HomeMy Public PortalAbout9E FY 10-11 Mid Year Budget ReviewFINANCIAL SERVICES DEPARTMENT
MEMORANDUM
DATE: March 1, 2011
TO: The Honorable City Council
FROM: Jose E. Pulido, City Manager
By: Monica Molina, Financial Services Manager
SUBJECT: FISCAL YEAR (FY) 2010-11 MID -YEAR BUDGET REVIEW
AGENDA
ITEM 9.E.
APPROVED
TEMPLE CITY
CITY COUNCIL
3--J-iI
RECOMMENDATION
The City Council is requested to receive and file FY 2010-11 Mid -Year Budget Review
report.
SUMMARY
The Midyear Budget Review Report provides the City Council with an opportunity to
review and adjust, if needed, the original revenue projections and budget estimates
based on six months of actual activity. Adjustments are a result of unanticipated
expenditures due to information that was not previously available, as well as changes in
revenue projections based on actual revenue received from July to December 2010.
ANALYSIS
The City continues to show positive financial results after being economically
challenged the last two fiscal years. It is through the significant work of the City by
finding cost-cutting strategies that the City has been able to preserve its financial health
without eliminating services that the City has always provided. While results have been
positive, the City continues to monitor revenues closely and to strictly control
expenditures.
I. FY 2010-11 GENERAL FUND REVENUES
A revenue analysis has been completed on all FY 2010-11 General Fund
Revenues. Due to the recession, Temple City has had a decrease in General Fund
revenues since FY 2007-08. The total General Fund Revenues for FY 2007-08
were $11.7 million. The new projected FY 2010-11 General Fund Revenue, after
recommended adjustments, is $10.2 million. Though most revenues are in line with
projections, there are a few revenues that require adjustments. Below is a brief
discussion of each significant revenue source with an explanation of the requested
adjustments.
City Council
March 1, 2011
Page 2
The table below summarizes the City's significant General Fund revenues and
provides an overview of the recommended changes that are requested based on
mid -year review by staff.
General Fund Revenues
Revenue Source
FY 2010-11
Budget
Revenue
FY 2010-11
Revised
Projection
Increase
{Decrease)
Percent
Change
Property Tax
$1,842,000
$2,142,000
$300,000
16.3%
Sales Tax
$1,425,000
$1,425,000
$0
0%
Other Taxes
$630,000
$630,000
$0
0%
License & Permits
$1,022,000
$1,022,000
$0
0%
Motor Vehicle In
Lieu
$3,001,750
$3,148,550
$146,800
4.9%
Charge for
Services
$569,340
$569,340
$0
0%
Court Fines
$580,000
$480,000
$(100,000)
-17.2%
Investments
$365,000
$365,000
$0
0%
Other Revenue
$451,250
$451,250
$0
0%
Totals
$9,886,340
$10,233,140
$346,800
3.5%
• 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 of ownership. After that, its assessed value is adjusted
annually by an inflation factor not to exceed 2 percent. For the first time in
history, properties were impacted by the negative 0.237% Consumer Price
Index (CPI). Due to this decrease, the estimated property tax revenue for FY
2010-11 was $1,842,000 which is 15% lower than FY 2009-10. Even with the
negative CPI, Temple City's assessed valuations are slowly increasing and
resale values are much higher than originally budgeted. Both of these factors
have led to the increase in property tax revenue during this fiscal year. Based
on this information, an adjustment to increase the General Fund Budget by
$300,000 is being recommended resulting in a new budget projection of
$2,142,000.
• Sales Tax: The projection for Fiscal Year 2010-11 was $1,425,000 which is
3.5% lower than prior year's actual. There has been a slight increase in sales
tax activity; however, due to the reduced amount that has been received to
date compared to the same time in FY 2009-10, no adjustments are being
recommended at this time.
