PREPARED BY: J. KELLY SESSIONS DATE OF MEETING: 02/04/19
SUBJECT:
TITLE
RECEIVE AND FILE THE 2nd QUARTER BUDGET REPORT FOR FISCAL YEAR ENDING JUNE 30, 2019
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CITY MANAGER RECOMMENDATION
Recommendation
For Informational Purposes Only
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Compliance statements
General Fund Reserves Protection, Budget Spending Controls, and Increase Financial Transparency are adopted policy items under the FY 2018-21 Council Priority Workplan, effective November 1, 2017.
CEQA Compliance Statement
This is not a project as defined by CEQA.
BACKGROUND
Best Management Practices (BMP’s) established by the Government Finance Officers Association (GFOA) urge local governments to fulfill their financial reporting responsibilities by providing timely financial statements regarding the entire financial reporting entity. This 4th quarter budget report, therefore, is provided to the City Council to support meeting the City’s fiduciary responsibilities to the residents of San Pablo.
This report uses unaudited figures and is for budgetary control purposes only for the fiscal year ending June 30, 2019. The final year-end audited fund balance will be contained in the Comprehensive Annual Financial Report (CAFR) and is generally presented to City Council in January, seven months after the end of the fiscal year.
2nd Quarter Revenues
With half of the fiscal year passed, the City is in good shape, having collected $20.7 million (50%) of its $41.0 million of budgeted revenues. Casino Revenue, comprising 52% of all budgeted revenues, is the City’s largest revenue source and leads the way with $14.2 million or 60% collected. Lagging behind is Intergovernmental Revenue, with only $516,000 collected (12%) of a $4.2 million budget; this is largely due to Vehicle License Fee revenues which are now included under property tax receipts. Sales Taxes, Utility Users Tax and Property Tax, the City’s other largest revenue sources, are coming in as expected at 38%, 39% and 43% respectively. These revenues typically lag each fiscal quarter by two or three months. By year end, staff projects overall revenue receipts to meet or exceed budgeted revenues.
FY 2018/19 Budgeted Revenues
2nd Quarter Expenditures
At the end of the second fiscal quarter, the operating expenditure budget is in good shape. With an adjusted budget of $43.2 million, a total of $19.0 million has been spent, leaving a remaining balance of $24.1 million (56% of budget). At $18.0 million, the Police Department comprises 41% of the City’s $43.2 million budget, is the City’s largest department, and has the largest operating budget.
Administrative Services, at $8.4 million, is the second largest operating budget, primarily due to citywide expenses which are budgeted centrally, including unfunded accrued pension liability (“UAL,” $2.3 million), professional services ($1.7 million), and citywide property, fire, crime, and general liability insurances ($0.8 million).
As noted in the following table, no departmental budget has spent more than 50% of its overall budget as of the end of the second quarter. Thus, overall the City is projected to end the fiscal year at or under budget:
Expenditures By Type. Salary & Benefits: At $26.2 million, Salary and Benefits makes up the largest part of the budget (60%). After the second fiscal quarter, $13.7 million was spent (53% of budget), giving the impression that year-end spending will be over budget. However, after accounting for the upfront UAL payment to CalPERS, total spent for Salary and Benefits drops to 48% of budget, less than half of the budgeted amount.
With $15.7 million, Service and Supplies makes up 36% of the budget. $4.6 million was spent, leaving an available balance of $11.2 million (71%). Much of this, however, is already encumbered for other projects; therefore, staff expects the majority of these budgeted funds to be spent.
The capital budget totals $1.3 million or 11% of budget. A total of $0.8 million was spent, leaving a balance of $475,000 (38%). Most of these funds are also encumbered; therefore, staff expects the entirety of these funds to be spent by year end.
FISCAL IMPACT
This report describes the unaudited budget status of the City through the month of December for FY 2018/19 and has no direct fiscal impact.