HomeMy WebLinkAbout5ACITY COUNCIL STAFF REPORT
DATE: April 22, 2021 NEW BUSINESS
SUBJECT: FISCAL YEAR 2020/2021 THIRD-QUARTER BUDGET REVIEW AND
END OF FISCAL YEAR ESTIMATE
FROM: Justin Clifton, City Manager
BY: Marcus L. Fuller, Assistant City Manager
Nancy Pauley, Director of Finance/City Treasurer
SUMMARY
This item presents a review of the City's General Fund revenue and expenditures for the
third quarter (January to March) of Fiscal Year 2020-2021 (FY 20-21).
RECOMMENDATION:
1. Amend the FY 20-21 Budget to:
a. Increase General Fund budgeted revenue by $20,232,881;
b. Increase Measure J Fund budgeted revenue by $4,968,321;
c. Cancel $2,800,000 transfer from Measure J Fund to General Fund
2. Amend the FY 20-21 Allocated Positions and Compensation Plan revising the "Frozen
and Unfunded" allocated position list to fund 18 positions currently vacant due to the
reduction in force implemented in FY 19-20;
3. Amend the FY 20-21 Budget to appropriate an additional $7,800,000 for various
expenditures; and
4. Provide direction to staff as appropriate.
BACKGROUND:
Over a series of meetings from March 19 to June 30, 2020, the City Council reviewed
financial projections for reduced General Fund and Measure J Capital Fund revenues
directly caused by the COVID-19 pandemic. Considering reduced General Fund
revenues, City Council was challenged with revising the previously adopted biennial
ITEM NO. ~5A~--1
City Council Staff Report
April 22, 2021 --Page 2
FY 2020/2021 Third Quarter Budget Review
budget for FY 19-20 and FY 20-21 and quickly implementing cost savings measures
through both non-personnel and personnel measures.
Given the unpredictability with how the COVID-19 pandemic will be mitigated and when
a vaccine will be readily available to the general public, the City incorporated a very
conservative approach to budgeted revenues generated in large part due to our tourism
economy through transient occupancy taxes ("TOT") at hotels and sales taxes at
restaurants, bars and retail stores.
The adopted FY 20-21 budget was based on an overall reduction of $44,627,831 in
General Fund revenue as compared to the original FY 20-21 budget adopted as part of
the biennial budget in June 2019 due to anticipated reduced business activity over the
entire FY 20-21 period due to the COVID-10 pandemic. This is an overall reduction of
36% from the originally budgeted FY 20-21 General Fund revenue of $125,482,131.
Reduced business activity was expected through COVID-19 restrictions imposed on the
City's tourism economy with indoor restaurant closures, bar closures, reduced occupancy
of retail stores, lack of any organized group events or conventions, cancellation of all
large-scale events, etc. All these restrictions were expected to result in lower occupancy
rates of hotels, closure of some restaurants and retail stores, and continued closure of
some bars that do not offer meal service. This, in turn, was expected to translate into
lower TOT and sales tax revenue generated in the City.
On December 5, 2020, the Governor issued a Regional Stay at Home Order that was
effective for the Southern California Region on December 6, 2020. This Order eliminated
all in-person outdoor dining and further restricted indoor occupancy capacities for certain
sectors of our business community. The Regional Order was lifted on January 26, 2021.
It was this very unpredictability with the COVID-19 pandemic that caused Staff to develop
the FY 20-21 budget with a very conservative approach and a "Rolling Budget" model to
address any further reductions (or additions) to personnel and operations that may be
necessary as we proceed through the fiscal year.
On June 30, 2020, the City Council adopted the revised FY 20-21 budget with this
unpredictability of the COVID-19 pandemic's impacts on the City's finances in mind. A
summary of the original and revised/adopted FY 20-21 General Fund and Measure J
Capital Fund revenue budget is shown in Table 1 and the original and revised/adopted
FY 20-21 General Fund expenditure budget is shown in Table 2 on the next pages.
2
City Council Staff Report
April 22, 2021 --Page 3
FY 2020/2021 Third Quarter Budget Review
1
---------I Original FY 20-21 Adopted FY 20-21
CATEGORY I Budget Budget Reduction
I I -··-
'TOT $36,314,528 $14,162,666 I 61% I -
I
Property Tax $27,776,442 $25,832,091 I 7%
·Sales Tax $23,!!_11,960 i $8,847,t 58 ' 63%
1 Utili~ Users Tax $7,386,840 $6,278,814 l 15% I I
Motor Vehicle in Lieu Tax $4,944,960 I $4,549,363 I 8% __ j 1---
$2,941,680 I $2,765,179 I
-
Franchise Tax 6%
I Cannabis Tax $2,447,890 l $2,203,101 I 10% l
All other taxes $5 353 399 $4 913 933 _1 8% l
.... ,._ ·-··---~--•· ..,,.. __
Total Taxes $ 111,077,699 $ 69,552,505 37% -i
I I
Vacation Rental Permit $2,005,000 $1,704,250 15%
Building Permits $1,540,000 $1,386,000 10% .,.., ... .,.,.._.,._...._ ___ ._,._...,._,,,._
Business License Permit $1,120,000 · $840,000 25% ..... ,._ ... ,,,_ ... __ ,. ..
Planning.i_ Zoning Fees $485,000 $405,250 16% ....... ,_,, ..... ._,_,..,,,.,.., _ _. -· .-.. -..................... ,...,.,~
Public Works Permit Fees $394,000 $394,000 --·-··--.. ··--··· ·--"• ~ ,-····-·-·-· ...
i All other fees $252 QQQ $429 84Q i +71% ·-.... __ -... -.. ~---·· ·-}------····
i~
!Total Fees $ 5,796,000 $ 5,159,340 11% ........... ,~ .... ,,.. ......
Admin Service Charges $2,297,900 $1,608,530 30%
., ... --...........
Fire Inspection Charges $1,312,800 $726,520 45% ---·-··· .. i Recreation Charges $770,000 $385,000 50% I --_,_., __ ., ... , ........ ,..,,.,.._,,..,,u.._i
Police Dept Charges $626,000 $486,100 22% i
l
., .. .._...__ .. __.._ ·-·-···· ........... ,,_ ...... -···--·-••·•--··~
Building Plan Check $600,000 $540,000 10% ----··-,.. _ .. _. _..., _________
$988 159 ,.. All other charges ---····------·--··---··· $955 400 +3% ·-.... ~ ................. "'. ........ .,_.,
Total Charges $ 6,562,100 $ 4,734,309 28% .. ---·--·-·· .... ~
-... ~--·-
Fines & Penalties 11 1066 1410 l603s205 43%
,_,._._ .... ,,, _ ___ ... _______ , __
r-·---__. ..........
... _______ ,. ___ ,,_,.,,,.. . .. _..,.,,,, .. ____ ·--···~·
Miscellaneous Revenue l979s922 IB04s941 18% ··-------· -·-
-
Total $ 125,482,131 $ 80,854,300 36% -··-··-·-
........ --
Transfers In $ -$ 14,350,000
Total Revenues $ 12s,4s2,131 I s 9s,204,3oo I 24%
I I
Measure J $ 1s,12s,100 I s 5,966,900 I 63%
Table 1 -General Fund Revenue Budget
3
City Council Staff Report
April 22, 2021 --Page 4
FY 2020/2021 Third Quarter Budget Review
Original FY 20-21 Adopted FY 20-21
CATEGORY
!
Budget Budget !
I
l I
General Government $44,800,200 $37,330,379 r
Police $37,221,500 $33,302,452 r
Fire $19,996,700 $17,364,889 r
Parks and Recreation $8,988,500 $7, 131,1ao r
PERS Reserve $3,000,000 $6,000,000
Transfers Out $11,604,100
,,.
$12,000,300 I
l Total Expenditures $ 12s,s11,ooo I s 113,129,soo r
Table 2 -General Fund Expenditure Budget
STAFF ANALYSIS:
% Change
-16.7%
-10.5%
-13.2%
-20.7%
100.0%
3.4%
-9.9% I
The FY 19-20 Comprehensive Annual Financial Report (CAFR) was recently completed
and filed with the City Council. The FY 19-20 CAFR identified total General Fund revenue
of $121,295,263 (inclusive of transfers in) and total General Fund expenditures of
($124,074,932) (inclusive of transfers out) resulting in a final FY 19-20 deficit of
($2,779,669).
Based on the final audit determined by the FY 19-20 CAFR, the City's unrestricted
General Fund balance as of June 30, 2020 was $26,320,928. The restricted CalPERS
reserve balance as of June 30, 2020 was $16,250,000. Total General Fund balance was
$42,570,928, equivalent to 33.15% of the FY 19-20 total General Fund expenditure
budget.
