CITY COUNCIL: Resolution Adopting Revisions to Fiscal Year 2010/11 General Fund Budget

Date: April 5, 2011
Prepared by: Laura Dadiw, Interim Finance Manager

City Council
Agenda Item Summary

Name: Consideration of a Resolution adopting revisions to the fiscal year 2010/11 General Fund budget.

Description: Based on analysis of the year-to-date revenues and expenditures, staff recommends increases to the fiscal year 2010/11 General Fund budget in the amount of $56,041 per the attached Exhibit “A”.

Staff Recommendation: Approve the FY 2010/11 General Fund budget adjustments. The City’s budget should be adjusted for increased Hostelry Tax revenues, as well as decreased Business License Tax revenues, cost savings in Salaries and Benefits and Materials and Supplies expenditures, and adjustments to Capital Projects. Due to the additional capital
projects proposed, it is recommended that the $56,041 increase be funded by a transfer from the Capital Projects Reserve Account #01-48013.

Important Considerations: City Council approval is required for budget adjustments.

Decision Record: Resolution 2010-45 dated June 16, 2010 approved the Annual Budget for Fiscal Year 2010/11 of the 2010/11 through 2012/13 Triennial Budget.

Reviewed by:

______________________________ _________________
Dewey Evans, City Treasurer Date

CITY OF CARMEL-BY-THE-SEA
STAFF REPORT
TO: MAYOR McCLOUD AND COUNCIL MEMBERS
FROM: LAURA DADIW, INERIM FINANCE MANAGER
DATE: APRIL 5, 2011
SUBJECT: CONSIDERATION OF A RESOLUTION ADOPTING BUDGET ADJUSTMENTS TO THE FISCAL YEAR 2010/2011 GENERAL FUND BUDGET

RECOMMENDED MOTION
Adopt the Resolution making adjustments to the Fiscal Year 2010/2011 General Fund budget.

