HomeMy WebLinkAbout2000-02-08; City Council; 15620; 1999-2000 Financial Status ReportCITY OF CARLSBAD - AGENDA BILL W
9B# 15,620
MTG. 02/08/00
DEPT. FIN
FINANCIAL STATUS REPORT, BUDGET
TITLE:
1999-00 SECOND QUARTER
AMENDMENTS CITY MGR.~
RECOMMENDED ACTIONS:
2. Adopt Resolution No.dOGO-Sb
1. Accept the Second Quarter Financial Status Report for 1999-00.
increasing the revenue estimates and appropriations for
3. Adopt Resolution No. aOoo-5 7 adopting changes to the Fee schedule for City services.
ITEM EXPLANATION:
Staff has completed a mid-year update of the revenues and expenditures for the City as of
December 31, 1999. The attached document (Exhibit 4) summarizes the results of the financial
review for the General fund, the Water and Sanitation Enterprise funds, and the Redevelopment
Agency. As a result of the review, several adjustments to the current budget are being
recommended. They will be discussed throughout the remainder of this report.
Financial UDdate
To-date, General fund revenues exceed projections by $2.1 million or 7%. Property taxes are General Fund
$500,000 higher than projected for the first half of the year, while sales tax revenues are ahead of
projections by $438,000, or 5%, and transient occupancy taxes are $446,000, or 12%, ahead of
projections.
Development-related revenues are slightly below expectations and include engineering fees,
planning fees, building permits and building fees. Although planning revenues are below
expectations both building permits and engineering fees are above expectations.
Other Funds
Revenue for the Water Operations fund, at $8.9 million, is $400,000 greater than the previous
year at this time. An increase in the number of water customers resulted in an increase in water
sales as well as in the cost of purchased water. Through December, the Water Enterprise has an
operating income of $552,000.
Revenues for the Sanitation Enterprise fund total $2.6 million for the first half of the fiscal year.
This is a 10.1% decrease over the prior year and is due to a residence rate decrease of $2 per
month for a single family, which became effective May 15, 1999. Expenses, at $1.6 million, are
$250,000 below the previous year due to a timing difference in payments to Encina Wastewater
Authority. To-date, the Sewer Operations fund has an operating income of $957,000.
and is due to the 9% increase in property values in the Redevelopment area. Expenses are as
Revenues for the Redevelopment Agency total $729,000, which is $60,000 higher than last year
expected through December.
fiscal year 1999-00.
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PAGE TWO OF AGENDA BILL NO. 15, W 0
BUDGET REVISIONS
General Fund Revenues
estimates for the General fund totaling $4,068,000 as detailed below and in Schedule A of Exhibit
Based upon the financial results through December, staff recommends an increase in the revenue
2.
I General Fund I Current I Revised Change in
Revenue Category Estimate Estimate Estimate
Taxes
85,000 6,127,000 6,042,000 Charges for Services
0 3,207,000 3,207,000 Licenses and Permits
682,000 4,649,000 3,967,000 Intergovernmental
$3,115,000 $48,653,000 $45,538,000
0 816,000 816,000 Fines and Forfeitures
Income from Invest. & Property
1,000,000 Other Revenue Sources
1,650,000 0 1,650,000 Interdepartmental Charges
2,350,000 186,000 2,164,000
1,000,000 0
sd~nmnnn
Tax revenue is estimated to increase by $3.1 million. The majority of the increase, $2.5 million, is
are estimated to increase by $1,092,000 based on the County’s report of final assessed values for
in the property tax, sales tax and transient occupancy tax (TOT) estimates. Property tax revenues
the City of Carlsbad. Assessed values have increased over 19% from the previous year. Sales tax
revenue is expected to be $1.1 million higher than the current estimate based on receipts to-date.
TOT estimates are recommended for an increase of $437,000. This is based on a continuation of
the high level of tourism seen over the past year bolstered by the opening of Legoland in March
1999. The remainder of the increase in the tax revenue estimate is for slightly higher estimates for
transfer taxes.
estimated. This is mainly due to one-time revenues totaling $416,000 authorized late in the State
Intergovernmental revenues are estimated to increase $682,000 over what was originally
budget process. In addition, the robust economy has boosted car sales which has increased our
vehicle license fee revenue.
fees, and other various charges. In the development-related revenues, staff is recommending an
Charges for services include development service fees, as well as ambulance billings, recreation
as high as was originally estimated, therefore, a decrease of $386,000 is being recommended.
increase in engineering fee revenues of $300,000. Revenues for planning fees do not appear to be
Due to the growing population and better collection rate, ambulance fees are estimated to be
$141,000 greater than originally estimated. Recreation fees are also estimated to increase by
which are part of the mid-year budget requests.
$30,000 based on the revenue generated from the additional enrichment classes and youth sports
category. Further detail on all of the General fund revenues can be found in the attached Financial
Interest income estimates have increased as shown in the Income from Investments and Property
Status Repolt.
a
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PAGE THREE OF AGENDA BILL NO. 15/62 0
ADDroDriations
A total of $1.7 million in additional appropriations are requested.
can be found in Exhibit 1.
Additional detail
General Fund
75,000 Vehicle Maintenance Fund
$ 281,850
$1,701,850 TOTAL APPROPRIATIONS: 1,345,000 Capital Projects - Sewer Fund
for these reque:
General Fund
Recreation is requesting $42,850 for the following unanticipated expenses: increase in lease
cost for copiers, increase in bank charges for Visa/Mastercard, unexpected replacement of the
ball field maintenance vehicle, overtime for adult sports league due to the maternity leave of the
supervisor, increase in cost of community services brochure due to change in publisher, plan
hangers and computer for staff relocating to City Hall, and additional costs associated with the
recreation strategic plan.
In addition, recreation is requesting $34,000 for items that will be 100% offset by revenues.
These include security guards for Harding facility rentals, youth basketball uniforms, youth
sports instructors, and enrichment class instructors.
Due to the unexpected early access to Pine School, staff is requesting $19,500. The Stay N
Play Program needs $4,500 for tables and chairs and other miscellaneous supplies and
Facility Maintenance is requesting $15,000 for maintenance. This includes custodial services,
utilities and minor renovations such as interior painting. Both of these items were not budgeted
because the lease and sale for this building'did not conclude until September 1999.
An additional $10,000 is requested for overtime for the Facilities Maintenance crews. With all of
the recent moves to new facilities, the maintenance department has had to work more overtime
than originally budgeted. They are also requesting $50,000 for the implementation of the
Computerized Maintenance Management System.
Police are requesting an additional $4,500 for the replacement and training of a new canine and
$3,200 for an additional crossing guard at Pacific Rim Elementary School.