The purpose of this staff report is to present to City Council the "Third Quarter" (January
to March) FY 20-21 General Fund budget review. Also presented is year to date financials
for the 9-month period (July to March), and Staff's estimated projections for final FY 20-
21 revenue and expenditures.
FEES and CHARGES
In tracking City revenue, it is important to understand the timing and collection of the City's
receipts. Payment of applications and permits or various City charges and services occur
daily and can be monitored in real-time. However, "Fee" revenue only accounts for
$5,159,340 (6.4%) and "Charges" revenue only accounts for $4,734,309 (5.9%) of the
total FY 20-21 adopted budgeted revenue of $80,854,300.
Staff did not identify monthly revenue projections for "Fees" and "Charges" but did identify
an overall reduction of 11 % for "Fees" and 28% for "Charges" in the FY 20-21 budget.
4
City Council Staff Report
April 22, 2021 --Page 5
FY 2020/2021 Third Quarter Budget Review
In the Third Quarter of FY 20-21, the City collected $1,833,262 in "Fees" which compares
to $1,525,788 collected in the Third Quarter of FY 19-20, an increase of $307,474 from
FY 19-20 (+20%) and higher than budgeted for that period by +$543,427 . Fiscal year to
date (9 months) revenues from Fees was $4,902,958 equal to 95% of total annual
revenue estimated for Fees exceeding budget. On average of the 9-month period, the
City has collected approximately $550,000 in Fees.
Staff's estimated projections for Fourth Quarter revenue from Fees conservatively
assumes 80% of this amount will be collected, for an additional $1,320,000 for total FY
20-21 revenue from Fees of $5,792,859 exceeding budgeted revenue of $5, 159,340 by
+$633,519 (+12%).
In the Third Quarter of FY 20-21 the City collected $1,809,587 in Charges which
compares to $1,473,383 collected in Third Quarter of FY 19-20, an increase of $336,204
from FY 19-20 (+23%) and above budget by (+$626,010). Fiscal year to date (9 months)
revenues from Charges was 88.5% of total annual revenue for Charges exceeding
budget. On average of the 9-month period, the City has collected approximately $466,000
in Charges.
Staff's estimated projections for Fourth Quarter revenue from Charges conservatively
assumes 60% of this amount will be collected, for an additional $820,868 for total FY 20-
21 revenue from Charges of $5,012,279 and above budgeted revenue of $4,734,309 by
+$277,970 (+6%).
TAXES
Most of the total budgeted FY 20-21 General Fund revenue ($69,552,505 of $80,854,300
-or 86%) is generated by various taxes with property taxes, Transient Occupancy Taxes
(TOT) and sales taxes generating most of it.
Property Taxes
Property taxes represent the largest segment of taxes generated (37%). Given the
surprisingly strong real estate market driven by historically low mortgage rates, at this
time Staff does not believe property tax revenues will decrease -but will increase over
FY 19-20 as real estate values continue to appreciate. However, the FY 20-21 General
Fund budget anticipated a -7% reduction in property tax revenue.
Property taxes are received in staggered payments from Riverside County; in the Third
Quarter of FY 20-21 the City has received $6,753,469 equivalent to 26.1 % of annual
budgeted property tax revenue. This compares to $6, 118,625 received in the same period
in FY 19-20-reflecting an increase of +10% over FY 19-20. Fiscal year to date (9 months)
revenues from property taxes was $15,946,567 and is 62% of budget and compares to
property tax revenues in the same period in prior fiscal years as shown in Table 3 on the next page:
5
City Council Staff Report
April 22, 2021 --Page 6
FY 2020/2021 Third Quarter Budget Review
Property Tax FY18-19 Revenue
Property Tax FY19-20 Revenue
Property Tax FY20-21 Revenue
I
I 9-months
$13,641,963
$ 14,676,756
$15,946,567
I % @ 9-months Total FY
I
$ 24,557,058 55.6%
$ 25,482,084 57.6%
~ -
$27,494,081 58.0%
Estimates only_.
Table 3 -Property Tax Revenue Estimate
Property tax revenue in the 9-month period of FY 20-21 exceeded revenue in same period
FY 19-20 by $1,269,811 (+8.7%) and exceeded revenue in same period FY 18-19 by
$2,304,604 (+16.9%). Total property tax revenue increased +3.8% from FY 18-19 to FY
19-20 with 9-month property tax revenue representing 56% to 58% of total property tax
collections in each of those fiscal years given the staggered basis for how it is received.
Staff estimates total property tax revenue of $27,494,081 aligned with the originally
estimated property tax revenue (pre-COVID) of approximately $27,800,000 for FY 20-21
-reflecting an increase of approximately +$1,661,990 over the reduced and adopted FY
20-21 budgeted revenue of $25,832,091.
Transient Occupancy Taxes (TOT)
Of the $69,552,505 in budgeted tax revenue, $14,162,666 (20%) is generated by TOT
(hotels and vacation rental properties). This segment of taxes is the most directly affected
by an economic downturn and was critical to monitor.
Payment of TOT by hotels and vacation rental properties are due to the City by the end
of the following month, meaning January receipts were due by February 28, February
receipts were due by March 31, and March receipts were due by April 30. Therefore, to
have a true understanding of the City's financial status in the Third Quarter of FY 20-21,
Staff has used the "cash-basis" approach where revenues received in the month are
tracked and compared to budgeted revenue.
Previously reported at the First Quarter and Mid-Year FY 20-21 Budget updates, Tables
4 and 5 below compare First Half FY 20-21 TOT revenue to budget.
,-··-------------,-•-----.--------.------,-------,
;
I
....... __ ,, ... _.~_ .... ___ ·--·--. .....-.
!ro
I r-~--
T FY20-21 Budgeted Revenue
iTO
i
I·-!
T FY20-21 Actual Revenue
i Diff erence
-·
$
~-
$
$
July August September
440,593 $ 406,421 $ 501,724
-----·
1,205,044 $ 1,471,448 $ 2,973,988 ____ ,. ____ --
764,451 $ 1,065,027 $ 2,472,264
·---·-·
Table 4 -First Quarter TOT Revenue
Total
$ 1,348,738
·---·•·
$ 5,650,480
-
$ 4,301,742
-
6
City Council Staff Report
April 22, 2021 --Page 7
FY 2020/2021 Third Quarter Budget Review
i I
i I
I · TOT FY20-21 Budgeted Revenue
.-.. .-..
TOT FY20-21 Actual Revenue
Difference
October
$ 727,360
$ 2,352,156
$ 1,624,796
I November December I
$ 933,116 $ 1,476,730
$ 2,958,820 $ 2,879,472
--·-·
$ 2,025,704 $ 1,402,742
Table 5 -Second Quarter TOT Revenue
I !
Total I
' I
I I
$ 3,137,206
$ 8,190,448
$ 5,053,242
As shown in these Tables TOT payments received in the First Half of FY 20-21 exceeded
budget by +$9,354,983 .1 City Council previously amended the FY 20-21 budget to
increase revenue by this amount.
Table 6 below compares actual Third Quarter FY 20-21 TOT revenue to budget.
( •. --r r-I January l February I March Total
l l ----................... ._ ··--·-·-__ ,. ___ , ... ----....
TOT FY20-21 Budgeted Revenue $ 1,289,142 $ 1,345,817 $ 847,102 $ 3,482,061
}---·-···· .....
TOT FY20-21 Actual Revenue $ 1,456,529 $ 975,749 $ 2,546,807 $ 4,979,085
M>-• ,..,,.,,,.,_,,.., ___ _,
Difference $ 167,387 $ (370,068) $ 1,699,705 $ 1,497,024
---~ ................. ,_..,,_, ... .., .. ---.. .
Table 6 -Third Quarter TOT Revenue
As shown in Table 6, TOT payments received in Third Quarter FY 20-21 exceeded budget
by +$1,497,024 . Staff notes that TOT payments received in January and February
(reflecting December/ January hotel room bookings) were closer to or under budget due
to the Regional Order issued by the Governor on December 5 that was in effect through
January 26.
As a further comparison, Table 7 identifies Third Quarter FY 20-21 TOT revenue for the
3-year period of FY 18-19, FY 19-20 and FY 20-21.
.. ........ ___ ,. . , ····-... .. ,. -·· .... .. r ----·· -·--~-----· f r·· 1 l l January l February l March i Total I I ! I ··--...... _,_ --·-··-_ ... _ .... ,.,~, ............ _ -·· ___ .. ..., .......... _,., ,._
:ToT FY18-19 Revenue $ 2,830,585 $ 2,861,639 $ 3,319,417 $ 9,011,642
-· ... ,,, _______ ·-·------.. ·---
;
;TOT FY19-20 Revenue $ 2,864,760 $ 2,990,705 $ 2,414,906 $ 8,270,371
.... -.... ·--.... -··-·---... -. ............
