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HomeMy WebLinkAbout1982-02-09; City Council; 6898; Quarterly Financial Reportz 0 § C ..l 0 z ::t 0 (,) ""'. ~ Cl\ _, OF C \RLSBAD -AGENli~ BILL AB# lo f-t r' MTG. 2/9/82 DEPT,_F_IN __ _ DILE; RECOMMENDED ACTiON: QUARTERLY FINANCIAL REPORT DECEMBER 1981 By minute motion, approve the following changes in estimated revenues: * Sales Tax -Increase by $100,000 from $3,662.00 to $3,762,000. * Building Permits -Decrease by $160,000 from $560,000 to $400,000. * Enp,ineering Fees -Decrease by $100,000 from $300,000 to $200,000. * Interest (General Fund) -Increase by $200,000 from $800,000 to $1,000,000. * Sewer Construction Fees -De~rease by $300,000from ~1,552,000 to $1,252,000. * Public Facilities Fees -Decrease by $400,000 from $1,300,000 to $900,000. * Park-In-Lieu Fees -Decrease by $100,000 fr.om $300,000 to $200,000. ITEM EXPLANATION: The attached report is a review of the second quarter financial activity for the City of Carlsbad, The purpose of the quarterly report proceRs is to keep council informed of problem areas as they are identified and to provide general financial information on the operation of the City. The City Council should take particular note of the following points: o Operating Revenues have recovered to some extent from the low levels reported in the f{rst quarter report. Building and Jevelop~ent continue to be very slow. Ho•ever, the losses in huildinA activity have been offset by sales tax and interest revenu~. o Operating Expenditu:es continue to be below budgeted levels. Salary savL,~s remain the pd.mary component in these 11avings, Rates of expenditures in dome departments ~hould be watched during the next quarter; however, no single department is in serious trouble. The staff has taken steps to improvn the mechancial maintenance problems reported in the first auarter, QUARTERLY FINANCIAI REPORT -nECF.MBER 1981 AB/I u ~o/fr Page 2 o Capital Funds continue of building activity. quarter if the Janunry tr~11d. FISCAL IMPACT: their weak performance due to the lack Some recovery may be seen in the third figures are a sign of a ne~ building The results of the second quarter expenditures continue to show weakness in development related revenues. Savings appear to be growing. The recommended revenue adjustments will actually ~ncrease ectimated general fund revenues by $40,000 or about 0.3%. The capital revenue adjustments reflect a decrease of $800,000 in total capital fund revenues. This should not impact the current capital program, but may slow future projects in the CIP. EXHIBIT: City of Carlsbad's Quarterly Financial Report, Dec, 31, 1981 CITY OF CARLSBAD QUARTERLY FINANCIAL REPORT DECEMBER, 1981 The first quarter report provided r.ouncil and staff with a brief description of the finan~ial condition of the City as of September 1981. This report will update the first quarter report by providing financial information for the City operations t.hrour,h necember 1981. Recommendations 1. Increase estimated sales tax revenue by $100 1 000 from $3,662,000 to $3,762,000. 2. Decrease estimated building permit revenue by $160,000 from $560,000 to $400,000. 3. Decrease estimated engineering fee revenue by $100,000 from $300,000 to $200,000. 4. Increase estimated inter~st income in the general fund by $200,000 from $800,000 to $1,000,000. 5. Decrease estimated sewer construction fund revenue by $300,000 from $1,552,000 to $1,252,000. 6. Decrease estimated public f cilities fee revenue by $400,000 from $1,300,000 to $900,000. 