City Council
March 1, 2011
Page 3
• Other Taxes: Other tax revenues include franchise fees and transient
occupancy tax. Franchise fee taxes are collected from service providers, such
as Athens Services, Gas Company and Cable services. A 10% transient
occupancy tax is collected from each guest that rents a room from any
hotel/motel located within the City and is directly paid to the City by the owners.
At this time, these revenues are in line with estimated projections and no
adjustment is being recommended.
• 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
six months of revenues received for this revenue source, the City is in line with
projected figures. No adjustments are being recommended at this time.
• Motor Vehicle in -lieu fee (VLF): 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 projected In Lieu VLF for FY 2010-11 is
$3,001,750. Based on the first allocation, an adjustment to increase the
projection by $146,800 is being recommended resulting in a new projection of
$3,148,550.
• Charge of Services: Charge of 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. This category may
fluctuate based on the number of participants who enroll to various programs.
Based on the current revenues, it is estimated that revenues may be slightly
higher than projected. At this time, no adjustments are being recommended.
• Court Fines: Court Fines are revenues collected from citation written from
both the Los Angeles County Sheriffs Department and authorized City staff.
Due to the hiring of two Parking Enforcement Officers during FY 2009-10, the
City has seen an increase in court fine revenues. Projection for FY 2010-11
was estimated at $580,000. Due to the reduced amount that has been received
to date, an adjustment to decrease the budget by $100,000 is being
recommended resulting in a new budget projection of $480,000.
• Investments: The City receives interest on various investments on a monthly;
quarterly or annual basis based on the type of investment. Currently the City
invests with Local Agency Investment Fund (LAIF); Certificates of Deposit
(CD); and security investments with various banks and agencies. Interest rates
on investment have decreased over the past few years. Based on current
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March 1, 2011
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interest received, no adjustment is being recommended at this time.
• Other Revenue: Other revenue include: recyclable revenue; sale of City
property; and donations. At this time, no adjustments are being recommended.
11. FY 2010-11 GENERAL FUND EXPENDITURES
The adoption of FY 2010-11 City Budget estimated total General Fund operating
expenditures of $9.78 million. Based on City Council's direction to transform
Temple City from a "status quo" to a "high performance" organization, the following
one-time expenditures were included in FY 2010-11 Budget:
• Update City Website;
• Information Technology Master Plan;
• City Messaging & Communication System;
• Actuarial Services; and
Enterprise Land Management System.
On a quarterly basis, staff has requested from the City Council additional
appropriations to FY 2010-11 Budget projections. For example, this fiscal year, staff
requested to allocate $30,000 from FY 2009-10 Budget to pay for Facade
Improvement Projects that began last year but were not completed or paid for until
the current fiscal year.
After reviewing six months of expenditures, staff is recommending a few
adjustments to the FY 2010-11 General Fund Expenditures. Additional adjustments
will be requested during the normal quarterly budget amendment process. Below is
a brief explanation of requested department adjustments.
The total General Fund Mid -Year Budget adjustments requested to be approved by
the City Council are $190,000. This amount will be offset by the $346,800 in
General Fund Revenue adjustments, leading to an overall increase in General Fund
Balance of $156,800 from $21,050,472 to $21,207,272. The table below
summarizes the changes in the General Fund Operating Expenditures for FY 2010-
11:
City Council
March 1, 2011
Page 5
General Fund Expenditures
Department
FY 2010-11
Budget
Ex+enditure
FY 2010-11
Revised
Projection
Increase
(Decrease
Percent
Change
Management
Services
$1,428,370
$1,578,370
$150,000
10.5%
Financial
Services
$561,515
$601,515
$40,000
7.1%
Community
Development
$2,490,350
$2,490,350
$0
0%
Parks
& Recreation
$1,972,595
$1,972,595
$0
0%
Law
Enforcement
$3,393,390
$3,393,390
$0
0%
Totals
$9,846,220
$10,036,220
$190,000
1.9%
• Management Services: Due to potential litigation, the Management Services
Department has seen an increase in the City Attorney program. An adjustment
increase for the Special Counsel account in the amount of $70,000 is being
requested. Due to the potential litigation, the Support Services program
requires an $80,000 adjustment for the Private/Special Contract Services
account.
