Title
Fiscal Year 2022-23 Preliminary Year-End Financial Report as of June 30, 2023
Staffreport
SUMMARY AND RECOMMENDATIONS
Staff recommends that the City Council Finance Committee review the Fiscal Year 2022-2023 Year-End Financial Report as of June 30, 2023. This report is for information only.
BACKGROUND
The City Council adopted the 2021-2022 and 2022-2023 General Fund, Enterprise and Internal Service Funds, and Parking Fund budgets on June 28, 2021. The approved budgets are the annual expenditure and resource allocation plans guiding and insuring implementation of City Council policies and priorities. The budget implements the vision and direction for the broad range of services meeting the needs of the community in accordance with City Council policy.
This financial review as of June 30, 2023, provides the preliminary year-end budget update to the City Council for the prior fiscal year. Analysis of the revenues collected and all expenditures through June 30, 2023, measures operational adherence to the budgetary allocation plan. These preliminary numbers are subject to an annual audit process, which will result in an Annual Comprehensive Financial Report (ACFR). Upon completion, the ACFR, containing final audited numbers will be presented to the Finance Committee and City Council for acceptance at a later date.
DISCUSSION
The City budget for 2022-2023 was adopted in June 2021. The amended budget incorporates estimated revenues and planned expenditures for all funds. The attached Preliminary Year-End Financial Report as of June 30, 2023, provides the revenue and expenditure summary for the General Fund, Enterprise and Internal Service Funds, and the Parking Fund. The detailed discussion offers comparisons to the prior year and focuses on variances from the revenue and expenditure plans and allocations contemplated in the budget.
General Fund
The General Fund finances the operations of the City having no special or dedicated revenue sources and pays for basic municipal services. The amended 2022-2023 General Fund budget projects revenues totaling $134,515,000 and expenditures totaling $159,816,000, including purchase order encumbrances from 2021-2022, approved carryover amounts, and City Council approved appropriation amendments.
Revenue in 2022-2023 totals $136,568,000, 102% of the amended budget of $134,515,000, compared to 105% in 2021-2022. Expenditures of $146,956,000 through the fourth quarter amount to 92% of the anticipated total of $159,816,000, compared to 98% in 2021-2022. Both revenues and expenditure totals were closely in line with the prior year.
A detailed review of revenue and expenditure variances is presented below.
General Fund Revenue
• Property Tax-(105% of the amended revenue budget was collected compared to 103% in 2021-2022). Property Tax is the City’s second largest revenue source and represents 21% of the total General Fund’s revenue. Property tax revenue was budgeted at $27,876,000, $982,000 higher than in 2021-2022.
• Sales/Transaction and Use Taxes-(94% of the amended revenue budget was collected compared to 103% in 2021-2022). Sales/Transaction tax appropriations were increased $3,068,000 in the budget reflecting continuing retail and economic growth. Actual revenue at year-end is $3,592,000 below the budget and lower than in the prior year by $2,283,000. Avenu Insights, the City’s sales tax advisor, projected a decline in City Sales/Transaction Tax revenue. This revenue is important as Sales and Transaction Taxes are the City’s largest revenue source and represent 38% of total General Fund revenue.
• Utility Users Tax-(111% of the amended revenue budget was collected compared to 105% in 2021-2022). The budget for Utility Users Tax revenue was unchanged from 2021-2022.
• Property Transfer Taxes-(101% of the amended revenue budget was collected compared to 136% in 2021-2022). This tax is highly volatile, relying on changes in property ownership. Property Transfer tax revenue was budgeted $1,730,000 lower than in 2021-2022. Revenue through year-end, at $9,337,000 was at the budgeted amount, but $5,618,000 lower than in 2021-2022. Note: Property Transfer Tax revenue ($1,152,000) was generated by the sale and leasehold transfer to Cal Coast (at $104,000,000) of City property in the Marina and paid by the Shoreline Enterprise Fund. This amount ($1,152,000) was transferred from the General Fund to the Shoreline Fund for the Shoreline Park at the Marina project.
• Charges for Services-(99% of the amended revenue budget was collected compared to 132% in 2021-2022). Charges for Services was budgeted at $3,021,000, $1,581,000 higher than in 2021-2022. Charges for Services revenue at $2,996,000 through year-end is $1,098,000 higher than the same period last year. Recreation program revenues were $278,000 higher than in 2021-2022 and Engineering Services revenue at $650,000 was 200% of budget.
• Interest & Property Income-(103% of the amended revenue budget was collected compared to -52% in 2021-2022). Interest and property income are budgeted at $2,564,000, $82,000 higher than 2021-2022. Posted Interest Income revenue is $281,000 higher in 2022-2023 compared to 2021-2022, while rental income at the Marina Community Center and the Senior Center increased by $136,000.