7. Decrease estimated park-in-lieu fee revenue by $100,000 from $300,000 to $200,000. Report Summary OPERATING REVENUES -Operating revenues have taken a turn upwards and now exceed budgeted figures by about $500,000 or 7%. Sales tax and interest revenue are the primary po~itive performers. Development related revenue continues to be slow. OPERATING EXPENDITURES -Salary savings and a slower usage of contingency funds help to keep operating expenditures below budgeted levels, Some departments are spending at a rate slightly ahead of the average expect~d at the end of six months. These will requir~ some management attention for the last half of 1981-82. GENERAL FUND RSVENUE -Sales tax and interest earnings are ahead of budgeted fi~ures. Developme~t continues to be very slow. January figures (not yet available) may show a slight upturn in development. GENERAL FUND EXPENDITURES -A savings in salary costs of $200,000 and a slower usnge rate of contingency funds contribute to the $500,000 savings logged to date in the general fund. Utilities, communications and ene~gy related products will require attention in the next quarter. 3 MONTHLY FINANCIAL REPORT DECEMBER 1981 Page 2 SALES TAX REVENUE -Sales taxes continue tn lead budget projections to about 6%, The City's sales tax base appears to he maintaining some strength in the face of a nation wide economic slowdown. BUILDING PERMITS -Development related activity is very slow. Building permit revenue for December 1981 is only 50% of budgeted figures, In addition, engineering fee revenue is down by a similar margin. January will show a slight improvement for these sources, But, unless the last half of this year picks up dramatically, the City stands to be $300,000 or more behind bud~eted levels, BUSINESS LICENSES -Second quarterly revenue continues to lack sufficient information to provide a good business license forecasting base, This will be updated for the council in the next report, PARKING CITATIONS -This source continues to provide good revenue history, A total of $~5,000 to $30,000 should be received in 1981-82, It should be noted that all motor vehicle fine revenues are running ahead of estimates, INVESTMENTS -Interest rates have taken a turn up again in December 1981. Interest revenue is well ahead of budget estimates due to higher interest rates and a stable investment pool. The increase in funds available for investment in December reflects the receipt of property tax distributiono from the county. The decrease in September was the result of the purchase of Macario Canyon Park. CONTINGENCIES -The balance in the contingency account at December 1981 is $794,492. Cantingency funds are being used at a slower rate this year than in past years. SANITATION FUND -Expenditures and revenues continue to match closely for the sewer fund, The first half of 1581-82 leaves the sewer fund in a very slightly positive position, Effects continue to put the sanitation operation on an enterprise basis. WATER FUND -Water expenditures and revenues are generally balanced as of December 1981. The water fund is looking at a 4% increase in purchased water costs for the remaining portion of 1981-82, The Utility Director is carefully watching the water fund operations for the effect of this rate increase. CAPITAL FUNDS -The builJing slaw down has seriously effected the capital funds. Sewer construction, public facilities fees and park-in-lieu fees are ~11 significantly behind budget projections. Some recovery is in stare in January 1982; however, n total recovery is unlikley. 4 ·""" MONTHLY FINAUCIAL REPORT DECEMBER 1981 Page 3 Report of Operations The following s&ction provides a capsule view of many of the components that make up the City's fiscal position. From month to month, these sections will be modified to reflect the most recent up-to-date information. Sections will be added or deleted as the need arises, The tables following the graphic section provide the detailed financial accounting of activity through December 31, 1981, OPERATING REVENUES Summary: Operating revenues are those revenues received by the City that arc used to pay for daily operations such as salaries, goods, services and small capital equipment, These revenues are dependent upon economic activity, building activity, city rate otructures and state and federal policies, As the chart shows, second quarter revenues are running slightly ahead of the budget projections. As of the