HomeMy WebLinkAbout1991-07-23; City Council; 11270; YEAR END FINANCIAL REPORTCr OF CARLSBAD — AGENT BILL
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YEAR-END FINANCIAL REPORT
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RECOMMENDED ACTION:
No action required.
ITEM EXPLANATION:
In December, 1990 and May, 1991, the City Council was briefed on the fiscal
condition of the City. This report is a preliminary year-end report of General
Fund revenues and expenditures for fiscal year 1990-91. The final
comprehensive annual financial report will be available after the completion of
the KPMG Peat Marwick audit.
General Fund revenues continued to decline below those projected in April, 1991.
Property taxes are expected to total $12.7 million, a reduction of $700,000 from
the April estimate. The reduction reflects the continued slow pace in property
turnover and the decreased supplemental property tax. Development related
revenues are generally below the April estimate and reflect slow construction
markets, tight credit and future uncertainty in the housing industry. Sales tax
revenues are estimated for 1990-91 at $9.4 million, unchanged from the April
projection. Both Gas Tax and Transient Occupancy Tax revenues are up
$100,000 over the April projection. Year-end General Fund revenues are
estimated to total $41.15 million, down $545,000 from the April estimate.
The City of Carlsbad adapted to the recession and corresponding declining
revenues by decreasing expenditures for this fiscal year. In order to insure that
the City would end the year balanced, several actions were taken. An informal
hold was put on all but the most necessary hiring until year end. Budget
transfers for new programs or equipment were held to a minimum. Some
projects, programs and capital equipment purchases were deferred. General Fund
expenditures for 1990-91 are expected to total $39.5 million, a reduction of $2.2
million from the April projection.
The net result is an anticipated increase in the General Fund balance of $1.65
million. These funds will allow the City to enter the uncharted waters of fiscal
year 1991-92 with a small financial cushion. The uncertainty of the economy
and the state budget crisis are factors that will be monitored as Carlsbad
navigates into the future.
EXHIBITS:
1. Memo to City Manager dated July 12, 1991 outlining the City's year-end
financial condition.
July 12, 1991
TO: CITY MANAGER
FROM: Financial Management Director
YEAR-END FINANCIAL REPORT
The last fiscal report submitted to the Council in May, 1991, was based on information
available through April, 1991. The conclusion of fiscal year 1990-91 prompted a year-end
review of the City's fiscal status and the review indicates that Carlsbad survived the
nationwide economic downturn in good stead. Revenues continue to demonstrate a
downward course, however, year-end expenditures also mirrored this trend. With the
inclusion of gas tax revenues, anticipated 1990-91 revenues should exceed expenditures by
over $1.6 million. The task of recording year-end accruals will not be complete until mid
August, so several revenue figures reported are estimates.
General Fund revenues for 1990-91 fell below the April projections and are now expected
end the year at $41.15 million, a decrease of $545,000 from the April, 1991 projection.
Major revenue sources are discussed below. Graphics demonstrating the revenue narrative
may be found at the back of this report.
PROPERTY TAX - $12.7 million, down $700,000
The largest single source of revenue, and generally the most consistent resource for
the City of Carlsbad is Property Tax. Over the years the growing tax base has
provided substantial support for expanding services and programs. Fiscal year 90-91
has shown a softening of the property tax base in concert with the rest of the
economy. The extremely soft real estate market combined with the slower than
normal growth in the value of property continued to slow the City's revenue from
property taxes. Additionally, a large portion of the tax base is tied to the increase
in property values as property is sold on the market. The past six months found
property values declining in the resale market.
Property tax revenues are reduced by $700,000 from the April estimate of $13.4
million to reflect actual property tax receipts for the year and accrued late 1990-91
property taxes expected to be paid in July and August.
SALES TAX REVENUE - $9.4 million, no change
Sales tax revenue remained consistent with the April estimates and retail sales
continue to be sluggish. The $9.4 million anticipated for 1990-91 is approximately
equal to last year's (1989-90) receipts.
