2016-03-09 Item 10C Mid-Year Budget Report - Revised Pages 1, 2, 3, 5 AGENDA REPORT
City Council
MEETING DATE: March 9, 2016
PREPARED BY: Tim Nash DEPT. DIRECTOR: Tim Nash
Finance Director
DEPARTMENT: Finance CITY MANAGER: Karen P. Brust
SUBJECT:
Fiscal Year 2015-16 Mid-Year Budget Status Report and Proposed Budget Amendments
RECOMMENDATION:
Staff recommends that City Council take the following actions:
1. Receive and file the Fiscal Year 2015-16 Mid-Year Budget Status report.
2. Adopt Resolution 2016-24 titled "A Resolution of the City Council of the City of Encinitas
Amending the Fiscal Year 2015-16 Budget"
STRATEGIC PLAN:
This agenda item applies to the Organizational Efficiency and Effectiveness focus area by
maintaining the City's financial health.
FISCAL CONSIDERATIONS:
Proposed mid-year budget amendments will reduce estimated revenue by $1,770,962 and
reduce budgeted expenditures by $858,287. The General Fund impact will be to reduce
estimated revenue $32,000 and increase budgeted expenditures $284,075 for a net reduction in
fund balance of$316,075.
Proposed mid-year amendments to transfers between funds are a net reduction of $1,226,402.
The General Fund impact is an increase in transfers out of the General Fund of$745,598 which
will reduce General Fund balance by that amount.
Table 1 on the next page lists all Fiscal Year 2015-16 General Fund budget amendments
approved by City Council since the adoption of the original budget. Prior to the proposed mid-
year budget amendments the available fund balance in the General Fund is $12,115,078.
Approval of the mid-year budget amendments will reduce the General Fund balance by
$1,061,803 to $11,053,405. The remainder of this report and attachments provide detailed
explanations for each mid-year amendment proposed.
2016-03-09 Item 10C 1 of 47 (amended)
Table 1
City of Encinitas 3/4/2016
General Fund Balance Status
Increase(Decrease)
Meeting Date Resolution# to fund balance
Net available fund balance at 6/30/2015 $ 13,599,967
FY 2015-16 Budget Amendments
1. Pacific View professional services 07/15/15 2015-47 (25,000)
2. SEIU and unrep. MOU impacts 07/15/15 2015-46 (180,800)
3. Alternative Fuel study additional budget 08/19/15 2015-42 (31,925)
4. Montgomery At-grade Pedestrian Crossing 10/28/15 2015-77 (573,766)
5. CalPERS Lump Sum Payment 5%of FY 2014-15 Budget Surplus 10/28/15 2015-72 (341,956)
6. 1Q FY2015-16 Operating Adjustments 11/18/15 2015-71 500,533
7. 1Q FY2015-16 CIP Adjustments 11/18/15 2015-79 (45,456)
8. El Portal Pedestrian and Bike Underpass local share 11/18/15 2015-75 (704,000)
9. Land Use/Development mediation program 12/09/15 2015-78 (7,750)
10. Law Enforcement Overtime 12/09/15 2015-85 (50,000)
11. TMDL Compliance Program 12/16/15 2015-76 21,761
12. Parking Study 12/16/15 2015-87 (25,000)
13. Hwy 101 Emergency Repairs(CX11F) 02/10/16 2016-01 (83,925)
14. Hwy 101 Slope Monitoring Project(CX16F) 02/10/16 2016-01 (4,014)
15. City Council work plan FY2015-16 operating budget adjustments 02/10/16 2016-09 118,668
16. Design for supplemental safety measures at Chesterfield 02/24/16 2016-25 (52,259)
Net available fund balance before mid-year amendments 12,115,078
17. Mid-Year budget amendments 03/09/16 2016-24 (316,075)
18. Mid-Year fund transfer amendments 03/09/16 2016-24 (745,598)
Available fund balance: $ 11,053,405
BACKGROUND:
On June 10, 2015, the City Council approved the FY 2015-16 and FY 2016-17 two-year
operating budget and adopted resolution 2015-32 authorizing appropriations for FY 2015-16.
City Council also approved the six-year Financial Plan and Capital Improvement Program. On
October 28, 2015 City Council received the Report on the Financial Results for Fiscal Year
2014-15 and adopted ending fund balances for FY 2014-15 as beginning fund balances for FY
2015-16. Beginning fund balance in the General Fund for FY 2015-16 was $41,402,445 with
$18,635,041 unrestricted and available for appropriation. In the first three years of the six year
plan, the unrestricted General Fund balance is projected to be drawn down $5,035,074 for
planned capital projects leaving $13,599,967 available for City Council appropriation. Through
2/24/16, City Council has approved amendments to the FY 2015-16 budget that have reduced
available fund balance by $1,484,889 to $12,115,078.
