HomeMy WebLinkAbout1984-01-24; City Council; 7622; Transfer of funds for business license auditCIT OF CARLSBAD — AGENDA* BILL
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1-24-84
TIN
TITLE:
TRANSFER OF FUNDS FOR BUSINESS
LICENSE AUDIT AND ENFORCEMENT
PROGRAM
DEPT.
CITY ATTY
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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.
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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