarterly Financial Report 2nd Quarter, Ending December 31, 2019 Page 2 of 5 While revenue sources are anticipated to be fairly consistent with the forecast, the 2nd quarter’s revenues provided limited meaningful data that can identify trends for the full year projection. As we progress further into the 2019/20 fiscal year, revenues and expenditures will be closely monitored and an update will be provided to Council if there are any material data that will impact the full year revenue budget. GENERAL FUND REVENUES Table 2 shows actual collections for the major revenue sources and the percent collected compared to the adjusted budget. Table 3 shows that revenues are trending less than $1.0 million higher than the same period last year. Revenue Collection by Source as of 12/31/19 Chart 1 Revenues Collected by Source Quarter Ending: 12/31/18 vs. 12/31/19 Adjusted Budget Actual % of REVENUE FY 2019/20 YTD 12/31/19 Adj. Budget Property Tax 11,455,002$ 90,657$ 0.8% Sales Tax 5,829,104 1,573,612 27.0% UUT Tax 3,458,945 1,486,840 43.0% Other Taxes 9,908,815 4,187,873 42.3% Charges for Services 4,726,906 1,879,154 39.8% Cost Reimbursement 2,195,243 1,185,935 54.0% Fines & Penalties 1,277,425 832,051 65.1% License & Permits 3,147,630 1,499,536 47.6% Miscellaneous 338,650 247,228 73.0% Money & Property Use 2,491,380 1,839,707 73.8% Total Revenues 44,829,100$ 14,822,592$ 33.1% Table 2: YTD % of Budget Actual Actual Increase/ REVENUE YTD 12/31/18 YTD 12/31/19 (Decrease) Property Tax 13,799$ 90,657$ 76,858$ Sales Tax 1,627,470 1,573,612 (53,858) Utility User Tax 1,490,532 1,486,840 (3,692) Other Taxes 4,218,749 4,187,873 (30,876) Charges for Services 2,195,647 1,879,154 (316,493) Cost Reimb.1,229,167 1,185,935 (43,232) Fines & Penalties 503,639 832,051 328,412 License & Permits 1,431,212 1,499,536 68,324 Miscellaneous 63,469 247,228 183,759 Money & Property Use 1,077,126 1,839,707 762,581 Total Revenues 13,850,810$ 14,822,592$ 971,782$ Table 3: Year-to-Year Comparison 2019-20 Quarterly Financial Report 2nd Quarter, Ending December 31, 2019 Page 3 of 5 Property Tax collections are low which is normal due to the timing of the revenue allocation by the County of Los Angeles Auditor Controller Tax Division. The majority of the property tax collections are received in four payments in December, January, April and May of each calendar year. Sales Tax collections are at 27.0% of the adjusted budget. The main reason for the low rate of collection is due to the timing of when the revenues are available. The City will not receive the November and December 2019 tax revenues from the California Department of Tax and Fee Administration until January and February of 2020 respectively. Utility User’s Tax collections are at 43.0% of the adjusted budget. This percentage is reflective of the consumption of utility services such as gas, electric and water, which was lower than expected due to cooler weather patterns. Other Taxes collections are at 42.3% of the adjusted budget. Other taxes are comprised mainly of franchise, land excavation, material recovery facility, and hazardous waste fees. Some revenues are calculated and collected after the quarter has ended. Timing of payments is the main reason for collections being under the 50% mark. Charges for Services collections are at 39.8% of the adjusted budget. Revenues are collected as services are rendered. Cost reimbursement collections are at 54.0% of the adjusted budget. Revenues are collected based on various grant reimbursement agreements. Fines and Penalties collections are at 65.1% of the adjusted budget. Second quarter revenues are pacing higher primarily due to timing of when the revenues are transmitted and recognized by the City. With the assistance of an external vendor, parking enforcement and motor vehicle ticketing activities are anticipated to pace higher than budget for the rest of the fiscal year. In addition, the Police Department was successful in its effort to collect some past due franchise tow fees from previous years that will be reflected in our financial reports later on in the fiscal year. License and Permits collections are at 47.6% of the adjusted budget. Miscellaneous fees for Planning, Building Permits and Public Works fees collected are on par with first quarter projection, and the timing of various development projects played a role in the percentage collected. Miscellaneous collections are at 73% of the adjusted budget. Second quarter revenues are pacing high primarily due to the timing of when the City will receive the revenues, but is expected to on par with budget forecasts. Money and Property Use collections are at 73.8% of the adjusted budget. Revenues are pacing higher than anticipated due to higher interest income earnings than expected as a result of higher investment rates. Revenues in the category as expected to exceed original budget projections. 