In order to properly study the relocation and redesign of the power plant, $50,000 is being
requested to hire a consultant to perform this study.
The State Board of Equalization (Board) recently conducted a sales tax audit of the City of
Carlsbad for the period of October 1, 1996 through June 30, 1999. The purpose of the audit
was to ensure that the City was not only paying sales tax on taxable items purchased, but that
the correct sales tax amount was being paid. It was determined by the Board that the City
underpaid sales tax during this time period, and this underpayment, combined with accrued
interest, totals $37,800.
0 Human Resources has requested an additional $30,000 for recruitment advertising. Due to the
number of new positions approved in the 1999-00 fiscal year and the tight job market, they have
had to perform intense advertising campaigns to attract qualified candidates. This has resulted
in higher advertising expenses than originally budgeted.
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Other Funds
Fuel costs have increased by approximately 31% since last year. Based on projections for this
year, staff is requesting an additional $75,000 be added to the fuel budget.
Capital Proiects
Staff is requesting additional appropriations for two Capital Improvement projects, both related to
the Foxes Landing Sewer Life Station Upgrade. The CIP project to upgrade the lift station has
existing appropriations of $720,000 from the Sewer Replacement fund. The estimated cost has
been revised, and this project is now expected to cost about $1,395,000, so an additional $675,000
is needed.
The second project is a new CIP project involving construction of a 14-inch sewer force main for
the Foxes Landing Sewer Lift Station and a new 16-inch potable water line under the Interstate 5
Freeway using the horizontal directional drilling method of trenchless technology. Staff has
determined that the cost of hauling wastewater during the lifi station upgrade would be very costly
and would disrupt the surrounding neighborhoods, thus construction of the force main is
recommended. The estimated cost is $670,000, also paid for with Sewer Replacement Funds.
Staff is requesting a total appropriation from the Sewer Replacement fund in the amount of
$1,345,000 for these two projects.
Fees for City Services
Requested changes in the ambulance, aquatic and Aqua Hedionda Lagoon fees are shown in the
attachment to the resolution (Exhibit 3). The ambulance fee increases are based on a survey of
what other agencies are charging as well as the recommendation of our contracted billing agency.
Lagoon fees are being increased in order to eliminate odd dollar amounts. Aquatics is requesting
the addition of discount pass options, now possible with their new registration software. They are
also requesting a slight increase in the North County Aquatics and North Shore Aquatics lane fees.
Staff has reviewed these fees and is recommending changes as shown in Exhibit 3.
FISCAL IMPACT:
Staff is recommending increases in the General fund revenue estimates of $4,068,000, and
additional appropriations of $281,850. This results in an increase to the General fund balance of
$3,786,150.. Staff is also recommending an increase in appropriations for the vehicle maintenance
fund of $75,000. Total additional appropriations for the Capital Improvement Program are
$1,345,000, There are sufficient balances available in each of these individual funds to support
these appropriations.
EXHIBITS:
1. Mid-year budget requests
2. Resolution No. dm-sb increasing the revenue estimates and appropriations for fiscal
4. Second Quarter Financial Status Report for 1999-00
3. Resolution No. doc0 -57 adopting changes to the Fee schedule for City services
5. Memo on sales tax audit
year 1999-00
EXHIBIT 1
Mid Year Requests
Requested
Department Appropriations
POLICY/ LEADERSHIP GROUP
Consultant to study relocationlredesign of powerplant
ADMINISTRATIVE SERVICES -
Human Resources - Recruitment Advertising
Finance - Results of sales tax audit
50.000
30,000
37,800
PUBLIC SAFETY
Police - Replacement K-9 4,500
Police - Additional crossing guard at Pacific Rim elementary 3,200
COMMUNITY SERVICES
Recreation ~~
Brochures
Strategic plan
Office relocation
Replacement of ballfield maintenance vehicle
Adult sport league overtime
Miscellaneous office expenses
Recreation - Revenue offset
Security Guards for facility rentals
Instructors
Pine School
Recreation programming
12,700
5,800
5,300
7,350
1,800
9,900
Total 42.850
2,000
32,000
Total 34,000
4,500
Facilities maintenance 15,000
Total 19,500
Facilities - overtime 10,000
Facilities -Computerized Maintenance Management System 50,000
PUBLIC WORKS
TOTALGENERALFUNDREQUESTS 281,850
Vehicle Maintenance
Increase in cost of fuel
CaDital Proiects
Foxes Landing Sewer Lift Station
75,000
1,345,000
TOTAL NON GENERAL FUND REQUESTS 1,420,000
TOTALREQUESTS 1,701,850
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Ill
Ill
RESOLUTION NO. 2000-56
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF CARLSBAD, CALIFORNIA, INCREASING THE
REVENUE ESTIMATES AND APPROPRIATIONS FOR
FISCAL YEAR 1999-00
WHEREAS, the financial results through December reflect
revenue receipts which are $3.2 million ahead of the estimate; and
WHEREAS, staff has identified unanticipated expenditures
for the first half of the year which require additional appropriations; and
WHEREAS, the total estimated cost to complete the Foxes
Landing Sewer Lift Station Upgrade (Project 3656) have increased
substantially; and
WHEREAS, construction of a force main is required in
addition to the sewer lift station upgrade; and
WHEREAS, the force main was not included in the fiscal
year 1999-2000 Capital Improvement Program and requires an additional
appropriation; and
WHEREAS, total appropriations for each fund many only
be increased or decreased by authorization of the City Council.
NOW, THEREFORE, BE IT RESOLVED by the City
Council of the City of Carlsbad, California, as follows:
1. That the above recitations are true and correct
2. That estimated revenues will be increased by
$4,068,000 as shown on Schedule A
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3. That budgeted appropriations for the General fund will
be increased by $281,850, and Non-General funds by
$75,000, as shown in Schedule B
4. That Council authorizes an additional appropriation of
$675,000 from the Sewer Replacement fund for the
Foxes Landing Sewer Lifl Station Upgrade, and an
appropriation of $670,000 from the Sewer
Replacement fund for construction of the Foxes Sewer
Lifl Station Force Main
PASSED, APPROVED AND ADOPTED at a regular
meeting of the City Council on the 8th day of February ,2000, by
the following vote, to wit:
AYES: Counclmembers Lewis, Hall, Finnila, Nygaard.
NOES: None -
ATTEST: '
(SEAL)
- SCHEDULE A
GENERAL FUND
REVISED REVENUE ESTIMATES FOR 1999-2000
CURRENT REVISED
REVENUE REVENUE
ESTIMATE ESTIMATE ESTIMATE
CHANGE
IN
SALES TAX
PROPERTY TAX
TRANSIENT TAX
FRANCHISE TAX
BUSINESS LICENSE TAX
TRANSFER TAX
TOTAL TAXES
15,808,000 16,900,000 1,092,000
17,756,000 18,890,000
7,463,000 7,900,000
1,134,000
437,000
2,034,000 2,034,000 0
1.629.000 1.829.000 0 ..
