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HomeMy WebLinkAbout09 MID-YR BUD REVIEW 03-06-95MARCH 6, 1995 FROM' SUBJECT: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL WILLIAM A. HUSTON, CITY MANAGER 1994-95 HID-YEAR BUDGET REVIEW Attached is a report from the Finance Department which projects revenue, expenditures and fund balances for the General Fund and other major funds through June 30, 1995. As indicated in the report, the General Fund and all other operating funds will be within the authorized amounts and balanced as of June 30, !995. Because of higher than anticipated revenues in fiscal year 1993-94, the 1994-95 General Fund balance is higher than had been anticipated. Although projected 1994-95 General Fund revenue is $282,769 less than initially projected, the June 30, 1995 fund balance is higher than originally anticipated due to expenses being under the budgeted amount and the higher beginning fund balance. The mid-year'budget review does not indicate there are any problems of significance. The General Fund continues to have a reserve that meets City Council policy regarding fund balance. Of particular help to the General Fund was avoidance of having to expend $466~000 which had been anticipated if the State had fully enacted the AB-$ repeal. This is the amount that appeared to be at risk of being lost to the State when the draft 1994-95 budget was prepared. Based on the mid-year revieW, it is recommended that the City Council authorize the following adjustments to the budget: (1) ApproPriate $190,000 from the Equipment Replacement Fund balance for police vehicles and other equipment needing replacement. There are adequate reserves in the equipment fund to cover the cost. (2) Transfer $600,000 from the General Fund reserve to the Capital Projects Fund. (~) Transfer $466,000 from the General Fund (the amount that had been budgeted to cover the anticipated loss to the State due to AB-8) to the Capital Projects Fund. 1994-95 Mid-Year Budget Review March 6, 1995 Page two With the transfers to the Capital Projects Fund, the projected June 30, 1995 General Fund balance will be $3,906,770. This amcunts tc a reserve of 15.8% (City Council policy is 15%). The General Fund is the single .largest source of funding for the Capital Projects Fund. In the past three fiscal years, contributions from the General Fund have been substantially r~duced due to revenue shifts to the State and general economic conditions. With the improvement in the financial condition of the General Fund, it has the ability to allocate monies to the Capital Projects Fund. Currently, and in the future, there are more needed capital improvements projects than availability of funds. Attachment midyrbud.wah ATE: FEBRUARY 13, 1995 r Inter-Corn TO' WILLIAM~HUSTON, CITY MANAGER FROM' RONALD A.~~ DIRECTOR OF FINANCE SUBJECT: 1994-95 MID-YEAR BUDGET REVIEW Attached is the 1994-95 Mid-year Budget Review. This report is a snapshot of actual revenues and expenditures in relationship to adopted budget figures after the first six months of the fiscal year and, a projection of additional revenues and expenditures expected during the remaining six months of the fiscal year. Before I discuss the particulars of the report I should reconcile the beginning General Fund balance as shown within this report. When we prepared the draft 1994-95 budget document we projected the June 30, 1994 General Fund balance to be $4,148,972. The final adjusted fund balance was $5,102,748, an increase of $954,000. The following details the significant changes in recurring and non- recurring revenues that impacted the year end fund balance: 1993-94 Reconciliation Recurring Revenues Property taxes Sales Tax Interest Income Motor Vehicle In-lieu Franchise Fees variance $<327,811> 572,623 72,768 66,552 62,865 Description Valuation Appeals Increased auto sales /Computer Sales Slightly better yields Higher vehicle registration fees General economic increase Non-Recurrinq Revenues ET Building Permits ET Plan Ck Fees ET New Const Tax $ 184,577 128,574 206,782 $ 966,930 Increased activity in Tustin Ranch t! t! II I! l! Page 2 February 13, 1995 1994-95 Mid-Year Budget Review While there was a slight increase in actual expenditures the most significant change was related to the increased transfer of the East Tustin new construction tax, $211,000, to the Park Development Fund. The June 30, 1994 year end fund balance of $5,102,749 was slightly greater than 21 percent of the actual expenditures for 1993-94. The General Fund target fund balance is 15 percent of estimated expenditures. 