end of December, total operating revenue was about $500,000 ahead 16 r--------··-:::.::NG REVEKUfs ·-··--·-·--· -· M of budgat estimates. This is primarily due to continued high interest earnings in investmunts, higher than anticipated sales tax revenue, and vehicle code fines; offset somewhat by reduced building related activity, Although the first six months of 1981-82 have been less than encouraging, if the last half of this year can maintain the economjc pattern of the first half we ohould find total operating rev~nues equaling or exceeding the adjusted budget estimates, 14 ~ I --Budget L L --Actual ·I •··--··-·-···-···············-· •... ·• 12 ~ O 10 N ~ ------·----------------------... ' 6 I 4 :·---------------1 . ,I -·--· .. ... The following sections discuss 2 .{ eales tax, building permits, and other specific revanue sources. ~ __________________ _. • ..._ ____ __, __ -"l" 1ooi sos 25S MONTHLY FINANCIAL REPORT DECEMBER 1981 OPERATING EXPENDITURES Page 4 Summary: Operating expenditures are those that support daily operations such as salaries, purchase of goods, services and minor capital expenditures, This category includes all operations of the City such as Police, Fire Administration, Maintenance, Parks, Library, Sewer Maintenance and Water. Total operating expenditures are about 10% behind budgeted levels. About $500,000 of this savings is found in the general fund in salary savings ($200,000) and apparent savings in contingency usage ($300,000). f -·------------- i6 14 Energy and communications costs continue to be within budgeted limits as of December 1981. It should be noted that the recent SDG&E rate hike could cause some serious problems in the City's utility accounts. The rate hike could cost the City as much as 12 S4O,OOO in additional utilit~ expenses. These accounts will be watched carefully for the next quarter. There are no serious problem areas in the City's operating expenditure picture through the first six months of 1981-82, Several departments have spent more than generally is anticipated in the first half of 198182. These managers should watch their expenditures closely for the last half of 1981-82. Action has been taken by the council and staff to correct problems indicated in the first quarter report. 10 8 6 4 2 1981-82 . OPERATING EXPENDITURES M . I L '" L --Budget I '" 0 --Actual ~--N ·-------..... ------------- '" $ I' I' ....... ----..... -----------··-... --- I' I-/ I' I ~---------1 t-• -· ---t-• '" I :r .. ---. .. . .. . .. ---- i ', I I I -, iOO% _, 75% .. , 50% .. MONTHLY FINANCilL REPORT nECEMBER 1981 GENERAL FUND REVENUE Total general fund revenue through the end of the second quarter is about $200,000 ahead of the revised budget estj~ate. This 2% gain is the net effect of additional interest, sales tax and v~hicle fines and reduced construction related revenues. IntP.rest revenue is the primary com~=nent of this positive position. Although interest rates have fallen as predicted, the "bottom" of the decline in rates was only 12%. Rates have recently begun a steady increase and have reached about 15% by the end of January. (For more information see the following section on investments.) Sales tax re~enue is still ahead of current estimates by 6% or about $100,000, Page 5 1981-82 GENERAL FUND REVENUE 12 P----------••• -·-····--·· ···-···-----------·-· .... ,,,,. ADOPTED BUDGET 10 M -REVISED BUDGET -ACTUAL I L •••••••••••••••••• ······•··•···-······· 8 p, L I 6 • 0 ··--·····--·-··· •••••••. 'N ./ 4 p, $ I . . ... -----·-·· 7 ... 