HomeMy WebLinkAbout1993-01-26; City Council; 12049; 1992-93 general fund mid-year financial reportA -
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DEPT. F1N GENERAL FUND FOR FISCAL YEAR 1992-93 CITY MGR:
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AB # japrcr TITLE: DEPT. HD.
MTG. 1/26/93 MID YEAR FINANCIAL, REPORT OF THE CITY ATTY
RECOMMENDED ACTION:
Receive and file
ITEM EXPLANATION:
This report summarizes the fiscal status of the General Fund for the first half of fiscal year
1992-93.
Revenues:
Total revenues for the General Fund through December are down 8% compared to
collections as of this date last year while our estimate is for only a 1% decrease for the year.
These numbers are an improvement over the November figures but are still below the
estimates.
Property taxes through December are less than last year’s collections by over 10% and are
8% below our estimate for this time of the year. However, the January payment which was
just received from the County is higher than usual. Thus, through January, we are only
2.7% below last year which puts us very close to our estimate of a 2.3% decrease.
The only caveat to this good news is that the County distributions have been all over the
board this year making it very difficult to compare last year‘s receipts with this year‘s. On
a monthly basis, we have been anywhere from 85% below last year to 3% above. Most of
these variances have been due to the County trying to adjust for the redistn’bution of
property taxes caused by the State budget. We were told that all adjustments had been
made by the December payment but the variances are continuing to occur. Considering the
current information, it is very possible that the property tax estimate for the year may be
overstated by as much as $500,000.
Sales taxes, the next largest revenue source for the General Fund, are still showing a 1%
decline from last year at this time. The estimate had been for a 9% increase in the sales
current receipts. We won’t see actual results from either of these until March. Even if the
stores had a good Christmas season, which many papers are reported, it may not be enough
to make up for the poor first half of the year.
All of the development related revenues are still less than estimated at this time; however,
there is good news from the planning department. They took in almost $200,000 in fees
in December putting them even with last year for the six month period. While this is good
news it is still not enough to make up for all the other declines. Through December, the
five development revenues are running approximately $550,000 behind our projections
which extrapolates to a potential $1.1 million shodall for the year if these trends continue.
The shortfall is mainly the result of the continuing depression in the real estate industry for which no recovery has yet been seen. Although the San Diego Economic Bulletin is
forecasting an increase in the number of housing units built in 1993, they have stated there are several road blocks to even a small amount of new growth including: the lack of
taxes. Neither the additional Price Club sales or the Christmas sales are reflected in the
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Page Two of Agenda Bill No. la! 04 7
affordable housing, the region's general economic weakness, zoning and regulatory
restrictions on new development (particularly low-cost multifamily) and the lack of
financing to acquire and develop real estate.
State subventions have jumped up this month to a 2% increase over last year. This is
attributed to the State finally catching up on their distributions. Fines and forfeitures,
however, have remained depressed at almost 50% below budget. This equates to a
$117,000 shortfall which could grow to over $175,000 by the end of the fiscal year,
Ambulance fees and business licenses continue to do well coming in 16% and 27% over
budget through December.
In summary, through December 1992, we are approximately $1.4 million behind last yeais
collections at this time and approximately $1.2 million below our estimates. If we were to
end the fiscal year at 8% below prior year, it would mean a $3.2 million shortfall in the
General Fund. However, property taxes have shown marked improvement in January and
we are expecting sales taxes to pick up in March. Thus, the potential shortfall would more
likely be in the $1.2 million to $2 million range.
The Finance Department will be reviewing the 1992-93 revenue estimates in the near future
to determine if additional adjustments to the estimates are necessary.
Expenditures:
On December 8,'1992, Council adopted revisions to the operating budget for the General
Fund which cut $2,578,000 from the previously adopted budget for 1992-93 as well as
eliminating 42 positions. The attached expenditure status by department reflects the
amounts spent or encumbered through December 30,1992 in comparison to those revised
budget amounts.
The General Fund in total has over 54% of its budget available. This means that through
December 1992 approximately $1.8 million less has been spent than would be anticipated
if funds were spent evenly through out the year. However, the majority of the savings
recognized in this first half of the year are due to several specific items as follows:
* The contingency fund has a remaining balance of $900,000 which accounts for
$400,000 of the savings through the first half of the year.
A payment from the General fund to the Golf course fund is done every year
towards the end of the year. This yeais payment is budgeted at $600,000. As this
payment won't be made until year end, it accounts for $300,000 of the $1.8 million
"saved" through December.
A number of maintenance contracts have not yet been awarded. These are expected
to be let in the latter half of the year. These account for another $400,000 of
"savings" in the first half.
*
*
Thus, although the numbers look good through the first half of the year, a large portion of
the potential amount saved wiU actually be spent in the latter half of the year. Considering
the revenue situation, all departments will continue to monitor their spending very carefully
over the remainder of the fiscal year.