• Financial Services: During FY 2010-11, the City Council amended the
Rosemead Boulevard Safety Enhancement and Beautification Project. Due to
the expansion of this project, the City Council requested staff to research other
potential revenue sources to fund the project. Avant Garde, the City's grant
consultant, researched additional funding and has submitted various grant
applications. A recommended increase adjustment for the Private/Special
Contract Services account in the Accounting Program in the amount of $40,000
is requested.
• Community Development: During FY 2010-11, the City Council approved an
appropriation of $45,000 to complete a Historical Resources Survey, which will
be partially offset by a $10,000 grant that will be reimbursed to the City. These
funds have been allocated and no adjustments are being requested at this
time.
• Parks & Recreation: A slight increase in Parks & Recreation classes is
anticipated which will require an increase of Recreation Leaders. If necessary
an adjustment will be recommended in the Fourth Quarter Budget Amendment
Report.
• Law Enforcement: The Los Angeles Sheriffs Department provides law
enforcement services to the City. At this time, no adjustments are being
requested for law enforcement services.
City Council
March 1, 2011
Page 6
III. CAPITAL IMPROVEMENT PROJECTS (CIP):
Temple City has been very busy this year completing various Capital Improvement
Projects (CIP). During the adoption of FY 2010-11 City Budget, the City Council
approved $6.2 million in CIP expenditures. The good news is that only 6% of the
total expenditures ($378,000) will be funded with General Funds. The majority of
the expenditures are for the Rosemead Boulevard Safety Enhancement &
Beautification Project which $5.2 million was allocated this fiscal year. This project
has been presented and has continued to be a proposed project that will not use a
cent of General Fund monies. Included in the March 1, 2011 City Council Agenda
was the request of an additional $5.8 million in non -General Fund monies for this
project.
Below is a brief description of a few other Capital Improvement Projects that are in
progress or were completed during FY 2010-11:
• New Playground Equipment: This project included new playground equipment
for Live Oak Park. The project was budgeted in FY 2009-10 and was completed
in FY 2010-11. The projected cost for the new playground was $35,000; the
actual cost was $31,850. General Funds were used for this project.
• Grind and Overlay Project for Freer Street: This project originally was
budgeted for slurry sealing. Due to the available American Recovery &
Reinvestment Act of 2009 (ARRA) funds, the City was able to amend the project
to Grind and Overlay Freer Street. The estimated project budget was $847,370.
The total cost was $845,726, which of $599,000 was paid with ARRA funds;
$211,278 with Traffic Congestion Relief Funds; and $35,448 from the General
Fund.
• Traffic Signal Upgrades on Rosemead Boulevard: This project consist of left
turn phasing traffic signals for Rosemead Boulevard & Broadway and
Rosemead Boulevard & Longden Avenue. This was another project that was
partially funded with ARRA funds. The estimated project budget was $281,900.
All payments have not been made for this project but are estimated to be under
budget. The City will be reimbursed up to $236,500 in ARRA funds and the
remaining will be paid with Lighting & Landscape funds.
• Renovation of Circular Planter: Originally budgeted for the renovation of
circular planter at Live Oak Park, this project has been amended to include the
installation of Walter Temple bust at Temple City Park. Since the City only
received one bid for this project, staff will re -bid this project. During FY 2009-10,
a budget appropriation of $30,000 was approved and an additional $10,000 was
approved in FY 2010-11. Due to the change in the project, additional funding
may be requested. This project is funded utilizing Park Acquisition Funds.
At this time, staff is not requesting any adjustments for FY 2010-11 CIP Budget.
