CC SR 20241217 J - FY24-25 Q1 Financial Report
CITY COUNCIL MEETING DATE: 12/12/2024
AGENDA REPORT AGENDA HEADING: Consent Calendar
AGENDA TITLE:
Consideration and possible action regarding the Fiscal Year 2024-25 First Quarter
Financial Report for General Fund and year-to-date report for ARPA Fund.
RECOMMENDED COUNCIL ACTION:
(1) Receive and file the FY 2024-25 First Quarter Financial Report for the General
Fund;
(2) Receive and file the year-to-date financial report for ARPA Fund and approve the
following:
a. Carry forward budget appropriations balance of $1,100,000 from FY 2023-24
to FY 2024-25 and increase the FY 2024-25 Adopted for the Portuguese Bend
Landslide Complex.
FISCAL IMPACT: No additional funds are being requeste d. All funds were previously
approved by the City Council during the budget hearings in June
2024, and additional appropriations for ARPA Fund were approved
on May 7, 2024 and October 1, 2024. The recommendations are
aligned with the year-end process under governmental accounting
standards to account for the balance for projects that started in FY
2023-24 and expected to be completed in FY 2024-25. VR
Amount Budgeted: $39,924,650 (General Fund - Expenditures)
$39,904,300 (General Fund – Revenues)
$1,428,100 (ARPA Fund – Expenditures)
Additional Appropriation: As listed in Council Action No. 2 (ARPA)
Account Number(s): General Fund 101 and ARPA Fund 333
ORIGINATED BY: Robert Moya, Deputy Director of Finance RM
REVIEWED BY: Vina Ramos, Director of Finance VR
APPROVED BY: Ara Mihranian, AICP, City Manager
ATTACHED SUPPORTING DOCUMENTS:
A. None
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BACKGROUND:
The FY 2024-25 First Quarter Report for the General Fund (operating fund) is an annual
report to the City Council that provides an overview and an analysis of revenue and
expenditure through the first quarter of the fiscal year. Traditionally, staff would propose
budget modifications only if there were substantial changes between the adopted budget
and first-quarter results that may require adjustments to the budget and current outlook.
These changes are typically recommended if there were a sudden decrease in general
fund revenues that would require an adjustment on the City’s operating expenditures.
Overall, as the report indicates, there are no significant changes in the General Fund that
would require budget adjustment for the first quarter.
Additionally, this year’s report includes an update on the ARPA Fund, providing details
on the transactions since 2022 and the updated balance. Overall, the ARPA Fund has
fully complied with federal auditing standards by obligating all funds by December 31,
2024, and is expected to be spent by the deadline of December 31, 2026. The proposed
adjustments for ARPA are part of the year-end’s process of carrying over budget balance
to account for projects that started in FY 2023-24 with a completion date in FY 2024-25.
Although not presented in this First Quarter Report, another major fund for the City is the
Capital Infrastructure Program (CIP) Fund. Due to the significant fiscal impact of the
emergency efforts and stabilization measures taken by the City for the Portuguese Bend
Landslide Complex, the financial report on the CIP is provided to the City Council as part
of the regular landslide update reports to the City Council.
DISCUSSION:
1. Fiscal Year 2024-25 First Quarter Financial Report
General Fund Revenues
The City received over $11.8 million in General Fund revenues through the first quarter
of FY 2024-25, including transfers. Through September 2024, total revenues rose by $5.0
million, or 73%, when compared to the same period one year ago, mainly due to a $5.0
million landslide grant received from the Los Angeles County Supervisor Hahn’s office.
These results exceed last year’s revenue growth of $1.4 million, or 25%, for the first
quarter. The current year-over-year changes are highlighted in Table 1 based on each
major revenue source.
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Table 1: 1st Quarter General Fund Revenues – Current Year vs. Prior Year
Additionally, this analysis identifies the percentage of revenues received through the first
quarter as a percentage of the FY 2024-25 Adopted Budget. This information is provided
in Table 2 below. Through September 2024, the $11.8 million received accounts for 30%
of the $39.9 million in adopted revenues.
Table 2: FY 2024-25 1st Quarter Revenue Status
As shown above, the annual change in first quarter revenues is impacted by the
performance of each revenue source. In certain cases, the timing of when revenues are
received will influence quarterly results, in addition to the changes in economic activity
and prices on an annual basis. Further insights into the specific variances are described
in greater detail for each revenue category highlighted below. An updated forecast is also
provided, based on the current trends.