648,000 1,100,000 452,000
45,538,000 48,653,000 3,115,000
..
ITERGOVERNMENTAL
VEHICLE LICENSE FEES 3,458,000 3,600,000 142,000
HOMEOWNERS EXEMPTIONS 279,000 279,000 0
OTHER
TOTAL INTERGOVERNMENTAL
230,000 770,000 540,000
3,967,000 4,649,000 682,000
ICENSES AND PERMITS
BUILDING PERMITS 1,980,000 1,980,000 0
OTHER LICENSES 8 PERMITS 1,227,000 1,227,000 0
TOTAL LICENSES & PERMITS 3,207,000 3,207,000 0
HARGES FOR SERVICES
PLANNING FEES
BUILDING DEPT. FEES
AMBULANCE FEES
ENGINEERING FEES
886,000 500,000
1,485,000 1,485,000
(386,000
0
1,100,000
859.000
1,400,000 300,000
1 .ooo.ooo 141,000
RECREATION FEES
OTHERCHARGESORFEES
TOTAL CHARGES FOR SERVICE!
..
1,087,000 1.1 17,000
625,000 625,000
30,000
0
6,042,000 6,127,000 85,000
INES AND FORFEITURES 816,000 816,000 0
ICOME FROM INT & PROPERTY 2,164,000 2,350,000 186,000
ITERDEPARTMENTAL CHARGES 1,650,000 1,650,000 0
THERREVENUESOURCES 1,000,000 1,000,000 0
DTAL GENERAL FUND 64.384.ooo h8.452ppp LQWIQQ
- - SCHEDULE B
GENERAL FUND
OPERATING FUNDS
REVISED APPROPRIATIONS
CURRENT REVISED
APPROPRIATIONS APPROPRIATIONS INCREASE/
EPT DESCRIPTION FY 1999-00 FY 199940 (DECREASE)
ENERAL FUND
3LICYILEADERSHIP GROUP
CITY COUNCIL
CITY MANAGER
CITY CLERK
CITY ATTORNEY
TOTAL POLlCYlLEADERSHlP
CITY TREASURER
DMlNlSTRATlVE SERVICES
ADMINISTRATION
FINANCE
PURCHASING
HUMAN RESOURCES
TOTAL ADMINISTRATIVE SERVICES
RECORDS
JBLIC SAFETY
POLICE
FIRE
TOTAL PUBLIC SAFETY
OMMUNITY DEVELOPMENT
COMMUNITY DEVELOPMENT ADMlN
HIRING CENTER
GEOGRAPHIC INFORMATION
ECONOMIC DEVELOPMENT
COMMUNITY PROMOTION (CCVB)
PLANNING
BUILDING
TOTAL COMMUNITY DEVELOPMENT
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3MMUNITY SERVICES
PARK PLANNING & RECREATION
SENIOR PROGRAMS
LIBRARY
TOTAL COMMUNITY SERVICES
CULTURAL ARTS
JBLIC WORKS
PUBLIC WORKS ADMINISTRATION
ENGINEERING
STREETS &TRAFFIC SIGNALS
PARKS
TOTAL PUBLIC WORKS
FACILITIES
3~-DEPARTMENTAL a CONTINGENCY
OTHERNONDEPARTMENTAL
OPERATING TRANSFERS OUT
CONTINGENCY
TOTAL NON-DEPT & CONTINGENCY
)TAL GENERAL FUND
3N-GENERAL FUND
VEHICLE MAINTENANCE
1,033,376
241,930
239,662
733,240
2,382,948
134,740
318,177
1,437,930
1,745,735
539,200
1,675,678
5,716,720
13,116,517
8,938.280
22,054,797
583,241
80,070
345.748
134,280
2,591,950
520,824
6,060,751
1,804,638
3,289,207
4,987,110
390,006
9,252,159
585,836
5,051,751
690,060
2,654,302
2,919,021
13.286598
1,971,464
11,102,949
982,022
14,334,534
2,249,563
1,083,376
241.930
239,662
733,240
2,432,948
134,740
318.177
1,475,730
1,775,735
539,200
5.784,520
1675.678
13,124,217
8,938,280
22,062,497
583,241
345,748
80,070
134,280
2,591,950
520,824
6,060,751
1,804,638
3,370,557
390,006
4,987.1 10
585.836
9,333,509
690,060
5,051,751
2,654,302
2,919,021 . 2,046,464
13,361,598
11,102,949
982,022
14,334,534
2,249,563
50,000
0
0
0
50,000
0
37,800
0
30,000
0
67,800
0
7,700
0
7,700
0
0
0
0
0
0
0
0
81.350
0
0
81.350
0
0
0
0
0
75,000
75,000
0
0
0
0
73,088,507 73,370,357 281,850
1,490,665 1,565,665 75,000
)TAL NON-GENERAL FUND 1,490,665 1,565,665 75,000
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RESOLUTION NO. 2000-57
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF CARLSBAD, CALIFORNIA, ADOPTING THE MASTER
FEE SCHEDULE AND ESTABLISHING THE FEES FOR
GENERAL CITY SERVICES
WHEREAS, the City Council of the City of Carlsbad has
the authority to establish fees for City services; and
WHEREAS, from time-to-time said fees are reviewed and
evaluated to maintain an adequate fee structure recovering costs for City
services; and
WHEREAS, the City Council has determined the cost of
providing general and development-related services; and
WHEREAS, the City Council finds it necessary to recover
the costs for City services; and
WHEREAS, the City Council has held the necessary public
hearing and allowed for public comment on the establishment of said
fees.
NOW, THEREFORE, BE IT RESOLVED by the City
Council of the City of Carlsbad, California, as follows:
1. That the changes to the general City fees as listed on
Exhibit A attached hereto are hereby adopted
2. That all other terms and conditions of Resolution No.
97-724 remain in full force and effect, except as
specifically amended
3. This resolution shall become effective on April 1.2000
for General City fees
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PASSED, APPROVED AND ADOPTED at a regular
,2000, by meeting of the City Council on the
the following vote, to wit:
8th day of February
AYES: Councilmembers Lewis, Hall, Finnila, Nygaard.
ATTEST:
(SEAL)
Approved Exhibit A
CHANGES TO THE CITY FEE SCHEDULE
Current Proposed Chanae
GENERAL CITY FEES
Ambulance Fees
Transport - Resident
Transport - Non-resident
Mileage - per mile
Night call
Assessment Oxygen
$340.00 $430.00 $90.00
540.00 623.00 83.00
9.00 ’ 11.00 2.00
18.00 0 (18.00) 40.00 43.00 3.00
0 139.00 New
Agua Hedionda Lagoon Fees
change wording on all categories from ‘boats, jet skis , sailboats” to “vessels“
Annual fee - Non Resident - Power vessels
Annual fee - Non Resident - Passive vessels
Daily Fee - Resident - Power Vessels
Daily Fee - Resident - Passive Vessels
87.50 90.00 2.50
43.75 45.00 1.25
12.00 14.00 2.00
5.00 6.00 1 .oo
Page 1
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EXHIBIT 4
A
Financial Status Report
Prepared by the Finance Department
December 31,1999
INTRODUCTION
for Carlsbad total $32.4
General fund revenues
million for the first half of
the 1999-2000 fiscal year.
This is a $2.4 million, or
8%, increase over fiscal
year 1998-99. The
sources contributing to
the overall upswing in
revenues were taxes
(sales, transient
occupancy, property and
transfer), vehicle license
fees, other
intergovernmental
revenue, income from
investments and
interdepartmental
charges. Significant
decreases from the prior
year can be found in
development related
revenues; down 18%,
other licenses and
permits; down 22%, and
other revenues; down
63%. However, total
General fund revenues
property, and
XY OF CARLSBAD
Property Taxes
Sales Tax
Transient Occupancy Tax
Planning Fees
Building Permits
Engineering Fees
Vehicle License Fees
are still ahead of last year's figures and exceed projected numbers by 7%. This is indicative of the local
economy, where, "San Diego County's leading economic indicators finished October 1999 at an all-time
high, positioning the City for economic growth through at least the first half of 2000. "'
The University of San Diego's Index of Leading Economic Indicators for San Diego County rose 0.4 percent in
for unemployment insurance were also moderately positive. Two components, building permits and help
October. The advance was fueled by strong gains in local stock prices and consumer confidence. Initial claims
wanted advertising, were down slightly, while the outlook for the national economy was unchanged during the
month. This was the eighth month in a row that the index has not fallen?
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2
The San Diego Union-Tribune. December 22. 1999, "San Diego Indicators Show Growth to Continue", p. C-1,
University of San Diego School of Business Administration, USD Index of Leading Economic Indicators, December 16, 1999,
"Leading Indicators Up in October", p. 1.
Financial Status Report 2
Further detail about Carlsbad's General fund revenues can be found in this report, as well as an overview
of the General fund expenditures for the month of December 1999. In addition, the financial status of the
Water and Sanitation Enterprises and the Redevelopment Agency will be addressed.
GENERAL FUND
Taxes
On an annual basis, the City's largest source
of tax revenue is sales tax, followed by
DroDertv tax. and transient OccuDancv for
TaxRevenue
Fiscal Year Comparison
hotel) iax. As expected, these leading tax
this fiscal year as the San Diego region
revenue generators have grown considerably
continues to enjoy a strong local economy,
increasing local stock prices and low
unemployment.
Through the month of December, sales tax
receipts are 9% over last year's collections.
Due to the continuation of a healthy economy,
the Carlsbad Company Stores in the fall of high consumer confidence, the expansion of
1999, and the first full year of sales tax
revenue from Legoland. The leading sales tax
generators by economic segment are new
FRANCHISE TAX up 12%
BUSiNESS
LICENSE
0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0
in millions
up 9%
&
auto sales, department stores, and
restaurants. December saw another month OActuals 98-99 mActuals 9940
with strong sales tax revenues:
American's confidence in the economy surged in November, thanks to a sharp rebound on Wall Street, low
unemployment rates and growth in personal income. The sharp rise reported yesterday by the Conference
Board came after four straight months of declines in the index that measures consumers' willingness to spend?
In December 1999, the City began to see the flow of property tax revenues. As expected, for the first six
year. According to the County of San Diego Assessor's Office, assessed values in Carlsbad for fiscal year
months of the fiscal year, property tax revenues at $7.8 million are 19% higher than the same period last
1999-2000 have increased by 19.7%. This is the largest percent increase of any city in the county. This
increase in assessed values was due to the new construction within the City as well as the reassessment of
property that changed ownership during the previous year.
Transient occupancy taxes (TOT) total $4.1 million through December; a $666,000 increase over the same
period last year. The majority of this increase is attributable to increased room rates at many of the hotels
within the City. As reported by the "Trends in the Hotel Industry" report published by PKF Consulting, from
January 1999 through September 1999, the average north coastal room rate increased by 8.5%, while the
average north coastal occupancy rate dropped by 1% during the same period. Other factors contributing to
the increase in TOT revenues include the opening of the Grand Pacific Palisades Resort and Hotel in March 1999 and the opening of the Residence Inn in July 1999. Three more hotels plan to open in
Carlsbad over the next 18 months, which will continue to add to the City's TOT revenue. With these new
' The San Diego Union-Tribune, December 1,1999, "Confidence Grows, Reporl Finds", p. C2.
Financial Status Report 3
hotels opening up soon and the increased room rates, the City is projecting an increase in TOT revenue for
the year.
Franchise tax revenues total $577,000 year-to-date in 1999; a 12% increase over the previous year.
Franchise fees come from public utility sources such as SDG&E, trash collection franchises, and cable
franchises conducting business within City limits. The majority of this year's increase is due to increased
fees paid by Waste Management due to population growth within the City.
Business license revenues total $924,000 for the year; a decrease of 3%, or $29,000, from fiscal year
2,817 to 2,734, a timing difference has caused the negative year-to-date variance. The timing difference
1998-99. Although the number of new and renewed licenses is up this fiscal year compared to last year;
was the result of one of the larger businesses in Carlsbad paying their 1997-98 business license fee in
August 1998; two months later than the actual due date. This year, that same business paid their fee in the
correct month (June), thereby creating the timing difference between this fiscal year and fiscal year 1998-
99.
DeveloDment Fee Revenues
As projected, building permit revenue
(residential, commercial and industrial),
totaling $994,000 through December, is
below last year's figure by $108,000 or
10%. These revenues represent a
continuation of a strong residential
housing market, combined with a weak
commercial and industrial market in the
area. Although interest rates ended 1999
at 8.06%, compared to December 1998's
rate of 6.83%, demand for homes is
outpacing the supply of homes, thereby
fueling not only increased home sales, but
escalating home prices.4 The downturn in
commerciallindustrial development is not
an affordability issue, but rather supply
and available land issues. The City
continues to experience a relatively high
vacancy rate with commerciaMndustriaI
sites within the area due to a high
Development Fee Revenue
Fiscal Year Comparison
A
Down 11%
PUNNING
0 200 400 600 800 1000 1200
in Thousands I OActuals98-99 WActuals99.00 I
development rate in previous fiscal years.
