CC - Item 7A - Mid-Year Budget UpdateROSEMEAD CITY COUNCIL
STAFF REPORT
TO: THE HONORABLE MAYOR AND CITY COUNCIL
FROM: JEFF ALLRED, CITY MANAGER
DATE: FEBRUARY 23, 2010
SUBJECT: MID-YEAR BUDGET UPDATE
SUMMARY
The Council will be provided with a mid-year update presentation regarding the current 2009-10
fiscal year budget along with a brief look towards the upcoming fiscal year. The Strategic Plan
identifies key goals and objectives to ensure long-term fiscal sustainability and staff has been
working to ensure these are met. In terms of the General Fund, revenues have proven to be
stable and are generally in-line with budgeted projections. Sales tax revenues, while down, are
coming in better than anticipated and property tax revenues have been relatively stable.
General fund expenditures are remaining in line with budgeted figures and staff has
implemented cost savings measures when available. The projected bottom line for the end of
the fiscal year is excellent and staff anticipates that revenues and expenditures will be balanced.
Special revenue funds and the Community Development Commission funds are also performing
well. Revenues related to property taxes in these funds are down slightly, primarily due to
adjustments in tax roll values; however, the overall health of these funds remain intact and
stable. The City is also awaiting payments from the State that have been delayed due to their
budget balancing tactics, but all funds are expected to be received and accounted for by the
close of the fiscal year.
Staff Recommendation
Receive and file the mid-year budget update report.
ANALYSIS
The City's General Fund revenues have continued to be negatively affected by the economy;
however, due to conservative budget projections and somewhat favorable conditions,
reductions in one category have been offset by increases in others. As an example, sales tax
revenues were down 6.3% on an adjusted basis for the last quarter, but this decrease was less
than the 10% or more decrease that had been projected. These positive returns are expected
to generate an additional $250,000 in sales tax revenues beyond projections for the current
fiscal year. While these increased revenues are certainly a benefit, many other revenue
sources continue their downward trend. Transient occupancy tax revenues continue to decline
and in speaking to local hotel and motel operators, much of the decline is not due to reduced
occupancy, but to reduced room rates on the occupancies. Permit activity also continues to be
down along with charges for service related to the building industry. Staff anticipates the fees
from the Fresh and Easy to help offset the downward trend; however staff still projects these to
finish below budgeted estimates. The reduction in interest rates on the City's investments have
also had a significant negative impact. Current investment yields are less than 1.0% and staff
will be evaluating other investment opportunities within the scope of the investment policy in an
effort to improve yield on investments.
APPROVED FOR CITY COUNCIL AGENDA:
ITEM NO. N
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City Council Meeting
February 23, 2010
Page 2 of 2
For the 2010-11 Fiscal Year, staff has begun developing the revenue estimates and overall are
projecting revenues to be flat. Sales tax revenues are projected to increase over the current
year budget by approximately 3.5%; however, these increases will be offset by slightly declining
property tax revenues, transient occupancy tax and user-generated fees and permits. On the
expenditure side, staff will continue to closely monitor our contracts to control cost increases.
Staff was successful this past fiscal year in negotiating no increases in many service contracts
and it may be difficult to expect similar concessions by vendors for a second year. A detailed
presentation and analysis will be provided at the Council meeting.
PUBLIC NOTICE PROCESS
This item has been noticed through the regular agenda notification process.
Submitted by:
Matthew E. H wkesw
Assistant City Manager
Prepared by:
Steve Brisco
Finance Director