Title
Fiscal Year 2024-2025 Third Quarter Financial Report as of March 31, 2025
Staffreport
CITY COUNCIL PRIORITY
• Fiscal Sustainability and Transparency
SUMMARY
The Fiscal Year 2024-2025 Third Quarter Financial Report as of March 31, 2025, is for information only.
RECOMMENDATION
Staff recommends that the City Council Finance Committee review the Fiscal Year 2024-2025 Third Quarter Financial Report as of March 31, 2025.
BACKGROUND
The City Council adopted the 2023-2024 and 2024-25 General Fund, Enterprise and Internal Service Funds, and Special Revenue Funds biennial budgets on May 15, 2023. Council amended the FY 2024-2025 Budget on May 20, 2024, with midcycle adjustments. Council adopted additional adjustments to the FY 2024-2025 Amended Budget on March 17, 2025. The approved budgets are the annual expenditure and resource allocation plans that enable the implementation of City Council policies and priorities. The budget provides funding direction for the broad range of services that meet the needs of the community in accordance with City Council policy.
This financial review as of March 31, 2025, provides the third-quarter budget update to the City Council for the current fiscal year. Analysis of the revenues collected and all expenditures through March 31, 2025, measures operational adherence to the budgetary allocation plan.
Analysis
The FY 2024-2025 Amended Budget incorporates estimated revenues and planned expenditures for all funds. The attached Third Quarter Financial Report as of March 31, 2025, provides the revenue and expenditure summary for the General Fund, Enterprise and Internal Service Funds, and the Parking Fund. The detailed discussion compares revenue and expenditure performance against the prior year and focuses on variances.
General Fund
The General Fund finances the operations of the City that have no special or dedicated revenue sources and pays for basic municipal services. The amended 2024-2025 General Fund budget projects revenues totaling $143,418,000 and expenditures totaling $163,228,000, including purchase order encumbrances from 2023-2024, approved carryover amounts, and approved budget adjustments.
Third quarter revenue in 2024-2025 totals $89,270,000, 62% of the amended budget of $143,418,000, compared to 64% in 2023-2024. Expenditures of $98,455,000 through the third quarter amount to 60% of the anticipated total of $163,228,000, compared to 57% in 2023-2024. Both revenues and expenditure totals are in line with the prior year. Expenditures are expected to stay within 2024-2025 budget appropriations. Nevertheless, all expenditures will continue to be monitored throughout the year.
A detailed review of revenue and expenditure variances is presented below.
General Fund Revenue
• Property Tax (received 60% of anticipated revenue budget compared to 62% in 2023-2024). Property Tax is the City’s second largest revenue source and represents 22% of the total General Fund’s revenue. Property tax revenue is budgeted at $31,925,000, $1,629,000 or approximately 5% higher than in 2023-2024 based on Alameda County’s revenue estimates associated with the current year tax roll. The City received the first Secured Tax payment in December and the County will distribute the second payment of Secured Tax in April.
• Sales/Transaction and Use Taxes (received 56% of anticipated revenue budget compared to 57% in 2023-2024). Sales and Transaction Taxes are the City’s largest revenue source and represent 37% of total General Fund revenue. Sales/Transaction and Use Tax estimates have been revised downward by $2,800,000 in FY 2024-2025 due to an uncertain economy, an increase in consumer spending on (non-taxable) services, and a sales tax reporting correction from one of the City’s sales tax remitters. While actual revenue at the end of the third quarter is $2,464,000 less than last year, this lower rate of revenue has been factored into the revised budget.
• Utility Users Tax (received 66% of anticipated revenue budget compared to 71% in 2023-2024). Utility Users revenue is budgeted in 2024-2025 at $13,947,000, $1,300,000 more than the 2023-2024 budget. Actual revenue through March 31 is $297,000 higher with increases associated with electricity and gas and offset by declines in cable tv and telephone.
• Franchise Fees (received 52% of anticipated revenue budget compared to 52% in 2023-2024). Franchise Fee revenue is budgeted in 2024-2025 at $7,207,000, $940,000 more than the 2023-2024 budget. Actual revenue through March 31 is $504,000 higher, primarily from a one-time payment related to refuse and recycling. The City will receive franchise fee payments for gas and electricity in the fourth quarter.