TRANSIENT OCCUPANCY TAX - $3.3 million, up $100,000
Although revenue from Transient Occupancy Taxes mirrored the declines in other
segments of the economy, total 1990-91 TOT is up slightly from the April estimate.
Upon receipt of June TOT (projected at $300,000 but not due until late July), total
TOT revenues should be $3.3 million.
DEVELOPMENT REVENUE - $3.3 million - down $315,000
All Development revenues declined from April, 1991 estimates, but the primary
decline is seen in the $235,000 decrease in Planning fees. License tax on new
construction has also declined, down $95,000. Slow construction markets, tight
credit, issues surrounding water availability, and general uncertainty within the
housing industry contribute to the lower than anticipated Development revenues.
It should be noted that the graphs attached to the back of this report are compiled
using only the four largest single development revenues. They are included to show
annual and monthly trends, and are not reflective of the total revenues which may
be attributed to development.
The table on the following page compares General Fund revenues projected in April, 1991
to the June, 1991 estimates and the resulting changes.
Revenue Projections/Comparisons
June,1991
Revenue Type
Property Tax
Sales Tax
Transient Tax
Franchise Tax
Transfer Tax
Trailer Coach Tax
Construction Permits
Business License Tax
License Tax on New Const
Other Permits
Cigarette Tax
Vehicle In-Lieu Fee
Home Prop Tax Exempt
Dev. Fees - Planning
Dev. Fees - Engineering
Dev. Fees - Building
Zone Plan Fees
Weed Cleaning
Ambulance Fees
Recreation Fees
Other General Fees
Fines & Forfeitures
Interest
Other Revenues
Total Revenues
Gas Tax Revenue
Total Funds Available
Total Expenditures
Net Revenue (Defecit)
June 1991
Estimate
12,700,000
9,400,000
3,300,000
800,000
200,000
18,000
640,000
835,000
455,000
319,000
135,000
2,100,000
255,000
655,000
950,000
400,000
165,000
33,000
190,000
690,000
695,000
515,000
2,000,000
2,800,000
40,250,000
900,000
41,150,000
39,500,000
1,650,000
April 1991
Estimate
13,400,000
9,400,000
3,200,000
780,000
260,000
20,000
580,000
840,000
550,000
265,000
150,000
2,125,000
295,000
890,000
1,000,000
420,000
140,000
35,000
200,000
700,000
650,000
530,000
2,000,000
2,465,000
40,895,000
800,000
41,695,000
41,689,800
5,200
Change
(700,000)
0
100,000
20,000
(60,000)
(2,000)
60,000
(5,000)
(95,000)
54,000
(15,000)
(25,000)
(40,000)
(235,000)
(50,000)
(20,000)
25,000
(2,000)
(10,000)
(10,000)
45,000
(15,000)
0
335,000
(645,000)
100,000
(545,000)
0
(545,000)
EXPENDITURES
Estimated year-end General Fund expenditures should total $39.5 million, over $5
million less than previously appropriated. The 1990-91 budget has been held in
balance through the application of several measures. First, Departments agreed to
put an informal hold on all but the most necessary hiring until year end resulting
in salary savings. Salary savings accumulate from unfilled personnel vacancies
occurring throughout the year. Second, in order to insure that expenditures would
not exceed revenues, departments identified areas where additional savings could
be realized. For example, the hiring of consultants for special projects was deferred,
as was the spending for capital equipment. The street overlay program was delayed.
Departments successfully continued to decrease expenditures without serious
reductions in service levels. Third, no additional appropriations were made from the
contingency fund. Through this process, the City was able to reduce expenditures
by $2.2 million over the April projection.
The table below summarizes anticipated year-end revenues and expenditures for the
General Fund. The estimated increase in fund balance is now projected at $1.65 million.
Although federal experts predict the recession has bottomed out, the projected increase in
the General Fund balance will give Carlsbad a cushion if the economy continues to be
sluggish, or if the State balances its budget by turning to Cities for support.
