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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 City Council March 1, 2011 Page 4 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.