2 .,,.1 ~ e.. C P., e-, > 0 0 0 w 8 0 w ., ..: 'll :z Q .. --- .. -· -· ~ C!l i w 1:1< --.. a: ~ ~ 75%, so, 2s, w § ., 7 ,.. ..... MONTHLY FINANCIAL ::PORT DECEMB!rn l gs1 GENERAL FUND EXPENDITURES Page 6 1981-82 For the first six months of 1981-82, general fund GENERAL FUND EXPENDITURES 12 M -BUDGET I --ACTUAL 10 I, L 8 I 0 expenditures are running about $200,000 below expected levels. This is primarily due to $175,000 of salary savings, In addition, there is an apparent savings of about $300,000 due to the low level of usage of the contingency fur.d. This may change in the last half of 1981-82 as departments begin to I-• --------------···-feel the pinch of price hikes in 6 N utility rates, costs for I professional services and capital outlay items. Many departments have exceeded 50% in expenditures as of the end of December, It will take good management control to avoid some tight money problems in some departments. Accounts such as communications and utilities are currently below budgeted levels, but will see cost increases in the last part of this year. SALES TAX $ 4 / 1--·------/ ,, .{ ---------1981 82 SALES TAX M -BUDGET '" I 3 L _ ACTUAL I:' L RE\'ENUE ••• 100% -· •• ·-75% ---· 50% -• -· 25% r:l 5 .., -----------. , .. 100% Sales tax revenue is based on 1% of gross retail sales within the City limits, The revenue picture through December 31, 1981 is generally favorable. During the first half of this year the City has received $1,7 million in sales tax revenue. This is about 6% or $100,000 ahead of anticipated revenues, If this trend continues through the end of 1981-82 total sales tax revenue will reach $3,9 million or about $240,000 more than the current estimate, This may be somewhat optimistic; however, it appears that an increase of at least $100,00Q can be expected. It is recommended that the sales tax estimate for 1981-82 be increased by s100,ooo from $3,662,000 to $3,762,000. ,.. I --------.. -· ----.. 1si '"o N ... $ 2 lo I"----------------·--··-···-... . .. . .. .. .. ·• 50~ I 1 : I ,?5% ~---------y u ---· .. . -·-.. -. .. ~ j ~ . >-E-< Ul ..:I t:, C. h > u z al 0: a: >-z :::> ::, Ul u 0 Ul < Ul :$ C. :;; ::, '"> < V) 0 z '.:l ., "' ... < ... ., y· MONTHLY FINANCIAL REPORT DECF,MBER 1981 BUILDING PERMITS Page 7 The past three months have continued the slow no growth pattern for construction related revenue established in the first quarter. Interest rates have dropped from the near record 20.5% posted in the first quarter, to a thirteen month low of about 16%. In spite of reduced loan rates, building activity has continued to decline. Building valuation, building permits is~ued and inspecti?ns made have all reached a 1981-82 low. Th~ first quarter report recommended reducing the estimated building permit revenue from $710,000 to $560,000. With December 31, 1981 revenues only reaching 50% of the revised estimate, the council should consider reducing this estimate again from $560,000 to about $400,000, ~ reduction of $160,000. By this late date, even if building activity does respond to these lower interest rates, revenue of $560,000 is unlikely. 700 ~ . 1981-82 BUILDING PERMITS 600 u••0 •••• • BUDGE'l' (ADOPTED) , 500. -• BUDGET (REVISED) --. -• ACTUAL T •• 100, In addition, engineering fees have taken a similar plunge. 1980-81 revenues from engineering fees were over $318, 00. Hot1ever, revenues to date in 198182 total only $45,000. The same slow down that has affected building permit revenues has stopped almost all preliminary work on major construction projects. This report recommends reducing the estimated revenue for engineering fees from $300,000 to $200,000 for 1981-82. 1--H ····-················-··-·-' •••••••••• .•. •. •. 751 400 .. 0 u "5 A 300 N •D •••··••-•· ••••• ••••• •• •• • •- 200 100 .. ,.. so, i -25% MONTHLY FINANCIAL REPORT DECEMBER 1981 BUSINESS LICENSES Revenues from business licenses can often be an indicator of economic conditions. The City's license cycle is January to December each year. The reduced level of revenue shown through December reflects a shift in timing for license payments when compared to 198081. The January and February revenues will be better indicators of the business climate. PARKING CITATIONS The 1981-82 budget does not include an estimat:e of revenues from parking citations. The activity of the first six months of this year indicates that the City can expect to receive $25,000 to $30,000 in parking citation revenue by year end. Parking citation collection expenses are estimated to amount to about $.3,500 in 198182. i,, T H 300 I'" 0 Page 8 1981-82 BUSINESS LICENSE REVENUE u ---------------------------·---100% • s A ' ~ --Budget • --Actual ... $ 200 ~ -• -• -_, 75% ,------------------------...... --.... ---· 50% 100 i,, ".' ____________________ - --1--25% ~ lo -- --Ill u • >-<!