Adjustments to projects are usually requested after a project has begun or other
City Council
March 1, 2011
Page 7
funding sources are available. Staff works diligently in funding projects, if
possible, with the minimal use of General Fund monies.
IV. COMMUNITY REDEVELOPMENT AGENCY
The Community Redevelopment Agency (CRA) consists of three programs. The
Capital Project Fund accounts for redevelopment activities and expenditures that
are made within the CRA area. This area consists of 69 acres of land and is located
on the western edge of Temple City adjacent to the Downtown Business district
(i.e.,Las Tunas Drive). During FY 2010-11, the City Council approved an allocation
to hire a consultant to study a time extension and/or an expansion of the CRA area.
Also, an allocation of $125,000 was made for the Rosemead Boulevard
Beautification and Improvement Project. This program does not receive any
revenue other than interest on investments. The $2.5 million fund balance in that
program was received when the CRA refinanced the bonds and received a cash out
in the amount of $2.9 million in September 2005.
California Redevelopment Law and Planning and Development Law mandate that
cities develop housing programs to address the needs of special population groups.
The Low/Moderate Housing Fund accounts for the 20% set -aside funds that are
allocated to this program from tax increment revenues. These funds provide
housing rehabilitation assistance to eligible homeowners. During FY 2010-11, the
Agency members in partnership with Habitat for Humanity, allocated $50,000 for
the "Brush with Kindness" program.
The Debt Service Fund accounts for the remaining 80% of tax increment revenue
that the CRA receives. These funds are used to make semi-annual bond payments
and annual loan payments to the City. Tax increment revenues are expected to
come in close to the estimated FY 2010-11 CRA Budget of $900,000. Eighty
percent of those funds (i.e., $720,000) are used for loan/bond payments. The
estimated 80% of these payments are $735,000 which means the loan payment to
the City needs to be paid with reserved funds. The current fund balance for the
Debt Service Fund is $450,000.
Based on the revenues received to date, staff is not requesting any adjustments for
FY 2010-11 CRA Budget. If approved tonight through a separate staff report, an
adjustment will be made to the Capital Project Fund for the Rosemead Boulevard
Safety Enhancement & Beautification Project. The below table summarizes the
estimated revenues and expenditures and the estimated fund balance at the end of
FY 2010-11.
City Council
March 1, 2011
Page 8
Community Redevelopment Agency
Program
FY 2010-11
Estimated
Revenues
FY 2010-11
Budget
Ex ' enditures
FY 2010-11
Expenditure
Adjustments
FY 2010-11
Ending Fund
Balance
Capital Project
Fund
$32,500
$490,780
$1,040,000*
$821,571
Low/Moderate
Housing Fund
$183,230
$402,450
$0
$403,512
Debt Service
Fund
$719,130
$929,375
$0
$438,568
Totals
$934,860
$1,522,605
$1,040,000
$1,663,651
*This amount includes $890,000 for the Rosemead Boulevard Safety Enhancement
& Beautification Project.
CONCLUSION
As the economy slowly recovers, it is reassuring to know that Temple City has survived
the great economic recession. Not only has Temple City lived within its means the past
couple of years, but we were able to put some money aside in our General Fund
Reserve. With a potential decrease in revenues and the inevitable increase in
expenditures, the FY 2010-11 City Budget was the most challenging to balance.
Nevertheless, on June 29, 2010, the City Council adopted FY 2010-11 City Budget with
a General Fund surplus of $107,000, and staff estimates, with the recommended
adjustments, the General Fund surplus for FY 2010-11 will be approximately $196,920.
Throughout the remaining three months additional amendments may be required, but if
we continue with our conservative spending, Temple City will complete another
successful year without dipping into the General Fund Reserves.
FISCAL IMPACT
It is recommended the City Council approve the above mentioned General Fund Mid -Year
adjustments which will increase the General Fund estimated Fund Balance by an
additional $156,800. The projected General Fund Balance as of June 30, 2011 will be
$21,207,272.