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Mid-Year Budget ReviewCity Council Meeting
City of Santa AnaFebruary 21, 2017ITEM 65B
TABLE OF CONTENTS
2
I. Path to Fiscal Stability
II. FY 16-17 Economic Overview
III. FY 16-17 General Fund Projected Year-End Balance
IV. Fiscal Year Ending Operating Balance
V. Assigned Balances
VI. Next Steps
Path to Fiscal Stability
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4
PATH TO FISCAL STABILITY
• Understanding the City’s Budget• FY 2008-2009• 1,785 Full Time Employees (FTE)• $239.1M General Fund Budget• Consolidation of Departments
(e.g. Library Services merged with Parks and Rec. Services)
5
PATH TO FISCAL STABILITY CONTINUED
• FY 2012-2013• 1,203 Full Time Employees (FTE)• $196.5M General Fund Budget• Outsourcing of the Fire Department to
OCFA• Due to effective resource utilization and
strong management, the City generated a positive ending operating balance.• Results in lower expenditure base• Increase in actual revenues
City of Santa AnaEconomic Overview
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7
FY 2016-17 OPERATING BUDGET
On June 21, 2016, the City Council adopted the FY 2016-17 Budget
Operating Budget Revenues Expenditures
General Fund $228,970,000 $228,970,000
Total Citywide Budget $513,887,000 $513,887,000
General Fund Operations: Mid-year Report
8
General Fund Operations: Budget to Actuals Comparison
9
JULY - DECEMBER 2016
GENERAL FUNDFY 16-17
Annual Budget
FY 16-17 July - Dec.
Actuals% Received
Revenues $228,970,000 $80,386,907 35.1%
Expenditures $228,970,000 $112,413,436 49.1%
JULY - DECEMBER 2015
GENERAL FUNDFY 15-16
Annual Budget
FY 15-16 July - Dec.
Actuals% Received
Revenues $225,813,258 $71,483,418 31.7%
Expenditures $225,813,258 $106,945,455 47.4%
FY 2016 – 2017General Fund 11 Revenue Sources
Estimated Revenues: $228,970,000
Sales Tax $46,504,000 (20.3%)
Property Tax $33,022,000 (14.4%)
Utility Users Tax $27,780,000 (12.1%)
Other Taxes $11,548,160 (5.1%)
Business Tax $11,632,323 (5.1%)
Hotel Visitor’s Tax $9,430,000 (4.1%)
Intergovernmental$8,521,802 (3.7%)
Franchise Fees$3,308,620 (1.5%)
Charges for Services & Fees
$10,244,709 (4.5%)
Property Tax In Lieu VLF
$30,096,000 (13.2%)
Licenses and Permits
$4,654,774 (2.0%)
Use of Money & Property
$17,018,300 (7.4%)
Miscellaneous
$10,331,856 (4.5%)
Fines
$4,877,456 (2.1%)
A Diversified General Fund Revenue Base.
10
General Fund Revenues: Top 6BUDGET TO ACTUALS
11
JULY - DECEMBER 2016 (50%)
Top 6 General Fund
Revenues
FY 16-17 Annual Budget
FY 16-17 July - Dec.
Actuals% Received
Sales Tax $46,504,000 $17,551,205** 37.7%
Property Tax $33,022,000 $17,854,802 54.1%
Property Tax In-Lieu of
VLF*$30,096,000 ------ -----
UUT $27,780,000 $10,977,808 39.5%
Business License $11,632,323 $2,202,351 18.9%
Hotel Visitors Tax $9,430,000 $4,424,793 46.9%
Total Top 6 $158,464,323 $53,010,959 33.5%
* Revenue is received in the 3rd and 4th Quarter (January and May)
**Amount reflects full 1% of Bradley-Burns Local Sales Tax
General Fund Revenues: Top 6Actuals Vs. Actuals
FY 15-16 v. FY 16-17
12
JULY - DECEMBER 2016 (50%)
Top 6 General Fund
Revenues
FY 15-16 July - Dec.
Actuals
FY 16-17 July - Dec.
