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Home My WebLink About2/21/2018 - STAFF REPORTS - 5.D. ?ALM S.. � a Y N a a .[ 4 a -CffO[pl[.`e a cA�1FORN%V City Council Staff Report DATE: February 21, 2018 NEW BUSINESS SUBJECT: FISCAL YEAR 2017-18 MID-YEAR BUDGET UPDATE FROM: David H. Ready, City Manager BY: Department of Finance & Treasury SUMMARY The City Council will receive a presentation containing an overview of General Fund revenues and expenses for the first half of the fiscal year. RECOMMENDATION Receive and file. STAFF ANALYSIS Overall General Fund Balance Summary.- On June 7, 2017, the City Council approved the FY 2017-18 budget, which included projections of revenues, expenses, and ending reserves. At that time, it was projected that the FY 2016-17 would end with an Unrestricted Reserve of$19.7 million. The actual Unrestricted Reserve for FY 2016-17 was $24,798,391 of which City Council set aside $3.25 million for anticipated future CaIPERS pension cost increases. Hence, the ending Unrestricted Reserve balance on 6/30/17 was $21,548,391 (22.3% fund reserve). For FY 2017-18, the Adopted Budget anticipated a surplus of $488,173 and an Unrestricted Reserve of$20,202,074. Based upon the latest projections, staff is projecting a surplus of$3.1 million and an Unrestricted Reserve of $24.7 million. Revenue Summary.- Total revenues received for the first half of the year are 32% of projected for the fiscal year, which is the expected normal level. Last year's revenues received at the same time represented 34% of final revenues. Excluding Measure J sales tax revenue, total revenues are projected at $102.7 million. The City's top revenue categories are slightly exceeding the same level of revenues received at the same time last fiscal year. MUNO._S.D _ City Council Staff Report February 21, 2018-- Page 2 Fiscal Year 2017-18 Mid-Year Budget Update The revenue estimates include a projection of$1,675,000 to be received for Measure D, the additional 1/2% sales tax, which goes into effect on April 1, 2018; however, actual revenues to the City will not be received until the last week in June. No data is available at this time to project additional revenues associated with Measure E, which expanded the City's Medical Cannabis Tax to include recreational cannabis sales and cannabis cultivation. However, the Medical Cannabis Tax revenue on its own is trending at a $100,000 decline versus last year. This could be due to cannabis collectives recently opening in neighboring cities. Sales taxes for the City (not including Measure J) have been strong both for last fiscal year and for the first half of the current fiscal year as the following chart indicates: FY 2016-17 4 Quarters FY 2017-18 2 Quarters Palm Springs +6.5% +7.0% Coachella Valley +4.0% +2.6% Riverside County +3.9% +6.1% Inland Empire +2.4% +5.6% Southern California +1.6% +4.8% State of California +2.1% +3.4% The Measure J sales tax is currently projected to be $13.4 million for the fiscal year. Since its inception on April 1, 2012, Measure J has produced $70 million in revenues. Expense Summary.- Expenses incurred for the first half of the fiscal year are 42% of projected expenditures. Last year's expense level at the same time represented 45%. Excluding Measure J sales tax revenue, total expenses and transfers to other funds are anticipated to be approximately $100 million. This reflects additional expenditures and allocated positions approved by the City Council after the budget was adopted. David H. Ready, Esq., Geoffrey S. Kiehl City Manager Director of Finance and Treasurer 02 2017 — 2018 Mid -Year Financial Review City of Palm Springs 2I2112018 City of Palm Springs 2017-2018 2nd Quarter 1 Cash Reserve Summary Actual Unrestricted Ending Balance, 6/30/2016 $18,545,978 Projected Unrestricted Ending Balance, 6/30/2017 when the Budget was