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HomeMy WebLinkAbout1984-01-24; City Council; 7622; Transfer of funds for business license auditCIT OF CARLSBAD — AGENDA* BILL MTG._ DEPT.. 1-24-84 TIN TITLE: TRANSFER OF FUNDS FOR BUSINESS LICENSE AUDIT AND ENFORCEMENT PROGRAM DEPT. CITY ATTY e oCda.a. O5 assist authorizing the transfer of funds for in the Business License Audit and RECOMMENDED ACTION: Adopt Resolution No. part time services to enforcement programs. ITEM EXPLANATION: This year the Finance Department implemented two new programs, the External Audit and Business License Enforcement programs. The Audit program utilizes an existing Accountant position to conduct the audits. The Enforcement program utilizes a part time Enforcement Officer. These programs combined have generated revenue of over $80,000 so far this year and have potential of generating about $155,000 by year end if carried to completion. Below is a summary of the projected results for these programs for 1983-84: Type of Audit Business License & Sales Tax Transient Tax Insurance Premiums Enforcement TOTAL Amount of Revenue $ 95,000 25,000 20,000 15,000 $155,000 The Finance Department budget is not capable of supporting the part time inspector position for the entire year. This program was initiated during 1983-84 on an experimental basis and will be terminated within the next month if not funded. The auditor is a budgeted position, however, to accomplish all audits this year, a part time clerk will be needed to assist with audit related paper work. theTo continue Audits in a timely fashion contract for services contracts hours required. programs and to complete all Business License , the Finance Department will need to or use part time accounting help. These could cost as much as $15,000 depending on the number of PAGE 2 OF AB# FISCAL IMPACT; The Audit and License Enforcement programs have already generated about $80,000 in new revenue to the City in the form of license fees, transient tax payments and insurance refunds. The program could potentially double that return by year end if the audit portion can be completed at a faster rate. Additional General Fund revenue of $155,000 is possible by year end, if not substantially more, if all audits are performed. The City should see a positive cash flow of well over $100,000 and a 300% return on investment if the program is allowed to continue. If not funded, the part time inspector position will be dropped and the audit work will continue at the present rate. The total return to the City will be about $50,000 less in 1983-84. Total cost for this program will be approximately $50,000 for 1983- 84- if continued to year end with additional funding: about $25,000 for audit services, $7,500 for inspector services and about $15,000 for clerical support, including fringe benefits. A contingency transfer of $15,000 has been requested to fund these programs. The Contingency account balance of $279,323 is lower than normal for this time of year due to several capital projects and the Traffic Safety program which were funded from this source. A transfer of $15,000 will reduce the balance to $264,323. EXHIBITS; 1 . Resolution No. 7^ ^2. authorizing the transfer of funds for part time services to assist in the business license audit and enforcement programs. 2. Memo to City Manager - Finance Department audit and business license enforcement performance, January 5, 1983. RESOLUTION NO. 7482 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD 1 AUTHORIZING THE TRANSFER OF FUNDS FROM THE CONTINGENCY ACCOUNT TO THE FINANCE DEPARTMENT BUDGET FOR PART TIME SERVICES TO 2 ASSIST IN THE BUSINESS LICENSE AUDITS AND ENFORCEMENT PROGRAMS. 3 WHEREAS, the performance of Business License audits 4 and the enforcement of business license regulations allows the 5 City to properly administer the business license program; and 6 WHEREAS, these activities have proven to be cost 7 effective for the City and should be funded for the remainder of 8 1983-8*; and 9 WHEREAS, the Finance Department requires part time or 10 contract assistance to perform the remaining business license 11 audits and enforcement program; and 12 WHEREAS, the Council's Contingency Account contains 13 sufficient funds to finance these programs. 14 NOW, THEREFORE, BE IT RESOLVED by the City Council of 15 the City of Carlsbad that the amount of $15,000 is hereby 16 transferred from the Contingency Account to the Finance 17 Department budget for the purpose of providing part time or 18 contract services to assist in the performance of the above 19 functions. 20 /// 21 /// 22 /// 23 /// 24 /// 25 /// 26 /// 27 /// 28 /// 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PASSED, APPROVED AND ADOPTED at a regular meeting of the City Council of the City of Carlsbad held the 24th day of , 1984, by the following vote, to wit: AYES: Council Members Casler, Lewis, Kulchin, Chick and Prescott NOES: None ABSENT: NOne , Mayor ATTEST: fc- ALETHA L. RAUTENKRANZ, City C/lerk (SEAL) JANUARY 5, 1984 TO: CITY MANAGER FROM: Finance Director FINANCE DEPARTMENT AUDIT AND BUSINESS LICENSE ENFORCEMENT PERFORMANCE Recommendation The City's audit and business license enforcement function have generated a total of $80,000 to date and has the potential for generating over $155,000 by year end. In order to keep these functions operating, additional funding of $15,000 will be necessary to finance part time salaries or contract services through the end of 1983-84. Without these funds, the enforcement program will be dropped and the audit function will take substantially longer than the remaining fiscal year to complete. Therefore, the Finance Director recommends that a total of $15,000 be transferred into the Finance Department budget to continue these programs. Discussion The Finance Department staff includes two Accountant positions. One of these positions is used primarily for tracking capital improvement program activity, grant accounting and auditing. The auditing function is by far the most profitable for the City. Audits have been performed in many areas over the past six months. Those of most importance are Business License, Sales Tax, Transient Occupancy Tax (TOT) and Insurance billing. In summary, the audit programs have generated revenue or potential revenue of about $140,000. This is detailed as follows: Type of Audit Amount Business License/Sales Tax $ 95,000 Transient Occupancy Tax 25,000 Insurance Premiums 20,000 TOTAL $140,000 Business License audits are being performed on all businesses in Carlsbad which are licensed on gross receipts. These audits cover 1980, 1981 and 1982. The audit uses sales tax reports, income tax reports and other books of account to verify that the appropriate license tax has been paid. Response to the requests