HomeMy WebLinkAboutStaff Report 228-08City of Palo Alto
City Manager’s Report
TO:HONORABLE CITY COUNCIL
ATTENTION:FINANCE COMMITTEE
FROM:CITY MANAGER DEPARTMENT: ADMINIST1L~kTIVE
SERVICES
DATE:MAY 13,2008 CMR: 228:08
SUBJECT:THIRD QUARTER FISCAL YEAR 2007-08 GENERAL FLeD
FINANCIAL RESULTS
This is an informational report and no Council action is required. The purpose of this report is to
provide the Council with insight into the financial condition of the City’s General Fund as of the
third quarter of fiscal year 2007-08.
DISCUSSION
At third quarter, General Fund operating revenues and expenditures are at 68 and 76 percent of
the adjusted budget respectively. Timing issues related to the collection of tax revenues and
recognition of contract encumbrances result in expenditures exceeding revenues. By year-end,
General Fund revenues are projected to exceed expenses.
During the first half of this fiscal year, the City experienced growth in its economically sensitive
revenue sources such as sales and transient occupancy taxes. In the third quarter, however, this
growth has moderated. This is a consequence of recessionary fears heightening, consumer
confidence and home values declining, lending standards tightening, and unemployment and
inflation rising.
Revenue Highlights for Third Quarter Fiscal Year 2007-08
Attachment A shows third quarter year-to-date actua! revenues as a percentage of the Adjusted
Budget.
Sales Ta:c: Receipts for the third quarter of fiscal year 2007-08 are at 68 percent of the adjusted
budget. This variance is a consequence of the timing of the State’s "triple flip" biannual
payments which are made in January and May. On a quarter to quarter basis, the economic
segments showing moderate strength within the City were apparel and department stores,
recreation products, and office/electronic equipment. Those showing decreases were auto, drug
stores, building materials, and light industry.
_Property Taxes: Payments from the County for the second half of the fiscal year essentially
begin in March and are fully paid by June. As a result of the timing of payments, receipts show
at 61 percent of the adjusted budget at the end of the third quarter. This is not indicative of
CMR:228:08 Page 1 of 3
expected year-end performance. Staff has noticed, however, a weakening in property tax growth
so it is possible that year end results will be moderately under budget.
Transient Occupancy Taxes (TOT): By year end, this revenue is expected to slightly surpass the
budget even though this report shows 63 percent of budget collected through March. The 63
percent is primarily caused by the timing of hotel payments. In addition, the strongest TOT
months are in April, May, and June, so staff is expecting the $7.7 million budget for 2007-08 to
be achieved. Compared to the prior year, average citywide occupancy and room rates through
January 2008 have steadily risen to 74 percent and $145 per night, respectively.
Expense Highlights for Third Quarter Fiscal Year 2007-08
Expenditures are often cyclical in nature and a department’s commitments could include items
for the entire fiscal year. Given these facts, departments are generally expected to conclude the
year within their adjusted budgets.
Excess Overtime Expenditures
Attachment B shows total overtime expenditures reaching 122 percent of the adjusted budget.
Although most of the General Fund depa-tments are below their overtime budget, the Fire, Police
and Planning Departments are exceeding their budgets for the following reasons:
The Fire Depa-tment is at 134 percent of adjusted budget for overtime. The main factors
contributing to overtime usage are: backfills for disability leave, vacancies, sick leave
use, and high vacation use during smmner months ($600,000); staffing of Station 8
($200,000); staffing of Medic-1 ($309,000); in and out-of-county mutual aid Strike Team
responses ($125,000, of which $105,382 was reimbursed); mandated training and other
personnel leave ($40,000). There are 4 personnel on long-term disability leave (2 of
whom recently retired). There are 6 entry-level personnel currently in the fire training
academy. When their training is completed in July, the Fire Department will be at fu!l
suppression staffing. There was a negligible increase in overtime for minimum staffing
backfill due to many of the open firefighter positions being filled.
The Planning Department is at 100 percent of the adjusted budget for overtime. Staff
vacancies in the Building division resulted in other staff working overtime to handle the
unusually high work load generated by large construction projects. The Building division
is now fully staffed, which should reduce the necessity for overtime for the remainder of
the year to budgeted levels.