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Page Three of Agenda Bill No. I a! 0 q 'i
In summary, it now looks as though we will not achieve our revenue projections while the
expenditure levels may be very close to budget by the end of the year. If this were to occur,
it would result in a shortfall of $1.2 million to $2 million for the General fund. Staff will
be reviewing this information in the upcoming weeks to detennine some methods by which
we can get back on track toward our goal of a balanced budget by year end. Possibilities
to be discussed will include continuing the managed hiring freeze and putting a freeze on all But the mast netessaqr cantratt!.
EXHIBITS:
1.
2.
3.
4.
5.
6.
7.
General Fund Revenue - 15 Year Comparison
Historical Analysis of General Fund Revenues
Historical Analysis of Property Taxes
Historical Analysis of Sales Taxes
General Fund Revenue Status through December, 1992
Budget to Actual Revenue Graphs
General Fund Expenditure Status by Department
EXHIBIT 2 General Find RevenugHistory
Millions Actual . Projected
50
40
30
20
io
0 87 88 89 90 91. 92 93 '93 93
Orig Revised New
% graph depicts the history of General fund revenues over the last six years and the changes
made during FY93. As can be.seen, the recession began to effect the revenues in FY91 with only
a $1.2 million, or 3% increase. FY92 showed a real decrease in revenues of $600,000 for the first
time in Carlsbad since 1979. The estimates originally made for the 1992-93 budget adoption in
,June 1992 were for a 5.5% increase. However, the continuing recession and the raid on local
government revenues by the State caused the projection to decrease to $39.5.don in September
1992, a $400,000 decrease from FY 92 ("Revised" column on the graph).
Now, with half of the yeah revenues collected, it has become clear that even the reduced amounts
estimated in September were optimistic. No recovery has been experienced yet and the.outlook for
the construction and real estate industry is as bleak as a year ago. Considering all factors known
to date, it is believed necessary to once again reduce the General fund revenue esthates. The
reductions come mainly in three areas: property taxes-$300,000 decrease, sales taxes-$200,000
decrease, and development related revenues - $575,000 decrease. The total decrease is $1.2 million
which produces an estimate of $38.3 million (the "new" column on the graph). With this revision,
the General fund revenues estimate is now below that experienced in FY90 with the trend going
downward instead of the upward growth experienced in earlier years. This new trend in revenues
is creating many challenges for the City in that it must find ways to deal with the increasing need
for services despite a declining revenue base.
..
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)I* PR~PERTY TAX HISTOR~XIIISI~ 3
1987-88 to 1992-93 Projected
Actual Projected Millions 14.7%
87-88 88-89 89-90 90-91 91-92 92-93 92-93 92-93
Fiscal Year Orig Revised New
The chart above provides a historical look at property taxes for the City since fiscal year 1987-88
and the various projections made throughout the year for 1992-93.
The first 92-93 column (Orig) reflects the estimate used when we adopted the budget in June. This
estimate was made in the early spring of 1992 in order to move ahead with our budget process.
to resume the previous pattern of double digit growth. The estimate was for a 10.7% increase over
the FY92 estimate of $14 million. When we closed the books in July of 1992, the actual property
tax revenue received forthe year was only $13.5 don. This difference between the actual and
estimate for 1992 pushed up the percentage growth needed to reach our FY 93 estimate to 14.7%.
As more information became available during the summer of 1992 regarding assessed values and
the effect of the recession on the property taxes, it was obvious that the adopted estimate was too
high. In addition, it became clear that the State was going to take some amount of money from
local governments though what and how much were still undetermined. As a resolution to the
State budget crisis was anticipated in the near future, the decision was made to wait to revise the
estimate until after that final piece of the puzzle was known.
The State budget crisis dragged out until final resolution in September 1992. At that time, the
property tax estimate was revised downward for both the State budget effect ($1.2 million) and the
effect of the depressed economy ($1.1 million). The new estimate anticipated a 6.7% growth in property taxes less the 9% taken from by the State for a 2.3% decrease. This is shown on the above
graph as "Revised".
We have since received the December 1992 and January 1993 tax payments which put property
taxes at a 2.7% decrease from prior year. The estimate as shown in the "Revised" column is for a
2.3% decrease. While this would tend to give us some confidence that the revised estimate may
At that time, a recovery was expected in the summer of 1992; thus, we projected our property taxes
e e I. '
be fairly accurate, there are a few other indicators that cause some concern. One of these is the
growth in assessed values for 1992-93. The assessors office has reported only a 2.6% increase in
the assessed values for Carlsbad for FY93. This is down dramatically from the 8% in FY92 and 13% in FY91. With no recovery seen or anticipated in the real estate industry for the upcoming six
months, it is difficult to expect much higher growth in property taxes than that from the increase
in assessed values (2.6%).
The other cause for concern is the number of assessment appeals that may be in process. The
County is unable to tell us the number or the amount of assessed value that is being appealed in
Carlsbad; however, we do know that there are significant amounts in the redevelopment area. If
the Redevelopment area is representative of the other commercialhdustrid areas of the City, it is
possible that these could cause a significant decrease in the property taxes due this year. The
County normally is able to hear all cases in the year that the appeal is filed and, therefore, any
adjustments would come through as retroactive adjustments to our property tax receipts.