TOT FY20-21 Revenue $ 1,456,529 $ 975,749 $ 2,546,807 $ 4,979,085
Table 7 -Third Quarter TOT Revenue Comparison
1 In the First Quarter TOT Review the TOT revenue in August 2020 was overstated by $483,312; the FY
20-21 General Fund Budget was increased by this amount in error. The final FY 20-21 TOT revenue
increase over budget is being adjusted accordingly.
7
City Council Staff Report
April 22, 2021 --Page 8
FY 2020/2021 Third Quarter Budget Review
As shown in Table 7, TOT revenue in Third Quarter FY 20-21 is -40% below FY 19-20
TOT revenue (a reduction of $3,291,286), and -45% below FY 18-19 TOT revenue (a
reduction of $4,032,557). Third Quarter FY 20-21 TOT revenue was the lowest FY to
date.
Table 8 tracks monthly TOT revenues for the entire fiscal year period for FY 18-19, FY
19-20, and FY 20-21. Staff will continue to track TOT revenues monthly under the City's
"Rolling Budget" model.
-·-·· .... ····--··-·· -------··-·--··--· -.... ---· ......... ····· -------· ...... --··---_______ ,. ----.. -----------·--· .. -----·-"··-7
TOOT~~ !
! (1 )Cash Basis (1)Cash Basis Adopted (1)Cash Basis ~--·····---·· "-'
.. _ ..... ..... , .. _ .. _ .......... _ ._,, ... --
I FY18-19 FY19-20 FY20-21 FY20-21 Increase/ l :
,.,_,. ___ .. _ ......... ..... , ................ ...,_.., __ , ... ,. .... --.. ____ ,., .. , .. --
t Actual Actual Budget Actual Decrease i. -
1 July $ 2,395,808 $ 2,425,609 $ 440,593 $ 1,205,044 $ 764,451 ... ,. '
Aug $ 1,276,428 $ 2,145,936 $ 406,421 $ 1,471,448 $ 1,065,027 -· • --•
1Sept $ 2,336,564 $ 2,006,896 $ 501,724 $ 2,973,988 $ 2,472,264 r , .. -· ~ ...............
l Oct $ 2,169,363 $ 2,238,030 $ 727,360 $ 2,352,156 $ 1,624,796 ~-.. ..............
Nov $ 2,446,059 $ 2,488,308 $ 933,116 $ 2,958,820 $ 2,025,704 .. ........
Dec $ 3,135,116 $ 3,108,906 $ 1,476,730 $ 2,879,472 $ 1,402,742 ... ..
Jan $ 2,830,585 $ 2,864,760 $ 1,289,142 $ 1,456,529 $ 167,387 --... . ... ..
Feb $ 2,861,639 $ 2,990,705 $ 1,345,817 $ 975,749 $ (370,068) .. . ..
L.Mar $ 3,319,417 $ 2,414,906 $ 847,102 $ 2,546,807 $ 1,699,705
,_,
! Apr $ 5,389,109 $ 2,366,740 $ 2,020,916 .... .. ··-·--·-· -. ·-• ____ .,. __ ,_,j
May $ 5,014,551 $ 888,331 $ 2,436,511 ! .. ·--... ......... ··-....... ., _., .. j
1 Jun $ 3,309,018 $ 489,882 $ 1,737,234 i
! r .... _ -~--
$ 36,483,657 $ 26,429,008 $ 14,162,666 $ 18,820,012 $ 10,852,007 ! 1 ........ .,. ...... .. ·-•·-·•""'
Table 8 -Rolling TOT Revenue Comparison
With TOT revenues received at +$1,497,024 over budgeted TOT revenues in Third
Quarter FY 20-21, Staff recommends the City Council amend the FY 20-21 budget to
adjust TOT budgeted revenues by this amount. Staff notes that TOT revenue received
fiscal year to date (9 months) was $18,820,012 and was lower than TOT revenue received
in the same period FY 18-19 of $22,770,980 (-17%) and lower than TOT revenue received
in the same period FY 19-20 of $22,684,055 (-17%). However, TOT revenue received
fiscal year to date is +33% of total budgeted annual TOT revenue.
In evaluating projections for TOT revenue in Fourth Quarter FY 20-21, Staff anticipates
continued improvement with the City's local tourism economy particularly in light of
Riverside County entering the "Orange Tier" of the State's Blueprint for a Safer Economy,
and Governor Newsom's announcement on April 6 that the entire State of California will
fully reopen on June 15 provided two criteria are met: The two specific criteria for the
state to fully reopen on June 15 are: vaccine supply must be sufficient for Californians
ages 16 and older who wish to be inoculated; and hospitalization rates must remain stable
and low.
8
City Council Staff Report
April 22, 2021 --Page 9
FY 2020/2021 Third Quarter Budget Review
Based on this news, Staff is estimating TOT revenue in Fourth Quarter FY 20-21 at
$11,000,000 (equivalent to 80% of TOT revenue received in Fourth Quarter FY 18-19)2,
generating an additional +$4,292, 169 3 in TOT revenue over budget. Table 9 provides
Staff's projections for total FY 20-21 TOT revenue.
TOT Taxes
(1 )Cash Basis (1)Cash Basis Adopted (1)Cash Basis ---
FY18-19 FY19-20 FY20-21 FY20-21 -·-
Actual Actual Budget Actual -·--· __ ..,_ --_.,.. ---------·--
July $ 2,395,808 $ 2,425,609 $ 440,593 $ 1,205,044
Aug_ $ 1,276,428 $ 2,145,936 $ 406,421 $ 1,471,448
S~pt $ 2,336,564 $ 2,006,896 $ 501,724 $ 2,973,988
Oct $ 2,169,363 $ 2,238,030 $ 727,360 $ 2,352,156 -· Nov $ 2,446,059 $ 2,488,308 $ 933,116 $ 2,958,820 . .., ..... -. .-•-
Dec $ 3,135,116 $ 3,108,906 $ 1,476,730 $ 2,879,472 ·---
Jan $ 2,830,585 $ 2,864,760 $ 1,289,142 $ 1,456,529 ~---·-................ ,
Feb $ 2,861,639 $ 2,990,705 $ 1,345,817 $ 975,749 ·--·-
Mar $ 3,319,417 $ 2,414,906 $ 847,102 $ 2,546,807 ---· .. ~e.~ $ 5,389,109 $ 2,366,740 $ 2,020,916 $ 4,311,287
, _ _..u_,.,.., __ ..,.., • -•-•
l May $ 5,014,551 $ 888,331 $ 2,436,511 $ 4,011,641 1·----_., ..... ~ .... _,,.,_ __ .,,, ·--~----•·"
;Jun $ 3,309,018 $ 489,882 $ 1,737,234 $ 2,647,214 \.,.,,,_, ___ ,
! $ 36,483,657 $ 26,429,Q0B $ 14,162,666 $ 29,790,154 ~-·-~------
l I ! I I I I i I :.. ...... . ..... -.. .... _..._. ...
Table 9 -TOT Revenue Estimate
Sales I Use Taxes
Increase/
Decrease ·--· $ 764,451
$ 1,065,027
$ 2,472,264
$ 1,624,796
$ 2,025,704
$ 1,402,742
$ 167,387
$ (370,068)
$ 1,699,705
$ 2,290,371
$ 1,575,130
$ 909,980
$ 15,627,488
Estimates only.
Of the $69,552,505 in budgeted tax revenue, $8,847,358 (13%) is generated by sales
taxes (excluding Measure J). This segment of taxes was also expected to be most directly
affected by an economic downturn and critical to monitor. However, as has been
demonstrated throughout the COVID-19 pandemic, sales of commercial goods remained
strong and sales tax revenues consistently exceeded budget.
Sales and use taxes are paid directly by customers to the vendor (restaurants, retail
stores, etc.) at the time of payment for goods and services for which sales or use taxes
apply. Sales tax is applied to retailers on tangible goods and is owed to the state and is
added to the price retailers charge customers. Use tax is also charged to certain
purchases of goods if the retailer does not pay sales tax and includes on-line purchases
from out-of-state retailers.
2 FY 20-21 TOT revenues for the 9-month period were on average 86% (-14 % below) both FY 18-19 and
FY 19-20 TOT revenue for the same periods. Staff has conservatively assumed a lower average of 80%
for the Fourth Quarter FY 20-21.