• Property Transfer Taxes (received 54% of anticipated revenue budget compared to 51% in 2023-2024). This tax is highly volatile, relying on changes in property ownership that continues to be impacted by the high-interest rate environment as well as heightened economic uncertainty. Property Transfer tax revenue is budgeted at $8,750,000, $650,000 above the 2023-2024 budget. Revenue through March 31, 2025, is $555,000 more than at this point in 2023-2024. The average Recorded revenue of for fiscal year 2024-2025 was $512,000 compared to $416,000 at this same in the previous year.
• Business License Tax (received 94% of anticipated revenue budget compared to 78% in 2023-2024). Business License Tax revenue is budgeted in 2024-2025 at $6,405,000, $50,000 more than the 2023-2024 budget. Actual revenue through the end of the third quarter is $1,100,000 higher than this same period last year, mainly due to an alignment of renewal due dates. It is anticipated that this line item will end the year at budget or slightly above as most business license renewals are due at the beginning of the calendar year.
• Charges for Services (received 70% of anticipated revenue budget compared to 84% in 2023-2024). Charges for Services is budgeted in 2024-2025 at $2,676,000, $37,000 more than the 2023-2024 budget. Revenues were $1,885,000, $338,000 less than in the same period last year. Recreation revenue associated with programming such as day camps is performing better than this point in time last year. These positive revenue results are primarily offset by a slower rate of revenue related to planning, engineering, and fire inspection fees. Given the economic uncertainty, staff are closely monitoring demand for services and these revenue sources, though it is common for the revenue rate to pick up in the last quarter.
• Interest & Property Income (received 104% of anticipated revenue budget compared to 78% in 2023-2024). The 2024-2025 Interest & Property Income revenue budget is $3,701,000. Actual revenue as of the third quarter is $3,861,000, $1,464,000 higher than last year. The revenue increase is the result of a larger investment portfolio and higher interest rates in 2024-2025.
• Fines, Fees & Forfeitures (received 160% of anticipated revenue budget compared to 85% in 2023-2024). The 2024-2025 Fines, Fees & Forfeitures revenue budget is $658,000. Actual revenue as of March 31 is $1,052,000, $593,000 higher than last year. While the rate of revenue as of third quarter is strong due to enhanced community preservation efforts, a significant portion of of this line item is not expected to be recovered as a fine but rather a long-term investment in property development.
As reported in the attached Third Quarter Financial Report, all other taxes and revenue receipts are in line with budgeted revenues.
General Fund Expenditures
• General Fund, Total Expenditures (60% of the amended budget compared to 57% in 2023-2024). Of the $163,228,000 expenditure budget, $98,455,000 or 60%, has been spent to date compared to 75% of the fiscal year. General fund expenditures were $7,941,000 higher than in the same period last year mainly due the rate of salary and benefit expenditures. All department expenditures remained less than 75% of annual appropriations (an average of 60% of budget) though it is anticipated that most departments will end the fiscal year at or close to budget as operational obligations are fully realized and reconciling items (e.g., retroactive pay for the SLCEA contract, pension costs, etc.) are recorded.
Enterprise, Internal Service Funds, and Parking Fund
• Four Enterprise funds make up the City's business-type with operations designed to fully recover costs through user fees: Water Pollution Control Plant Fund, Environmental Services Fund, Shoreline Enterprise Fund, and the Storm Water Fund.
• Internal Service funds also operate as business activities, exclusively supporting the City's internal operations: Facilities Maintenance Fund, Information Technology Fund, Insurance Services Fund, and Equipment Maintenance Fund make up these internal service funds.
• The Parking Fund provides for parking meter and parking lot operations and maintenance at the Downtown Parking Structure.
Enterprise Funds, Internal Service Funds, and the Parking Fund all have revenue and expenditure trends in line with expectations. Revenue and expenditures will continue to be closely monitored throughout the remainder of the year.
ATTACHMENTS
Attachment A - Third Quarter Financial Report as of March 31, 2025
Attachment B - Third Quarter Financial Report Presentation
PREPARED BY
Felicia Silva, Assistant Finance Director
Tyler Hammond, Accountant II