Based on the above concerns, it now appears that it may be prudent to further decrease the
property tax estimate by $300,000, a 4.5% decrease. This would allow for a 4.5% growth in taxes
less the 9% taken from by the State. The new estimate is shown in the "New" column on the graph.
*
0 0 EXHIBIT 4 b.
SALES TAX HISTORY
1987-88 to 1992-93 Projected
Actual Projected Millions
87-88 88-89 89-90 90-91 91-92 92-93 92-93 92-93
Fiscal Year Orig Revised New
This chart graphs the history of sales tax receipts by Carlsbad over the last 5 years plus the revisions
made to the FY93 estimate.
The original estimate was $9.7 million which anticipated 3% growth in sales tax plus $750,000 net
increase from the opening of the Price Club. This estimate was determined in the spring of 1992
in order to continue with the budget process. It became increasing suspect as to whether the City
would be able to achieve this projection as the summer wore on. No recovery in the San Diego
economy was seen and the Price Club, originally anticipated to open in July, was not opened until
October. When the State adopted their budget in September, the estimate for sales taxes was
revised downward by $200,000. This effectively reduced the estimate for 1 quarteis worth of Price
Club sales. (See column on chart marked "Revised").
Since that time, the slow recovery expected in sales tax has not materialized. Thus, another
decrease to the estimate is believed warranted at this time which would further reduce the sales tax
estimate to $9.3 million (another $200,000 decline). This new estimate is shown as the last column
on the graph.
BXHIBIT 5 0 0 *. *
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EXHIBIT 6A 0 ? 1" .
-, TAX REV NUE - BUDGET TO ACTUAL
JULY - DECEMBER 1992
DOLLARS IN MILLIONS
7
6 ........................................
................................. 5
..................... 4
3 .....................
..................... c< .' 2 .I
18
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DEVELOPMENT FEE REVENUE - BUDGET TO ACTUAL
JULY - DECEMBER 1992
DOLLARS IN THOUSANDS
600
500
400
300
............. .........................
.............. ......................
.............. ......................
.............. 200
100
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OTHER REV UE - BUDGET VE 'SUS' ACTUAL
JULY - DECEMBER 1992
DOLLAR§ IN THOUSANDS
1400
1200
1000
800
600
400
1,
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8,
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EXHIBIT 7 0 CITY OF CARLSBAD
GENERAL FUND
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4 I'
EXPENDITURE STATUS BY DEPARTMENT
TOTAL AVAILABLE %
BUDGET COMMITTED* BALANCE AVAILABI
DEPT DESCRIPTION FY 1992-93 1 2/3 1 /92 12/31 /92 12/31 /$
GENERAL GOVERNMENT
1010 CITY COUNCIL 159,368 82,096 77,272 48
1030 CITY CLERK 28,700 13,131 1 5,569 54
1210 ATTORNEY 378,963 178,252 200,711 53
1310 FINANCE 91 4,678 41 9,042 495,636 54
1320 TREASURER 85,380 34,475 50,905 59
1410 PURCHASING 376,029 190,860 185,169 49
1610 RESEARCH & ANALYSIS 249,737 131,603 118,134 47
1020 CITY MANAGER 620,799 302,926 31 7,873 51
1510 HUMAN RESOURCES 824,650 325,723 498,927 60
1710 INFORMATION SYSTEMS 375,864 181,340 194,524 51
1910 INSURANCE/RISK MANAGEMENT 198,326 95,994 102,332 51
lxxx OTHER (INCL CONTINGENCY) 2,257,558 800,678 1,456,880 64
1990 MISC. NON-DEPARTMENTAL 1,013,250 252,670 760,580 75
TOTAL GENERAL GOVERNMENT 7,483,302 3,008,790 4,474.51 2 59.
21xx POUCE 8,847,775 4,251,396 4,596,379 51
22xx FIRE 6,816,906 3,247,013 3,569,893 52
TOTAL PUBLIC SAFETY 15,664,681 7,498,409 8,166,272 52.
PUBLIC SAFETY
COMMUNITY DEVELOPMENT
30xx COMMUNITY DEVELOPMENT ADMIN. 829,393 281,649 547,744 66
31xx ENGINEERING 3,533,675 1,874,422 1,659,253 47
32xx PLANNING 2,268,886 1,117,143 1,151,743 50
341 1 HISTORIC PRESERVATION 5,572 2,103 3,469 62
3610 BUILDING 962,998 363,282 599,716 62
TOTAL COMMUNITY DEVELOPMENT 7,600,524 3,638,599 3,961,925 52.
CULTURE & RECREATION
4Oxx LIBRARY 2,365,29 1 1,144,644 1,220,647 51
42xx CULTURAL ARTS 251,525 110,531 140,994 56
41 xx PARKS & RECREATION 4,006,587 1,845,715 2,160,872 53
TOTAL CULTURAL ARTS 6,623,403 3,100,890 3,522,513 53,
MAINTENANCE 8c UTILITIES 4,389,183 1,860,076 2,529,107 57 I
TOTAL GENERAL FUND 41,761,093 19,106,764 22,654,329 54
* Total committed includes expenditures & encumbrances. ** Amount available would be 50% if funds were spent evenly throughout the year.
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