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Property Tax
Property tax revenues for the first quarter of FY 2024 totaled approximately $383,618,
comprising of $269,021 in secured property taxes and $114,597 in property transfer
taxes. By comparison, first-quarter revenues for FY 2023 came in lower at $97,926, all of
which was attributed to property transfer taxes. This year-over-year increase of $285,692
reflects improved timing in remittances for secured property taxes, which had no
collections reported during the first quarter of FY 2023. Property transfer taxes in FY 2024
show an increase in collections compared to the prior year but remain influenced by
declining sales volumes.
To date, FY 2024 first-quarter revenues make up 2.5% of the $10.69 million adopted
budget for secured property taxes and 28.6% of the $400,000 budget for property transfer
taxes. The lower percentage for secured property taxes is attributed to the typical property
tax collection schedule, with the majority of revenue received in December and June. In
comparison, FY 2023 first-quarter revenues represented 21.8% of the property transfer
tax budget. Despite these fluctuations, staff expects property tax collec tions to align with
projections provided by the City’s property tax consultant, and no adjustments are
recommended at this time. Staff will continue to monitor revenue trends to ensure
budgetary compliance and will provide updates as necessary.
Transient Occupancy Tax (TOT)
TOT revenues for the first quarter of FY 2024 totaled approximately $1.9 0 million, with
$1.89 million generated by Terranea Resort and $18,456 from miscellaneous sources.
Compared to the same quarter in FY 2023, which reported $1.87 million, this represents
an increase of approximately $30,000, or 1.6%. The year -over-year growth reflects a
continued stabilization in the hospitality sector, supported by strong performance from
key revenue generators such as Terranea Resort. Based on these numbers, and
confirmation from Terranea, activity surrounding the landslide did not impact revenues for
the first quarter.
As of September 2024, TOT revenues represent 29.3% of the $6.43 million budget for
Terranea Resort and 12.3% of the $150,000 budget for miscellaneous TOT sources. The
sustained recovery in travel and tourism has helped mitigate the impacts of increased
hotel room pricing and fluctuating occupancy rates. Staff will continue to monitor TOT
revenues closely to identify any material changes that could impact projections, but no
adjustments are recommended at this time. Updates will be provided as necessary to
ensure fiscal alignment with the adopted budget.
Sales Tax
Sales tax revenues for the first quarter of FY 2024 totaled $710,099, with $685,928
attributed to general sales tax and $24,171 from Public Safety Augmentation Fund
(PSAF) revenues. In comparison, FY 2023 first-quarter revenues were higher, totaling
$827,753, comprising $803,145 in general sales tax and $24,608 from PSAF revenues.
This represents a year-over-year decline of $117,654, or 14.2%.
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The decline in revenues can be attributed to the moderation in consumer spending and
the stabilization of prices for taxable goods, which have reduced the taxable sales base.
Additionally, FY 2023 saw higher sales tax collections as consumers continued to adjust
to post-pandemic economic conditions with elevated spending.
Despite the decrease, FY 2024 first-quarter revenues account for 24.9% of the $2.75
million budget for general sales tax and 24.2% of the $100,000 budget for PSAF,
indicating alignment with budgetary expectations. Staff will continue to monitor sales tax
trends to assess whether midyear budget adjustments are necessary. No changes are
recommended at this time.
Permits and Fees
Permits and Fees revenues for the first quarter of FY 2024 totaled approximately
$858,024, reflecting a decrease of about $123,343, or 12.6%, compared to the $981,367
received during the same period in FY 2023. Revenue from building and safety permits
accounted for $498,000, or 58%, of the total revenues within this category, slightly lower
than the proportion in FY 2023.
Year-to-date through September 2024, the $858,024 in revenues received represents
21% of the $4.09 million revised budget for this category, aligning closely with prior year
trends despite the decline. The decrease is attributed to a reduction in revenue from plan
check permits and building and safety permits, reflecting potential slowing in development
activity or construction timelines. However, this decline was anticipated, and the budget
was already adjusted to account for the expected changes in development trends.
Staff continues to monitor this revenue category and notes that no material changes to
the current budget are recommended currently. Future updates will be provided if trends
shift significantly.