2019-20 Quarterly Financial Report 2nd Quarter, Ending December 31, 2019 Page 4 of 5 GENERAL FUND EXPENDITURES General Fund expenditures are tracking close to the anticipated 50% second quarter mark. Expenditures by Category as of 12/31/19 The expenditures outlined in Table 4 are pacing in line with the 2nd quarter budget at 48.7% of budget. The second quarter expenditures in Table 5 compared to the same period last year was higher by $1.6 million primarily due to the increased CalPERS costs and timely booking of internal services costs. Overall, the General Fund expenditures are at 48.7% or $23.3 million of the adjusted budget of $47.8 million. When comparing the Q2 FY 2019/20 expenditures with the same period last year, it is $3.09 M higher. The General Fund expenditures are pacing higher primarily due to the timing of lump-sum payments made to CalPERS, the City’s insurance premiums which are due at the beginning of the fiscal year, and the summer recreation programs costs paid in the summer months. DEPARTMENT EXPENDITURES At the end of the 2nd quarter, most departments are tracking close to the 50% mark or below of the adjusted budget. Some expenses are paid in the beginning of the year such as Recreation seasonal staff and the lump- sum CalPERS payment for Public Safety as mentioned earlier. Table 6 Chart 2 Expenditures by Department % of Budget by Department As of 12/31/19 as of 12/31/19 FY 19-20 Actual % of EXPENDITURE Working Budget YTD 12/31/19 Budget Personnel 28,202,873$ 15,181,058$ 53.8% Operating 19,580,784 8,087,368 41.3% Total Expenditures 47,783,657$ 23,268,426$ 48.7% Table 4: YTD % of Budget Actual Actual Increase/ EXPENDITURE YTD 12/31/18 YTD 12/31/19 (Decrease) Personnel 14,206,495$ 15,181,058$ 974,563$ Operating 7,474,031 8,087,368 613,337 Total Expenditures 21,680,526$ 23,268,426$ 1,587,900$ Table 5: Year-to-Year Comparison Adjusted Budget Actual EXPENDITURE FY 2019/20 YTD 12/31/19 % of Budget Council 145,145$ 70,163$ 48.3% City Clerk 663,330 316,865 47.8% City Attorney 275,000 111,548 40.6% City Treasurer 190,365 72,896 38.3% Administration 621,813 267,499 43.0% Finance 1,565,220 848,854 54.2% Economic & Comm. Dev.3,232,865 1,190,507 36.8% Human Resources 482,395 258,497 53.6% Library 1,531,435 702,004 45.8% Public Safety 21,676,562 11,501,054 53.1% Public Works 3,244,733 1,516,876 46.7% Community Resources 2,120,356 965,016 45.5% City-Wide 12,034,438 5,446,647 45.3% Total Expenditure 47,783,657$ 23,268,426$ 48.7% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 2019-20 Quarterly Financial Report 2nd Quarter, Ending December 31, 2019 Page 5 of 5 MAJOR SPECIAL REVENUE, SEWER AND INTERNAL SERVICES FUNDS SUMMARY The major Special Revenue funds including the Gas Tax, Fire Safety fund, Sewer Fund, and the major Internal Services funds such as Risk Management/Liability and Information Technology funds are reflected below. Table 7: Major Special Revenue and Internal Services Fund Revenues Table 8: Major Special and Internal Service Fund Expenditures Chart 3 Major Special Revenue & Internal Services Funds Revenues by Funds Ending 12/31/19 Chart 4 Major Special Revenue & Internal Services Funds Expenditures by Funds Ending 12/31/19 Adjusted Budget Actual % of REVENUE FY 2019/20 YTD 12/31/19 Adj. Budget Gas Tax Fund 1,243,767$ 628,976$ 50.6% Fire Safety 5,796,345 3,761,720 64.9% Sewer Fund 3,068,265 1,499,401 48.9% Risk Mgmt/Liab Fund 3,265,095 2,258,703 69.2% IT Fund 1,923,470 952,436 49.5% Total Expenditures 15,296,942$ 9,101,236$ 59.5% Adjusted Budget Actual % of EXPENDITURE FY 2019/20 YTD 12/31/19 Adj. Budget Gas Tax Fund 1,619,030$ 738,567$ 