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HomeMy WebLinkAboutD-2 Staff Report - FY 22-23 Mid-Year Budget and AdjustmentsSCHEDULED ITEM D-2 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL VIA: SERGIO GONZALEZ, CITY MANAGER FROM: TALIKA M. JOHNSON, DIRECTOR OF ADMINISTRATIVE SERVICES DATE: MARCH 6, 2023 SUBJECT: FISCAL YEAR 2022-23 MID -YEAR BUDGET REVIEW AND ADJUSTMENTS BACKGROUND: This report provides the City Council a mid-year review of the Fiscal Year 2022/23 budget, with emphasis on the financial status of the General Fund, and also serves as a preview of the City’s financial position for the upcoming fiscal year budget process. The report also makes recommendations for budget amendments, both to estimated revenues and expenditures for the current budget year. RECOMMENDATIONS: Staff recommends the City Council take the following actions: 1)Adopt Resolution No. 2023-C12, a Resolution of the City Council of the City of Azusa adopting mid-year budget adjustments for the City of Azusa for the fiscal year commencing July 1, 2022 and ending June 30, 2023; 2)Adopt Resolution No. 2023-R04, a Resolution of the Successor Agency of the Former Redevelopment Agency of the City of Azusa adopting mid-year budget adjustments for the City of Azusa for the fiscal year commencing July 1, 2022 and ending June 30, 2023; and 3)Receive, review and file Fiscal Year 2022/23 Second Quarter Budget-to-Actual report ending December 31, 2022. ANALYSIS: Public safety, general government, internal support services, community resources, such as youth and senior recreational services, library activities, parks and facilities maintenance services make up the majority of the General Fund budget. The Fiscal Year (FY) 2022/23 budget was adopted on June 20, 2022 with a projected General Fund budget surplus of $9.3 million and forecasted reserves of $33.5 million (of which $23.0 million is set aside for internally restricted reserves). With carry forward projects from the FY 2021/22 budget year and other approved amendments, before mid-year Approved City Council 3/6/2023 Fiscal Year 2022/23 Mid-Year Budget Review March 6, 2023 Page 2 adjustments, the adjusted normal operating budget surplus is $3.9 million. The FY 2022/23 budget also set aside of one-time uses of reserves of $13.0 million of budgeted extraordinary capital improvement projects to modernize multiple community facilities such as the Senior Center, Library, and Memorial Park Gymnasium and Community Center and $500,000 for small-business grants to help businesses recover from the impacts of the COVID-19 pandemic. Staff provides quarterly budget-to-actual reports to the public which details revenues received and expenditures are certain periods in the year. Mid-way through the fiscal year, Staff performs an in-depth review of the city-wide budget and presents necessary adjustments to Council for review and approval. Table 1 is a summary of proposed FY 2022/23 Mid-Year budget amendments with justifications below: Table 1: Proposed Mid-Year Budget Adjustments for Fiscal Year 2022/23 Increase/(Decrease) Department Description Revenues Expenditures A.Administration Treasury 107,000$ B.Administration Contribution to Other Agencies 673,269 C.Administration Salary Savings (2,100,000) D.Administration Supplemental Refuse Fee 500,000 E.Citywide American Rescue Plan Act Funds (5,977,421) F.Citywide Transfers Out 5,549,208 F.Citywide Transfers Out 174,409 G.Citywide Transaction Use Tax 250,000 H.Econ & Comm Dev Consultant Plan Check Fees/Other 85,000 I.Econ & Comm Dev Rents (68,930) E.Public Safety American Rescue Plan Act Funds 340,947 General Fund Total Increase/(Decrease)(4,588,995)$ 4,122,477$ E.ARPA American Rescue Plan Act Funds 340,947 E.ARPA American Rescue Plan Act Funds 340,947 F.Capital & Transfers In 240,912 F.Information Transfers In 174,409 J.Public Works Residential Roadway Rehab 953,945 F.Self-Insurance Transfers In 5,308,296 B.Successor Agency Reimbursement/Redevelopment Agency 673,269 B.Successor Agency Contribution to Other Agencies 673,269 All Funds Total Increase/(Decrease)1,974,429$ 6,265,046$ Total Mid-Year Adjustments Revenues Expenditures General Fund Total (4,588,995)$ 4,122,477$ Other Funds Total 6,563,424 2,142,570 All Funds Total 1,974,429$ 6,265,046$ General Fund proposed adjustments in total is a decrease in revenue of $4,588,995 and an increase in expenditures of $4,122,477 for net fund balance decrease of $8,711,472. All Funds, including the Fiscal Year 2022/23 Mid-Year Budget Review March 6, 2023 Page 3 General Fund, proposed adjustments in total is an increase in revenues of $1,974,4429 and an increase in expenditures of $6,265,046 for net fund balance decrease of $4,290,617. A. Higher interest earnings and cash balances has yielded more revenues than anticipated. B. After dissolution of the Redevelopment Agency, the State Department of Finance (DOF) allowed repayment on one of the loans, Enterprise, with the condition that 20% of the loan repayment be set aside for Los Angeles County Low Mod Housing. The DOF has fully repaid the City for the Enterprise loan and the City must now remit the Low Mod monies to the County through the Successor Agency. C. Due to timing of filling vacancies, salaries are pacing lower than budget by nearly 8%. D. The City’s refuse contract with Athens Services provides a supplemental fee. This fee will be collected in FY 2023/24, but for the FY 2022/23 service year so revenues must be programmed. E. The City was awarded $11,954,843 in American Rescue Plan Act funds (ARPA) for COVID-19 relief with payments in two traunches, 50% ($5,977,422) in FY 2021/22 and the other 50% ($5,977,421) in FY 2022/23, and were budgeted accordingly. Based on Council approval, $10 million of the total award was assigned for general government services. When the second traunch was received, the remittance showed the payment was for FY 2021/22. Therefore, in FY 2021/22 $9,659,054 of the $10 million was allocated to public safety expenses, leaving $340,947 remaining from the $10 million allocation. The remaining $340,947 is will be programmed for public safety expenditures in FY 2022/23, leaving $1,954,843 in ARPA funds still available and set aside to program in future fiscal years for addressing homelessness in the City. F. Internal Service (IS) Funds such as Information Technology and Self-Insurance are funded through allocations to Enterprise/Utilities Funds. The remainder of costs in the IS Funds are subsidized by the General Fund, and depending on revenues and expenditures can have a negative or positive fund balance. Typically, IS Funds carry a fund balance, however, due to the growing negative fund balances, transfers from the General Fund is needed to clear these balances in FY 2022/23. Moving forward, staff will examine fund balances and do more frequent transfers to or from the General Fund to keep these IS fund balances close to zero. G. Revenues from Measure Z transaction and use tax are pacing higher than forecasted. Based on the City’s tax consulting expert, HDL, staff is proposing to adjust revenues by HDL’s revised forecast. H. The City utilizes an outside firm to assist with plan check services, and has a cost-sharing agreement with them. Plan check activities are pacing higher than expected. I. The Promenade at Citrus was expected to be occupied by Metro in January 2023, but the building improvements have been delayed to higher than expected construction costs. Rents for FY 2022/23 need to be removed from the budget. J. The 2021-2022 Residential Resurfacing Project is a project which will focus on the repair and maintenance of residential roadways. This project includes sidewalk repairs, curb & gutter repairs, ADA ramp upgrades, and roadway resurfacing. Dues to unpredictable price increases in material costs, the project was postponed and combined with the 2022-2023 Residential Resurfacing Project. Combining the projects will help reduce unit costs which will ultimately yield a more cost-effective project. These funds have already been programmed in the CalSmart system and have been approved by the City Council per Resolution 2021-C32. Fiscal Year 2022/23 Mid-Year Budget Review March 6, 2023 Page 4 General Fund Reserve Forecast The General Fund has a strong financial position. Table 1 provides an updated estimate of the General Fund budget results and cash reserves forecast. With mid-year adjustments, allocation of American Rescue Plan Act (ARPA) funds to cover government services, and Council approval to set aside cash to fund a retiree medical trust, undesignated reserves by end of FY 2022/23 are estimated at $13.6 million. Table 2: Fiscal Year 2022/23 Mid-Year Budget and Reserves Forecasts UNAUDITED ACTUALS FY 21-22 ADOPTED BUDGET FY 22-23 MID-YEAR BUDGET FY 22-23 Total Revenues 65,712,799 64,465,919 64,950,091 Total Expenses 47,210,053 55,187,638 61,044,666 Normal Operating Surplus or (Deficit)18,502,746$ 9,278,281$ 3,905,425$ Use of Excess Reserves for Small Business Program (500,000) (500,000) Mid-Year Adjustments: Mid Year Net Revenue Increase/(Decrease)(4,588,995) Mid Year Net Expenditure (Increase)/Decrease (4,122,477) Revised Operating Surplus or (Deficit)18,502,746$ 8,778,281$ (5,306,047)$ Beginning Reserves Balance 35,758,160 41,215,548 54,260,906 Use of Excess Reserves for Capital Projects (13,035,000) (13,035,000) OPEB Trust Contributions from Reserves (1,500,000) (1,500,000) ARPA funds expensed in FY 2021/22, cash received in FY 2022/23 4,022,578 Ending Reserves Balance 54,260,906$ 35,458,829$ 38,442,437$ Less: Internally Restricted Reserves Target 18,302,513 23,056,291 24,813,400 Less: ARPA Funds Restricted for Homelessness Initiatives 1,954,843 1,954,843 Reserves In Excess/(Short) of Restricted Funds 35,958,393$ 10,447,695$ 13,629,038$ Upcoming Fiscal Year Budget Timeline On January 17th, Council adopted a two-year budget cycle. Staff has begun the FY 2023/24 and FY 2024/25 budget development process and will return to Council at a special study session on March 27, 2023 to discuss budget goals and priorities and then for an in-depth Budget Study Session the first Monday in June. Both of these sessions provide review and input from the Azusa Community and direction by the City Council. FISCAL IMPACT: Adoption of the recommended FY 2022/23 mid-year adjustments will result in a net General Fund net fund balance decrease of $8,711,472, but still provides $24.8 million in set aside designated reserves and $13.6 million in undesignated reserves – a strong General Fund financial position. Reviewed and Approved: Reviewed and Approved: Talika M. Johnson Sergio Gonzalez Director of Administrative Services City Manager Fiscal Year 2022/23 Mid-Year Budget Review March 6, 2023 Page 5 Attachments: 1.Table A - Summary of the Proposed Budget Adjustments 2.Resolution No. 2023-C12, adopting mid-year budget adjustments for the City of Azusa for the fiscal year commencing July 1, 2022 and ending June 30, 2023 3.Resolution No. 2023-R04, adopting mid-year budget adjustments for the Successor Agency of the Former Redevelopment Agency of the City of Azusa for the fiscal year commencing July 1, 2022 and ending June 30, 2023 4. FY 2022/23 Second Quarter Budget-to-Actual Report Proposed Mid-Year Budget Adjustments for Fiscal Year 2022/23 Increase/(Decrease) Department Description Revenues Expenditures Justification for Adjustment Revenue Expenditure Administration Treasury 107,000$ Higher interest earnings from increased rates 1045820000-4435 Administration Contribution to Other Agencies 673,269 Remittance of 20% Low Mod collections to LA County from Successor Agency Enterprise Loan repayment 1090000000-7040 Administration Salary Savings (2,100,000) Savings from position vacancies 1090000000-6095 Administration Supplemental Refuse Fee 500,000 Program Supplemental Refuse Fee to be collected FY 2023/24 for FY 2022/23 activities 1090000000-4157 Citywide American Rescue Plan Act Funds (5,977,421) Removal of budget due to funds being expended in prior year. $9,659,054 of $10M allocation for government services applied to public safety in FY 2021/22. Of total $11,954,843 ARPA award, $340,947 remains for government services and $1,954,843 for homelessness services. The homelessness funds will be programmed into budget in the year in which funds are expected to be used. 1090000000-4899 Citywide Transfers Out 5,549,208 Transfers to Internal Service Funds (IT, Capital, Self- Insurance) to cover accumulated negative fund balances 1090000000-5950 Citywide Transfers Out 174,409 Transfers to Internal Service Funds (IT, Capital, Self- Insurance) to cover accumulated negative fund balances 1090000000-5940 Citywide Transaction Use Tax 250,000 Measure Z sales tax revenues higher than anticipated 1090000000-4108 Econ & Comm Dev Consultant Plan Check Fees/Other 85,000 Building division revenues from cost/revenue sharing agreement with Transtech higher than expected 1035620000-4798 Econ & Comm Dev Rents (68,930) Citrus Promenade property not yet occupied as expected 1035645000-4412 Public Safety American Rescue Plan Act Funds 340,947 Use of remaining $10M ARPA funds allocated for government services - public safety 1020310000-5940 General Fund Total Increase/(Decrease)(4,588,995)$ 4,122,477$ Account Coding 1 of 2 Attachment 1 Proposed Mid-Year Budget Adjustments for Fiscal Year 2022/23 Increase/(Decrease) Department Description Revenues Expenditures Justification for Adjustment Revenue Expenditure Account Coding ARPA American Rescue Plan Act Funds 340,947 Use of remaining $10M ARPA funds allocated for government services - public safety 5400000000-4560 ARPA American Rescue Plan Act Funds 340,947 Use of remaining $10M ARPA funds allocated for government services - public safety 5400000000-5950 Capital & Infrastructure Replacement Transfers In 240,912 Transfer from General Fund to cover accumulated negative fund balances 4600000000-5940 Information Technology Transfers In 174,409 Transfer from General Fund to cover accumulated negative fund balances 4800000000-5950 Public Works Residential Roadway Rehab 953,945 FY 2021/22 programmed SB1 Roadway Maintenance and Rehab funds to be combined with FY 2022/23 0580000661-7120/ 66123C Self-Insurance Transfers In 5,308,296 Transfer from General Fund to cover accumulated negative fund balances 4250923000-5940 Successor Agency Reimbursement/Redevelopment Agency 673,269 Remittance of 20% Low Mod collections to LA County from Successor Agency Enterprise Loan repayment 8710125000-4645 Successor Agency Contribution to Other Agencies 673,269 Remittance of 20% Low Mod collections to LA County from Successor Agency Enterprise Loan repayment 8710125000-7040 All Funds Total Increase/(Decrease) 1,974,429$ 6,265,046$ Total Mid-Year Adjustments Revenues Expenditures Net Fund Balance Change General Fund Total (4,588,995)$ 4,122,477$ $ (8,711,472) Other Funds Total 6,563,424 2,142,570 4,420,854 All Funds Total 1,974,429$ 6,265,046$ (4,290,618)$ 2 of 2 RESOLUTION NO. 2023-C12 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA ADOPTING MID-YEAR BUDGET ADJUSTMENTS FOR THE CITY OF AZUSA FOR THE FISCAL YEAR COMMENCING JULY 1, 2022 AND ENDING JUNE 30, 2023 WHEREAS, on June 20, 2022, City Council of the City of Azusa adopted the City­ wide Fiscal Year 2022­23 Operating and Capital Budgets; and WHEREAS, on March 6, 2023, the City Council of the City of Azusa met and reviewed the mid­year 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, SB1 Road Maintenance Rehab Account and American Rescue Plan Act Special Revenues Funds, and considered recommendations for budget amendments. NOW, THEREFORE, BE IT RESOLVED, THE CITY COUNCIL OF THE CITY OF AZUSA DOES APPROVE AND ADOPT THE FOLLOWING FISCAL YEAR 2022-23 BUDGET AMENDMENTS: SECTION 1. SECTION 2. The City Clerk shall certify as to the adoption of this resolution. PASSED, APPROVED and ADOPTED this 6th day of March 2023. _____________________________________ Robert Gonzales Mayor ATTEST: _________________________________________ City Clerk Attachment 2 STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES CITY OF AZUSA ) ) ss. I HEREBY CERTIFY that the foregoing Resolution No. 2023­C12 was duly adopted by the City Council of the City of Azusa, at a regular meeting of said City Council held on the 6TH day of March 2023, by the following vote of the Council: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCIL MEMBERS: _____________________________________________ Jeffery Lawrence Cornejo, Jr. City Clerk APPROVED AS TO FORM: _____________________________________________ Best Best & Krieger, LLP City Attorney RESOLUTION NO. 2023-R04 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE SUCCESSOR AGENCY FOR THE FORMER REDEVELOPMENT AGENCY OF THE CITY OF AZUSA ADOPTING THE MID-YEAR BUDGET ADJUSTMENTS FOR THE SUCCESSOR AGENCY OF THE FORMER REDEVELOPMENT AGENCY OF THE CITY OF AZUSA FOR THE FISCAL YEAR COMMENCING JULY 1, 2022 AND ENDING JUNE 30, 2023 THE BOARD OF DIRECTORS OF THE SUCCESSOR AGENCY OF THE FORMER REDEVELOPMENT AGENCY OF THE CITY OF AZUSA DOES RESOLVE AS FOLLOWS: SECTION 1. On June 20, 2022, the Board of Directors of the Successor Agency of The Former Redevelopment Agency of the City of Azusa adopted the Successor Agency of the Former Redevelopment Agency of the City of Azusa Fiscal Year 2022-23 Operation Budget. SECTION 2. On March 6, 2023, the Board of Directors of the Successor Agency of The Former Redevelopment Agency of the City of Azusa met and reviewed the mid-year financial status of the Successor Agency budget and considered recommendations for budget amendments. NOW, THEREFORE, BE IT RESOLVED, THE BOARD OF DIRECTORS OF THE SUCCESSOR AGENCY FOR THE FORMER REDEVELOPMENT AGENCY OF THE CITY OF AZUSA DOES APPROVE AND ADOPT THE FOLLOWING FISCAL YEAR 2022-23 BUDGET AMENDMENTS: SECTION 3. The Secretary shall certify to the adoption of this resolution. PASSED, APPROVED and ADOPTED this 6TH day of March, 2023. ________________________________________ Robert Gonzales Chairman ATTEST: _________________________________ Jeffrey Lawrence Cornejo, Jr. Secretary Attachment 3 STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) ss. CITY OF AZUSA ) I HEREBY CERTIFY that the foregoing Resolution No. 2023-R04 was duly adopted by the Successor Agency of the former Redevelopment Agency of the City of Azusa, at a regular meeting thereof, held on the 6st of March 2023. AYES: AGENCY MEMBERS: NOES: AGENCY MEMBERS: ABSENT: AGENCY MEMBERS: _________________________________ Jeffrey Lawrence Cornejo, Jr. Secretary APPROVED AS TO FORM: _________________________________ City Attorney Best Best & Krieger FY 2022/23 Quarterly Financial Report 2nd Quarter, Ending December 31, 2022 OVERVIEW This financial report summarizes the City’s General Fund’s position for the 2nd quarter of Fiscal Year 2022/23 (July 1, 2022 through December 31, 2022). 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 first quarter for total sources (revenues and transfers-in) are estimated to be $64.95 Mil, consistent with the adopted revenues with no change. Total uses (expenditures and transfers-out) are estimated to be $74.5 Mil and $5.63 Mil higher primarily due to budget carryforward such as the $2.76 mil in promenade, $500K in small business support grant, and various general funds budgets that were not fully spent in FY 2021/22. Also $500K in advancement was set up for the school house move. Adopted Budget 2022-23 Revised Budget 2022-23 Mid-Year Budget 2022-23 Beginning Estimated Fund Balance $ 41.22 $ 41.22 * $ 54.26 Plus Revenues 62.45 62.93 ** 58.34 Transfers In 2.02 2.02 2.02 Total 2022-23 Sources 64.47 64.95 60.36 Less Expenditures 61.98 67.79 ** 77.00 Transfers Out 6.74 6.73 1.70 Total FY 2022-23 Uses 68.72 74.53 78.70 Expenses in (excess)/below Exp-FY 2022-23 (4.25) (9.58) (18.34) Estimated Reserves Balances before Designated Reserves 36.97 31.64 35.92 Add: ARPA Funds received and budgeted in FY 22/23, but not spent in FY 22/23 5.97 Less: Internally Restricted Reserves Funds set aside for OPEB Trust 1.50 1.50 1.50 ARPA funds set aside for Homelessness 1.96 1.96 1.96 Budget Stabilization & Catastrophic Reserve 16.56 16.56 *** 18.30 Capital & Infrastructure Replacement Reserve 2.00 2.00 *** 2.00 Insurance Reserve 2.50 2.50 *** 2.50 Retiree Benefits Reserve 2.00 2.00 *** 2.00 Available Reserves Balance $ 10.45 $ 5.12 $ 13.63 *Unaudited **Financial Data as of 2/29/23 - Q2 FY2223 ***Established Updated Reserves Resolution 2022-C46 adopted June 20, 2022 Table 1 Budget vs. Estimated Actual (in millions) Attachment 4 FY 2022-23 Quarterly Financial Report 2 nd Quarter, Ending December 31, 2022 Page 2 of 6 The 2nd quarter’s revenues ended the year at the 34.7% mark. The charts and explanation below will go over each of the revenue categories in details. 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 came in at $1.4 Mil higher than the same period last year. Revenues are higher compared to the same period last year primarily due to increased economic activities resulting in higher sales tax, TUT, other taxes. Charge for services improved due to more request for design reviews, higher rental inspection fees due to performing a higher number of rental inspections, and the City also received higher than forecasted revenues from planning consultant revenue sharing agreement. UUT increased due to higher usage and higher gas prices. Money and Property use increased due to higher demand for facilities rentals including the senior center, woman’s club, aquatic facilities, and recreation facilities. In addition, the City received higher interest income as a result of the higher Federal Reserve Fund rate. Revenue Collection by Source As of 09/30/22 Chart 1 Revenues Collected by Source Quarter Ending: 12/31/21 vs. 12/31/22 FY2022-23 Actual % of REVENUE Adjusted Budget YTE 12/31/22 Adj. Budget Property Tax 14,544,731 3,025,245 20.8% Sales Tax 8,085,572 2,665,960 33.0% Transaction Use Tax 6,932,635 2,453,828 35.4% UUT Tax 3,000,000 1,771,781 59.1% Other Taxes 11,282,937 4,579,745 40.6% Charges for Services 5,935,965 3,028,757 51.0% Cost Reimbursement 2,078,304 1,176,004 56.6% Fines & Penalties 1,283,250 804,931 62.7% License & Permits 2,998,283 1,418,195 47.3% Miscellaneous 6,188,295 118,681 1.9% Money & Property Use 2,620,119 1,512,042 57.7% Total Revenues $64,950,091 $22,555,168 34.7% Table 2: YTE % of Budget Actual Actual Increase/ REVENUE YTD 12/31/2021 YTD 12/31/2022 (Decrease) Property Tax $2,980,317 $3,025,245 $44,928 Sales Tax 2,565,762 2,665,960 100,198 Transaction Use Tax 2,201,561 2,453,828 252,267 Utility User Tax 1,551,183 1,771,781 220,598 Other Taxes 4,423,266 4,579,745 156,479 Charges for Services 2,802,421 3,028,757 226,336 Cost Reimb.1,022,831 1,176,004 153,173 Fines & Penalties 808,559 804,931 (3,628) License & Permits 1,466,420 1,418,195 (48,225) Miscellaneous 89,310 118,681 29,371 Money & Property Use 1,233,784 1,512,042 278,258 Total Revenues $21,145,414 $22,555,168 $1,409,754 Table 3: Year-to-Year Comparison $0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 $4,500,000 $5,000,000 YTD 12/31/2021 YTD 12/31/2022 FY 2022-23 Quarterly Financial Report 2 nd Quarter, Ending December 31, 2022 Page 3 of 6 Property Tax collections came in low in Q2 and it is normal due to the timing of when the revenues are allocated 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 33% of the adjusted budget. The reason for the low collections rate is due to the timing of when the revenues are available. The November and December 2022 sales tax will not be distributed by the California Department of Tax and Fee Administration until January and February of 2023. Sales Taxes are higher in comparison to the same period last year mainly due to an improved economy. Transaction Use Tax (TUT) collections are at 35.4% of the adjusted budget. Similar to the Sales Tax, the low collection rate is due to the timing of when revenues are available. The November and December 2022 TUT will not be distributed by the California Department of Tax and Fee Administration until January and February of 2023. TUT is higher in comparison to the same period last year mainly due to an improved economy. Utility User’s Tax collections are at 59.1% of the adjusted budget. This percentage is reflective of the consumption of utility services such as gas, electric and water. Other Taxes collections are at 40.6% of the adjusted budget. Other taxes are comprised mainly of transient occupancy tax (TOT), franchise/landfill, land excavation, material recovery facility, and hazardous waste fees. Other Taxes are higher in comparison to the same period last year mainly due to increases allowable in the enterprise agreements and higher hazardous waste tax. Charges for Services collections are at 51.0% of the adjusted budget. Revenues are collected as services are rendered. This revenue source was higher compared to the same period last year due to the timing of the development projects, and greater demand for government services. Cost reimbursement collections are at 56.6% of the adjusted budget. Revenues are collected based on various reimbursement agreements. The revenues were slightly higher in Q2 FY2022-23 and compared to the same period last year due to reimbursement of public safety service costs by the America Rescue Plan Act funds. Fines and Penalties collections are at 62.7% of the adjusted budget due to the timing of when the fines are collected. Once the government mandate not to charge penalties or close any accounts from the Covid19 pandemic, revenues are back to a normal year level. License and Permits collections are at 47.3% of the adjusted budget. This is mainly due to the timing of development activities and when the licenses and permit fees are issued. Miscellaneous collections are at 1.9% of the adjusted budget. The miscellaneous revenues represent a small percentage of the general fund revenues and are dependent on items such as metal recycling and other miscellaneous sources that do not come in as a regular revenue stream. The budget will be revised lower during the mid-year review since a large portion of the ARPA funds were spent in FY2021-22, which is sooner than the forecast. Money and Property Use collections are at 57.7% of the adjusted budget. The Q2 FY2022-23 revenues are pacing slightly above target. The Q2 Revenues and when compared to the same period last year were pacing higher due to greater demand from facilities rentals including Women's Club, Senior Centers, recreation facilities, and Aquatic Facilities. In addition, the City received higher interest income as a result of the higher Federal Reserve Fund rate. FY 2022-23 Quarterly Financial Report 2 nd Quarter, Ending December 31, 2022 Page 4 of 6 GENERAL FUND EXPENDITURES Expenditures by Category As of 12/31/22 The expenditures outlined in Table 4 are pacing at 30.1% of the 2nd quarter budget. The personnel budget came in at 45.2% of the revised budget, and it is lower primarily due to vacancies. The Personnel costs were higher in Q2 of FY2022-23 compared to the same period last year on table 5 primarily due to cola adjustments and higher benefits costs. Operation costs came in at 21.2% of the revised budget due to the timing of the various development projects. Operating costs was higher in Q2 of FY 2022-23 quarter compared to the same period last year in table 5 is primarily due to the City appropriating $500K in business grants to support small businesses, and $500K of advance general fund for the School House Move. DEPARTMENT EXPENDITURES At the end of the 2nd quarter, actuals for most departments are tracking at or below the 50% 2nd quarter mark of the adjusted budget. Some departments with CIP projects are pacing lower due to the timing of the projects including $4mil for the senior center remodel and $750K woman’s club under Community Resources, $3mil for Memorial Park improvement, $2mil for Library improvement, $1mil for sidewalk improvement, $785K for downtown improvements, $750K for the dog park, and $750K for the scout house under Public Works. Economic & Comm Dev is pacing low due to the timing of the development projects. City Treasury is higher due to the timing of when the bank charges are imposed. City Council is slightly higher due to the timing of the various conferences. Table 6 Chart 2 Expenditures by Department % of Budget by Department As of 12/31/22 as of 12/31/22 FY 22-23 Actual % of EXPENDITURE Working Budget YTE 12/30/22 Adopted Personnel 27,804,687 12,554,608 45.2% Operating 46,724,979 9,887,309 21.2% Total Expenditures $74,529,666 $22,441,918 30.1% Table 4: YTE % of Budget Actual Actual Increase/ EXPENDITURE YTD 12/31/21 YTD 12/31/22 (Decrease) Personnel 11,635,771 12,554,608 $918,837 Operating 9,109,966 9,887,309 777,343 Total Expenditures $20,745,737 $22,441,918 $1,696,181 Table 5: Year-to-Year Comparison 2022/23 Actual EXPENDITURE Adj. Budget YTD 12/31/22 % of Budget Council $164,335 $92,976 56.6% City Clerk 669,430 235,203 35.1% City Attorney 372,160 130,235 35.0% City Treasurer 147,380 104,681 71.0% Administration 1,754,333 634,668 36.2% Finance 1,561,570 822,580 52.7% Economic & Comm. Dev.7,749,651 1,045,414 13.5% Human Resources 827,272 391,901 47.4% Library 3,975,642 671,895 16.9% Public Safety 22,179,996 9,203,400 41.5% Public Works 11,325,566 1,661,821 14.7% Community Resources 7,549,988 1,059,081 14.0% City-Wide 16,252,343 6,388,063 39.3% Total Expenditure $74,529,666 $22,441,918 30.1% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% FY 2022-23 Quarterly Financial Report 2 nd Quarter, Ending December 31, 2022 Page 5 of 6 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 12/31/22 Chart 4 Major Special Revenue & Internal Services Funds Expenditures by Funds Ending 12/31/22 2022-23 Actual % of REVENUE Adjusted Budget YTD 12/31/22 Adj. Budget Gas Tax Fund $1,434,234 $565,172 39.4% Fire Safety 6,340,707 3,170,354 50.0% Sewer Fund 3,075,000 1,602,766 52.1% Risk Mgmt/Liab Fund 3,724,090 1,862,045 50.0% IT Fund 2,311,265 1,155,633 50.0% Total Revenues $16,885,296 $8,355,970 49.5% Table 7: YTD % of Budget 2022-23 Actual % of EXPENDITURE Adjusted Budget YTD 12/31/22 Adj. Budget Gas Tax Fund $1,597,690 $855,701 53.6% Fire Safety 6,340,707 3,579,859 56.5% Sewer Fund 3,651,865 1,205,515 33.0% Risk Mgmt/Liab Fund 4,926,488 3,957,900 80.3% IT Fund 2,622,108 1,251,962 47.7% Total Expenditures $19,138,858 $10,850,937 56.7% Table 8: YTD % of Budget 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% 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% 90.0% 100.0% Gas Tax Fund Fire Safety Sewer Fund Risk Mgmt/Liab Fund IT Fund FY 2022-23 Quarterly Financial Report 2 nd Quarter, Ending December 31, 2022 Page 6 of 6 Gas Tax Fund Gas Tax revenues are pacing at 39.4% of the 2nd quarter FY 2022-23 adjusted budget, and the expenditures are tracking at 53.6%. Fire Safety Fund Fire Safety Fund’s operating revenues are pacing at 50.0% of revenues. The expenditures are pacing at 56.5% for the 2nd quarter, and the costs are anticipated to smooth out for the full year and consistent with the budget. Sewer Fund Sewer year -to-date operating revenues are 52.1% of the adjusted budget. Expenditures are pacing slightly lower than the 2nd quarter end mark at 33.0% due to the timing of the various projects. Risk Management Fund The revenues for the Risk Management Funds are at 50%. The expenditures are at 80.3% of the adjusted budget due to the timing of when claims are paid out. Information Technology Fund The Information Technology Fund revenues for the 2nd quarter are pacing at 50%. Its allocations are recorded twice a year, in December and June. The expenditures are pacing at 47.7% and consistent with the timing of the various IT projects.