Franchise Tax
Franchise Taxes are levied on providers of utility, refuse, and cable services in exchange
for the use of the City’s public rights-of-way. Revenues collected through the first quarter
of FY 2024 totaled approximately $367,000, reflecting a slight increase of $26,000, or
7.6%, compared to the $341,000 received during the same period in FY 2023.
First-quarter revenues for FY 2024 represent 16.3% of the $2.25 million revised budget,
indicating a consistent pace of collections relative to historical trends. This modest
increase is attributed to stable utility and service demand within the City. Staff will continue
to monitor this revenue source, but no adjustments to the budget are r ecommended at
this time. Future updates will be provided as necessary.
Utility Users Tax (UUT)
UUT revenues are primarily influenced by weather conditions, utility consumption rates,
and prices for electricity, gas, and water. For the quarter ending September 2024, UUT
revenues totaled approximately $734,275, reflecting an increase of about $29,548, or
4.2%, compared to the $704,817 collected during the same period in FY 2023.
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First-quarter revenues account for 28.9% of the $2.5 million revised budget for UUT in FY
2024. This increase is attributed to higher utility consumption and pricing trends,
particularly in electricity and water use, during the reporting period. Although utility prices
remain susceptible to economic changes, the current pace of collections align closely with
budget expectations.
Staff will continue to monitor UUT trends to ensure alignment with revenue forecasts.
However, no adjustments to the budget are recommended at this time. Updates will be
provided as needed based on changes in utility pricing or consumption patterns.
Other Taxes and Miscellaneous Revenue
First-quarter revenues in this category for FY 2024 totaled approximately $6.8 million,
representing a substantial increase of $4.9 million, or 252.3%, compared to the $1.9
million received during the same period in FY 2023.
This significant variance is primarily due to a $5 .0 million grant issued from Supervisory
Hahn’s Social Program Grant to assist the City in addressing landslide-related impacts,
particularly in the Portuguese Bend area. Of this amount, $2.8 million is allocated to the
Financial Assistance Grant Program, which provides up to $10,000 in aid to each eligible
property owner impacted by land movement and utility shutoffs, covering up to 280
homeowners residing in the Portuguese Bend Community Association (including
surrounding properties), certain Seaview residents, and Portuguese Bend Beach Club.
The remaining $2.2 million is designated for stabilization measures, including ongoing
mitigation efforts, public safety measures, and planning for long -term stabilization in the
region.
Excluding the one-time grant, revenues in this category totaled approximately $1.8
million, consistent with prior year collections. Key revenue sources include golf taxes,
rentals and leases, and interest earnings, all of which performed as expected. Interest
earnings increased significantly from the prior year, rising from approximately $264,700
in FY 2023 to $424,100 in FY 2024, a growth of $159,400 or 60%. This increase reflects
higher interest rates and improved investment strategies. Additionally, a fair value
adjustment to the City’s investments resulted in an unrealized gain of $982,000, reflecting
compliance with Governmental Accounting Standards Board (GASB) requirements.
Including the one-time grant and fair value adjustment, first-quarter revenues represent
179.6% of the $3.8 million adopted budget for FY 2024. Excluding these factors, revenues
account for 48% of the budgeted amount, indicating a steady trend consistent with fiscal
projections.
Staff will continue to monitor these revenue streams closely. The one -time grant
underscores the County’s recognition of the urgent need for resources to address
significant geological challenges in the Portuguese Bend area. At this time, no
adjustments to the adopted budget are recommended. Future updates will be provided
as necessary to reflect evolving trends or additional one -time revenues.
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General Fund Expenditures
As of September 30, 2024, total General Fund expenditures were approximately $8.2
million, reflecting a 3.1% decrease compared to the same period last year. The $262,000
reduction is primarily attributed to lower year-to-date expenditures in categories such as
the Sheriff's Contract, which decreased by 30.6%, and Repairs, which declined by 21.3%.
These reductions are due to timing differences in invoice processing and adjustments in
maintenance schedules rather than reductions in appropriations
Table 3 provides a comparison of the first quarters in FY 2023-24 and FY 2024-25.