In addition, the City is running out of finished industrial land on which to build. Some additional non-
will become available for construction in the future.
residential projects are being processed through the planning stages and, therefore, some additional land
Building permits are issued to cover the cost of regulating construction activities. This allows the City the
means to protect overall community interests. In December, 103 new homes were started, compared to
121 new homes in December 1998. On a calendar year basis, we issued permits for 2,228 new homes;
the most in a year since the mid-1980's. As with the last several months, building activity is occurring all
over the City. The busiest areas were La Costa Valley, Calavera Hills and Rancho Carrillo, where 92% of
all the December permits were issued. The non-residential side continues to remain relatively quiet. In
10%
The San Diego Union-Tribune, December 30,1999, "Mortgage Rates Climb Above 8% in Last Week of '99. p. C-3.
i5
1
Financial Status ReDort 4
December, there was one significant industrial permit and no commercial permits issued. The industrial
permit was for a new 56,000 square-foot tilt-up building.
Engineering fees, which are fees received for improvement and grading plan check and inspection
services, total $704,000; a decrease of $142,000, or 17%, from fiscal year 1998-99.
Building department fees total $654,000 year-to-date. This is a decrease of 11 %, or $81,000, compared to fiscal year 1998-99. Planning fees are also down for the City of Carlsbad. Planning fee revenues total
$200,000; a decrease of 55% over last fiscal year.
In total, development fee revenues are $2.6 million for the year. This is $572,000, or 18.3%, lower than
development revenues collected in the prior year. However, development fee revenues are slightly ahead
of projected figures by $23,000, or .9%. Due to this volatility in development fee revenues, we will continue,
to monitor these revenues closely to determine whether we will meet our expected revenues for the year.
Vehicle license fees (VLF) total $1.8 million through December 1999, which is an increase of 20% over the
lnteraovernmental Revenues
disbursed by the State Controller to the City. The State taxes motor vehicles in lieu of local property taxes.
same period in 1998. Vehicle License Fees are collected by the Department of Motor Vehicles and
The State reduced the VLF last fiscal year by 25%, and replaced the reduction in fees with State General
fund money. Due to provisions in the 1999-2000 State budget, the fee will be automatically cut by an
additional 10% in the 1999-2000 fiscal year; a year earlier than originally anticipated. The State General
fund will also replace the revenues lost by this rate reduction. Vehicle License Fees have increased this
year due to the population growth in the City and the statewide increase in VLF received.
Other intergovernmental revenues are comprised mainly of a $172,000 receipt from the State to partially
replace property taxes that were shifted to schools back in the early 90's. This payment is the first of two
payments authorized by the State budget on a one-time only basis. The second payment is expected to be
approximately $40,000. The City also received $204,000 in December 1999, to reimburse the City for
booking fees paid. Other intergovernmental revenues include reimbursements for mandated costs and
POST reimbursements.
Other Revenues
Other licenses and permits have decreased by 22% from the previous year, at this time. A factor in the
decrease was the refund of fees for a permit application which was withdrawn. In addition, general permits
(Le., fire protection systems, hazardous uses, oversize load, etc.) and other miscellaneous building permits
have seen a drop in revenues during the current year
Recreation fees total $487,000 and are slightly lower than fiscal year 1998-99. Instructional classes, youth
and adult sports, the triathlon and other special events, day trips and the various aquatics programs
comprise the majority of the recreation fees.
-
Financial Status ReDort
Ambulance fees are $468,000 and are
ahead of last December's figures by 12%,
or $12,000. Increased collection rates
and an increase in the City's population
have contributed to the higher revenue
balance.
Fines and forfeitures consist mainly of
receipts from parking citations and the
City's share of fines from moving
violations. They total 5385,000 for the
year; this is 6%, or $25,000, less than fiscal year 1998-99. The largest portion of
these revenues is derived from moving
violations. These revenues are received
by the City from the county of San Diego,
and the state of California. In the
previous fiscal year, the City received one
more payment at this time from the
County, than we have at the same time
this year, creating the majority of the
variance.
Year-to-date income from investments
and DroDertv totals $1.1 million. a $93.000
Other Revenue
Fiscal Year Comparison
ttts I
0 200 400 600 800 10001200140016001800
in Thousands
OActuals 98-99 mActuals 99-90
Jp 20%
I
or 9% increase. Interest income is $136,000 higher than last year due to higher interest rates and the
maintenance of higher average daily cash balances, while sales and rentals of property are less so far this
year, creating a net increase in income from investments and property.
Interdepartmental charges at $956,000, are $99,000, or 11%, more that last year. The majority of this
variance is due to an increase in miscellaneous interdepartmental charges in 1999-2000 caused by the
overall increases in the annual budget as well as the inclusion of a building usage allowance in these
charges. The increase in miscellaneous interdepartmental charges was partially offset by a timing
difference in engineering overhead charges that have not yet been booked for December 1999. In addition,
fees in 1999-2000 of $24,000.
the portfolio management fee was lowered in January 1999, creating a reduction in portfolio management
Other revenue sources total $349,000; $594,000 less than the previous fiscal year. In December 1998, the
City received $500,000 in condemnation funds from a developer. This one-time revenue also resulted in an
increase in appropriations for the same amount in the previous fiscal year.
..<
- -
Financial Status Report 6
GENERAL FUND
REVENUE
EXPECTED
AS OF 12/31/99
BUDGET
AXES
PROPERTY TAX
SALES TAX
TRANSIENT TAX
FRANCHISE TAX
TRANSFER TAX
BUSINESS LICENSE TAX
TOTAL TAXES
4TERGOVERNMENTAL
VEHICLE LICENSE FEES
HOMEOWNERS EXEMPTIONS
OTHER
TOTAL INTERGOVERNMENTAL
ICENSES AND PERMITS
BUILDING PERMITS
OTHER LICENSES 8 PERMITS
TOTAL LICENSES a PERMITS
HARGES FOR SERVICES
PLANNING FEES
BUILDING DEPT. FEES
ENGINEERING FEES
AMBULANCE FEES
RECREATION FEES
TOTAL CHARGES FOR SERVICE!
OTHER CHARGES OR FEES
INES AND FORFEITURES
COME FROM INT a PROPERTY
4TERDEPARTMENTAL CHARGES
ITHER REVENUE SOURCES
7.284.550
8,786,278
3,630,213
1,002,537
535,718
198,939
21,438,234
1,570,964
41.850
43.841
1,656,656
864.143
1,499,679
635,535
458,973
658,409
546.808
429,500
526,203
248.813
2,868,705
416,199
1,082,000
825,000
500,000
OTAL GENERAL FUND
111
30,286,473
(1) Calculated General fund revenues are 7% over budget I
6,541,761
8,476,251
7,784384
3,409,982
9.224.189
514,696
4,076,137
952,575
576.669
331.763
923,639
20,227,028
368.892
22,954,410
1.483.202 1,773,359
37.681 43,254
69.553 504,417
2,321,030 1,590,436
1,101,592 993.863
1,776,297
674,705
1,519,115
525,252
442,010 200,193
734,379 653,636
845,442 703,577
418.611 467,845
500,713 487,103
3,133,686
192,531
2,774,307
261,953
410,210 385,423
1,056,137 1,148,840
859,795 958,436
942,508 348,663
1,243,123
747.938
666,155
(28,936)
61,973
37,129
2,727,382
290,157
434.864
5,573
730,594
(107,729)
(149,453)
(257,182)
(241.817)
(80.743)
(141.865)
(13,610)
49,234
69,422
(359,379)
(24,787)
92,703
98,641
(593.845)
ACTUAL
FY 1999
ACTUAL
FY 2000
CHANGE FROM
YTD 99 TO PERCENT
19%
9%
20%
12%
-3%
11%
13%
20%
625%
0%
46%
-10%
-22%
-14%
-55%
-11%
-17%
12%
36%
-3%
-11%
-6%
9%
11%
-63%
29,996,097 32.410.224 2,414,127 8%
hates as of December 1999.
-
Financial Status Report 7
ExDenditures
Total General fund expenditures and encumbrances through December 1999 are $38.9 million. This
leaves $34.2 million, or 46.8%, available through the fiscal year ending on June 30, 2000. Excluding the
operating transfers and contingencies, the percentage available at December 31, 1999 is 53.5%, as
compared to 50.6% at December 31, 1998.
Council has allocated $4 million from the General fund budget for unanticipated emergencies or unforeseen
program needs. Just under $1.8 million has been authorized out of the contingency account to-date, as
shown in the chart below.
I CONTINGENCY ACCOUNT i USE OF FUNDS
RESOLUTION
EXPLANATION AMOUNT DATE NUMBER
Adopted Budget $4,000,000 06/15/99 99-21 8
Consultant Services for Establishment of a Second Redevelopment Area
PERS Cost for Four Year Service Credit
Preparation of EIR for Second Redevelopment Area
Addition of Management Assistant in Public Works
Extend Pool Hours
Management Base Pay Increase
Carlsbad Convention and Visitor's Bureau Contract Adjustment
Year 2000 Contingency Plan
Carlsbad Convention and Visitor's Bureau Contract Adjustment
Tree, Street and Sidewalk Policy Committees
Management Incentive Pay
(125,000)
(457,962)
(79,900)
(56.700)
(300,600)
(17,775)
(104.000)
(10,000)
(486,000)
(32,500)
(80,000)
07/20/99
08/17/99
09/14/99
09/14/99
09/14/99
09/14/99
10/05/99
10/19/99
10/19/99
10/26/99
12/07/99
99-265
99-293
99-307
99-308
99-313
99-315
99-457
99-457
99-483
99-471
99-503
CURRENT BALANCE $2,249,563
A detailed schedule of General fund expenditures is provided on the following page.
-
Financial Status Report
GENERAL FUND
EXPENDITURE STATUS BY DEPARTMENT
TOTAL
BUDGET
AVAILABLE %
COMMITTED. BALANCE AVAILABLE-
EPT DESCRIPTION FY I9993000 12/31/1999 12/31/1999 12/31/1999
OLlCYlLEADERSHlP GROUP
CITY COUNCIL
CITY MANAGER
CITY CLERK
CITY ATTORNEY
CITY TREASURER
TOTAL POLlCYlLEADERSHlP
,DMINISTRATIVE SERVICES
ADMINISTRATION
FINANCE
PURCHASING
HUMAN RESOURCES
RECORDS
TOTAL ADMINISTRATIVE SERVICES
'UBLIC SAFETY
POLICE
FIRE
TOTAL PUBLIC SAFETY
;OMMUNITY DEVELOPMENT
COMMUNITY DEVELOPMENT ADMIN
HlRiNG CENTER
GEOGRAPHIC INFORMATION
COMMUNITY PROMOTION (CCVB)
ECONOMIC DEVELOPMENT
PLANNING
BUILDING
TOTAL COMMUNITY DEVELOPMENT
:OMMUNITY SERVICES
PARK PLANNiNG & RECREATION
SENIOR PROGRAMS
LIBRARY
CULTURAL ARTS
TOTAL COMMUNITY SERVICES
'UBLIC WORKS
PUBLIC WORKS ADMINISTRATION
ENGINEERING
PARKS
STREETS &TRAFFIC SIGNALS
TOTAL PUBLIC WORKS
FACILITIES
ION-DEPARTMENTAL & CONTINGENCY
OTHER NON DEPARTMENTAL
OPERATING TRANSFERS OUT
CONTINGENCY
TOTAL NON-DEPT & CONTINGENCY
'OTAL GENERAL FUND
1,033,376
241,930
239,662
733,240
2,382,948
134,740
1,437,930
318,177
1,745,735
539,200
1,675.678
5,716,720
13,116,517
8.938.280
22,054,797
563,241
345.748
80,070
134,280
2,591,950
520.824
6,060,751
1.804.638
3,289.207
4,987,110
390,006
9,252,159
585.836
5,051,751
690,060
2,654.302
2,919.021
13,286,598
1.971.464
11,102,949
982,022
14,334,534
2,249,563
401,501
111,633
338.004
181,166
1,084,404
52,100
122,406
670,716
255,078
698,666
34,060
1,780,926
6,600.238
4.464.920
11,065,158
232.331
75.182
133.687
503,147
64,195
1,321,617
3,418,251
1,088,092
1,602,320
2,021,766
172,232
4,014,088
217,770
2,469,149
250,447
1,205,247
1,414,344
6,317,192
978,005
11,102,949
127,393
11,230,342
0
631.875
130,297
58,496
395,236
1,298,544
82.640
195,771
767,214
1,047,069
284.122
3,935,794
1,641,618
6,516,279
10,989,539
4,473,360
350,910
4,888
212,061
70.085
17,677
1,270,333
716,546
2,642,500
1,686,867
2,965,344
217,774
5,238,071
368.066
2,582.602
439,613
1,449,055
1,504,677
6,969,406
993,459
854,629
0
2,249,563
3,104,192
53.9%
61.1%
24.4%
61.3%
53.9%
54.5%
61.5%
53.4%
52.7%
60.0%
98.0%
68.8%
49.7%
49.8%
50.0%
60.2%
61.3%
6.1%
52.2%
3.4%
49.0%
43.6%
39.7%
51.3%
55.8%
62.8%
59.5%
56.6%
63.7%
51.1%
54.6%
51.5%
50.4%
52.5%
87.0%
0.0%
100.0%
21.7%
73.088.507 38,910,361 34.178,146 46.8%
*Amount available would be 60.3% if funds were spent in the same proportion as the previous year.