Actuals% Variance
Sales Tax $11,769,028 $17,551,205** $5,782,177 49.1%
Property Tax $16,891,583 $17,854,802 $963,219 5.7%
Property Tax In-Lieu of
VLF*-------- ------- ------- --------
UUT $11,528,284 $10,977,808 ($550,476) -4.8%
Business License $2,226,895 $2,202,351 ($24,544) -1.1%
Hotel Visitors Tax $4,083,902 $4,424,793 $340,891 8.3%
Total Top 6 $46,499,692 $53,010,959 $6,511,267 14.0%
* Revenue is received in the 3rd and 4th Quarter (January and May)
**Amount reflects full 1% of Bradley-Burns Local Sales Tax
Positive Development Activity
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JULY - DECEMBER 2016
General Fund Revenues
FY 16-17 Annual Budget
FY 16-17 July - Dec.
Actuals% Received
Building Plan Check $1,292,845 $2,757,322 213.3%
Electrical Plan Check $149,433 $425,356 284.6%
Mechanical Plan
Check$121,337 $326,293 268.9%
Plumbing Plan Check $45,966 $178,563 388.5%
Total $1,609,581 $3,687,534 229.1%
General Fund Revenues: BUDGET TO ACTUALS COMPARISON
14
JULY - DECEMBER 2016 (50%)
General Fund RevenuesFY 16-17
Annual Budget
FY 16-17 July - Dec.
Actuals
% Received
Dept. Revenue Total: $70,505,677 $27,375,948 38.8%
Top 6 GF Revenues $158,464,323 $53,010,959 33.5%
Total: $228,970,000 $80,386,907 35.1%
Projected Revenues as of December is $225,671,339. Current Year-End revenue shortfalls include:
1) Water Overhead Transfer: ($2.4M) 2) UUT: ($2.2M)3) Jail Rental Facility: ($2.4M)
City of Santa AnaTop General Fund Revenues
Sales Tax
15
Sales Tax Overview
Sales Tax Base by Category
General Retail 23.8%
Transportation 22.6%
Business to Business 20.7%
Food Products 17.9%
Construction 13.9%
Other 1.1%
16
City of Santa AnaTop General Fund Revenues
Property Tax
17
Property Tax Overview
Fiscal Year Secured Value Unsecured Value Total Assessed Value
% Change
Total Value
2016-2017 22,436,846,167 1,449,280,188 23,886,126,355 3.8%
2015-2016 21,528,908,507 1,484,317,701 23,013,226,208 4.2%
2014-2015 20,432,992,347 1,642,391,147 22,075,383,494 4.5%
2013-2014 19,579,938,214 1,539,744,991 21,119,683,205 3.8%
2012-2013 18,829,929,040 1,509,850,095 20,339,779,135 1.2%
2011-2012 18,509,577,519 1,591,286,970 20,100,864,489
Source: Orange County Auditor-Controller Office Assessed Valuations
City of Santa Ana
Assessed Valuation
18
Property Tax Overview
A majority of the assessed basic property value is derived from residential, commercial and industrial parcels.
Net Taxable Value
Residential 59.4%Commercial 21.2%Industrial 12.1%
Total: 92.7%
19
Source: HdL Co. (Consultant)
City of Santa AnaTop General Fund Revenues
Property Tax in Lieu of Vehicle License Fee (VLF)
20
Property Tax In Lieu of Vehicle License Fee (VLF)
Property Tax (VLF) is the third largest general fund revenue source.
In 2004, the California Legislature approved a VLF for property tax swap.
The result was a reduction of the VLF from 2% to 0.65% and the difference in the reduction was backfilled to cities and counties with property tax.
21
City of Santa AnaTop General Fund Revenues
Utility User Tax
22
Utility User Tax (UUT) Overview Utility Users Tax represents the fourth largest revenue source for the City
The UUT is applied to four categories: Electricity (48.0% of total UUT revenues) Telephone (34.1% of total UUT revenues) Water (9.6% of total UUT revenues) Gas (8.3% of total UUT revenues)
23
City of Santa AnaTop General Fund Revenues
Business License
24
Business License
Business License represents the fifth largest revenue source for the City
Number of Business Licenses:2016 = 30,593 vs. 2015 = 29,107
25
City of Santa AnaTop General Fund Revenues
Hotel Visitors’ Tax (HVT)
26
Hotel Visitors’ Tax (HVT) Hotel Visitors’ Tax is the sixth largest general fund revenue. HVT Rate since January 2005 is 11% Total number of hotels is 36. The top 10 generate 75% of the City’s Hotel Visitors’ tax.