45.6% Fire Safety 5,696,345 4,056,549 71.2% Sewer Fund 3,245,891 1,060,809 32.7% Risk Mgmt/Liab Fund 3,726,345 1,717,052 46.1% IT Fund 1,932,070 935,627 48.4% Total Expenditures 16,219,681$ 8,508,604$ 52.5% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% Gas Tax Fund Fire Safety Sewer Fund Risk Mgmt/Liab Fund IT Fund 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% Gas Tax Fund Fire Safety Sewer Fund Risk Mgmt/Liab Fund IT Fund 2019-20 Quarterly Financial Report 2nd Quarter, Ending December 31, 2019 Page 6 of 5 Gas Tax Fund Gas Tax revenues are pacing at 50.6% of the second quarter adjusted budget, and the expenditures are tracking slightly under at 45.6% due to timing of the planned expenditures. Revenues and expenditures are expected to be on par with budget. Fire Safety Fund Fire Safety operating revenues are pacing at 64.9% of budget forecast, and expenditures at 71.2% for the second quarter. Payments for the fire safety contract were higher than estimated for first and second quarter, but was offset by revenues credits received from the county in the amount of $808,735. Taking the credits into consideration, the full year costs will be smoothed out and be consistent with FY 19/20 projections. Sewer Fund Sewer year-to-date operating revenues are 48.9% of estimated budget. Expenditures are slightly lower than the second quarter end mark at 32.7% due to the timing of the various projects. Risk Management Fund Revenues in the Risk Management Fund are at 69.2% due to the timing of its allocations for insurance premiums. Expenditures are at 46.1% of the adjusted budget due to the timing of when claims are paid out. Information Technology Fund Information Technology Fund revenues and expenditures are nearly at the 50% second quarter mark, pacing at 49.5% and 48.4% of budget, respectively, and consistent with the timing of the various IT projects. RESOLUTION NO. 2020-C07 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA APPROVING AND ADOPTING THE MID-YEAR BUDGET AMENDMENTS FOR THE CITY OF AZUSA WHEREAS, on June 17, 2019, City Council of the City of Azusa adopted the City-wide Fiscal Year 2019-20 Operating and Capital Budgets; and WHEREAS, on March 2, 2020, the City Council of the City of Azusa met and reviewed the mid-year financial status of the General Fund, Gas Tax Fund, Fire Safety Special Revenue Fund, Sewer Enterprise Fund, Risk Management/Liability and Information Technology Internal Services Funds, and considered Staff’s recommendations on the budget amendments. NOW, THEREFORE, BE IT RESOLVED, THE CITY COUNCIL OF THE CITY OF AZUSA DOES APPROVE AND ADOPT THE FOLLOWING FY 2019-20 GENERAL FUND BUDGET AMENDMENTS: SECTION 1. SECTION 2. The City Clerk shall certify as to the adoption of this resolution. Proposed Mid-Year Adjustments for Fiscal Year 2019-20 Revenues Expenditures Department Description Increase/(Decrease) Increase/(Decrease)Justification for Adjustment City-wide Salary Savings (1,100,000) Savings from vacant positions City-wide Rental Income (44,280) City negotiaitng lease agreement and tenant improvements for Promenade property City-wide Interest Income 200,000 Higher interest rate earnings and cash balances Econ & Comm Dev Plan Checking 150,000 Plan check services outsourced due to Building Inspector II Econ & Comm Dev Permits/Building (120,000) Based on year-to-date activity Econ & Comm Dev Plan Check Fees (120,000) Based on year-to-date activity. Revised revenue forecasts covers cost of Plan Check Contract(s). Econ & Comm Dev Land Excavation Tax (100,000) L&G Crushing left the City. Anticipating another mining company to come on board next year. Safety Parking Enforcement 100,000 Based on parking enforcement activities Public Works Public Works Permits (50,000) Based on year-to-date activity Totals (134,280)$ (950,000)$ Attachment 2 PASSED, APPROVED AND ADOPTED this 2nd day of March 2020. Joseph Romero Rocha Mayor ATTEST: Jeffrey Lawrence Cornejo, Jr. City Clerk STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) ss. CITY OF AZUSA ) I HEREBY CERTIFY that the foregoing Resolution No. 2020-C07 was duly adopted by the City Council of the City of Azusa at a meeting thereof, held on the 2nd day of March 2020, by the following vote of the Council: