The URL can be used to link to this page

Home My Public Portal About11) 9.A. MID YEAR GENERAL FUND BUDGET REVIEWAGENDA ITEM 9.A. ADMINISTRATIVE SERVICES DEPARTMENT DATE: February 19, 2013 MEMORANDUM TO: The Honorable City Council FROM: Jose E. Pulido, City Manager Via: Tracey L. Hause, Administrative Services Director By: Lee Ma, Accountant SUBJECT: FISCAL YEAR 2012-13 MID -YEAR GENERAL FUND BUDGET REVIEW IN*ff]�rihrtl4L4I17_TII[C LqF The City Council is requested to: a) Receive the Fiscal Year (FY) 2012-13 Mid -Year General Fund Budget Review report; b) Authorize staff to revise various revenue estimates as indicated in Attachment "A"; and c) Authorize staff to revise various budgeted appropriations as indicated in Attachment „B,. BACKGROUND: 1. On June 19, 2012, the City Council approved the FY 2012-13 General Fund Budget of $12,075,035, including operating and capital. 2. On February 7, 2013, the Mid -Year Budget Ad Hoc Standing Committee (i.e., Mayor Yu and Councilmember Blum) met to review the proposed mid -year adjustments. ANALYSIS: The FY 2012-13 Mid -Year Budget review process provides the City Council with an opportunity to review and adjust original revenue projections and budgeted appropriations based on six months of actual activity. Adjustments are a result of changes in revenue projections based on actual revenue received from July 1, 2012 through December 31, 2012, as well as unanticipated expenditures due to information City Council February 19, 2013 Page 2 that was not previously available. The City continues to show positive financial results after being economically challenged for the last four fiscal years. It is through the significant diligence of staff by finding cost-cutting strategies that the City has been able to preserve its financial health without eliminating services. While results have been positive, the City continues to monitor revenues closely and to strictly control expenditures. Details of revenues and expenditures are detailed below. 1. FY 2012-13 GENERAL FUND REVENUES A revenue analysis has been completed by staff for the FY 2012-13 General Fund revenues. Although most revenues are in line with projections, there are some revenues that require adjustments. The table below summarizes the City's significant General Fund revenues and provides an overview of the recommended changes based on mid -year review by staff. The total General Fund revenue net adjustment is $130,000. The following are the details of the revenue changes: Property Tax: Property taxes continue to be one of the City's strongest revenue sources. Under Proposition 13, property is generally reassessed only when there is a change in ownership. After which, its assessed value is adjusted annually by an inflation factor not to exceed two percent. The property tax revenue for Temple City continues to be strong. Temple City's assessed valuations are increasing and resale values are higher than the original amount budgeted. Staff estimated an increase of 2% to the property tax for FY 2012-13 during the budget process last spring. However, after analyzing property tax receipts to date, staff anticipates receipts will be higher than originally anticipated and an adjustment of $117,500 is FY 2012-13 FY 2012-13 Revenue Source Budget Revised Increase Percent Revenue Projection (Decrease) Change Property Tax $2,285,000 $2,402,500 $117,500 5% Sales Tax $1,305,000 $1,305,000 $0 0% Other Taxes $1,130,200 $1,150,200 $20,000 2% License & Permits $1,245,000 $1,330,000 $85,000 7% Motor Vehicle In $3,321,400 $3,321,400 $0 0% Lieu Charge for Services $865,760 $785,760 ($80,000) (9%) Court Fines $525,000 $525,000 $0 0% Investments $455,000 $455,000 $0 0% Other Revenue $218,500 $206,000 ($12,500) (6%) Totals $11,350,860 $11,480,860 $130,000 1% The total General Fund revenue net adjustment is $130,000. The following are the details of the revenue changes: Property Tax: Property taxes continue to be one of the City's strongest revenue sources. Under Proposition 13, property is generally reassessed only when there is a change in ownership. After which, its assessed value is adjusted annually by an inflation factor not to exceed two percent. The property tax revenue for Temple City continues to be strong. Temple City's assessed valuations are increasing and resale values are higher than the original amount budgeted. Staff estimated an increase of 2% to the property tax for FY 2012-13 during the budget process last spring. However, after analyzing property tax receipts to date, staff anticipates receipts will be higher than originally anticipated and an adjustment of $117,500 is City Council February 19, 2013 Page 3 recommended at this time, with a revised projected revenue estimate of $2,402,500. Sales Tax: Sales tax increased slightly by $18,000 from the second quarter in FY 2012-13 over the same quarter in FY 2011-12. However, based on the prior and current fiscal years' actual amounts received for and with the continued environment of a slow recovering economy, no adjustment is recommended at this time. Other Taxes: Other tax revenues include franchise fees, transient occupancy tax and real estate transfer tax. Franchise fees are fees collected from service providers, who provide utility services to the residents, such as Athens Services, The Gas Company, Southern California Edison and cable television. There is not an adjustment recommended for franchise fees at this time. A 10% transient occupancy tax is collected from each guest that rents a room from any hotel located within the City. The tax is remitted directly to the City by the hotel owners on a quarterly basis. Similar to franchise fees, there is not an adjustment recommended. Real estate transfer tax is a tax that is collected when there is a change in ownership of all real properties. Staff is recommending $20,000 increase for real estate transfer tax, as a result of actual receipts collected in the first six months of FY 2012-13. The net adjustment for this category is $20,000, with a new projected revenue estimate of $1,550,200. v License & Permits: License & permits include building permits, business license fees, animal license fees, parking permits, impound fees, temporary parking permits, code enforcement fees and in lieu parking fees. Based on the first six months of revenues received in FY 2012-13, staff recommends the following adjustments: a $10,000 increase to the business license fees; a $100,000 increase to the building permit fees; a $10,000 decrease to the parking permit fees; and a $15,000 decrease to the animal license fees. These adjustments are recommended after analyzing actual receipts collected in the first six months of FY 2012-13. The net adjustment for this category is an increase of $85,000, with a new projected revenue estimate of $1,330,000. r Motor Vehicle in -lieu fee (VLF): VLF was established in 1935 as a uniform statewide tax, the VLF is a tax on the ownership of a registered vehicle in place of taxing vehicles as personal property. By law, all revenues from the VLF fund city and county services, but the state legislature controls the tax rate and the allocation among local governments. In 2004, the Legislature permanently reduced the VLF tax rate and eliminated state general fund backfill to cities and counties. Instead, cities and counties now receive additional transfers of property tax revenues in lieu of VLF. The budgeted In Lieu VLF for FY 2012-13 is $3,321,400. Based on the first allocation the City received in January 2013, no adjustment is recommended. City Council February 19, 2013 Page 4 Charae for Services: Charge for services are revenues received from recreation fees, facility rental fees, zoning fees and plan check fees. These revenues are reflected when services, classes or events are provided. Based on the current revenues, staff recommends the following adjustments: a $30,000 increase in zoning fees; a $30,000 decrease in the recreation fees; and an $80,000 decrease to the plan check fees. As a result of actual receipts collected in the first six months of FY 2012-13 this increase in zoning fees is recommended. Recreation fees are anticipated to be less primarily due to Community Development Block Grant (CDBG) scholarships that were not factored in when the original budget was estimated last spring. Plan check fees of $100,000 are being reduced to $20,000 as a result in the delay of the Gateway project. The net adjustment is $80,000 decrease which brings this category to a new projection of $785,760. Court Fines: Court Fines are revenues collected from citations written from both the Los Angeles County Sheriff's Department and authorized City staff. At this time, these revenues are in line with estimated projections and no adjustment is recommended. Investments: The City receives interest on various investments on a monthly, quarterly, semiannually, or annual basis depending on the type of investment. Currently the City invests with Local Agency Investment Fund (LAIF); Certificates of Deposit (CD); the Los Angeles County Investment Pool and other various Federal notes and agencies. Interest rates on investments have slightly decreased this year; however the City had more idle funds on hand and therefore was able to invest a higher portfolio as of December 2012, up by $521,000 from December 2011. At this time, these revenues are in line with estimated projections and no adjustment is recommended. Other Revenues: Other revenues include recyclable revenue, rental income, sale of City property and donations. Staff recommends two minor adjustments to this category: a $5,000 decrease to the recyclable revenue; and a $7,500 decrease to the rental income. The net adjustment is a $12,500 decrease, bringing this category to a new projection of $206,000. 2. FY 2012-13 GENERAL FUND EXPENDITURES The adoption of FY 2012-13 City Budget estimated total General Fund operating expenditures of $11.5 million. The table below summarizes staff's recommendations for adjustments to the Department's operating expenditures: City Council February 19, 2013 Page 5 The total General Fund mid -year operating net increase is $169,000. The following are the details of adjustments: a request of $230,000 one-time expenditure for the City Attorney due to unanticipated legal fees during this fiscal year, a $36,000 re -appropriation from Facade Improvements in Planning to the Habitat for Humanity, Brush of Kindness program in Housing; and $48,000 to fund the Planning Manager position. In order to offset these additional recommended appropriations, Bonus Pay appropriation for all City employees will be reduced by $100,000. 3. GENERAL FUND CAPITAL IMPROVEMENT PROJECTS (CIP) Temple City has been very busy this year completing various projects. At the adoption of FY 2012-13 City Budget, the City Council approved $13.7 million in CIP expenditures, of which 3.9% of the total expenditures of $546,250 were funded by the General Fund. In order to further address the increase in expenditures, staff is recommending the following reductions in the CIP project budgets: • Citywide Park & Open Space Master Plan $ 5,000 • Remote Access to Gate for City Yard $ 15,000 • Council Chamber Renovation $ 200,000 • Reroof City Hall $ 50,000 • City Hall AM Radio $ 6,000 • Live Oak Park Community Center $ 25,000 These projects are either complete, near completion or have been re-priotized to take place at another time. The total savings of $301,000 can further address the additional operating expenditures requested. The recommended shift in funding will not jeopardize the quality or timeliness for completion of these projects. FY 2012-13 Budget FY 2012-13 Increase Percent Department Expenditure Revised (Decrease) Change Projection Management Services $1,640,345 $1,870,345 $230,000 14% (includes City Attorney) Administrative Services $1,338,200 $1,238,200 ($100,000) (7%) Community Development $3,029,840 $3,068,840 $39,000 1% Parks $1,825,180 $1,825,180 $0 0% & Recreation Law Enforcement $3,695,220 $3,695,220 $0 0% Totals $11,528,785 $11,697,785 $169,000 1% The total General Fund mid -year operating net increase is $169,000. The following are the details of adjustments: a request of $230,000 one-time expenditure for the City Attorney due to unanticipated legal fees during this fiscal year, a $36,000 re -appropriation from Facade Improvements in Planning to the Habitat for Humanity, Brush of Kindness program in Housing; and $48,000 to fund the Planning Manager position. In order to offset these additional recommended appropriations, Bonus Pay appropriation for all City employees will be reduced by $100,000. 3. GENERAL FUND CAPITAL IMPROVEMENT PROJECTS (CIP) Temple City has been very busy this year completing various projects. At the adoption of FY 2012-13 City Budget, the City Council approved $13.7 million in CIP expenditures, of which 3.9% of the total expenditures of $546,250 were funded by the General Fund. In order to further address the increase in expenditures, staff is recommending the following reductions in the CIP project budgets: • Citywide Park & Open Space Master Plan $ 5,000 • Remote Access to Gate for City Yard $ 15,000 • Council Chamber Renovation $ 200,000 • Reroof City Hall $ 50,000 • City Hall AM Radio $ 6,000 • Live Oak Park Community Center $ 25,000 These projects are either complete, near completion or have been re-priotized to take place at another time. The total savings of $301,000 can further address the additional operating expenditures requested. The recommended shift in funding will not jeopardize the quality or timeliness for completion of these projects. City Council February 19, 2013 Page 6 4. FUND BALANCE ANALYSIS Attachment "C" provides an analysis of the fund balance. Estimated General Fund Balance at June 30, 2013 is provided: at July 1, 2012, when the FY 2012- 13 City Budget was adopted; at December 31, 2012, when actual Fund Balance at July 1, 2012 was available due to completion of the audited Comprehensive Annual Financial Report (CAFR), including budget adjustments approved by the City Council for the first six months of operations; and at present if the recommended adjustments are approved and implemented. While at the time of adoption of the FY 2012-13 City Budget, a structural deficit of $706,985 existed as a result of a conscious decision on the City Council's part to commit to one- time, capital expenditures. With the revised revenue estimates and recommended reductions in spending, staff has been able to reduce the structural deficit to $539,351, and address areas where additional operating costs are necessary. The analysis further articulates the resources that are available in accordance with the City's adopted reserve policy. It is anticipated the City will be moving into the FY 2013-14 City Budget process with resources of $1,300,508 that have not been committed. This will give the City Council flexibility to replenish and/or increase reserves or fund one-time spending for projects that will continue to enhance services and infrastructure to the community. CONCLUSION: As the economy slowly recovers providing for enhanced revenues and the City continues with its best practices and conservative approach to fiscal management, including proactive Mid -Year Budget adjustments, leveraging resources and realistically estimating a true spending plan for the remaining fiscal year, additional operating expenditures (primarily one-time) are recommended to be funded. It is anticipated another successful fiscal year will be complete at June 30, 2013. FISCAL IMPACT: If the City Council approves the above mentioned FY 2012-13 General Fund mid -year adjustments, the estimated General Fund Balance at June 30, 2013, will increase from $23,252,732 to $23,514,729. ATTACHMENTS: A. FY 2012-13 Mid -Year General Fund Revenue Adjustments B. FY 2012-13 Mid -Year General Fund Appropriation Adjustments C. FY 2012-13 Fund Balance Analysis Attachment "A" CITY OF TEMPLE CITY FY 2012-13 MID -YEAR GENERAL FUND REVENUE ADJUSTMENTS Total 4,347,500 130,000 4,477,500 Proposed Original Budget Amendments Revised Budget Real Estate Transfer Tax 01-810-32-3201 100,000 20,000 120,000 Property Tax 01-810-32-3211 2,285,000 117,500 2,402,500 Business License 01-820-33-3301 190,000 10,000 200,000 Building Permit 01-820-33-3303 700,000 100,000 800,000 Parking Permit Fees 01-820-33-3305 75,000 (10,000) 65,000 Animal License Fees 01-820-33-3307 82,000 (15,000) 67,000 Zoning Fees 01-840-35-3503 125,000 30,000 155,000 Recreation Fees 01-840-35-3505 578,000 (30,000) 548,000 Plan Check Fees 01-840-35-3508 100,000 (80,000) 20,000 Recycle Revenues 01-870-38-3809 55,000 (5,000) 50,000 Rental Income 01-870-38-3811 57,500 (7,500) 50,000 Total 4,347,500 130,000 4,477,500 Attachment "B" CITY OF TEMPLE CITY FY 2012-13 MIDYEAR GENERAL FUND APPROPRIATIONS ADJUSTMENTS Total 994,175 (132,000) 862,175 Original Budget Proposed Revised Budget Amount Adjustments Amount Fagade Improvement (Planning) 01-930-53-4650 97,925 (45,000) 52,925 Brush with Kindness (Housing) 01-930-55-4934 0 36,000 36,000 Planning Manager 01-930-53-4118 0 48,000 48,000 Legal Fees (City Attorney) 01-910-43-4234 220,000 230,000 450,000 Bonus Pay 01-910-47-4305 175,000 (100,000) 75,000 Citywide Parks & Open Space Master Plan 60-980-59-4810 P12-02 100,000 (51000) 95,000 Remote/Motorizi ng Access to Gate for City Yard 60-980-81-4810 P13-06 15,000 (15,000) 0 Council Chamber Renovation ** 60-980-81-4810 P10-05 250,000 (200,000) 50,000 Reroof City Hall 60-980-81-4810 P13-07 60,000 (50,000) 10,000 City AM Radio Station 60-980-81-4810 P13-09 26,250 (6,000) 20,250 Live Oak Park Community Center HVAC 60-980-81-4810 P13-10 50,000 (25,000) 25,000 Total 994,175 (132,000) 862,175 Attachment "C' CITY OF TEMPLE CITY FY 2012-13 FUND BALANCE ANALYSIS * $230,000 One -Time Expenditures in Operations ** Estimated Fund Balance Designations at lune 30, 2013, in accordance with the General Fund Budget Reseve Policy Nonspendable H 2012-13 Budget Amendments(Jul- Dec)and FY 2012-13 Adopted Budget Actual Fund Balance (6-30-12) Mid -year Budget Review Estimated Fund Balance July 1, 2012 Liquidity $ 2,000,000 Designated $ 24,005,266 - Nonspendable $ 500,000 $ $ 1,678 $ 1,678 Committed $ 4,500,000 $ 4,500,000 Assigned Facilities Management $ 17,200,000 $ 17,200,000 Unassigned Technology Replacement $ $ 1,849,859 $ 1,849,859 Total Fund Balance Before Reserves $ 24,005,266 $ 23,551,537 $ 23,551,537 Reserved (Internal Purposes) 1,000,000 5800 Temple City Boulevard $ City Loan(Calabee's) $ 440,668 $ 440,668 $ 440,668 City Loan (Chamber) $ 5,100 $ 5,100 $ 5,100 City Loans (Homeowners) $ 56,775 $ 56,775 $ 56,775 CRA Loans $ 1,706,980 $ - $ - Total Fund Balance July 1, 2012 $ 26,214,789 $ 24,054,080 $ 24,054,080 Revenues $ 11,350,860 $ 11,350,860 $ 11,480,860 Transfers In $ 105,750 $ 105,750 $ 105,750 Estimated Expenditures $ (11,434,420) $ (11,528,783) $ (11,697,786) Operating Surplus/Deficit $ 22,190 $ (72,173) $ (111,176) Estimated Equip/Vehicle Replacement $ (182,925) $ (182,925) $ (182,925) CIP/Transfers Out $ (546,250) $ (546,250) $ (245,250) Surplus/Deficit $ (706,985) $ (801,348) $ (539,351) Estimated Fund Balance June 30, 2013 $ 25,507,804 $ 23,252,732 $ 23,514,729 ** * $230,000 One -Time Expenditures in Operations ** Estimated Fund Balance Designations at lune 30, 2013, in accordance with the General Fund Budget Reseve Policy Nonspendable $ 1,678 Committed Emergency/Disasters $ 1,000,000 Liquidity $ 2,000,000 OPEB $ 1,000,000 Local Economic Uncertainty $ 500,000 $ 4,500,000 Assigned Fleet Management $ 400,000 Facilities Management $ 4,000,000 - Technology Replacement $ 200,000 Economic Development $ 5,950,000 Rosemeadh Blvd Enhancement $ 1,000,000 5800 Temple City Boulevard $ 1,050,000 Opportunitues for One -Time Expenditures $ 4,600,000 $ 17,200,000 Unassigned $ 1,310,508 Internal Reserves (City Loans) $ 502,543 $ 23,514,729