Adopted $19,713,901 Initial Unrestricted Ending Balance $2497989391 CalPERS Reserve for Future Costs $39250,000 Final Actual Unrestricted Ending Balance, 6/30/2017 $215548,391 Reserve % Equivalency 22.3% 2/21/2018 City of Palm Springs 2017-2018 2nd Quarter 2 2017- 18 Revenues 6-Month Comparison $120.0 _— $98.1 • $100.0 $80.0 Actuals Projected $60.0 for for $40.0 2016-17 2017-18 $20.0 34% 32% $0.0 Full Year 6 Months Does Not Include Measure J Sales Taxes ❑ 2016-2017 ❑ 2017-2018 2/21/2018 City of Palm Springs 2017-2018 2nd Quarter 3 Major Revenues 6-Month Comparison 50% - 0 46% — 40% 39% 40% 42 /o 30 /o 0 30% 30% 29% 28% 20% 10% 0% Property TOT UUT Sales Taxes Taxes * * Does not include Measure J ❑ 16-17 6 Months as % of Actuals ❑ 17-18 6 Months as % of Projected 2/21/2018 City of Palm Springs 2017-2018 2nd Quarter 4 Transient Occupancy Tax Growth $30 29.3 $25 (In Millions) 24.5 $25.8 $21 .9 $20 $17.9 $19.4 $15.7 Ir $2'I $15 $12.8 $13.4 $17.8 $19.3 $19.6 $10 r15 $1fi.35 $0 $3.1 $4.1 N$5.211 6• 08-09 09-10 10-11 11 -12 12-13 13-14 14-15 15-16 16-17 ■ Vacation Rentals ■ Hotels & Motels 2/21/2018 City of Palm Springs 2017-2018 2nd Quarter 5 Hotel Tax (TOT) Chart Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Month 2013-14 2014-15 2015-16 2016-17 2017-18 July $1 ,1405053 $1 ,3677238 $1 ,512,002 $1 ,753,054 $15774,238 August 111077575 113949495 15419,761 153925466 154419042 September 15131 ,490 1 ,222,473 1 ,321 ,426 1 ,626,990 1 ,705,393 October 1 ,488,957 1 ,664,808 157439288 25578,367 2,172,226 November 1 ,700,617 2,037,777 11928,849 2,2719654 2545%734 December 194625499 157019740 11631 ,801 11911 ,758 23214,258 6 Months $8,031 ,191 $%388,531 $9,557,127 $115534,289 $115766,891 January 118185620 21126,168 21060,000 212105971 February 2,227,977 27589,923 216885355 298819638 _ March 3,1149847 373029211 326969455 41122,820 April 3,4%057 3,4909391 35848,446 4,4485936 May 15971 ,374 211859052 214183289 2,4111619 June 193039870 154049972 1 ,4979773 1 ,721 ,020 Annual $21 ,877,936 $245487,248 $25,766,445 $299331 ,293 2/21/2018 City of Palm Springs 201 7-201 8 2nd Quarter 6 Sales Taxes ( Regular only, no M-J or M-D) Comparisons : 16- 17 4Q's 17- 18 2nd Q Palm Springs T +6.5% T +7.0% Coachella Valley +4.0% T +2.6% Riverside County T +3.9% +6.1 % Inland Empire T +2.4% +5.6% Southern California T +1 .6% T +4.8% State of California T +2.1 % T +3.4% $15.0 $10.0 -$5.0 $11 .4 $12.4 $12.3 $13.0 $0.0 (in millions) 14-15 Act 15-16 Act 16-17 Act 17-18 Proj 2/21 /2018 City of Palm Springs 2017-2018 2nd Quarter 7 Measure J Sales Tax Measure J Fund 2016-2017 2017-2018 Actuals Budget Beginning Balance $241 ,102 $7939199 Revenue $13,4073180 $1334009000 Bond Payments 311863965 312009000 Project Maint & Other Exp 475,000 5005000 Projects - Spent & Committed 832819393 8,9553162 Community Projects 9119725 172025125 Project Contingency Reserve 0 335,912 Ending Balance $7939199 $0 Total Measure J Sales Taxes since 4/1/2012 = $69,940,058 2/21 /2018 City of Palm Springs 2017-2018 2nd Quarter 8 2017- 18 Expenses 6-Month Comparison $120.0 — - $100.0 95.3 $99.6 -� $80.0 Actuals Budget $60.0 for for 2016-17 2017-18 $42,6 $41 ,8 $40.0 $20.0 45% 42% $0.0 Full Year 6 Months 11 2016-2017 ❑ 2017-2018 2/21/2018 City of Palm Springs 2017-2018 2nd Quarter 9 2017-2018 Revenues & Expenses 6-Month & Full-Year Comparisons Total Property Sales Revenues Revenues Taxes TOT UUT Taxes 16-17 6 Months $32,970,203 $7,334,946 $11,534,289 $2,999,209 $3,601 ,859 17-18 6 Months $33,282,784 $7,804,914 $11,766,891 $3,215,215 $4,112,089 16.17 Actuals $98,145,046 $24,535,716 $29,248,258 $7,099,836 $12,282,535 17-18 Projected $102,6649166 $2597909000 $2954%000 $7,000,000 $149683,000 Does not include Measure J Sales Tax Expenses Full Year 6 Months 2016-2017 $95,292,191 $4296479028 2017-2018 $993562,182 $4198339994 2/21/2018 City of Palm Springs 2017-2018 2nd Quarter 10