Table 3: First Quarter – FY 2023-24 vs. FY 2024-25
Expenditure Type 1st Quarter
FY 2023-24
1st Quarter
FY 2024-25
Salaries 1,850,656$ 2,156,944$ 306,288$ 16.6%
Benefits 774,501 859,478$ 84,977$ 11.0%
Sheriff Contract 1,904,438 1,322,308$ (582,130)$ -30.6%
Legal Services 231,487 307,568$ 76,081$ 32.9%
Supplies 107,743 111,109$ 3,366$ 3.1%
Professional and Technical 759,328 542,184$ (217,144)$ -28.6%
Repairs 894,244 704,123$ (190,121)$ -21.3%
Training and Conference 77,013 57,270$ (19,743)$ -25.6%
Capital 214 32,378$ 32,164$ 100.0%
Misc. Expense 452,677 479,461$ 26,784$ 5.9%
Transfers-Out 1,436,700 1,653,913$ 217,213$ 15.1%
Grand Total $8,489,001 $8,226,735 ($262,266)-3.1%
Variance
A brief summary of the first quarter activities is discussed below.
Personnel Costs
At the end of the first quarter of FY 2024-25, salaries ended at approximately $2.2 million,
or 19.6% of the FY 2024-25 Adopted Budget. This represents an increase in Salaries of
approximately $306,000, or 16.6%, and an increase in Benefits of approximately $85,000,
or 11.0%, compared to the same period last year. The increases are consistent with
projected costs, reflecting the cost-of-living adjustments, merit increases, new hires as
the City continues to fill vacant positions citywide , benefits in accordance with the labor
contracts, and the required annual payment for the City’s CalPERS unfunded liability.
Non-Personnel Costs
At the end of the first quarter, non-personnel expenditures totaled approximately $3.6
million, representing 16.8% of the FY 2024-25 Adopted Budget. This category includes
legal services, the Sheriff’s Department contract, repairs and maintenance, professional
and technical services, supplies, capital, and miscellaneous expenses. Miscellaneous
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expenses include equipment replacement charges and general liability insurance
premiums.
Overall, non-personnel costs decreased by approximately $262,000, or 3.1%, compared
to the same period last year. Significant reductions are observed in Repairs, which
decreased by $190,121 or 21.3%, and Professional and Technical services, which
declined by $217,144 or 28.6%. These reductions are primarily due to timing differences
in project expenditures, adjustments in service priorities, and the filling of vacant positions,
which has reduced the need for certain professional services. Additionally, expe nditures
for the Sheriff’s Contract is lower by $582,130 or 30.6%, likely reflecting timing differences
in disbursements rather than reductions in appropriations. Legal services also increased
by $76,081 or 32.9%, consistent with anticipated needs in this category.
Transfers-Out
At the end of the first quarter, Transfers-Out totaled approximately $1.7 million, or 39.9%
of the FY 2024-25 Adopted Budget. This represents an increase of approximately
$217,213, or 15.1%, compared to the same period last year. The increase is consistent
with the adopted budget of $4.1 million and reflects planned allocations to support
citywide initiatives and projects.
Table 4 below summarizes FY 2024-25 expenditures and the percentage of expenditures
over budget for the period ending September 2024.
Table 4: FY 2024-25 General Fund Status Report - Expenditures
Expenditure Type
FY 2025-25 Adopted
Budget*
1st Quarter
Actuals
%
Expenditures
Salaries $11,029,500 2,156,944$ 19.6%
Benefits $3,601,100 859,478$ 23.9%
Sheriff Contract $8,171,600 1,322,308$ 16.2%
Legal Services $965,000 307,568$ 31.9%
Supplies $725,000 111,109$ 15.3%
Professional & Technical $4,679,500 542,184$ 11.6%
Repairs $4,307,000 704,123$ 16.3%
Training & Conference $439,750 57,270$ 13.0%
Capital $78,000 32,378$ 41.5%
Misc. Expense $1,780,700 479,461$ 26.9%
Transfers-Out $4,147,500 1,653,913$ 39.9%
Grand Total $39,924,650 $8,226,735 20.6%
*FY 2024-25 Adopted Budget includes PO Carryover from FY 2023-24*
Overall, at the end of the FY 2024-25 first quarter, the City’s General Fund expenditures
are tracking slightly lower at 20.6% spent with no significant changes or adjustments to
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report. Similar to the City’s process annually, Staff will continue to monitor all categories
and if applicable, report any significant changes in future quarterly reports.
Staff seeks City Council approval to receive and file the General Fund’s FY 2024-25 first
quarter report.