> .... I-> u = w ... C. ~ 00 = ~ z ::, :::, UJ u 0 UJ UJ ~ 0. ::, ,:, < V, 0 z Q ,:, u. < ,:, 1981-82 PARKING CITATIONS 60 T H 0 u 50 s A N 40 D $ 30 20 • 10 ~ >-I-I>! w ... .,, C. I-> u ~ 00 i i z ::, ::, w u 0 UJ w 0. ::, ,:, < V, 0 :z: Q ,:, u. < ,:, /C MONTHLY FINANCIAL REPORT DECEMBER 1981 INVE STMENT3 Page 9 The City Treasurer is charged with the responsibility of managing inactive City funds in a manner consistent with good financial practices and sound investment policies. The amount of interest earned each year LS directly proportional to the availability of inactive deposits and interest rates. The following graph shows the investment pool available during each Aonth this fiscal year. The decrease in the investment pool between August and September reflects the purchase of Macario Canyon Park. The increase in December is the result of property tax revenue distributed by the county near the end of the month. We can expect to see this pool of funds decrease as capital projects get underway. There will be another marked increase in the investment pool in April when the second property tax payment is distributed by the county. The chart below shows the interest rate swing during the past year. City earnings usually approximate the 9O-day Certificate of Deposit (CD) level shown. Interest revenue for the first six months of 1981-82 has exceeded origin~l estimates by abount $100,000. This is primarily due to the higher than anticipated interest rates. Based on this experience, it is recommended that the City Council approve an increase in estimated interest revenue in the general fund of $200,000, bringing the total estimate to for 1981-82 to l million. YIELDS ON SELECTED SECURITIES ,wiRAGtS OF DAILY RATf.S ENOeo· FRIO/\Y 14 K ~' L 12 l I 0 " 10 1981•82 !NVESiMENTS 21.0 : 10.0 11.0 ; h ~ 7 ': / I :: it I' ~fi '" I\ ,.1,.. 1L LC..,. II Tt l"1 I 1 11.., J ~ 1, A oo otv co•~ ' n Y\l\ II" I\ 17.. I\ ,," Ir' r\\ \ ~ l I ! : _g :l § , ta.o n.o 11,0 IS,O ;rf/ ~ \J -\' r\ r' ~~, ... /"\... L_, ~ L -, ,-3 8 6 I- 4 i- i- c i- i- I >-,_ ... i s ~ Q. ... 8 ~ ~ "' . . ~-~ "' °' ~ .... ~ ... ,.. ~ ~ ~ ••.a ' l),C u.o 11,0 10,0 t.0 ... '\ 1\ /, "" \r-.\ _%3 : I/'\ Ir '1~ ,,.. ~1 ' J.-A ' ' "' L. I '· ,,, \\ ',rt" ; i ,· 1.~19 ~ -E ,,. I -· ~~1"£ ... ::l ,.h ,, . -·~ .. -' -! j i:,. l : ~ " I.. ,. ... : . " ' .j, t t• I •· I H M •~ ;7 0 ll 10 0 a ll l t J i, lt U I II I I I ., .... 11,0 20,0 11,0 u.o lt,0 IS,0 14,0 u.o u.o 10.0 "9,0 ••• I ( MONTHLY FINANCIAL REPORT DECEMBER 1981 GENERAL ?UND CONTINGENCY ACCOUNT The general fund contingency account started this fiscal year with a balance of $855,587. Transfers from this account through December have amounted to $61,095 leaving a balance of $794,492. SANITATION FUND The sanitation fund is responsible for the collection of sewer fees and the support of the sewer system maintenance effort, including the City's share of thEi Encina operating costs. lt is important that the fees collected fully support the system's operating coste. The following chart shows that expenditures have exceeded revenues by about $61,000. Th is however is due to the timing of the third quarter payment to the Encina operations fund. De.ducting this $71+,000 payment shows that the sewer fund is in a slightly positive position by about $13,000 at December 31, 1981. Revenues continue to come in at about $49,000 per month, Th is is about $1000 per month more than previous estimates, 1,000 T H 0 u s A 800 600 400 600 500 400 300 200 100 N D $ Page 10 1981-82 CONTINGENCY ACCOUNT BALANCE --->-~ >-a: .... ..J 0. t; > <.> ~ a> I i z ::, ~ .... 