• Fines, Fees, & Forfeitures-(82% of the amended revenue budget was collected compared to 97% in 2021-2022). Fines, Fees, & Forfeiture revenue is budgeted in 2022-2023 at $622,000, $124,000 lower than the 2012-2022 budget. Year-End revenues are $215,000 lower than in 2021-2022. Vehicle Code Fine (County) revenue and Court Fines Collected (County) revenue are lower by $71,000 and Red-Light Safety Program residual revenue of $58,000 in 2022-2023 compares with $158,000 in 2021-2022. No new revenue is budgeted in 2022-2023 because of termination of the Red-Light program effective June 30, 2021.
• Licenses & Permits-(115% of the amended revenue budget was collected compared to 101% in 2021-2022). Actual Building Permit revenues recorded amount to $3,576,000 in 2022-2023. Revenue in the same period last fiscal year was $2,715,000. This increase in Building Permit revenue reflects the change in total License & Permit revenue. Extraordinary projects affecting Building Permit revenue include Centro Callan at East 14th and Callan, Ariat Apparel on Alvarado, and tenant improvements at Prologis Development on Doolittle.
• Other/Transfers-(750% of the amended revenue budget was collected compared to 292% in 2021-2022). Settlements & Claims Recovery revenue included the extraordinary payment of $1,888,000, the City’s share of the settlement agreement payment for City of Long Beach, et al. v. Monsanto Company, et al.
As reported in the attached Preliminary Year-End Financial Report, all other taxes and revenue receipts are in line with budgeted revenues.
• General Fund, Total Expenditures-(92% of the amended budget compared to 98% in 2021-2022). The year-end expenditure total was $146,956,000, 92% of the amended budget of $159,816,000. General Fund expenditures were $23,449,000 greater than in the same period last year. Department expenditures remained less than 96% of annual budget appropriations except for Engineering & Transportation, Fire, and Library.
• Fire-(100% of the amended budget compared to 100% in 2021-2022). The amended budget in 2022-2023 was $27,954,000, $920,000 higher than 2021-2022. Higher expenditures, increasing by $799,000 reflect the increase in the amended budget.
• Human Services-(18% of the amended budget compared to 0% in 2021-2022). The Human Services Department was newly established, and the 2022-2023 appropriation previously was in Recreation. The budget appropriation of $6,956,000 includes $3,200,000 in the General Fund for the Long-Term Navigation Center. The transition to a separate department was completed in 2022-2023.
• Non-Departmental-(120% of the amended budget compared to 696% in 2021-2022). Expenditure appropriations were amended in 2022-2023 for transferring $3,600,000 to the Pension Trust and further buying-down the City’s unfunded pension liability. In 2021-2022, an additional transfer of $5,000,000 to the Pension Trust was recorded.
• Transfers-(100% of amended budget compared to 100% in 2021-2022). Transfers is budgeted at $24,284,000, $17,678,000 higher than in 2021-2022. Amended appropriations increased the budget appropriation for fund transfers to the Pension Trust, to the Capital Project Fund for the Shoreline Park at the Marina, Mulford-Marina Library Branch Library, and street projects, and $2,700,000 for Information Technology projects.
Enterprise, Internal Service Funds, and Parking Fund
Four Enterprise Funds make up the City's business-type operations. The Water Pollution Control Plant Fund, the Environmental Services Fund, the Shoreline Enterprise Fund, and the Storm Water Fund are City municipal operations designed to fully recover costs through user fees. Internal Service Funds also operate as business activities, exclusively supporting the City's internal operations. Facilities Maintenance, Information Technology, Insurance Services, and Equipment Maintenance make up these Internal Service Funds. The Parking Fund provides for parking meter and parking lot operations and maintenance at the Downtown Parking Structure.
• Shoreline Enterprise, Revenues, and Expenditures-(56% of the revenue budget has been collected compared to 110% in 2021-2022 and 44% of the amended expenditure budget compared to 90% in 2021-2022). Revenue appropriations were decreased by $366,000 to $5,792,000 reflecting further change in Marina-Berth Rental revenues. The reported revenue decrease in Shoreline Fund revenues results from a delay in posting Year-End revenues from the Monarch Bay golf course operations.
• Insurance, Expenditures-(54% of the expenditure budget compared to 106% in 2021-2022). Insurance expenditures decreased by $2,289,000 reflecting Settlement/Judgements expenditures in Worker’s Compensation Insurance lower by $1,152,000 and, and discontinuing further transfers ($1,500,000 each year) to the OPEB Trust.
Parking, Revenues and Expenditures-(26% of the revenue budget has been collected compared to 98% in 2021-2022 and 65% of the amended expenditure budget compared to 99% in 2021-2022). Parking Fund revenues in 2021-2022 at $849,000 included Operating Transfers (from the General Fund) of $550,000, compared to Operating Transfers in 2022-2023 of $100,000. Expenditures in 2022-2023 reflect a total $416,000 less than budget, with actual Consulting expenditures $334,000 less than budget.
ATTACHMENTS
Attachment A - Preliminary Year-End Financial Report as of June 30, 2023
Attachment B - Preliminary Year-End Financial Report Presentation
PREPARED BY
T. Michael Yuen, Finance Director