Total committed includes expenditures & encumbrances.
a) Other non-departmental expenses include property tax administration fees, Y2K prep costs and other non-departmental Items
Financial Status Report 9
ENTERPRISE FUNDS
New Utilitv Billina Svstem
The Citv's water. sewer. and trash customers saw a new look to their utilitv bill in December. The Citv
implemented a new system which successfully billed all 22,000 accounts in the last week of Decembei.
The new software provides for computerization of systems that were previously being done manually.
Some of the new computerized processes include service orders taken on-line by customer service staff,
payment arrangements for customers automatically tracked by the system, and recording of continuity of
service agreements to allow accounts to be placed in a landlord's name after a tenant moves out. Features
that will be coming in the future include customers being able to pay their bills either by auto-pay or by
credit card.
WATER ENTERPRISE
Total water revenues have increased by $409,000 over the prior year. The largest revenue source, water
Revenues
sales, is the largest contributing factor to this increase. Although there has been a rate decrease ($10 per
unit) in effect all fiscal year, the number of water units sold has increased 11.4% over 1998-99 figures. An
$172,000 lower than last year as a result of lower cash balances in the Water Enterprise. Eight million
increase in the customer base helped to generate higher "charges for current services." Interest income is
dollars was transferred from the Water Enterprise fund to the Water Capital Replacement fund in April 1999
to support the construction of future water projects, thus lowering the cash balance substantially. A major
factor in the increase of other revenues was an accounting adjustment of $44,000, because there is no
longer a liability for meter entitlements.
Expenses
Operating expenses in the Water fund total $8.4 million, which is 18.9%, or $1.3 million, more than last
year. Purchased water, the biggest factor in this variance, increased by 18.9 % over last year due to the
increase in water units purchased. The higher water sales has affected the number of units purchased, as
well as the topping off of local reservoirs and the subsidizing of reclaimed water with potable water during a
couple of high-use reclaimed water usage periods during the year. Staffing costs are higher this fiscal year
due to the reallocation of salaries between reclaimed and potable water, and additional temporary costs
incurred as part of the reorganization of the Public Works area. Through December 1999, $127,000 in
SDCWA infrastructure access charges were paid. This fee is for the five months ended November 30,
1999. These charges did not become effective until January 1, 1999. Additional outside services expenses
relate to costs associated with the new utility billing system, as well as work done at the Carlsbad Village
Station.
-
Financial Status Report
4
10
WATER OPERATIONS FUND
DECEMBER 31,1999
FY 1999-00
BUDGET
EVENUES
WATER SALES
CHARGES'FOR CURRENT SERVICES
FINES, FORFEITURES &PENALTIES
OTHERREVENUES
INTEREST
TOTAL OPERATING REVENUE
XPENSES
STAFFING
INTERDEPARTMENTAL SERVICES
PURCHASED WATER
MWD/CWA READY-TO-SERVE
OUTSIDE SERVICES/MAINTENANCE
UTILITIES
GENERALOFFICEEXPENSE
MATERIALS AND SUPPLIES
DEPRECIATION
CAPITAL OUTLAY
MISCELLANEOUS EXPENSES
TOTAL OPERATING EXPENSES
'PERATING INCOMElLOSS
10,943,000
3,551,000
350,000
176,000
15,430,000
410,000
2,716,954
8,596,500
1.01 1,792
762.000
194,900
599,464
258.943
472,357
1,300,000
205,916
16,161,526
42,700
(731,526
YTD
CHANGE FROM
YTD YTD 99 TO
12/31/1998 12/31/99 YTD 2000
PERCENT
CHANGE
6,175,105 6.542.318 367,213
1,664,097 1,790,794 126,697
5.9%
118.813 111,220
7.6%
368.550
-6.4%
196.856
209,194
(171,694) -46.6%
303,766 94,572
8,535,759 8,944,954
45.2%
409,195 4.8%
(7,593)
1,055,562
446,527
4,254,612
222,523
54,539
102,201
89.727
157,083
619,760
43.829
7,059,041
12.678
1,230,139
504,142
5,059,557
349,263
74,370
209,905
125,674
165,218
650.000
14,299
8,392,970
10,403
174,577
804,945
57,615
126,740
19.831
120.178
23,473
8.135
30,240
(29,530)
(2,275)
1,333,929
16.5%
12.9%
57.0%
18.9%
133.9%
36.4%
23.0%
5.2%
-67.4%
4.9%
-17.9%
18.9%
I ,476,718 551.984 (924,734) -62.6%
-. -
Financial Status Report 11
SANITATION ENTERPRISE
Revenues
Revenues for the Sanitation Enterprise fund total $2.6 million for the first half of the fiscal year. This is a
10.1% decrease over the prior year. The decrease in charges for current services is due to a rate decrease
also lower than last year by $107,000. The decrease in interest revenue is the result of a reduction in the ($2.00 per month for a single family residence) which became effective May 15, 1999. Interest income is
average cash balance in the Sanitation Enterprise fund during the year. Funds were transferred out of the
sanitation operations fund to support the construction of future sewer projects. In 1998-99, the Enterprise
received a one-time termination payment of $41,670 for refinancing an investment agreement. This has
created a negative variance in other revenues for 1999-2000. However, this has been partially offset by the
sale of $1 1,000 worth of surplus property by the Enterprise.
ExDenses
Expenses for the Sanitation Enterprise total $1.7 million through December; a decrease of $250,000. The
largest factor in this decrease is the result of a timing difference. At this time last year, two quarterly
payments had been made for Encina plant services. As of December 31, 1999, only the first quarter has
been paid. Partially offsetting this decrease in expenditures are staffing increases this fiscal year
attributable to the normal increases in salaries and benefits, as well as the vacation accrual adjustment
annual budget as well as the inclusion of a building usage allowance in these charges, and capital outlay for
costs incurred in October 1999, an increase in interdepartmental charges due to the overall increases in the
the purchase of a vactor truck.