The Police Department is at 134 percent of the adjusted budget for overtime. The main
factors contributing to overtime usage are: staffing shortages due to disability leave;
vacancies in Patrol and the 9-1-1 Dispatch Center; and academy and field training
programs ($1,148,000). Also, overtime was incurred for: the response and investigation
of the fire on University Avenue ($38,000); the investigation of a sexual assault case
($44,000); traffic control services at Stanford football games ($106,000) which is
partially reimbursed by the university; the Tour of California bike race ($32,000); and
other city-sponsored events. Overtime usage will be pm’tially offset with salary savings.
With the Police and Fire Departments removed from the overtime analysisl General Fund
overtime expense is at 72 percent of adjusted budget as of the third quarter.
CMR:228:08 Page 2 of 3
ATTACHMENT
Attaclm~ent A: 2007-08, Third Quarter Financial Report, General Fund
Attactm~ent B: 2007-08, Third Quarter General Fund Overtime
PREPARED BY:
ALLEN LEE
Senior AccePtant, Administrative Services
TARUN NARAYAN ~
~, ¯Financial Analysf, Admil~istratiy~ServicesSenior
DEPARTMENT HEAD APPROVAL:
CITY M.a~AGER APPROVAL:
Director. Administ~tiv_e~,ices
ST~VE~EMSLtE/KELLY MORARIU
Deputy City Managers
CMR:228:08 Page 3 of 3
Attachment A
CITY OF PALO ALTO
2007-08 Q3 FINANCIAL REPORT
GENERAL FUND
(in thousands of dollars)
BUDGET~
Revenues & Other Sources
Sales Tax
Property Tax
Transient Occupancy Tax
Utility Users Tax
Other Taxes and Fines
Charges for Services
Permits & Licenses
Return on Investment
Rental Income
From Other Agencies
Charges To Other Funds
Other Revenues
Total Revenues
Operating Transfers-In
Encumbrances and Reappropriation
Total Sources of Funds
22,045 22,400
22,034 22,735
6,985 7,700
9,402 9,793
8,181 8,437
20,383 20,383
6,044 6,074
2,191 2,466
13,037 13,037
118 167
10,650 10,650
1,433 1,772
122,503 125,614
17,207 !7,786
-3,400
139,710 146,800
Expenditures & Other Uses
City Attorney 2,746 3,544
City Auditor 887 1,030
City Clerk 1,440 1,488
City Council 190 306
City Manager 2,002 2,572
Administrative Services 7,374 7,789
Community Services 21,212 22,123
Fire 22,868 23,441
Human Resources 2,703 2,994
Library 6,484 6,885
Planning and Community Environment 10,137 10,815
Police 27,981 29,057
Public Works 13,225 13,885
Non-Departmental 9,229 7,455
Total Expenditures t28,478 133,384
Operating Transfers-Out 10~707 15,537
Total Uses of Funds 139,185 148,921
Net Surplus (Deficit)525 (2,121
Adjust intra-fund reserve transfer
Net To (From) Reserves 525 (2,121)
Beginning Reserves 25,220 27,480
Projected Ending Reserves 25,745 25,359
Excludes encumbrances, reappropriation and infrastructure reserve
ACTUALS (nine months ended 3-31-08)
15,188 68%
13,817 61%
4,862 63%
7,545 77%
5,608 66%
13,874 68%
3,817 63%
1,604 65%
10,146 78%
181 108%
7,904 74%
1,573 89%
86,119 69%
13,275 75%
99,394 68%
20 511 1,970 71%
!24 696 70%
4O 1 ,O69 75%
46 44 143 76%
25 202 1,692 75%
46 260 5,610 76%
121 1,708 15,590 79%
65 272 17,982 78%
47 146 2,049 75%
3 350 5,069 79%
69 499 7,280 73%
30 324 22,230 78%
51 649 9,747 75%
4,986 67%
524J 5,029 J 96,113[76°/o
11,467 74%
524I 5,029! t07,580I 76°/o
Attachment B
CITY OF PALO ALTO
2007-08 Q3 FINANCIAL REPORT
GENERAL FUND OVERTIME
(in thousands of dollars)
ACTUALS (nine monhs ended 3-31-08)
City Attorney -0%
City Auditor -0%
City Clerk 7 7 1 14%
City Council -0%
City Manager 3 3 -0%
Administrative Services 45 45 21 47%
Community Services 185 190 -133 70%
Library 58 58 -33 57%
Fire 893 997 -1,338 134%
Human Resources 4 4 -2 50%
Planning and Community Environment 66 66 -66 100%
Police 1037 1066 -1,429 ! 34%
Public Works 113 113 -92 81%
Total Overtime 2,411 2,549 I --3,115 I 122%