3 This amount has been adjusted by (-$483,312) overstated in August 2020 to reflect the final annual
estimated increase of TOT revenue over budget of $15,627,488.
9
City Council Staff Report
April 22, 2021 --Page 10
FY 2020/2021 Third Quarter Budget Review
Sales/use tax payments are paid directly by retailers to the state, and the state then
distributes those payments back to the Counties and Cities or other special taxing
districts. Generally, the City receives sales/use tax payments for sales generated in the
City ( or for on-line sales for goods and products delivered to properties in the City) two
months after the sale. Therefore, to have a true understanding of the City's financial status
in the Third Quarter, Staff has used the "cash-basis" approach where revenues received
in the month are tracked and compared to budgeted revenue.
Previously reported at the First Quarter and Mid-Year FY 20-21 Budget updates, Tables
10 and 11 below compare actual First Half FY 20-21 sales tax revenue (excluding
Measure J) to budget.
r--·--. -... -·--------··--.. ------·-·-·-···-·-···-· -1··-·-· ···-· ---r-· ·----i --y--·--
' i
!
I July August i September i
I
Sales Tax FY20-21 Budgeted Revenue $ 315,566 $ 347,069 $ 394,535
Sales Tax FY20-21 Actual Revenue $ 2,148,660 $ 991,568 $ 1,769,583
Difference $ 1,833,094 $ 644,499 $ 1,375,048
Table 10 -First Quarter Sales Tax Revenue
-··---···-... ··, -.
j
I ;
-·-r·-·--l
October ; November I December
l
I Total
I
$ 1,057,170
$ 4,909,811
$ 3,852,641
r ·-·-· --· ·-··1
1
Total l
Sales Tax FY20-21 Budgeted Revenue $ 554,978 $ 730,385 $ 840,923 $ 2,126,286
Sales Tax FY20-21 Actual Revenue $ 1,824,908 $ 1,542,882 $ 2,062,035 $ 5,429,825
1 Difference $ 1,269,930 $ 812,497 $ 1,221, 112 $ 3,303,539
Table 11 -Second Quarter Sales Tax Revenue
As shown in these Tables sales tax revenue (excluding Measure J) exceeded budget by
+$7, 156,180 for the First Half of FY 20-21. City Council previously amended the FY 20-
21 budget to increase revenue by this amount.
Table 12 below compares actual Third Quarter FY 20-21 sales tax revenue to budget.
l ! I l ------1
! ! January February March ! I I Total I
i-·---···~.
; Sales Tax FY20-21 Budgeted Revenue $ 1,082,886 $ 946,265 $ 755,274 $ 2,784,425
1---·--··-··•-· ·-
I $ $ $ $ 6,286,454 [ales Tax FY20-21 Ac".'~ Revenue 1,830,685 2,327,721 2,128,048
·--~--··
$ 747,799 $ 1,381,456 $ 1,372,774 $ 3,502,029 Difference
Table 12 -Third Quarter Sales Tax Revenue
10
City Council Staff Report
April 22, 2021 --Page 11
FY 2020/2021 Third Quarter Budget Review
As shown in Table 12, sales tax payments received in Third Quarter FY 20-21 exceeded
budget by +$3,502,029 .
As a further comparison, Table 13 identifies Third Quarter FY 20-21 sales tax revenue for
the 3-year period of FY 18-19, FY 19-20 and FY 20-21.
··-.. _ -·-· -..... ----....... ~-·--.. ___ -. -. -· ... ·-· T . _,... __ .,... --... . f .. -. r . ·-1
j January February I March Total I
I l l I l ---· ---........... -" ,_ .. ,.,, .. ,_,._... ~ .,.., ..... --,
Sales Tax FY18-19 Revenue $ 1,772,943 $ 2,179,244 $ 2,196,128 $ 6,148,315
,_ .. __ .,,. ___ ...,.,,..,.
Sales Tax FY19-20 Revenue $ 1,770,364 $ 2,648,464 $ 2,102,810 $ 6,521,638
------· _,_ . ..,_,_,,.,
Sales Tax FY20-21 Revenue $ 1,830,685 $ 2,327,721 $ 2,128,048 $ 6,286,454
Table 13 -Third Quarter Sales Tax Revenue Comparison
As shown in Table 13, sales tax revenue in Third Quarter FY 20-21 is -4% below FY 19-
20 sales tax revenue (a reduction of $235,184) and +2% above FY 18-19 sales tax
revenue (an increase of $138, 139). Third Quarter FY 20-21 sales tax revenue was the
highest fiscal year to date.
Table 14 tracks monthly sales tax revenues for the entire fiscal year period for FY 18-19,
FY 19-20, and FY 20-21. Staff will continue to track sales tax revenues monthly under the
City's "Rolling Budget" model.
Sales Taxes
----l
.. ., ..... _ .J1)Ca sh Basis _ ... h ·•·•-·__(1)Cash _Basis .. _ .......... ___ Adopted ____ , .
FY18-19 FY19-20 FY20-21
(1 )Cash Basis !
i
...,. ...... , .. --~-...................... ---.. , . , .. ,. ...... !
FY20-21 Increase/ ! ....... ·-·--· _, ..
-· ···-··--·---· Actual -··-·-..... _____ Actual -·· ___ Budget .......... . Actual Decrease ·-.. -··· --
I July $ 1,569,192 $ 2,052,175 $ 315,566 $ 2,148,660 $ 1,833,094
I Aug $ 1,540,406 $ 1,803,236 $ 347,069
---· , __ ,.., _ _,, ·-· ·--··-·---
$ 991,568 $ 644,499
!"'sept $ 1,721,728 -$··-----···-1,735,577 $ -394,535
!--------·-· -----····· ... ·------·--· .. -· ---····-·-·-··~·-·----.. , .... _ ------
: Oct $ 1,608,493 $ 1,578,141 $ 554,978
1· -----. --·-· -·-· --·-·-·-··· ··----------------· ·-·--
: Nov $ 2,377,484 $ 1,707,623 $ 730,385
i Dec $ 1,930 ,063 $ -1,947 ,694 $ 840,923 l Jan _$_ ........ --1 ,772,943 ·$-· __ ... _, __ ·1,770,364 _$ ____ ... 1-,082,886
1·i=et> $ 2,179,244 .i' ___ .... •·2,s'48,464 ... r -·· -·· ... 9 46,265
; Mar $ · 2,196,128 $ 2,102,810 $-755,274
---· ·-· -' $ 1,769,583 $ 1,375,048 i
$ 1,824,908
.• . . _____ .. ·------·------j
$ 1,269,930 I
$ 1,542,882
-----------... ·---I
$ 812,497 · ·-·-·-...... "-·-·-·-···-· ________ j
$ 2,062,035 $ 1,221,112 I
... ... ._., .... , I
$ 1,830,685 $ 747,799 i --··-··-
$ 2,327,721 $ 1,381,456 !
$ 2,128,048
--··-··•· ____ , -------------·---·-·i
$ 1,372,774 i i----·-···-· _____ .. _ --·· ··---·---····-· ----------·•-----------__ _.,
! Apr $ 2,013,662 $ 1,849,644 $ 917,902 r---"'·--·---·•" -•· -------···"
i May $ 2,447,740 $ 780,032 $ 909,290
i·---· ---· .. -·-•"'·-·---·---... --, ----•·--····-·-----
1 Jun $ 1,819,330 $ 1,762,940 $ 1,052,286
•-------------
r--···-·--· -----------1.,__--------ii,....---------1--------------! ________ ,.., $ 23,176,411 $ ___ ·-21 _,738,699 __ $ __ 8_,_84_7_,3_5_9 ___ $_1_6_,6_26_,0_9_0 ____ .t ... _~_Q_,658,209_J
Table 14-Rolling Sales Tax Revenue Comparison
11
City Council Staff Report
April 22, 2021 --Page 12
FY 2020/2021 Third Quarter Budget Review
With sales tax revenues received at $3,502,029 over budgeted sales tax revenues in
Third Quarter FY 20-21, Staff recommends the City Council amend the FY 20-21 budget
to adjust sales tax budgeted revenues by this amount. Staff notes that sales tax revenue
received fiscal year to date (9 months) was $16,626,090 and generally equal to sales tax
revenue received in the same period FY 18-19 of $16,895,680 (-1.6%) and lower than
TOT revenue received in the same period FY 19-20 of $17,346,084 (-4%). However,
sales tax revenue received fiscal year to date is +88% of total budgeted annual sales tax
revenue.