SEWER OPERATIONS FUND
DECEMBER 31,1999
CHANGE FROM
BUDGET
12/31/1998 12/31/1999 FY 1999-00
YTD YTD YTD 99 TO
YTD 2000
PERCENT
CHANGE
REVENUES
CHARGES FOR CURRENT SERVICES 4,670,000
INTEREST 100,000
2,612,507 2.462.443 (150,064)
-10.1%
-54.5%
(293,715)
(36,725)
TOTAL OPERATING REVENUE
-47.7%
OTHERREVENUES
-5.7%
224,129 117,203 (106,926)
40,000
2,904,023 2,610,308 4,810,000
67,387 30,662
EXPENSES
STAFFING
INTERDEPARTMENTAL SERVICES
OUTSIDE SERVICES a OTHER
MATERIALS AND SUPPLIES
DEPRECIATION
ENCINA PLANT SERVICES
CAPITAL OUTLAY
MISCELLANEOUS EXPENSES
TOTALOPERATINGEXPENSES
811,435
248,371
372,160
143.183
1.300.000
1,540,000
64,485
47,400
4,527,034
333.958
96,952
99,952
656,707
36,850
660,000
12,732
6,103
1,903,254
361.481
127,506
85.737
650.000
37,924
347,073
26.984
16.787
1,653,492
27,523
(14,215)
30,554
(6,707)
1,074
(312,927)
20.881
4,055
(249,762)
8.2%
-14.2%
31.5%
2.9%
-1.0%
342.1%
-47.4%
31 .E%
-13.1%
OPERATING INCOMElLOSS 282,966 I 1,000,769 956.816 (43.953) 44%
".
Financial Status Report 12
REDEVELOPMENT AGENCY
Revenues
Revenues for the Redevelopment Agency are $729,000 through December 1999. Assessed values within
the Redevelopment area have increased by approximately 9% over 1998-99 values, creating an increase in
property taxes for the year. Interest income is $26,000; almost identical to fiscal year 1998-99.
Miscellaneous revenue totals $85,000; an increase of $2,000 from the prior fiscal year due to the rental of
the Beach Sleep Furniture Store.
Through December, expenditures and encumbrances for the Redevelopment Agency total $1.9 million.
ExDenditures
Excluding the Tyler Court purchase from the budget and expenditure figures, the percentage available at
the end of December is 40% compared to 42.6% at December 31, 1998.
During September 1999, the Redevelopment Agency purchased the Tyler Court Apartments, an affordable
senior apartment complex. The Agency contributed approximately $949,000 of the $5 million purchase
price. Of the $949,000, $503,000 was an operating transfer from the General fund, and $446,000 was a
loan from the General fund to the Redevelopment Agency.
CARLSBAD REDEVELOPMENT AGENCY
OPERATIONS AND DEBT SERVICE FUNDS
DECEMBER 1999
BUDGET YTD YTD s Y.
FY 1999-2000 12/31/98 12/31/99 CHANGE CHANGE
lEVENUES
PROPERTY TAXES 1,230,000
INTEREST 42,500
MISCELLANEOUS REVENUES 92,500
TOTALREVENUE 1,365,000
TOTALREVENUEBOPXFERS
OPERATING TRANSFERS 502,949
1,867,949
560,651
25,656
82,446
688,957
668,957
0
616,431 57,780 10%
25,686 (172)
64,610
-1 %
2,362 3%
728,927 59,970
502,949 502,949
9%
NA
1,231,876 562,919 84%
TOTAL AVAILABLE %
BUDGET
FY 1999-2000
COMMITTED BALANCE AVAILABLE
12/31/99 (1) 12/31/99 12/31/99 (2)
iXPENDlTURES
STAFFING 153,130
INTERDEPARTMENTAL SERVICE: 75,374
RENTALS&LEASES 123,550
DEBT EXPENSE 1,058,000
TYLER COURT PURCHASE 948,923
OUTSIDE SERV, MAINT 8 MlSC 106,453
TOTAL EXPENDITURES 2,465,430
86,572 66,558 43%
34,917 40,457
99,404
54%
24,146 20%
675,141 382.859 36%
948,923 0 0%
14,053 92,400 87%
1,859,010 606,420 25%
lEVENUES OVER EXPENDITURES (1,100,430)
40%
(1,130,083)
(1) Total committed includes expenditures and encumbrances.
(2) Overall amount available would be 42.6% if funds were spent at the same pace as last year
January 17,2000
- EXHIBIT 5
TO: FINANCE DIRECTOR
FROM: Assistant Finance Director
SALES TAX AUDIT
Overview
The State Board of Equalization (Board) conducted a sales tax audit of the City of Carlsbad
during the months of October though December 1999, and January 2000. The period being
audited by the Board was from October 1, 1996 through June 30, 1999. The purpose of the
audit was to ensure that the City was not only paying sales tax on taxable items purchased, but
that the correct sales tax amount was being paid.
The audit was broken up into three segments: fixed assets, consumable supply invoices less
than $5,000 and consumable supply invoices greater than $5,000. In each of these areas,
different auditing techniques were utilized, recommended findings were made and the
appropriate sales tax is now being assessed. The following is a brief discussion of each of the
three components of the audit.
Fixed Assets
All fixed asset invoices greater than $5,000 were examined for the entire audit period. By
looking at all invoices greater than $5,000, 98% of all fixed asset purchases ($7.1 million) were
examined. The amounts under $5,000 were examined on a cursory basis, with no errors found.
Five invoices were found where either sales tax was not paid, or the correct sales tax amount
was not paid. These invoices totaled $80,374, which equates to an error rate of 1.1%. The
sales tax associated with these invoices equals $6,229.
Consumable SUPP~Y Invoices Greater Than $5,000
All consumable supply invoices greater than $5,000 were examined for the entire audit period.
This accounted for $3.6 million of the $13.7 million in consumable supply purchases. Six
invoices were found where either sales tax was not paid, or the correct sales tax amount was
not paid. These invoices totaled $52,828, which equates to an error rate of 1.5%. The sales
tax associated with these invoices equals $4,094.
Consumable SUDD~V Invoices Less Than $5.000
A sample of consumable supply invoices less than $5,000 were examined for the entire audit
period. The total population of consumable supply invoices less than $5,000 equaled $10.2
million. Of this total, 725 invoices totaling $168,795 were examined for proper sales tax
treatment. Eleven errors totaling $431 1 were identified, which equates to a 2.67% error rate.
This error rate was then projected through the entire $10.2 million dollar population, to project a
sales tax delinquency of $21,045,
Summary
In total, the sales tax audit projected that $31,368 in sales tax had not been paid by the City
during the entire audit period. No penalties were assessed on the delinquency, since the audit
showed that the City did not knowingly underreport the sales tax owed to the State Board of
Equalization. However, interest at a rate of 12% per year was charged on the delinquency. By
paying the sales tax delinquency by March 31, 2000, the total owed by the City, including sales
tax, totals $37,762.
The majority of the errors found were either unique in nature, dealt with City credit cards, or
occurred after the accounts payable batching function was decentralized. The Finance
Department is working with the various departments within the City, as well as the State Board
of Equalization, to ensure proper reporting to the Board.
KEVIN BRANCA
C: Senior Accountant - Cheryl Gerhardt