2. ARPA Fund Financial Update
As of November 30, 2024, ARPA’s total expenditures and encumbrances are
approximately $9.4 million, or 89% of the ARPA grant amount of $9.9 million and
approximately $0.5 million of interest earnings. According to ARPA requirements, the City
must secure a contract for any ARPA projects no later than December 31, 2024.
Subsequently, the City has until December 31, 2026 to spend allocated funds. The City is
on track to meet these requirements.
Table 4: FY 2024-25 ARPA Status Report
Projects Project Code
YTD Expenditures
and PO
IT- CITYWIDE TECHNOLOGY IMPROV 8005 240,672
IT - HESSE PARK TECHNOLOGY IMP 8006 66,010
PBL EMERGENCY - BOREHOLES/DEEP
DEWATERING WELLS 8307 3,056,014
LADERA LINDA COMMUNITY CENTER 8405 4,154,294
PARK MONUMENT SIGNS 8424 430,845
PVIC RESTROOMS IMPROVEMENTS 8508 477,665
SDDIP PVDS AT PEPPERTREE 8715 11,000
WESTERN BEAUTIFICATION 8840 89,325
ARTERIAL @ SILVER SPUR NORTH 8843 839,469
TOTAL $9,365,294
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Projects
Project
Code
YTD
Expenditures
and PO
Continuing
Appropriation
Total ARPA
Obligations
FY 2022-24
IT- CITYWIDE TECHNOLOGY
IMPROV 8005 240,672 240,672
IT - HESSE PARK TECHNOLOGY
IMP 8006 66,010 66,010
PBL EMERGENCY -
BOREHOLES/DEEP
DEWATERING WELLS 8307 3,056,014 1,100,000 4,156,014
LADERA LINDA COMMUNITY
CENTER 8405 4,154,294 0 4,154,294
PARK MONUMENT SIGNS 8424 430,845 0 430,845
PVIC RESTROOMS
IMPROVEMENTS 8508 477,665 0 477,665
SDDIP PVDS AT PEPPERTREE 8715 11,000 0 11,000
WESTERN BEAUTIFICATION 8840 89,325 0 89,325
ARTERIAL @ SILVER SPUR
NORTH 8843 839,469 0 839,469
TOTAL $9,365,294 $1,100,000 $10,465,294
On May 7, 2024 and October 1, 2024, the City Council approved staff’s recommendation
to use the remaining ARPA balance for the Portuguese Bend Landslide Complex
mitigation efforts. Since these projects are still ongoing, staff seeks City Council approval
to carry forward the remaining budget balance of $1,100,000 from FY 2023 -24 to FY
2024-25. A final budget reconciliation of ARPA will be reported at the next budget update
in Spring 2025.
ADDITIONAL INFORMATION:
Finance Advisory Committee (FAC)
On December 12, 2024, this same report will be presented to FAC with a recommendation
to receive and file. Given the timing of the meeting, staff will report any significant
feedback from the FAC to the City Council as late correspondence after December 12, if
necessary.
FY 2025-26 Budget Process
At its January 21, 2025 meeting, the City Council will be asked to approve the budget
calendar for FY 2025-26. The budget process will begin with a Goals Workshop, followed
by workshops on the General Fund and Capital Improvement Program.
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CONCLUSION:
In summary, actuals through September 2024 reflect an increase in revenues when
compared to the same period one year ago. Through September 2024, City revenues
totaled $11.8 million, or 29.7%, of the adopted budget and spent approximately $8.2
million or 20.6% of the adopted budget. Overall, total revenues are up by $5 million, or
73.3%, compared to the previous quarter mainly from the Supervisor Hahn’s Social Grant
Program. This program includes $2.8 million in financial assistance to approximately 280
homeowners impacted by the land movement and utility shutoffs, and $2.2 million for the
City’s stabilization measures. These funds are expected to be fully spent by the end of
FY 2024-25. For the City’s expenditures, the first quarter is lower by nearly $0.3 million,
or 3.1%. This decrease is mainly due to the timing of invoices, such as the Sheriff
Contract, and the timing of repairs, which are expected to be completed after midyear.
In accordance with the City's annual process, staff will closely monitor all categories and,
if needed, report any significant changes in upcoming quarterly reports.
ALTERNATIVES:
In addition to the Staff recommendation, the following alternative action is available for
the City Council’s consideration:
1. Take other action, as deemed appropriate.
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