Each year after the mid-point of the fiscal year, staff presents a report to City Council describing
the status of the budget and the related revenue estimates. Staff also presents proposed
amendments to the budget necessary to complete the fiscal year within budget.
ANALYSIS:
After the first six-months of FY 2015-16, the budget remains balanced. In the General Fund,
revenue and transfers-in total $24,963,029 which is 37% of estimates, while expenditures and
transfers-out of $33,020,396 are 46% of budget. Revenue and transfers in are $2,804,703
ahead of last fiscal year after six months, and expenditures are $5,269,922 ahead of last fiscal
year.
2016-03-09 Item 10C 2 of 47 (amended)
General Fund Revenue (Attachment 1)
General Fund revenue through the first six months of FY 2015-16 is $24,963,029 which is 37%
of total estimated revenue for the fiscal year. Current fiscal year revenue is $2,839,303 greater
than the first six months of FY 2014-15. In a typical year, a higher percentage of revenue is
received in the second half of the fiscal year than in the first half. The primary reason for this is
property tax receipts. Property owners can pay their taxes in two installments each year with
the deadline for the first installment being December 10th and the second installment, April 10tH
The San Diego County Treasurer collects all property taxes and then distributes the taxes to the
various governmental agencies that levy property taxes in the County. The City of Encinitas
receives the majority of its property tax revenue in December, January, April and May.
Over 84% of General Fund revenue is generated from taxes, with property tax alone accounting
for nearly 58% of total General Fund revenue. Through the first six months of FY 2015-16 total
tax revenue of $18,993,255 is up 5.7% over the same period in the prior fiscal year and is
33.9% of total estimated tax revenue for FY 2015-16. At mid-year property tax revenue is
$13,776,752 which is 6.4% ahead of last year's revenue, while sales tax revenue is $3,752,253
which is 1.5% ahead of last year. The FY 2015-16 budget was balanced based on an assumed
2.7% increase in property tax revenue and an 8.8% increase in sales tax revenue. The sales tax
revenue estimate included an anticipated one-time payment for the wind down of the triple flip
which will not be received until the end of the fiscal year. Transient Occupancy Tax collections
through six months total $873,939 which is 11% greater than last year. TOT collections year to
date are 58.2% of the estimate.
Charges for services account for 10% of total General Fund revenue. Charges for services
revenue totaling $3,491,243 have increased 39.2% in the first six months of FY 2015-16. Most
of this increase is attributable to the inclusion of Recreation and Junior Lifeguard program
revenue in the General Fund for the first time. In prior years Recreation and Junior Lifeguard
program revenues were accounted for in Enterprise Funds. Planning, building, engineering and
fire prevention fees total $1,947,601 at mid-year which is an increase of 8.7% over last year.
The remaining 6% of General Fund revenue consists of licenses and permits,
intergovernmental, fines and forfeitures, use of money and other financing sources. Revenue
from these sources total $2,478,531 through mid-year which is an increase of 49% over last
year. This year's revenue includes a one-time transfer of$462,721 into the General Fund which
represents remaining fund balances in the Recreation and Jr. Lifeguard Funds which were
dissolved at first quarter this year. Table 2 below provides General Fund revenue totals by
adopted budget, amended budget, YTD actual and mid-year revised projections.
