HomeMy WebLinkAboutStaff Report 272-05?
City of Palo Alto.
City Manager's Report
TO: HONORABLE CITY COUNCIL
FROM: CITY MANAGER DEPARTMENT: ADMINISTRATIVE
SERVICES
DATE: JUNE 6, 2005 CMR:272:05
SUBJECT: THIRD QUARTER FISCAL YEAR 2004-05 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 (OF) as
of the third quarter of 2004-05.
DISCUSSION
Revenue Highlights for Third Quarter Fiscal Year 2004-05 Financial Results
Economically sensitive revenue sources such as sales and transient occupancy taxes have shown
some improvement in 2004-05. In comparison to prior year quarterly and monthly performance,
staffhas seen these revenue sources stabilize and gradually trend upward. This is in line with the
slow growth of jobs in Silicon Valley, which is highly correlated with growth in these revenue
sources. In addition, property and documentary transfer taxes have improved due to rising
demand and prices for residential properties. While these positive developments are welcome, it
is prudent to temper expectations because of countervailing forces such as a weak regional
economy, State budget deficits, higher oil and commodity prices and rising interest rates.
Attachment A shows third quarter year-to-date actual revenues as a percentage of the Adjusted
Budget. One would expect that by the end of the third quarter, the City would receive 75 perc~nt
of projected revenues. In fact, due to seasonal, State and county payment schedules and other
timing variations, revenues reflected in the City's General Ledger are at 71 percent of annual
revenues. It is only when the City "closes its books" at year-end that performance compared to
budget can be realistically assessed. Nevertheless, staff attempts below to describe variances
that are at least 5 percentage points below or above the 75 percent level and to comment on
whether annual budget goals will be met in these categories.
Transient Occupancy Taxes (TOT):
Attachment A shows that actual transient occupancy tax receipts are 57 percent of the Adjusted
Budget. The principal reason for this variance is that the City's General Ledger reflects revenues
through February instead of March. Staff estimates that with March revenues the City will have
received 70 percent of the annual budget and that by year-end, TOT receipts will be slightly
below the $6.0 million target. Occupancy and daily rates have gradually improved since the
beginning of the fiscal year.
CMR:272:05 Page 1 of3
Property Taxes:
Property taxes are at 65 percent of budgeted revenues at the end of the third quarter in
Attachment A. With the adyent of the "triple-flip" and "in-lieu vehicle license" fee payments
being made through property taxes twice a year (in January and May), actual revenues will trail
budgeted revenues that are evenly spread across the year. Based on performance to-date, staff
expects that actual 2004~05 property tax revenues will exceed tre budgeted $16.1 million.
Sales Tax:
Sales tax receipts through March are 73 percent of budget. With sales taxes gradually moving
upward during 2004-05, it is projected that year-end sales tax receipts will meet and probably
exceed the $18.1 million budgeted. Strong performances from department and apparel stores
have buttressed this revenue category in 2004-05.
Other Taxes Fines and Penalties
Attachment A shows this category at 81 percent of budgeted revenues through March. This is
primarily due to healthy 'revenues from the documentary transfer tax. This volatile revenue
source has performed well due to rapidly increasing residential property values and the low
mortgage interest rate environment. By year's end, these taxes will easily exceed $3.7 million in
budgeted revenues.
Charges for Services:
Charges for services receipts are 71 percent of adjusted budget as of the third quarter. This is
primarily due to a cyclical delay in payment' of planning fees. There is also a decrease in golf
green fees from less activity at the golf course due to rainy weather. Revenues are expected to
reach the adjusted $18.1 million by year-end.
Permits and Licenses:
Permits and licenses receipts are 56 percent of the adjusted budget. The variance is primarily
due to lower-than-anticipated street cut fees.
Other Revenues:
Other revenues are 68 percent of budget. Revenues collected from regional cities for animal
services are delayed. Revenues are expected to reach the adjusted figure of $1.3 million by year-
end.
, Expense Highlights for Third Quarter Fiscal Year 2004-05 Financial Results
Just as revenues are cyclical in nature, so too are some expenditures. Given that the percentage
of adjusted budget used could include commitments for the entire fiscal year, departments are
within their expected target range. By year-end, staff expects that department actual
expenditures will be within the adjusted budget goals.
