CC SR 20171219 1 - 1st Quarter Budget ReviewRANCHO PALOS VERDES CITY COUNCIL
AGENDA REPORT
AGENDA DESCRIPTION:
MEETING DATE: 12/19/2017
AGENDA HEADING: Consent Calendar
Consideration and possible action regarding the FY17-18 first quarter budget report.
RECOMMENDED COUNCIL ACTION:
Receive and File the FY 2017-18 first quarter budget report.
FISCAL IMPACT: None
Amount Budgeted: General Fund (including Transfers)
Revenues: $30,437,300
Expenditures: $30,417,800
Additional Appropriation: N/A
Account Number(s): Various
ORIGINATED BY: Allan Kaufman, Senior Administrative Analyst
REVIEWED BY: Deborah Cullen, Director of Finance
APPROVED BY: Doug Willmore, City Manager.z",.,
BACKGROUND AND DISCUSSION:
In the past, Finance has presented a series of budget reports to the City Council
covering Mid -Year, Third Quarter and Year-end. Beginning this year, Staff is adding a
First Quarter budget report. For this report, Staff has reviewed all FY17-18 revenues
and expenditures through the end of the first quarter (July — September). This report
will focus on the General Fund and, at this time, Staff expects revenues and
expenditures to end the year on target with the budget amount.
General Fund Revenue
The summary table of major General Fund revenue categories is presented below. The
General Fund Adopted Budget for FY17-18 revenues (including transfers) is
$30,437,300 of which $3,162,899 or 10.4%, was received through September 30, 2017,
compared to $3,227,387 or 11.2% in the prior year. This is in line with historical first-
quarter revenues as many of our major revenues are received in the second and third
quarter. The Adopted Budget represents the entire amount expected to be received by
year-end. As of September 30, 2017, total revenues received are 2.0% lower than the
same period last year. Most of this variance is due to the collection of quarterly
franchise payments in FY17-18 that were not received until after the first quarter ended.
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FY17-18 Budget to Actual Revenues
Current vs. Prior Year Comparison
Revenue Source
Adopted Budget
2617-18
1st Qtr. Actuals
(thru 9{36f 2617)
% Received of
Adopted Budget
2016-17
1st Qtr. Actuals
(thru 9/36/ 2616)
1st Qtr. Comparison
FY16-17 to FY17-18
$ variance % Change
Property Tax
$12,746,100
$351,591
2.8%
$360,827
($9,236)
(2.6%)
Sales Tax
2,580,200
250,242
9.7%
232,184
18,058
7.2%
Transient Occupancy Tax (TOT)
5,740,000
1,106,934
19.3%
1,136,184
(29,250)
(2.6%)
Utility Users Tax (UUT)
1,871,100
322,879
17.3%
315,912
6,967
2.2%
Planning, Building & Safety, and
Other Permits
2,321,100
586,289
25.3%
599,168
(12,879)
(2.2%)
Other Revenue
4,948,800
487,464
9.9%
583,112
(95,648)
(19.6%)
Total General Fund Revenues
Net of Transfers
30,207,300
3,105,399
10.3%
3,227,387
(121,988)
(3.9%)
Transfers In
230,000
57,500
25.0%
0
57,500
100.0%
Total General Fund Revenues
$30,437,30®
$3,162,899
10.4%
$3,227,387
($64,488)
(2.D%)
Property Tax
The City has received $351,591 in Property Tax in the first-quarter of the current fiscal
year. This represents a -2.6% or $9,236 decrease compared to the same period last
year. The majority of property taxes are not received until after December. At that time,
Staff will continue to monitor and report any changes to this revenue source in the
future.
Sales Tax
Sales Tax is the third largest revenue source in the City. In the first-quarter of FY17-18,
the City has collected $250,242, which is 7.2% or $18,058 higher than the same period
last fiscal year. Based on information from our sales tax consultant, the growth is in the
food and beverage category. This revenue source is expected to meet the estimated
revenue projection at year-end.
Transient Occupancy Tax (TOT)
The City has received $1,106,934 of TOT or 19.3% of budget this fiscal year, which
is -2.6% or $29,250 less than the same period last year. At this time, Staff believes that
TOT will meet its budget amount at year-end. Staff will continue to monitor this revenue
source and report any changes to economic conditions that might impact TOT in this
fiscal year.
Utility Users Tax (UUT)
UUT is based primarily on utility rates and consumption patterns. The City has received
$322,879 in UUT, which is 17.3% of the budgeted amount. This represents a 2.2%
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increase over the same period last year. Staff is projecting this revenue source will
make budget at year-end.
Licenses and Permits
License and permits is approximately -2.2% or $12,879 below the same period last
year, with 9.9% of budget received. The current decrease is primarily due to a large
commercial project that was performed in the first quarter of FY16-17. Staff will
continue to monitor and report any changes to construction costs, home improvement
trends, and other economic conditions that might impact this revenue source in the
future.
Other Revenue
Other revenues are comprised of a variety of revenue sources including: Franchise Tax,
Business License Tax and Charges for Services to name a few. Other Revenues
collected for the first-quarter of FY17-18 is -19.6% or $95,648 less than the same period
last year. Most of this decrease is due to the franchise payments (previously stated)
that were not received until after the first quarter ended.