27
TOP 10 REPORTING HOTELS - REVENUE
ALPHABETICAL SECTION
Best Western Orange County Airport North
Candlewood Suites
Courtyard By Marriott Santa Ana
Doubletree Club Hotel
Doubletree Hotel Santa Ana Orange County Airport
Embassy Suites
Hampton Inn & Suites
Holiday Inn Orange County Airport
La Quinta Inn #2006
South Coast Metro Courtyard
General Fund Operating BudgetFiscal Year 2016-2017
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Fire Department
$41,765,144 (18.2%)
Police Department
$120,257,118 (52.5%)
Finance & Mgmt. Services
$4,873,614 (2.1%)
Public Works
$5,908,755 (2.6%)
Parks, Recreation, &
Com. Services
$19,366,804 (8.5%)
All Others$14,706,278 (6.4%)
Planning & Building
$9,514,222(4.2%)
Debt Service & Transfers
$12,578,065 (5.5%)
FY 2016-2017 General Fund 11 Appropriations$ 228,970,000
City Manager’s Office $2,270,005 (1.0%)
City Attorney’s Office $2,878,925 (1.3%)
Community Development $465,675 (0.2%)
Personnel $1,405,042 (0.6%)
Non-Departmental $2,224,235 (1.0%)
Bower’s Museum $1,475,890 (0.6%)
Legislative Affairs $377,515 (0.2%)
Clerk of the Council $976,761 (0.4%)
Information Services $2,632,230 (1.1%)
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General Fund Expenditures: BUDGET TO ACTUALS
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July – December (50%)
Departmental ExpendituresFY 16-17
Annual Budget
FY 16-17 July - Dec.
Actuals% Expended
City Manager $ 2,647,520 $ 1,167,032 44.1%
Non-Dept $ 17,434,530 $ 8,296,799 47.6%
Clerk of the Council $ 976,761 $ 445,037 45.6%
City Attorney's Office $ 2,878,925 $ 1,657,176 57.6%
Personnel Department $ 1,405,042 $ 588,666 41.9%
Finance & Management Services Agency $ 4,873,614 $ 2,114,744 43.4%
Bowers Museum $ 1,475,890 $ 737,853 50.0%
Parks and Recreation Services Agency $ 19,366,804 $ 8,567,922 44.2%
Police Department $ 120,257,118 $ 58,337,154 48.5%
Fire Department $ 41,765,144 $ 23,424,548 56.1%
Planning & Building Agency $ 9,514,222 $ 4,774,949 50.2%
Public Works Agency $ 5,908,755 $ 2,091,343 35.4%
Community Development Agency $ 465,675 $ 210,211 45.1%
TOTAL GENERAL FUND $ 228,970,000 $ 112,413,436 49.1%
General Fund Expenditures: ACTUALS TO ACTUALS
FY 15-16 v. FY 16-17
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Departmental ExpendituresFY 15-16
July - Dec.Actuals
FY 16-17 July - Dec.
ActualsVariance
City Manager $ 1,020,800 $ 1,167,032 $ 146,232 14.3%
Non-Dept $ 8,884,922 $ 8,296,799 $ (588,123) -6.6%
Clerk of the Council $ 389,237 $ 445,037 $ 55,800 14.3%
City Attorney's Office $ 1,499,146 $ 1,657,176 $ 158,030 10.5%
Personnel Department $ 647,614 $ 588,666 $ (58,949) -9.1%
Finance & Management Services Agency $ 1,920,332 $ 2,114,744 $ 194,412 10.1%
Bowers Museum $ 730,565 $ 737,853 $ 7,288 1.0%
Parks and Recreation Services Agency $ 8,096,112 $ 8,567,922 $ 471,811 5.8%
Police Department $ 53,146,193 $ 58,337,154 $ 5,190,961 9.8%
Fire Department $ 23,669,959 $ 23,424,548 $ (245,411) -1.0%
Planning & Building Agency $ 4,078,307 $ 4,774,949 $ 696,642 17.1%
Public Works Agency $ 2,631,484 $ 2,091,343 $ (540,140) -20.5%
Community Development Agency $ 230,784 $ 210,211 $ (20,573) -8.9%
TOTAL GENERAL FUND $ 106,945,455 $ 112,413,436 $ 5,467,981 5.1%
General Fund Operating BudgetProjected Year End
Fiscal Year 2016-2017
32
General Fund Operations
33
Projected Net Operating Balance: ($3,179,684)
Pending items:1) Christmas Sales2) Additional major development3) Additional utility usage4) Expenditure Trends