Table 2
General Fund Revenue Summary(December 31,2015)
Adopted Amended Percent Revised
Budget Budget YTD Actual Realized Projections
Description 2015/16 2015/16 2015/16 2015/16 2015/16
Property Taxes $ 38,578,376 $ 38,670,487 $ 13,776,752 36% $ 38,670,487
Sales Tax 13,685,188 13,685,188 3,752,253 27% 13,685,188
Franchise Taxes 2,197,000 2,197,000 590,311 27% 2,197,000
Transient Occupancy Taxes 1,502,000 1,502,000 873,939 58% 1,502,000
Licenses, Fees and Permits 250,000 250,000 131,800 53% 250,000
Revenue from Other Agencies 500,679 972,034 209,031 22% 987,034
Current Services 6,627,762 6,456,462 3,491,243 54% 6,409,462
Fines and Forfeitures 674,750 674,750 383,841 57% 674,750
Interest and Rents 426,547 591,547 441,789 75% 591,547
Other Revenue 590,000 596,300 162,168 27% 596,300
Transfers In 1,184,360 1,637,081 1,149,902 70% 1,637,081
Revenue Total $ 66,216,662 $ 67,232,849 $ 24,963,029 37% $ 67,200,849
2016-03-09 Item 10C 3 of 47 (amended)
Table 4
Capital Improvement Program Summary as of December 31,2015
FY 2014-15 FY 2015-16 FY 2015-16 FY 2015-16
Carryover FY 2015-16 Offcycle YTD Project Close FY 2015-16
Funding New Funding Funding Expenditures Out Balance
Capital Projects $15,249,564 $ 8,524,000 $7,093,637 $(1,543,530) $(2,133,103) $ 27,190,568
Work Projects 3,313,753 3,066,578 517,157 (932,707) (205,548) 5,759,233
Facilities Capital Projects - 1,362,000 207,000 (73,845) 1,495,155
Cardiff Sanitary Division Capital Projects 7,634,100 3,664,762 - (108,024) 11,190,838
Encinitas Sanitary Division Capital Projects 1,334,527 1,376,587 - (438,394) (5,720) 2,267,000
$27,531,944 $17,993,927 $7,817,794 $ 3,096,500 $ 2,344,371 $ 47,902,794
Proposed Budget Adjustments (Attachment 5)
Budget adjustments proposed at mid-year for all funds reduce estimated revenue $1,770,962
and reduce budgeted expenditures $858,287. In the General Fund, estimated revenue is
reduced$32,000 and budgeted expenditures increased$284,075.
Significant adjustments to estimated revenue include, in the State Capital Grant Fund (203), the
elimination of an anticipated Active Transportation Program (ATP) grant for the Leucadia Blvd.
roundabout at Hygeia St ($1,300,000), and in the Restricted Donations & Contributions Fund
(229), the elimination of the anticipated grants, donations and rebates for the Leo Mullen
artificial turf project ($472,000).
Significant adjustments to budgeted expenditures include, in the General Fund (101), a request
for eight (8) replacement 800Mhz radios for Marine Safety, $45,776; in the Encinitas Ranch
Lighting and Landscaping District Fund (297), increased budget for water, $47,000; and in the
Capital Improvement Fund (401), four (4) emergency repairs due to storm damage $182,000,
an increase to the Leo Mullen artificial turf project for engineering and design costs $77,600 and
the removal from the current fiscal year budget of the Leucadia Blvd. roundabout at Hygeia St.
project ($1,500,000). A detailed explanation for each budget adjustment is included in
Attachment 5. Table 5 below summarizes operating budget amendments by fund.
Table 5
Operating Budget Amendments - Mid-Year (1) (2) (1-2)
Fund
Revenue Expenditure Balance
Increase Increase Increase
Description Department (Decrease) (Decrease) (Decrease)
General Fund (101) $ (32,000) $ 284,075 $ (316,075)
State Capital Grant Fund (203) $(1,300,000) $ - $(1,300,000)
Restricted Donations&Contributions Fund (229) $ (469,462) $ 2,538 $ (472,000)
Village Park MID (293) $ 18,000 $ 18,000 $ -
Encinitas Ranch Lighting and Landscaping District(297) $ 12,500 $ 77,500 $ (65,000)
Capital Improvements Fund (401) $ - $(1,240,400) $ 1,240,400
$(1,770,962) $ (858,287) $ (912,675)
Proposed Adjustments to Transfers between Funds (Attachment 6):
Requested transfers between funds are reduced ($1,226,462). Transfers between funds of the
city are primarily used to fund capital projects and debt service payments. The most significant
transfers creating the net reduction at mid-year included the elimination of the $1,300,000
transfer from the State Capital Grant Fund to the Capital Improvement Fund due to the
determination that the city would not receive an ATP grant for the Leudcadia Blvd. roundabout
at Hygeia St. The transfer of the $200,000 local match from the Regional Traffic Mitigation Fees
Fund (234) to the Capital Improvement Fund (401) is also eliminated. Significant increases in
transfers between funds include $182,000 from the General Fund (101) to the Capital
Improvement Fund (401) for emergency projects to repair storm damage. Detailed explanations
for each transfer can be found in Attachment 6. Table 6 summarizes transfer amendments by
fund.
2016-03-09 Item 10C 5 of 47 (amended)