CDC - Item 5A - Mid- Year Budget UpdateROSEMEAD CITY COUNCIL
TO: THE HONORABLE MAYOR AND CITY COUNCIL
FROM: JEFF ALLRED, CITY MANAGER
DATE: FEBRUARY 22, 2011
SUBJECT: MID -YEAR BUDGET UPDATE
SUMMARY
The Council will be provided with a mid -year budget update presentation regarding the
2010 -11 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 that these are met. The General
Fund revenues have proven to be stable and are generally in line with budget
projections. Assessed property values have increased slightly this year while
countywide property values have declined. Sales tax revenue is projected to meet
budget expectations. There is a large increase in building permit revenue due to the
Edison facility expansion. Most other revenues have not varied significantly from
budget estimates.
Staff Recommendation
Staff recommends that the City Council receive and file the mid -year budget update.
ANALYSIS
The City's General Fund revenues have continued to be negatively impacted by the
lingering economic downturn. Sales tax is expected to increase slightly compared with
the prior year, but the City is not experiencing the growth that it has enjoyed in the prior
years. Furthermore, most of the sales tax growth is attributed to increased gas prices
and not an improvement in general retail sales. Assessed property values have
increased 0.96% while at the same time countywide values have declined 1.73 %. With
the exception of a large expansion project by the Edison Company, building permit
activity has been relatively slow, a reflection of the sluggish economy. Investment
yields are still at historic lows; the Local Agency Investment Fund (LAIF) rates are below
.5% with no signs of increasing. However, there is some relief in certificates of deposit
(CD) which are paying between 1% to 1.5% and government sponsored agencies
(agencies) are also yielding in the 1.25% to 1.75% range. Within the parameters of the
City's investment policy, staff is taking money out of LAIF and investing in CDs and
agencies' to increase revenue.
APPROVED FOR CITY COUNCIL AGENDA: ITEM NUMBER:
City Council Meeting
February 22, 2011
Page 2 of 2
Staff is also planning to have local hotels and motels audited for Transient Occupancy
Tax (TOT) compliance and that is expected to contribute a small increase in overall
TOT revenue. Expenditures remain at or below budget and are being closely monitored
and adjusted when necessary.
In FY 2011 -12 revenues are not expected to change materially and appropriations will
be proposed not to exceed revenue limitations, further, there is also a great deal of
uncertainty surrounding the governor's FY 2011 -12 budget. In the prior two fiscal years
the State has tried to make up their shortfalls with takes from local government and it
would not be unreasonable to expect another attempt at balancing the State budget with
local money. Therefore, staff will remain watchful of expenditures, take every step to
avoid any oversight of revenue collections and look for new revenue sources (where
allowable) throughout the remainder of this fiscal year as well as into next year.
PUBLIC NOTICE PROCESS
This item has been noticed through the regular agenda notification process.
Submitted by:
Steve Brisco
Director of Finance