02-07-1995 - Mid-Year Budget Report8
TO:. City Coun*
FROM: Finance;Department
City of West Covina
Memorandum
AGENDA
SUBJECT: MID -YEAR BUDGET REPORT ITEM NO. J` 1
DATE February.7, 1995
® PRINTED ON RECYCLED PAPER
SUMMARY: This is a status report on the General Fund's revenues and expenditures for
FY 1994-95.
BACKGROUND:
The 1994-95 General Fund Budget was unique in at least one respect. It began the process of
reducing reliance on BKK revenues amounting to $1.5 million by a combination of non -tax
revenue enhancements � and expenditure reductions. As directed by the City. Council, staff
implemented several initiatives simultaneously as this year's component of the Long Range .
Strategic Plan. At thel mid -point of the fiscal year, staff has prepared an analysis of how our
revenues and expenditures in the General fund. are progressing as compared to our original
estimates.
DESCRIPTION
Sales Tax
Interest Income
State Revenues
Other Revenues
Franchise Tax
Interfund Charges
RDA Repayment.
Construction Revenues
Property Tax
Revenue Enhancements
FAVORABLE/
7/ 1 /94
CURRENT
< UNFAVORABLE >
BUDGET
PROJECTION
VARIANCE
$ 7,857,000
$ 8,522,000
$ 665,000
1,2001,000
1,250,000
50,000
3,240,900
3,289,100
48,200
2,467,740
2,489,600
21,860
1,813,000
1,813,000
-0-
1,662,940
1,662,940
-0-
1, 652,500
1, 652, 500
-0-
514,400
511,300
<3,100 >
4,648,000
4,363,585
<284,415 >
899.500
209,700
< 689,800 >
TOTAL $25,955,980 $25,763,725 $ < 192,255 >
The best news in the Budget is the increase in sales tax revenues which are running at a level 8 %
higher than last year. This is the joint result of an improving economy and economic development
efforts and is projected to provide $665,000 more than budget. More surpluses totaling $119,960 .
are expected from three categories of revenues, namely interest income ($50,000), State revenues,
mostly Motor Vehicle in -lieu fees, ($48,200) and "other" revenues ($21,860).
Three categories are performing as budgeted and will therefore not impact our projections. These
are the revenues from franchise -fees, : interfund charges and the RDA loan repayment.
Unfortunately, this is where the good news ends.
The remainder of the revenue budget is underperforming relative to our approved Budget..
Revenues generated by the level of construction activity are expected to fall a little short of Budget
($3,100) while a more I significant problem exists with property tax. The shortfall here exists
because of the passage AB860 during the summer. This legislation effectively reduces the City's
property tax revenues to make up for a shortfall in the State's shift of property tax from Cities to
Memo to City Council
�
Page 2
4
schools. In 1993-94 the State fell $300 million short of the $2.6 billion it expected to shift to
schools statewide. This resulted from an oversight in the State's formula which AB860 corrected.
This means $359,169 less in ,property tax for the General Fund in 1994-95 which will mean a
budget shortfall of $284,415 for property tax. (Without the reduction incurred as a result of
AB860, property tax revenues would have exceeded original estimates by approximately $75,000.)
The biggest problem in our Budget concerns our revenue enhancements:
I
FAVORABLE/
< UNFAVORABLE >
DESCRIPTION ` BUDGET PROJECTED VARIANCE
i
,"Departmental" revenues $ 149,500 $ 56,500 $ < 93,000 >
Emergency service fees 200,000 -0- <200,000 >
Non -emergency service fees 550,000 153,200 <396,800 >
(MSI)
TOTAL $ 899,500 $ 209,700 $ < 689,800 >
The shortfall of the MSI revenue enhancements has been caused by three factors. Firstly, more
time was needed for. implementation of the program than was originally _anticipated. In some
areas, this involved issues such as designing and printing new forms, training staff and adjusting
administrative procedures. Secondly, our experience so far is suggesting that some of the services
on which the fees are charged are not being provided at the level assumed in the study (e.g.,
Planning Department fees). Finally, we� are experiencing a delinquent collections problem on
some of the charges levied by the Police Department such as the DUI charges. All of these
factors have combined to reduce over expected revenues from this source by $396, 800 if present
trends continue. This situation will be monitored carefully throughout the remainder of the.year to
provide a clearer picture at year end.
i
The Council will recall that the original Budget included $200,000 in revenues from an
"Emergency Service" fee or substitute. However; no revenues from this source are included in
our revenue projections at this time.
Several departments developed some innovative ideas to generate revenues totaling $149,500 in
the current fiscal year:
Weekender Program $ 40,000 1
Juvenile Holding Fees 25,000
Enhanced Traffic Enforcement 58,000
Fire Department Seminars, 20,500
Recreation Brochure Ads 6.000
$ 149,500
These programs have been somewhat successful on the whole but some will not produce the
revenues originally anticipated. The shortfall will be $93,000.
All of the above results in a projected net'revenue shortfall of $192,255 (0.7 %) at year end..
At
Memo to Council
Page 3
ANALYSIS OF GENERAL FUND EXPENDITURES:
Pursuant to the Council s direction, the operating Budget has remained balanced without the use of
reserves. This was made possible because of a credit (for interest earnings) received on the City
Hall lease payment to the Civic Center Authority ($193,333). A .detailed review of all
departmental budgets, indicates that expenditures overall will be within budget although the City
Manager may need to apply savings in some departments to other departments. Thus the lease
payment savings will be available to offset the revenue shortfall:
REVENUE < SHORTFALL > $ < 192,255 >
EXPENDITURE SAVINGS 193,333
NET SAVINGS $ 1,078
ANALYSIS OF RESTRICTED FUNDS:
There is no need for any action with respect to any of the restricted. funds. On the revenue side,
these funds are expected to collect what was projected; and on the expenditure side, no Budget
overruns are anticipated-.
RECOMMENDATION:
Staff recommends that the Council receive and file this report.
Basil Panas
City Controller
REVIEWED AND APPROVED:
i
Abraham W. oniarsky
Finance D' ector
MIDYRBUD.AGE