1994-95 Overview The primary focus of the mid-year budget review as always, is the general operating funds of the City and Capital Improvements'. The fund balance projects on page one give a quick overview of the audited beginning balances, the most current revenue and expenditure estimates and the projected June 30, 1995 fund balances. For purposes of this review we've removed the assessment district funds. The approximately $50 million of non-discretionary assessment district balances tend to skew the analysis that we are providing. Overall, I believe that the projected fund balances represent a positive economic picture of the City of Tustin. Most of the significant changes in the ending fund balances are associated with the funds that we are heavily involved with like capital improvements such as Gas Tax and Measure "M"; the General Capital Projects Fund; RDA and Water Capital Projects. The majority of these funds are projecting fund balances higher than our budget estimates. This is reflective of the sheer volume of capital projects that we are undertaking. If you look at the Capital Projects Reconciliations on pages 19-22 you will find significant carryovers in all funds. General Fund The projected General Fund balance at June 30, 1995 is $4,506,770. While this is an increase of $753,000 from the projected fund balance as shown in the adopted budget, it is actually $16,000 less than the budget when you consider the changes to the beginning fund balance previously discussed. The overall short fall in projected revenues of $282,769 is nearly dollar for dollar offset by a projected savings in expenditures of $282,143. The following are the most significant changes in recurring and non-recurring revenues. Page 3 February 13, 1995 1994-95 Mid-year Budget Review Recurrinq Revenues Property Taxes Sales Tax Interest Income Non-recurring Revenue ET Development Fees Developers Share Variance $<296,000> 450,000 <100,000> <622,800> 355,067 $<213,733> Description 9% decrease in valuation Continued strong auto and computer sales Over estimated Accelerated development fees into 1993-94 Late fire station fees The .following summarizes the operating expenditure variances projected for June 30, 1995.* Department Variance (over)/under Description Legislation Administration Community Development Public Works Police Fire Community Services Non-Departmental $ <3,547> <7,284> 216,02.0 <86,431> 58,868 --0-- 104,516 --0-- $282,142 Salaries/operations Salaries/increases Salaries/operations savings Salaries/increases Salary savings-services Salary/operations savings The projected General Fund balance of $4,506,770 is 18.2 percent of the 1994-95 projected expenditures and 18 percent of the budgeted expenditures. Water Operations Water operations is currently projecting a positive variance of $440,000. This is primarily due to vacant positions and reduced pumping expenses from the Walnut Well being taken out of service. * The impact of the recently completed salary negotiations have been reflected in the departmental projected expenditures beginning on page six. Page 4 February 13, 1995 1994-95 Mid-Year Budget Review Community Development Block Grant (CDBG) The CDBG programs are primarily reimbursement in nature. This is the first year that Tustin has been an entitlement City so our experience is very limited. We are projecting a carryover of about $376,000 for project years 1992-93 through 1994-95. These allocations will be carried over to the following year and be available for program expense in addition to future entitlement periods. Redevelopment Agency The Redevelopment Agency is projecting a positive variance of $487,000 at June 30, 1995. This is primarily due to operation savings that are anticipated to carry over to the next fiscal year. Capital Projects Summary Project Projected Fund Budget Expenses Carryover Capital Projects $9,793,158 $4,454,081 $4,189,055 Measure "M" 1,225,986 420,000 801,850 CDBG 313,695 105,400 208,300 Gas Tax 1,650,226 710,065 619,967 RDA 3,644,421 2,837,485 803,003 Water 7,754,854 5,006,495 2,687,171 $ 24,382,340 $13,533,526 $9,309,346 Mid-Year Recommendations Appropriate an additional $190,000 from the unappropriated reserves of the Equipment Replacement Fund for replacement Police units, and other vehicles scheduled for replacement in 1994-95. RAN: ls a:midyear.bgt A r~ NW ~.. 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