Excess of Overtime Expenditures to Adjusted Budget
General Fund Overtime Analysis:
Attachment B shows total overtime expenditures reaching 112 percent of adjusted budget.
Although most of the General Fund departments are close to 75 percent of their overtime budget,
the Police, Fire and Human Resources Departments exceed their budget for the following
reasons.
CMR:272:05 Page 2 of3
• The Fire Department is at 156 percent of adjusted budget for overtime. The primary
factor contributing to overtime expense is a shortage of staffing resulting from medical
disabilities. While new recruits have been hired, they will not be on active duty until next
fiscal year.
! .
• The Human Resources Department has no budget for overtime. Overtime, however, was
needed to support hourly unit negotiations. The use of overtime was offset with savings
in regular salaries.
• The Police Department is at 93% of the adjusted budget for overtime. The main factors
contributing to overtime expense are disability leave, staff vacancies, and newly· hired
officers assigned to the academy and patrol program. The department expects to receive
reimbursement for overtime for some activities. Overtime hours are approximately 500
less than for the same period last year.
ENVIRONMENTAL REVIEW
The action recommended is not a project for the purposes of the California Environmental
Quality Act.
ATTACHMENT
Attachment A: 2004-05, Third Quarter Financial Report, General Fund
Attachment B: 2004-05, Third Quarter General Fund Overtime
PREPARED BY:
Accounting Manager, Administrative Services
DEPARTMENT HEAD APPROVAL:
CITY MANAGER APPROVAL:
Assistant City Manager
CMR:272:05 Page 3 of3
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
From Infrastructure Reserve
Total Sources of Funds
EXRenditures & Other Uses
City Attorney
City Auditor
City Clerk
City Council
City Manager
Administrative Services
Community Services
Library
Fire
Human Resources
Planning and Community Environment
Police
Public Works
Non-De artmental
Total Ex enditures
Operating Transfers-Out
Total Uses of Funds
Attachment A
CITY OF PALO ALTO
2004-05 Q3 FINANCIAL REPORT
GENERAL FUND
(in thousands of dol/ars)
18,335 18,100
13,600 16,093
5,800 6,000
7,392 7,226
9,526 6,382
18,296 18,079
4,397 4,126
2,360 2,300
11,776 11,845
61 317
9,309 9,309
1,322 1,317
102,174 101,094.
14,619 14,632
116,793 115,726·.
2,544.
803
3,404
1,000
84
178
782
148
1,799
6,736
19,618
5,251
18,837
2,409
8,839
22,422
11,262
8,063
109;513
6,502
116,015
778
778
778
808
158
1,980
6,871
20,132
5,229
19,275
2,575
10,097
22,809
11,525
6,525
112,388
6,928
119,316
(3,590)
13
93
• Excludes encumbrances, reappropriation and infrastructure reserve
•• Excludes $35,881 k transfer of infrastructure reserve to CIP fund
••• In Lieu VLF revenues for Adopted budget and Actuals reported with Property Tax
533
54
20
5
26
165
1,930
150
316
153
739
612
1,014
•••• COPS funding for the Police Department was inadvertently loaded in the GF at mid year.
This funding will be moved to the Special Revenue fund as part of the year end BAO
General Fund Summaries - 1
13,212
10,424
3,429
5,333
5,168
12,780
2,293
1,743
8,925
346
6,912
892
1,816
602
550
95
1,185
4,671
13,727
3,554
13,554
1,697
6,366
16,671
7,402
4556
City Attorney
City Auditor
City Clerk
City Council
City Manager
Administrative Services
Community Services
Library
Fire
Human Resources
Attachment B
CITY OF PALO ALTO
2004-05 Q3 FINANCIAL REPORT
GENERAL FUND OVERTIME
(in thousands of dol/ars)
13 13
4 4
52 52
199 199
59 59
983 983
2
Planning and Community Environment 67 67
Police 974 1,028
Public Works 100 ' 100
Total Overtime , 2,453 ' 2,5051
General Fund Summaries - 2
0%
0%
0%
0%
0%
10 19%
153 77%
38 64%
1,530 156%
2 N/A'
44 66%
956 93%
77 77%
2,8101 112%