Based on continued improvement of the City's local tourism economy, Staff is estimating
sales tax revenue in Fourth Quarter FY 20-21 at $5,650,000 (equivalent to 90% of sales
tax revenue received in Fourth Quarter FY 18-19)4 , generating an additional +$2, 773,180
in sales tax revenue over budget. Table 15 provides Staff's projections for total FY 20-21
sales tax revenue.
r··--------··-·········--··-----·-··-·--····-· ·-··--· ····-··-·-·-······-··-··----·---
i
i Sales Taxes
(1 )Cash Basis (1 )Cash Basis Adopted (1 )Cash Basis ..... __ ....... _ .. ._,.. ...... -·-·----·-· -·--· ... ·-----
FY18-19 FY19-20 FY20-21 FY20-21 Increase/ ... ,-.-..... -, ..... --·---.. -· .. --............. ·--....... ..,_,. ..... ·----··-·-,..,., __ ..,,., ..... .. ...... ----·-·-·-----,-.. .. -...
Actual Actual Budget Actual Decrease __ _.. .............. ...___ ....... -._. ,,, ____ ..,.. _.., ____ ..,, ___ ..... , ...... ,_ .. _ ~ --··-.. .. "-··---•v·,.•-••
l July $ 1,569,192 $ 2,052,175 $ 315,566 $ 2,148,660 $ 1,833,094 t··-··---,._,. .. _,, .. ,-.. ~ ..... -...... ---~-.. ---.-........ ,_. __
! Aug $ 1,540,406 $ 1,803,236 $ 347,069 $ 991,568 $ 644,499 ;..---------·-·-·•-··--· ___ ..,,_,. ____ , ·-· --·-· ---· ........... , .. ,, ___ ,, __________ ., _______ ., __ ·--·-··----··---· ·-----••--•-•• .... •-•-•-•H---•-·•·· --•---
1 Sept $ 1,721,728 $ 1,735,577 $ 394,535 $ 1,769,583 $ 1,375,048 _ f---·-·-..._ ......... ,,...,., ........ -, .. _ ... _.., . .~.-... ,_, ...... ,,. '•·-~·. ·-·-,...___ ,_. -·· , .. _
I Oct $ 1,608,493 $ 1,578,141 $ 554,978 $ 1,824,908 $ 1,269,930 !Nov · ... ..-.,-..... --_ .. _ ... -...... ·-$ 2,377,484 $ 1,707,623 $ 730,385 $ 1,542,882 $ 812,497 f•• ____ ,. _____ ·---'••---· . -___ ._._. __ ,... ......... --• ..... . ... ,,....... ............... ~·--------·--·
1 Dec $ 1,930,063 $ 1,947,694 $ 840,923 $ 2,062,035 $ --···--··1,221, 11_2 _ L ______ ···-,-,.-· ...... _,.._ .. _______ ----~ ,...,. __ ,4.,,, ••--· ..........
l Jan $ 1,772,943 $ 1,770,364 $ 1,082,886 $ 1,830,685 $ 747,799
I.,....._..,_,,,.., ... __ , ____ .................. --.......... ··--···-· ..... ---, ... -····-,.,. __ ........ ____ ,.,_ , ____ ,..,,. __ .. ___ ,__.,_ ··-·--·-· ·-..... ________ , ... ·-··--· .. U:e~_ $ 2,179,244 $ 2,648,464 $ 946,265 $ 2,327,721 $ 1,381,456 i
~ ...... ·-· •'9-........................ ~ ...... ·--..... --...... ---·-! l Mar $ 2,196,128 $ 2,102,810 $ 755,274 $ 2,128,048 $ 1,372,774 ;
i ----·· --·~·--···· .. -·-.. , ,..,,. _ ................... ,, ____ .. _, ................... __ ..,,, ............................ -.....-.. ,
L.Apr _ $ 2,013,662 $ 1,849,644 $ 917,902 $ 1,812,295 $ 894,393 -· _ ............ -~-~-.... -, .... --·-· ·-·-·--
: May $ 2,447,740 $ 780,032 $ 909,290 $ 2,202,966 $ 1,293,676 ~---··· ___ .. ,._,. ... __ ~ -·-· .... __ ,._._ ... -... , ....
i Jun $ 1,819,330 $ 1,762,940 $ 1,052,286 $ 1,637,397 $ 585,111 I r ······-·-·--· $ 23,176,411 $ 21,738,~~~-$ 8,847,359 $ 22,278,748 $ 13,431,389 !
f·-·--···----.
l I i ! I Estimates only. l ~-~-----· ,_, ............. ~-•-· .......... ,, _, ..... ,.,.
Table 15 -Sales Tax Revenue Estimate
4 FY 20-21 sales tax revenues for the 9-month period were on average 100% of FY 18-19 sales tax
revenues for the same period, and on average 96% of FY 19-20 sales tax revenue for the same period.
Staff has conservatively assumed a lower average of 90% for the Fourth Quarter FY 20-21.
12
City Council Staff Report
April 22, 2021 --Page 13
FY 2020/2021 Third Quarter Budget Review
Measure J Sales Tax
Previously reported at the First Quarter and Mid-Year FY 20-21 Budget updates, Tables
16 and 17 below compare actual First Half FY 20-21 sales tax revenue (excluding
Measure J) to budget.
,-.. -I ·r -_ ... , ... ----1
September ;
l
July August Total '
I I
Measure J FY20-21 Budgeted Revenue $ 195,554 $ 216,610 $ 282,663 $ 694,827
Measure J FY20-21 Actual Revenue $ 1,540,834 $ 853,771 $ 1,260,444 $ 3,655,049
Difference $ 1,345,280 $ 637,161 $ 977,781 $ 2,960,222 _,. ___ ...
Table 16 -First Quarter Measure J Sales Tax Revenue
! ~ ---· ---... . -.... .
'
.. ---• -----•• •. r --
! I October l November December Total I i
l I --···~ -----.. ----·-
Measure J FY20-21 Budgeted Revenue $ 426,741 $ 468,348 $ 819,994 $ 1,715,083
Measure J FY20-21 Actual Revenue $ 1,359,801 $ 1,084,702 $ 1,412,971 $ 3,857,474
Difference $ 933,060 $ 616,354 $ 592,977 $ 2,142,391
Table 17 -Second Quarter Measure J Sales Tax Revenue
As shown in these Tables Measure J sales tax revenue exceeded budget by +$5, 102,613
for the First Half of FY 20-21. City Council previously amended the FY 20-21 budget to
increase revenue by this amount.
Table 18 below compares actual Third Quarter FY 20-21 Measure J sales tax revenue to
budget.
i . . .
January February March Total
Measure J FY20-21 Budgeted Revenue $ 626,222 $ 613,241 $ 526,411 $ 1,765,874
Measure J FY20-21 Actual Revenue $ 1,332,028 $ 1,629,918 $ 1,482,955 $ 4,444,901
Difference $ 705,806 $ 1,016,677 $ 956,544 $ 2,679,027
.... ----·-__ ._ ....
Table 18 -Third Quarter Measure J Sales Tax Revenue
As shown in Table 18, Measure J sales tax payments received in Third Quarter FY 20-21
exceeded budget by +$2,679 ,027.
13
City Council Staff Report
April 22, 2021 --Page 14
FY 2020/2021 Third Quarter Budget Review
As a further comparison, Table 19 identifies Third Quarter FY 20-21 Measure J sales tax
revenue for the 3-year period of FY 18-19, FY 19-20 and FY 20-21.
~
---··-····
January
. T l February l March
··-1
Total ·
-· ·-· .. ------·-·---··---· ,_ .. _,
easure J FY18-19 Revenue
l ·-·----.. ---·----
!Measure J FY19-20 Revenue I M:~su.re J FY20-21-R:v:nue
.. -, ......... _,_ ··-.. _, ........
·--· ...... _., .. ___
--·--
l
$ 1,291,276
___ , __ , __ -.. ·-· ·---
$ 1,287,324
-·-·-·--· ___ ..... ,
$ 1,332,028
.. ----· -·---··
I
$ 1,366,766 $ 1,540,628 $ 4,198,670
..... ,_,.~-·-· ,.., ___ -·-.... -. ·--· ,,.. .. _ ·-··-... _, ·-
$ 1,756,619 $ 1,423,604 $ 4,467,547 _ .. ·-·--· ·--··------.-·-------~--·--·
$ 1,629,918 $ 1,482,955 $ 4,444,901
··---·-·--·-· .. --. --· ·-· ---· ... -.... --.. , ,_._ .. ___
Table 19 -Third Quarter Sales Tax Revenue Comparison
As shown in Table 19, Measure J sales tax revenue in Third Quarter FY 20-21 is generally
equal to FY 19-20 Measure J sales tax revenue and +6% above FY 18-19 Measure J
sales tax revenue (an increase of $246,231). Third Quarter FY 20-21 Measure J sales
tax revenue was the highest fiscal year to date.
Table 20 tracks monthly Measure J sales tax revenue for the entire fiscal year period for
FY 18-19, FY 19-20, and FY 20-21. Staff will continue to track sales tax revenues monthly
under the City's "Rolling Budget" model.
, ----·-.. ··-···-·-·-·"-""'"' .... -.......... _ .... -... -,..-· -··-· .. -·•-·••---··----·-·-····-·-·--· ·-·· .. -·-··-·····---.. --------... _ .. ___ ...... _ .... _._ .. ______ l
Measure J Sales Taxes I
1
.... ____ .... _.(~)Cash Bas~_! ... ,. .... L ..... i~J~~sh Basis .. •-M• ·--~-R_e_vi ~~~-......... . (1)Cash Basis ......... .-........ -.......... , ......... .-...... ~ ...... , ___ . .._ __
FY18-19 FY19-20 FY20-21 FY20-21 Increase/
,··--•--.-.-·-·•···----... ···--·--· -·-··-·•-"•-·· ·---.. ------•-·---,.,_ ... ,. ... -.•-·-~-..........
·-..... -·---·---·-Actual _____ ·--_________ Actual __ _____ _____ Budget Actual Decrease --·-· ·------
l._July_ .,,t .-....... 1,190,015 $ 1,489,086 $ 195,554
:. Aug .t ... ·--~2~.§I,Q~ .. 1 __ .t ....... -... 1., 146,9 q~_ t . .. --· ·-~-!_~i.?. .. 1.Q __
$ 1,540,834 $ 1,345,280
$ 853,771 $ 637,161 l I
Sept _$ __________ 921,434 __ . $ ....... -.. 1,199,?38 ___ $ ___ 282,663 $ 1,260,444 $ 977,781 l
l
-4
Oct $ 1,225,007 $ 1,155,050 $ 426,741 $ 1,359,801 $ 933,060 ..... ·--------... -. .... ...._ ........ ..._. ···---~ ....._ ...... --···· ........ -........... _, ____ , ___ ,. .... _, __ ·-· ...
Nov $ 1,372,704 $ 1,188,251 $ 468,348 $ 1,084,702 $ 616,354
•••••-••--,.,~ ...,_ .. ..., .. ,._.~,,;.,,...,.,,o,...., --• •-•..o •-• ,_,.,. ,._.__._.,......,, .... •-..--••--••-•--•-~ ,_........... •-
Dec $ 1,394,758 $ 1,357,357 $ 819,994 $ 1,412,971 $ 592,977
L~~-~-$ · 1,29!!_~1-~ __ t . ·--·---1,281 ,324 $ s2s,222 $ 1,332,028 $ 705,806
; Feb $ 1,366,766 $ 1,756,619 $ 613,241 $ 1,629,918 $ 1,016,677 . ,,..._._ .. , __ ...... -....... ,,.,............. ,,. __ ..., ·--_...,_ .. .---· ·-
-~a!... $ 1,540,628 $ 1,423,604 J _ ·-.. --·· ~?.§,4.!.1 __ _ $ 1,482,955 $ 956,544 ----~-..
-Apr_ $ 1,449,640 $ 1,228,280 $ 473,233
_May __ $_ ... _ .. ____ 1 .. ,545,175 __ $ .. ___ 588,549 $ 730,143
Jun $ 1,300,354 $ 1,250,141 $ 587,740
L _____ .. -~--1s,1s4,aoa s 1s,010,901 s s,9ss,9oo s 11,9s1,424 s 1,1a1,s40 1
Table 20 -Rolling Measure J Sales Tax Revenue Comparison
With Measure J sales tax revenue received at $2,679,027 over budgeted Measure J sales
tax revenue in Third Quarter FY 20-21, Staff recommends the City Council amend the FY
20-21 budget to adjust Measure J sales tax budgeted revenue by this amount. Staff notes
that Measure J sales tax revenue received fiscal year to date (9 months) was $11,957,424
14
City Council Staff Report
April 22, 2021 --Page 15
FY 2020/2021 Third Quarter Budget Review
and higher than Measure J sales tax revenue received in the same period FY 18-19 of
$11,459,639 (+4.3%) and roughly equal to Measure J sales tax revenue received in the
same period FY 19-20 of $12,003,938. However, Measure J sales tax revenue received
fiscal year to date is +100% of total budgeted annual Measure J sales tax revenue.
Based on continued improvement of the City's local tourism economy, Staff is estimating
Measure J sales tax revenue in Fourth Quarter FY 20-21 at $4,080,410 (equivalent to
95% of Measure J sales tax revenue received in Fourth Quarter FY 18-19)5 , generating
an additional +$2,289,294 in Measure J sales tax revenue over budget. Table 21 provides
Staff's projections for total FY 20-21 Measure J sales tax revenue.
Measure J Sales Taxes 7
I
(1 )Cash Basis (1)Cash Basis Revised (1)Cash Basis _ .. _,., ___ ._. ...... ..... .,.._ ... .,. ._., __ , --· ·-· ....... -FY18-19 FY19-20 FY20-21 I FY20-21 Increase/ ,... ...... _ ............... ..,_ .... --·-··· ......... ,_, I Actual Actual Budget Actual Decrease .......... ____ ,.. _,·~··---•·
___ .. ___ ----···---· ·--·•-'I --·-·---_ _. __ ...
~~~-$ 1,190,015 $ 1,489,086 $ 195,554 $ 1,540,834 $ 1,345,280
_Au.9_ $ 1,157,051 $ 1,146,909 $ 216,610 $ 853,771 $ 637,161
Sept $ 921,434 $ 1,199,738 $ 282,663 $ 1,260,444 $ 977,781 _,_ ..... .,...,,,--.....
I Oct $ 1,225,007 $ 1,155,050 $ 426,741 $ 1,359,801 $ 933,060 [·-----·----··---·-·----··-·-·-~ .. ,.
: Nov $ 1,372,704 $ 1,188,251 $ 468,348 $ 1,084,702 $ 616,354 , ______ ..... __ ..,._,., .. ,_ .... ,,, _______ .... ,,_.._ _____ ....... ·~--..-,--.... ,_ ....... --. .. .-.................. , .......... . ..
Dec $ 1,394,758 $ 1,357,357 $ 819,994 $ 1,412,971 $ 592,977 ---·-------........... ~, ..
Jan $ 1,291,276 $ 1,287,324 $ 626,222 $ 1,332,028 $ 705,806 '""'---··---· ,..,. __ .. , --.. ,,,_. __ , __ , ___ ,. ____
i Feb $ 1,366,766 $ 1,756,619 $ 613,241 $ 1,629,918 $ 1,016,677 I ---··· ·---. ._. ......... ·---· ·---.... ~-! Mar $ 1,540,628 $ 1,423,604 $ 526,411 $ 1,482,955 $ 956,544 ! ...... .,, ...... ,,.,,._._,_.,....,_.......,,. __ . __ , ___ , -----•.---•·--~-._ . ..,,, ...
Apr $ 1,449,640 $ 1,228,280 $ 473,233 $ 1,377,158 $ 903,925 r-·-·-· ·-----... --·-: May $ 1,545,175 $ 588,549 $ 730,143 $ 1,467,916 $ 737,773 , .. ~--··-·" ---~··-·-·-·----· ·-· ·-----·--· -·-
· Jun $ 1,300,354 $ 1,250,141 $ 587,740 $ 1,235,337 $ 647,597 I
! $ 15,754,808 $ 15,070,907 $ 5,966,900 $ 16,037,834 $ 10,070,934 l
I l I I I Estimates only. i _____ " ___ L ... ·-------·--· ... ,....,. .... , _ _,.....,.., ·-Table 21 -Measure J Sales Tax Revenue Estimate
5 FY 20-21 Measure J sales tax revenue for the 9-month period was on average 105% of FY 18-19 Measure
J sales tax revenue for the same period, and on average 100% of FY 19-20 Measure J sales tax revenue
for the same period. Staff has conservatively assumed a lower average of 95% for the Fourth Quarter FY
20-21.
15
City Council Staff Report
April 22, 2021 --Page 16
FY 2020/2021 Third Quarter Budget Review
Summary of General Fund Expenditures
Staff also monitored monthly General Fund expenditures during FY 20-21 to ensure costs
were contained and within the reduced budget that was adopted. Table 22 reflects
expenditures by category for the FY 20-21 9-month period with comparison to FY 19-20
same period. _
Category
l Adopted FY 20-21 I 9-Month ~~ 20-21 I %
20
°f
2
F
1
Y I 9-Mo~-; FY 19-20 1 · -
0
.:
B d E d . -E d"t 111erence u get I xpen 1tures I Budget xpen I ures I
Ge£iral Government ·t-_---$37 ,678,599 .· ~=)-22,800,459 ~· 69~-% $28,160,6 1.E_ _ ($5,360,157)
_Poli ~ ------------· ··-__ $33,302,452 ____ j 23,894,064 . l.!.:.?% $25,973,048 ($2,078,984)
Fire __ ·-···-·-·--$17,364,88~ L_.$13,765,772 . 79.3% $14,068,304:~.7: ($302,532) j
i ParksandRecreation ___ l_ ______ $7,197,380 .L-~~.520,916 _ _J -~-2.8% I_ $5,789,52~ .. --J. ($1,268,61?) J
· PERS Reserve _ _ _ i. _ $6,000,000 · __ _j6,000,000 1_Q0.0% ! $6,000,00Q__ $0 I
Transfers Out $12,000,300 $9,406,893 78.4% $13,520,425 ($4,113,532 )
Tota~ Expenditures ____ ..., ~--___ 113,543,620 __ _!~0,388,104 ' 70.8% $93,511,921 ($13,123,817)
Table 22 -General Fund Expenditures YTD
As shown, overall General Fund expenditures are at 70.8% of total budgeted
expenditures, tracking below 75% of total budgeted expenditures ($85,200,000) where
the City would anticipate to be at the end of the 9-month period. This implies a savings of
approximately $4,800,000 may be realized at end of FY 20-21 provided expenditures
continue to track as they are. More importantly, as shown the expenditures are
(-$13, 100,000) below expenditures in the same 9-month period of FY 19-20.
Summary of FY 20-21 Financial Status
General Fund
As demonstrated in this report, the City's financial status is significantly improved over
budget due to the demonstrated strength of the City's local tourism economy. General
Fund revenue improved in Third Quarter and is projected to increase through end of FY
20-21 as follows:
• Fees and Charges:
• Property Taxes:
• TOT:
• Sales Taxes:
Total Increase:
+$911,489
+$1,661,990
+$5, 789,193
+$6,275,209
+$14,637,881
At the First Quarter and Mid-Year Budget Updates, City Council amended the General
Fund budget to increase revenues; the currently revised General Fund revenue budget
is $112,198 ,775. With the Third Quarter FY 20-21 increased revenues and projected
Fourth Quarter FY 20-21 revenues, an additional $14,637,881 is recommended to adjust
the final budgeted FY 20-21 General Fund revenue to $126,836,656.
16
City Council Staff Report
April 22, 2021 --Page 17
FY 2020/2021 Third Quarter Budget Review
American Rescue Plan Act
Not included in the additional $14,637,881 of General Fund revenue anticipated by end
of FY 20-21 is the federal stimulus funding that will be paid to Palm Springs through the
American Rescue Plan Act of 2021 (ARP), signed into law by President Biden on March
11, 2021. The ARP provides financial assistance in the form of stimulus payments to state
and local governments, including Palm Springs. The City itself will receive a direct
stimulus payment of $11,190,000 divided into two payments. The first payment of
$5,595,000 will be received sometime in May with the second payment received one year
later in FY 21-22.
The ARP provides general guidelines on how the City can only use these funds: (1) to
respond to the public health emergency or negative economic impacts associated with
the emergency; (2) to support essential work; (3) to backfill a reduction in revenue that
has occurred since FY 18-19; or (4) for water, sewer, or broadband infrastructure. The
City will have until December 31, 2024 to use these funds.
A review of General Fund revenue in FY 18-19 as compared to FY 19-20 (excluding
budgeted transfers in) shows the following loss of revenue due to the COVID-19
pandemic:
FY 18-19:
FY 19-20:
Loss of Revenue:
$ 140,127,840
$ 112,439,828
($ 27,688,012)
Therefore, the City can exclusively use these funds to "backfill" the loss in revenue
demonstrated in FY 19-20, or to fund any "essential work." The only restriction noted in
the ARP on the City's use of the stimulus funds is that the City is prohibited from using
the funds to make supplemental pension payments.
Including the first payment of $5,595,000 with the increase in General Fund revenue
received in Third Quarter and projected in Fourth Quarter FY 20-21 will bring the total
increase in General Fund revenue to +$20,232,881 at end of FY 20-21.
Measure J Fund
As demonstrated in this report, Measure J Fund revenue increased over budget
throughout FY 20-21. Measure J Fund revenue improved in Third Quarter and is projected
to increase through end of FY 20-21 by +$4,968,321 .
At the First Quarter and Mid-Year Budget Updates, City Council amended the Measure J
Fund budget to increase revenue; the currently revised Measure J Fund revenue budget
is approximately $11,069,513. With the Third Quarter FY 20-21 increased revenue and
projected Fourth Quarter FY 20-21 revenue, an additional $4,968,321 is recommended
17
City Council Staff Report
April 22, 2021 --Page 18
FY 2020/2021 Third Quarter Budget Review
to adjust the final budgeted FY 20-21 Measure J Fund revenue to approximately
$16,037,834 (an overall improvement of $10,070,934).
The adopted FY 20-21 General Fund budget included a transfer of $2,800,000 from the
Measure J Fund as one of the measures to reduce the General Fund's FY 20-21
estimated deficit. Given the improvement with the General Fund budget, the Measure J
Commission has recommended that the City Council cancel this one-time transfer and
allow the $2,800,000 to remain in the Measure J Fund for capital projects.
Recommendations
Staff recommends the City Council amend the FY 20-21 General Fund budget to increase
budgeted revenue for Third Quarter receipts and estimated Fourth Quarter receipts by
+$20,232,881 .
Similarly, with the Measure J Fund Staff recommends the City Council amend the FY 20-
21 budget to increase budgeted revenue for Third Quarter receipts by $2,679,027 and for
estimated Fourth Quarter receipts by $2,289,295 for a total increase of $4,968,321.
With improvement of the City's financial status through the First Half of FY 20-21, the
adopted FY 20-21 deficit of ($17,925,500) was reduced to an estimated deficit of
($4,322,576). As noted herein, the continued improvement of the City's financial status
through the end of FY 20-21 is estimated to increase General Fund revenue by
+$20,232,881 and may develop a surplus of approximately +$15,910,305 . It should be
noted that the original deficit was reduced through one-time use of $10, 150,0006 from the
Measure J Fund and $4,200,000 from the Capital Project Fund by cancelling and
deferring many capital projects.
If the Measure J Commission's recommendation is considered by City Council (to cancel
$2,800,000 transfer from Measure J Fund), the FY 20-21 surplus is estimated at
+$13, 110,305.
The City Council may also consider cancelling more of the remaining one-time transfer of
$7,350,000 from the Measure J Fund, or some of the one-time transfer of $4,200,000
from the Capital Projects Fund, to restore funding for the cancelled capital projects.
If the $2,800,000 transfer from the Measure J Fund is cancelled, it will have $12,870,934
in new revenue in FY 20-21 in addition to estimated Measure J Fund revenue of
$16,500,000 in FY 21-22 to allocate towards the many capital projects and programs that
were cancelled and deferred. The Measure J Commission is currently considering the
prioritization of recommended funding for those capital projects and will be presented to
City Council as part of the overall draft FY 21-22 budget.
6 The $10,150,000 transfer included $7,350,000 in funding previously appropriated prior to FY 20-21 for
several capital projects and $2,800,000 in new Measure J revenue from FY 20-21.
18
City Council Staff Report
April 22, 2021 --Page 19
FY 2020/2021 Third Quarter Budget Review
Additional Appropriations
Given the change in circumstances with the City's financial status, Staff recommends the
City Council as a first priority consider funding the currently frozen and unfunded positions
that are vacant due to the reduction in force and layoffs of City staff implemented at the
end of FY 19-20. A total of 18 positions that include 14 positions in the City's General Unit
and 4 positions in the Management Unit (17.75 Full Time Equivalents [FTEs]) are
affected, with a total fully burdened cost of $2,200,000.
Staff recommends the City Council approve and adopt the revised "Frozen and Unfunded
List" of allocated positions provided as Attachment 1. This will leave 33 FTE positions
unfunded and frozen out of the total of 506.0 FTE positions approved in the FY 20-21
budget (6.5% of allocated FTEs), however, all these positions are vacant due to voluntary
separation. Another 33.5 FTE positions are currently vacant and funded and in various
steps of the recruitment process.
This action will not generally impact the estimated surplus of $14,981,9337 as most of
these employees will not generally be returned to service until end of May depending
upon the circumstances, and some former employees may have obtained other
employment and will not return to City service. In those cases, open recruitment will be
used to fill these vacant positions unless the City Manager then determines that for
organization effectiveness those positions may remain vacant.