General Fund Expenditures
The General Fund budget for FY17-18 expenditures (including transfers) is $30,417,800
of which $6,991,974 or 23.0% was expended through September 30, 2017. In
comparing prior year expenditures at first quarter there is approximately a $2.9 million
variance. The explanation for the quarter to quarter variance is detailed below.
Expenditure Budget
Current vs. Prior Year Comparison
,,, $35.0
o $30.0
$25.0
$20.0
$15.0
$5.0
$5A
$
$0.0
Adopted
1st Qtr.
Budget
Actuals
■ FY2016-17
28,433,900
4,108,635
■ FY2017-18
30,417,800
6,991,974
■ FY2016-17 FY2017-18
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The change in actuals of almost $2.9 million from first quarter FY16-17 to first quarter
FY17-18 are attributed to:
Professional and technical services increased by over $751,000 comparing the
first quarter of FY17-18 to the first quarter in FY16-17 primarily due to:
a. An increase of about $118,000 in temporary professional staff to cover job
responsibilities for vacant positions and employees on an extended leave
of absence.
b. The Sherriff's Contract increased by about $228,000 to reflect the
transition from the growth (introductory) rate to the standard rate.
c. Legal charges increased by almost $198,000 because invoices for the first
quarter of FY16-17 were not captured until after the 1St quarter had ended.
d. Public Works received one-time reimbursements of over $207,000 from
State grants and other agencies in FY16-17 for non -capital expenditures.
2. Salaries and benefits increased in the first quarter of FY17-18 by over $800,000
due to:
a. Timing and reporting issue with FY16-17 first-quarter payroll run being
attributed to the FY16-17 second quarter. The result is FY16-17 first
quarter had four payroll cycles, while FY17-18 first quarter had six payroll
cycles, resulting in the first quarter comparison variance of $739,000. This
comparison will normalize by mid -year.
b. Impact of the COLA increase totaling approximately $50,000.
c. Increase in over -time to backfill positions due to retirements and existing
vacancies of almost $11,000 in the first quarter.
3. Non -personnel increased by approximately $128,000 primarily due to an
increase in the general liability insurance premium.
4. Transfers Out of $1.2 Million, mainly to the Capital Improvements Project (CIP)
Fund, were not made in the first-quarter of FY16-17. This was due to a change
in the accounting process that requires transfers to be allocated and reported
quarterly. Prior practice was to record transfers at the year-end.
El
Below is the comparison of the major expenditure type to the adopted budget and the
amount of budget expended through the first quarter. With the ending of the first
quarter or 25% of the fiscal year completed, General Fund expenditures are tracking at
23% expended, right on target with the adopted budget.
FY17-18 Budget to Actual by Major Expenditure Type
Expenditure Type
Adopted
Budget
2017-18
1st Qtr. Actuals
(thru 9/30/2017)
% Spent of
Adopted Budget
Salaries
$7,852,800
$1,795,659
22.9%
Benefits
2,572,000
1,014,470
39.4%
Professional /Technical Services
12,048,500
2,021,936
16.8%
Supplies/Materials
1,654,900
241,896
14.6%
Training/Meetings/Conferences
333,500
55,134
16.5%
Miscellaneous
1,142,600
659,504
57.7%
Total General Fund Expenditures
1,106,400
781,367
70.6%
Net of Transfers
25,604,300
5,788,599
22.6%
Transfers Out
4,813,500
1,203,375
25.0%
Total General Fund Expenditures
$30,417,800
$6,991,974
23.0%
Below the comparison of the expenditures by department to the adopted budget and the
amount of budget expended by department through the first quarter.
FY17-18 Budget to Actual Expenditures by Department
Expenditure by Department
Adopted
Budget
2017-18
1st Qtr. Actuals
(thru 9/30/2017)
% Spent of
Adopted Budget
Administration
$4,701,500
$1,158,136
24.6%
Finance
1,410,600
372,031
26.4%
Public Works
5,184,100
865,908
16.7%
Community Development
3,543,000
784,123
22.1%
Recreation & Parks
2,698,000
711,221
26.4%
Public Safety
6,960,700
1,115,813
16.0%
Non -Departmental
1,106,400
781,367
70.6%
Total General Fund Expenditures
Net of Transfers
25,604,300
5,788,599
22.6%
nsfers Out 4,813,500 1,203,375 25.0%
:al General Fund Expenditures $30,417,800 $6,991,974 23.0%
CONCLUSION
Staff has reviewed all FY17-18 revenues and expenditures through the end of the first
quarter (July — September). Through September 30, 2017, the City has received
$3,162,899 or 10.4% of the FY17-18 revenue budget compared to $3,227,387 or 11.2%
in the prior year. On the expenditure side, the City has spent 6,991,974 or 23.0% of the
FY17-18 budget compared to $4,108,635 or 14.4% in the prior year. With 25% of the
fiscal year completed, Staff expects revenues and expenditures to end the year on
target with the budget amount. If it is determined that adjustments to the budget need
to be made, Staff will present these adjustments when it presents its mid -year review of
revenues and expenditures to the City Council later in the fiscal year.
Al
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