0 UJ .... ~ ::, ..., V, 0 z Cl .., ... ..., 1981-82 SANITAHON FUND MAINTE~ANCE & OPERATION REVENUES vs EXPENDITURES --Expend! tu res ~ • .._ • -Revenues T Ii 0 u s A N ) D $ . 1· , ,. . >, "' ... LU .., 0. ... > <.> ~ a> i a: s z ::, ~ w u 0 ~ w ~ ::, ..., Vl 0 :z: .., ... ::.: ..., MONTHLY FINANCIAL REPORT DECEMBER 1981 WATER FUND Page 11 The Water Department is e municipal enterprise. That is its operations are accounted for in a manner that approaches those used in private busindss. One of the primary indicators used to determine the condition of thP. general operation is the revenue vs expenditure or profit and l~ss comparison. The chart at the right shows a comparison of the ~umulative water operation through the second quarter of 1981-82. Revenues presently exceed e~penditures by about $24,000 or ubout 3%. We should see this trend continuing for the rest of 1980-82. It should be noted, hQwever, that the City will be ie1uired to pay about $6 per acre foot mo•e for water purch~sed froru the Costa Real Municipal Water Di~trict for the second half of 1981-82. This equates to a 4% increase in water costs. 2 l9m-~ WATER ENTERPRISE OPERATIONS REVENUES vs EXPENDITURE~ •····· • Revenues -£XQendltures 13 MONTHLY FINANCIAL REPORT DECEMBER 1981 REVENUE -CAPITAL FUNDS Page 12 As discussed earlier, development activity continues to be considerably below estimated levels. Capital revenues such as sewer construction funds, public facilities fees and park-in- lieu fees all depend ou construction activity for their income base. These charts show that construction revenue has been slow and continues to show little sign of improvement. Sewer construction funds are about $290,000 behin~ o~iginal estimate public faciities f~es are about $400,000 behind original estimates; end park-in-lieu fees are about $100,000 behind original estimates. It is recommended that these revenue estimates be adjusted downward as follows: o Sewer Construction Funds -Down $300,000 from $1,552,000 to $1,252,000. o Public Facilities Fees -Down $400,000 from $1.3 million to $900,000. o Park-In-Lieu -Down $100,000 from $300,000 to $200,000 llll•ll P\IILIC FACIIIIUS ms T 1'00 " !ZOO g -• Act .. ! """"' s A 1000 N 0 s lOO ~ 0 Ull•U PA,X•1N•L1EU RE U -• ACTllAL 1'1:\'1::lVC s A N 200 D lto.l -•A<1 .. , ..... ,.. T " 1000 Q u s 100 A " 0 IOO 400 zoo ijJ§jj§ iH !i! i S.i l CITY OF CARLSBW COMPARATilr.: STATEMENT OF' Ftll..-DS I•# 1981-82 ---- Beginning Capital.'Projects Estimated Interfund Adopted Ending Balance continued from Revenues Transfers Budget Balance FUND 7-1.-81 1980-81 6-30-82 OPERATING FUNDS General $ -o-$ $12,436,300 $325,000 $12,871,107 $ (109,807) G'.lS T~x: 589,907 180,939 325,000 (325,000) 40,300 388,668 Sanitation 136,81° 639,000 679,812 96,007 Street Lighting ::1,805) 449,900 449,900 (9,805) Lilirary Bond Debt Service 68,423 9,000 18,·100 59,323 Sewer Bond Debt Service· 73,610 130,000 124,570 79,040 ) Workers Comp. Self Insura~ce 102,287 223,000 50,500 274,787 Liability Self Insu~.mce 100,000 100,000 67,382 132,618 Housing Antho:-.... ty 93,704 816,200 816,156 93,748 Redeve;~;,ment (l.96,025) -o-.89,061 (285,086) o•..l,er Special Revenue Funds 63,011 -o--o-63,011 Water Enterprise ·4,033,181 1,9CO,OOO (455,080) 1,885,450 3,592,651 TOTAL OPERATING FUNDS $5,055,112 $ 180,939 $17,028,400 $(455,080) $17,092,338 $4,355,155 CAPITAL FUNDS General Capital Const. $6,232,362 $3,353,751 $ -o-$ $1,902,445 $ 976,166 Sewer Construction 236,646 83,535 1.,2s2_,ooo 959,425 445,686 Revenue Sharing 1,027,659 709,861 540,000 86!>,000 (2,202) Public Facilities Const. Fund 683,659 86,000 .900,000 404,000 1,093,659 -.) Park In-Lieu Fund 625,084 251,500 200,000 65,000 508,584 Planned L6cal Drainage 18,091 --o--o-18,091 Con:munity Dev. Block Gra.'lts -o--39,280 39,280 -o- Bristol Cove Assmt. District 43,369 ---o-43,369 Water Enterprise -o---o-455,080 455,080 -o- TOTAL CAPITAL FUNDS $ 8,866,870 $'4,484,647 $ 2,931.,280 $455,080 $4,685,230 SJ,083,353 TOTAL ALL FUNDS $13,921,982 $4,665,586 $:l.9,959,680 $ -o-$21,777,568 $7,438,508