01-04-1994 - Review of General Fund Revenues & Expenditures for FY 1993/94City of West Covina
Memorandum
TO City Council
AGENDA
FROM Finance Department
ITEM NO. J-la
SUBJECT: REVIEW OF. GENERAL FUND REVENUES DATE January 4, 1994
AND EXPENDITURES FOR FY 1993-94
SUMMARY: This is a review of the City's General. Fund revenues and
expenditures for.Fiscal Year 1993-94.
BACKGROUND.
The 1993-94 revenue budget was prepared based on projected 1992-93 actual
receipts and incorporated our best estimates of the State budget impact.
Since that time, the City's annual financial audit has been completed and the
County has distributed information concerning the impact of the State budget.
As a result, we have updated our •revenue projections based on this
information and using actual revenues received through November. "The result
is a down trend in revenues with a projected net loss in revenues of
$350,453.
Year-to-date expenditures are 'in -line with the Budget, with!' the only
significant change resulting from additional Council appropriations since the
final budget was adopted. A more detailed discussion of the significant
changes is provided below.
STATE BUDGET IMPACT
The initial estimate for the amount of City property taxes to be shifted from
the City to the State was $1,214,000. This shift was to be partially offset
with a one-time transfer of $378,00 from the State and an estimated $418,000
in new sales tax revenues coming from Proposition 72. The projected net loss
was $418,000. This information was used to balance the 1993-94 Budget.
The actual property tax shift now appears to .be $1,269,890. The one-time
transfer of State funds, which will be received with our: Vehicle License Fees
(VLF) is projected at $376,000. As this transfer is only one-time funding,
our revenues for next year will reflect a loss.equal to this amount.
The passage of Prop. 72 permanently established the 1/2 cent sales tax and
sets forth the formula by which it will be allocated. The funds will come to
the City from the County through a newly created Public Safety Augmentation
Fund (PSAF). The funds are restricted for public safety purposes and will be
tracked in a separate fund. However; as a funding source that wasa;identified
as an offset to the loss in property taxes, the funds are not required to be
spent in addition to our current level of public safety expenditures.
Projected revenue from the PSAF is $397,000, which is the maximum;' amount the
City may receive for FY 1993-94. The estimate is based on the State's sales
tax estimates and if actual. revenues..are lower, our share will be
proportionately reduced.
The revised loss due to the State's actions is $496,890, which!'is $78,890
greater than our original projection.
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In preparing the budget the projected net loss in property tax revenues, due
tothe State's actons was incorporated- into the property tax projections.
However, to more accurately show the impact of the State's actions, the
projections shown blow have been adjusted to show the one-time VLF offset
revenues and Prop. 72 revenues separately. The actual drop in' projected
property tax revenues is $302,338 ($1,075,338 $397,000 - $376,000).
REVENUES
The General Fund's major revenue projections are summarized below:
Property Tax
Sales Tax
PSAF (Prop. 72)
Interest
State Subventions
VLF Offset (One-time Revenue)
Other
Total General Fund
BKK Aug. Fund
Int. Lease Pmt.
Budget
1993 - 1994
$ 5,705,000
8,846,000
0
632,200
3,327,000
0
7.836.550
$26,346,750
$ 3,467,440
1,098,787
Total All Un-restricted Revenue $30,912,977
Projected
As of 11/30/93
1993 - 1994
$ 4,629,662
8,309,064
397,000
1,015,351
3,300,500
376,000
8,104.660
$26,132,237
$ 3,285,000
1,098,787
$30,516,024
1993 - 1994
$<1,075,338>
< 536,936>
397,000
383,151
< 26,500>
376-, 000
268,110
<$ 214,513>
<$ 182,440>
0
<$ 396,953>
As can be seen above, the budget numbers for property and sales tax were too
optimistic. In both cases, the 1992-93 actual levels turned out to be lower
than originally projected, which in turn reduced the 1993-94 projections.
Property taxes were $282, 000 less than- expected in 1992-93 due to a sharp
. Sales taxes
etion lredemption
expectaons by $392,1y received at 000 due to weaker a d than fellll shortof our t'
expected sales
f
in April, May, and June.
Interest income for 1992-93 was budgeted conservatively, and in addition we
have been more active in our investment strategies resulting in increased
revenues. The continued active management of the City's investment portfolio
should result in $353,151 of additional interest income beyond the original
budget amount.
The major revenue source from State subventions is the Motor Vehicle in -lieu
tax, which finished 1992-93 basically on budget. Our year-to-date receipts
for Motor Vehicle in -lieu tax is running slightly below the original budget.
The State also eliminated funding for several state mandated programs for
which we had originally pojected receiving revenues of $30,000. It is now
projected that we will only recieve $5,000. The net impact is a projected
loss of $26,500 in State subventions.
Finally, all other revenues should yield about $268,110 more than originally
budgeted, due to construction related fees and vehicle impound fees. We also
received an additional $30,000 in a one-time reimbursement of excess
insurance premiums from past years:
As shown above, the net effect of,these changes to General Fund revenues is
a $214,513 deficit. This situation is made worse by disappointing BKK
Augmentation Fund revenues. Business License taxes from the Landfill were
originally budgeted at $4,130,000 of which only $3,467,440 was needed to.
balance the -General Fund. Based'on year to date receipts, BKK's business
license taxes will total only $3,285,000. This creates an additional loss of
$182,440 in the General Fund and eliminates the originally projected $662,560
surplus in the BKK Augmentation ;Fund. Staff is currently reviewing BKK
business license revenues with respect to their computations regarding
contaminated soil received by the landfill. The loss in BKK revenues brings
the projected deficit to $396,953.
EXPENDITURES
On the expenditure side, the only development worthy of mention is the
appropriation by Council from General Fund reserves of $1,305,000 for the BKK
litigation, which was not included in the original budget for 1993-94.
Departmental operating expenditures in the General Fund are in -line with the
Budget.
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