FUND
REVENUES AND EXPENDITURES
ESTIMATED REVENUES 40,250.000
GAS TAX REVENUE 900,000
TOTAL REVENUES 41.150,000
ESTIMATED EXPENDITURES 39,500,000
ESTIMATED INCREASE IN FUND BALANCE 1,650.000;
RESERVES
The General Fund entered 1990-91 with $12.4 million in reserves. 1989-90
commitments (encumbrances and budgeted expenditures) and planned 1990-91
assistance to other funds (tree and median maintenance, cultural arts, vehicle
replacement, data processing, and general capital construction) reduced the reserve
balance to $10 million. An additional $3.3 million was expended on pooled
insurance requirements, Alta Mira Park land purchase, and other capital projects.
With the anticipated $1.65 million increase in fund balance at year-end, the General
Fund year-end balance is projected to be $8.3 million.
The table below demonstrates the applications of reserves and the resulting fund
balance.
1991-92 GENERAL FUND RESERVES
GENERAL FUND BALANCE - 6/30/90
BUDGETED COMMITMENTS
89-90 ENCUMBRANCES & CARRY FORWARD
90-91 BUDGET FUND TRANSFERS
AVAILABLE RESERVES AT 6/30/90
COUNCIL RESERVE
UNDESIGNATED
USE OF COUNCIL RESERVE
ALTA MIRA PARK
GEN'L LIAB POOL INSURANCE
USE OF UNDESIGNATED FUNDS
GOLF COURSE
JAMES DRIVE STORM DRAIN
OTHER
(1.1)
(1.3)
6.0
(2.5)
(0.6)
0.2
(0.3)
(0.1)
12.4
(2.4)
10.0
(3.1)
(0.2)
INCREASE IN RESERVES
REVENUES
EXPENDITURES
41.2
(39.5)1.6
AVAILABLE BALANCE - 6/30/91 8.3
Final 1990-91 financial information will be available once the annual audit is completed.
KPMG Peat Marwick will spend six weeks at the city in August and September, 1991,
resulting in a published final report in late 1991. Financial data on capital projects will
be brought to the Council in conjunction with the 1991-92 Capital Improvement Program,
in "August, 199L
H :UII3IVARY\FINANCE\WPDATA\ANNUAL
CITY OF CARLSBAD
PROPERTY TAX HISTORY BY MONTH
Millions
JUL AUG SEP OCT NOV DEC JAN FEE MAR APR MAY JUN
Month
1989-90 1990-91
CITY OF CARLSBAD
PROPERTY TAX HISTORY - CUMULATIVE
Millions
JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN
Month
1989-90 1990-91
90/91 ESTIMATE • $12.7 MILLION
CITY OF CARLSBAD
SALES TAX HISTORY BY MONTH
Thousands
200
ESTIMATE
1990-91
JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN
Month
1987-88 1988-89 •* 1989-90 1990-91
CITY OF CARLSBAD
SALES TAX HISTORY - CUMULATIVE
Millions
ESTIMATE
1990-91
JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN
Month
1987-88
90/91 Estimate - $9.4 million
1988-89 * 1989-90 1990-91
CITY OF CARLSBAD
TOT TAX HISTORY BY MONTH
400
350
300
250
200
150
Thousands
100
JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN
Month
1988-89 + 1989-90 1990-91
CITY OF CARLSBAD
TOT TAX HISTORY - CUMULATIVE
Thousands Estimate
4000
JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN
Month
--— 1988-89 1989-90 1990-91
3/15/91 ESTIMATE - $3.2 MILLION
CITY OF CARLSBAD
DEVELOPMENT REVENUE BY MONTH
Thousands
500
400 -
300
200
100
JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN
Month
--- 1989-90 1990-91
CITY OF CARLSBAD
DEVELOPMENT REVENUE - CUMULATIVE
2000
1500
1000
500 -
Thousands
JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN
Month
1989-90 1990-91