However, assuming all these positions are re-filled with former employees by May/June
will impose only a fraction of this annual cost on the FY 20-21 General Fund budget. Staff
recommends that one-month of this fully burdened cost be appropriated in the FY 20-21
budget (using $200,000 as the estimated cost), with the full amount to be incorporated
into the draft FY 21-22 General Fund budget.
Staff also recommends the City Council appropriate $7,600,000 as transfers to cover
anticipated expenditures in FY 20-21 in the following areas: legal consulting fees
($520,000); vacation / sick time conversion ($900,000); animal shelter operations
($180,000); Golf Fund ($1,000,000); and Risk Fund ($5,000,000).
With the City Council's acceptance of the Measure J Commission recommendation
(cancel one-time $2,800,000 transfer from Measure J Fund) and Staffs recommendations
(the total appropriation of $7,800,000 as outlined above), and after accounting for
($3,200,000) in continuing appropriations and related expenditures, FY 20-21 is
estimated to end with a surplus of $2,110,305. As there remains uncertainty with the
COVID-19 pandemic and the potential for a resurgence of cases in the Fall, Staff
recommends this surplus remain in General Fund unrestricted balance.
7 Assumes City Council cancels $2,800,000 transfer from Measure J Fund; this estimated surplus may be
further reduced to the extent City Council cancels more of the one-time transfer from the Measure J Fund
to replenish funding previously budgeted for capital projects.
19
City Council Staff Report
April 22, 2021 --Page 20
FY 2020/2021 Third Quarter Budget Review
-·---··--------. -... -----·------' -··-······ ··---•·-• --·---------T ·--
.. ----·· -.L -. --.. .. --i
!
• -· •· ·1
---..... -,··-...... ·--... --· -·-· --,._ -
' I ~--·--------·----~-·-·---·•---...----------·--· .. ··--... ~ .. --....... , __ ., __
Beginning Projected Fund Balance -Unrestricted
------··--·-·····---------·····-·-··· .J_ -----------·-·---------··--··-·-
I
!
I
I
Revenues
·-----;--.. -----·-····-.. --··-·--·····---r---
Addditional Revenues Taxes 11-12-20
Addditional Revenues Taxes 02-11-21
Additional Revenues 4-22-21
Eliminate Measure J Transfer 4-22-21 ! -·--· ·-· ~-----·· --· : .... --· -
FY 2020-21
Adopted
Budget
$ 17,925,700
80,854,300
Transfers In 1 1 14,350,000
Total Revenues ------1·---------------------t-95,204,300
... -· -·· •.• ··-1 ···-·· ·--·---·· •. _,,_, __ ··-· ···········--··---·--··-·1·-·-·
Expenditures : j (101,129,500)
Recommended Addt'I Expenditures 4-22-21
Recommended Addt'I Expenditures 2-11-21
[
Recommended Addt'I Expenditures 1-14-21 Small ~usiness Asst.
Recommended Addt'I Expenditures 11-12-20
Appraisal of Tahquitz Golf Course 9-24-20
Continuing appropriations
Transfers Out !
Total Expenditures __ L .. ..
i
Surplus/ (Deficit) __ __ __ .I_ _______ .. ____ .. _ .... ... ....... _ ,
I
E .. ~-~ing Projected Unrestricted Balance Sutotal ------~i, ___ _
(12,000,300)
(113,129,800)
(17,925,500)
$200
··---•····--·--·--· ··-··--··-----·-···--·-· --. -;--· ---------
CalPERS Reserve Set-Aside $ 22,250,000
.... ··--··---·· ·---•.... -....... •·-···--~····•··· ·------
CalPERS Set-Aside/Fund Balance !
-----...... ----·-.... ----1· ..
Fund Balance Unrestricted Total
Fund Balance CalPERS Reserve Total
!
$ 22,250,200
0.00%
19.67%
........... _ -······· ----------
Fund Balance% Total 19.67%
-----
l FY 2020-21 ·-----
Revised Fund
I
I Balances
I ···--
$ 26,320,928
..... -~---· ... ,,. -----------·--
---··
80,854,300 -·----·
8,637,694 . ----·--·---·-·-
-r·· .. 8,356,781
l 20,232,881 r-···-··-(2,800,000) ! r ------
14,350,000 !
I 129,631,656
;
I ~ .. ._ ......... _, -···· .. ·-· i {101,129,500) I 1 .• -. ·-
I
i .... --! (7,800,000) L-------I {230,000) i t· .. ... .... ~-..
l (1,000,000) !••---·---·---·
! (2,147,55_!) !
L
-----···-...
(14,0!?_Q)
(3,200,000) -·------·-·· --
(12,000,300)
I
(127,521,351)
$ 2,110,305
$ 28,431,233
$ 22,250,000
;
$ 50,681,233
t--... --.----------
i 22.30% i
! 17.45%
I 39.74% !
------------.. -· -.I.. ---·------···
Table 23 -General Fund Balance Schedule
20
City Council Staff Report
April 22, 2021 --Page 21
FY 2020/2021 Third Quarter Budget Review
SUBMITTED:
Marcus L. Fuller
Assistant City Manager
Justi k ~
City Manager
Attachments:
1. Revised "Frozen & Unfunded" Positions List
Nancy Pauley
Director of Finance/Treasurer
21
ATTACHMENT 1
22
Allocated Positions FY21/22 - Frozen and Unfunded April 22, 2021
Department Position FTE
Airport Operations Specialist I 1
Airport Operations Specialist I 1
Assistant Airport Director 1
Community Development Administrator 1
Director of Fund Development 1
Building Inspector*1
Building Inspector Supervisor 1
Civil Engineer, Senior 1
Permit Center Technician 1
Planning Technician 1
Plans Examiner 1
Public Works Inspector 1
Public Works Inspector, Senior 1
Account Clerk II 1
Account Clerk I 1
Administrative Assistant 1
Assistant Finance Director 1
Clerical Assistant 1
Fire Captain*1
Fire Deputy Chief*1
Firefighter (Overhire)1
Information Technology Assistant Director of Information Technology 1
Library & Public Services Manager 1
Library Assistant 0.5
Administrative Secretary 1
Fleet Maintenance Technician II 1
Fleet Maintenance Technician III/Service Writer 1
Heavy Equip. Operator & Sr Street/Traffic Maint. Wkr 1
Maintenance Electrician 1
Maintenance Mechanic I 1
Maintenance Supervisor 1
Maintenance Supervisor 1
Street/Traffic Maintenance Worker, Lead 1
Animal Services Officer 1
Community Outreach & Media Specialist 1
Community Services Officer 1
Crime Scene Technician 1
Jail Transport Officer 1
Police Officer - Overhire 1
Police Officer - Overhire 1
Police Officer 1
Police Officer 1
Police Officer 1
Police Services Officer 1
Rangemaster 1
Senior Secretary 1
Lifeguard 0.75
Lifeguard 1
Literacy Coordinator 1
Recreation Program Assistant (.5)0.5
Secretary, Senior 1
Special Programs Account Clerk II 1
50.75
*Partially funded through December 31, 2020
Positions to be funded by City Council action on April 22, 2021
Maintenance & Facilities
Police
Recreation
TOTAL FTE Frozen & Unfunded
Library
Aviation
Community & Economic Development
Development Services
Finance
Fire
23
Allocated Positions FY21/22 - Frozen and Unfunded April 22, 2021
Department Position FTE
Airport Operations Specialist I 1
Airport Operations Specialist I 1
Assistant Airport Director 1
Community Development Administrator 1
Director of Fund Development 1
Building Inspector*1
Building Inspector Supervisor 1
Civil Engineer, Senior 1
Permit Center Technician 1
Plans Examiner 1
Public Works Inspector 1
Public Works Inspector, Senior 1
Account Clerk II 1
Account Clerk I 1
Administrative Assistant 1
Assistant Finance Director 1
Fire Captain*1
Fire Deputy Chief*1
Firefighter (Overhire)1
Information Technology Assistant Director of Information Technology 1
Library Library Assistant 0.5
Maintenance & Facilities Heavy Equip. Operator & Sr Street/Traffic Maint. Wkr 1
Animal Services Officer 1
Community Services Officer 1
Jail Transport Officer 1
Police Officer - Overhire 1
Police Officer - Overhire 1
Police Officer 1
Police Officer 1
Police Officer 1
Police Services Officer 1
Senior Secretary 1
Literacy Coordinator 1
Recreation Program Assistant (.5)0.5
33.00
Police
TOTAL FTE Frozen & Unfunded
Aviation
Community & Economic Development
Development Services
Finance
Fire
24