PROJECTED YEAR-END FY 16-17
GENERAL FUNDFY 16-17 Annual Budget
FY 16-17 Projected
% Received
Revenues $228,970,000 $225,671,339 98.6%
Expenditures $228,970,000 $228,851,023 99.9%
FISCAL YEAR ENDING OPERATING
BALANCE
34
35
General Fund(s) include:
1) Fund 11 – General Fund2) Fund 50 – Council Special
Projects3) Fund 52 – Strategic Plan 4) Other Funds
Final numbers are audited and validated annually in December for the year-end operating balance
FY 15-16 GENERAL FUND ENDING OPERATING BALANCE
$215.5M(Actuals without triple-flip)
$212.0M(Actuals)
$3.5M
FY 15-16Ending Operating
Balance
36
Revenues Expenditures
$2119M(Actuals)
5.6M
Triple-Flip Payment• On June 24, 2016 the DOF directed the State Controller to
transfer the final Triple-Flip payment to the Counties• The County Auditors had 60 days to make the final payment to
cities and counties• On July 15, 2016 the City received final Triple-Flip payment of
$5,677,782.91
$3.5M Ending Operating Balance(without triple-flip)
$9.1MFinal Ending Operating Fund
Balance(with triple-flip)
FY 2015-16 SURPLUS CALCULATION
37
FY 14-15 GENERAL FUND ENDING OPERATING BALANCE
$220.2M(Actuals)
$208.4M(Actuals)
$11.8M
FY 14-15Ending Operating
Balance
38
Revenues
Expenditures
FY 14-15 Surplus Allocationo Surplus Allocation Monies of $11.8M in October 2015
• Technology - $2,653,600
Computer/Technology Replacements and Software Enhancements
Communication Upgrades
• Investment in City - $2,550,000
General Plan Update
Branding Study
Pension Stability
• City Facility/Assets - $2,885,000
HVAC Projects – Library and Community Centers
Vehicle Replacement
Calle Cuatro/Plaza Calle Cuatro
• Parks - $1,870,200
Playground Equipment and Basketball Court/Trail Resurfacing
Restroom Renovations
• Public Safety/Security - $1,290,000
200 Body Cameras,
Security Lights at eight parks
Homeless efforts
• 20% Operating Reserve - $500K 39
ASSIGNED BALANCES
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$6M FUND BALANCE AMOUNT EXPLANATION
$2.5M From encumbrance and project savings
$3.5M From Prepaid Savings (OCFA)
$6.0M Available Fund Balance
$2119M(Actuals)
42
Encumbrance procedure occurs annually
43
AS OF JANUARY 31 2017
Assigned Programs as of June 30, 2016 (GENERAL FUND)Community Engagement 500,000
So. Main, Downtown, Harbor Blvd., 17th St. Business Corridor 1,600,000
South Main Development ($400K)
Downtown ($400K)
Harbor Boulevard ($400K)
17th Street Business Corridor - ($400K)
Pension Stability Fund 500,000
Orange County Animal Shelter 550,000
Jail Revenue Stability Fund 1,000,000
Economic Development/Infrastructure: SARTC 400,000
Additional Police Officers (June 21 Council Meeting) 1,500,000
Subtotal General Fund Assigned Programs as of 6/30/2016 6,050,000
City Council Approved Fund Balance Items (GENERAL FUND)
Civic Center Safety/Homeless - 09/20/2016 CCM (731,836)
Animal Shelter Payment - 01/17/2017 CCM (750,000)
Subtotal (1,481,836)
Remaining Available General Fund Balance 4,568,164
CURRENT ASSIGNED PROGRAM BALANCE
NEXT STEPS
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NEXT STEPS
• Development and adoption of FY 2017-2018 Balanced Budget by June• Key Elements
• Available monies are one time only monies
• Importance of maintaining the 20% operating reserve ($42.4M) and a healthy Economic Uncertainty Account ($3.8M)
• All Bargaining Units MOU’s are scheduled to expire June 2017
• Conduct Community Outreach Meetings
Mid-Year Budget ReviewCity Council Meeting
City of Santa AnaFebruary 21, 2017