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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. I 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 r' 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. 3 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 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 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 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 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 ~~ 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 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 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 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 ,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 I 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? I 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