BACKGROUND
With the review of revenue data for the current fiscal year (July 1 through December 31,
2010), it appears the economy is slightly better than at this point last year. When the
Annual Budget was adopted by the City Council in June 2010, the financial picture was
that of a continuing downturn trend. The adopted City Budget for Fiscal Year 2010/2011
planned for a total expenditure of $13,927,864 with an emphasis on completing some
capital improvement projects to improve the City’s infrastructure.
The financial trend last year was sluggish for all three major revenue sources, i.e.,
hostelry tax, property tax and sales tax. Although the financial picture this year is far
from optimum, there appears to be a slight increase trend in Transient Occupancy Tax
revenues. It is hoped that Business License Tax revenues will recover somewhat during
the warmer weather in the second half of the fiscal year, as was the case last fiscal year.
The positive financial picture of years prior to the economic downturn allowed the City to
complete important capital improvement projects. The current sluggish economy is
allowing an excellent bid environment for improvement projects to be undertaken once
again. Several Proposition 1B and TAMC projects were budgeted for 2010/11 and were bid
with some of the construction anticipated to commence this month.
Economic indications continue to call for spending diligence with respect to materials
and supplies and payroll expenses, as recommended later in this report.
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STAFF REVIEW
The chart below summarizes the $56,041 increase needed in the 2010/11 Annual Budget
as proposed by staff. The recommendations to add and defer capital improvement
projects and a decrease in Salary and Benefits expenses constitute the majority of the
adjustments. Staff’s primary goal with the proposed budget adjustments is to complete
the FY 2010/2011 approved projects in the current fiscal year to take advantage of cost
savings due to the slow economy.
FISCAL YEAR 2010/2011 EXHIBIT A
PROPOSED BUDGET REVISIONS
Original YTD % Revised Revised
2010/2011 2010/2011 of 2010/11 2010/11
Budget Actual YTD Budget Incr/(Decr) Budget
REVENUES
Hostelry Tax $ 4,004,000 $ 2,267,299 56.63% $ 80,000 $ 4,084,000
Property Tax 4,147,055 2,364,225 57.01% ‐ 4,147,055
Sales Tax 1,750,000 983,085 56.18% ‐ 1,750,000
Other 2,603,471 1,170,429 44.96% (128,000) 2,475,471
Grant (see Offset below) 634,760 2,545 0.40% (46,001) 588,759
Transfers from/(to)
Reserves 788,578 797,161 101.09% 98,326 886,904
TOTALS $ 13,927,864 7,584,744 54.46% $ 4,325 $ 13,932,189
EXPENDITURES
Personnel Costs $ 8,075,890 $ 3,813,811 47.22% $ (150,535) $ 7,925,355
Materials & Supplies 4,756,070 2,617,101 55.03% (60,024) 4,696,046
Capital Outlays 179,156 100,472 56.08% (1,000) 178,156
Capital Improvements 390,988 264,681 67.70% 317,926 708,914
Grant Offset 525,760 31,995 6.09% (46,001) 479,759
TOTALS $ 13,927,864 $ 6,828,060 49.02% $ 60,366 $ 13,988,230
Total Surplus/(Deficit) ‐ $ 756,684 $ (56,041) $ (56,041)
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Revenues
An $80,000 budget increase is proposed for Transient Occupancy Tax (“TOT”), one of
the “Big Three” revenues. At 56.63% of budget, TOT revenue is currently 2% ahead at
the six month point of the current budget of $4,004,000 as compared to 54.85% at the
same point last fiscal year.
The largest revenue budget adjustment recommended is for Business License Tax, a
reduction of $128,000. Current receipts are $438,916 as compared to $489,087 for the
same period last fiscal year. (Approximately $60,000 in Business License Tax was
received after December during the 2009/10 fiscal year for a total of $550,666.)
Capital Outlay grant revenues are anticipated for the Police Department 911 Upgrade
Project ($29,000). The TAMC $50,000 grant funded San Carlos Street repaving project
was deferred and the Dolores Street repaving project was completed instead for a total of
$74,097, resulting in a net upward budget adjustment of $24,097 for grant funding
between the two projects. The Dolores Street project was one of the Proposition 1B
programs that had been funded in advance in the amount of $400,000 to the City in 2008.
Thankfully, the “use it or lose it” deadline of June 30, 2011 for expending Proposition 1B
funds has been extended to June 30, 2012. This allows time to consider undertaking the
Prop 1B Del Mar Parking Lot Repaving Project after the Del Mar Underground Water
Storage Tank Project, if approved in the proposed budget adjustments, is completed.
Expenditures
The majority of the adjustments to expenditures come from staff retirement or other
employment termination from certain positions that were in the original budget. These
adjustments decrease the Salaries and Wages budget by $150,535. Positions vacated
include:
• Fire/Police Chief
• Forest, Parks and Beach Tree Care Specialist
• Human Resources
• Payroll
The Materials and Supplies proposed adjustments (decrease of $60,024) are a result of
various cost savings over all the City departments.
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Capital Outlays and Capital Improvements
Capital budget adjustments are proposed for one project already completed and two
others bid in February. Adjustments also include an increase for the San Antonio
Pedestrian Path project previously approved by Council Resolution. Pebble Beach
Company will be sending an invoice for approximately $80,000 for the balance due from
the City on the cost-share project. That amount is accounted for in the adjustments.
Capital Outlays & Improvements
Fiscal Year 2010/2011
Original Proposed Revised
2010/2011 2010/2011 2010/2011
Budget Incr/(Decr) Budget
Capital Outlays
Finance Software/Operating System $ 30,000 $ (30,000) $ ‐
Lease Obligations 149,156 ‐ 149,156
Capital Outlays (not part of approved budget)
PD 911 Upgrade (State Dept of Gen Svcs. Funds) $ ‐ 29,000 29,000
Total Outlays $ 179,156 $ (1,000) $ 178,156
Capital Improvements
PD/CYC Generator (Design) $ 40,000 $ (15,000) $ 25,000
Carmel Beach Sand Replenishment 26,000 (6,000) 20,000
Carmel Beach Seawalls Repairs 100,000 (50,000) 50,000
Pedestrian Path‐San Antonio bet 2nd & 4th 60,000 118,326 178,326
Dry Weather Diversion ($125,000 City match) 125,000 (95,000) 30,000
Repave Junipero bet Ocean & 8th, streetscape
(TAMC Funded) 462,760 (99,098) 363,662
Repave San Carlos (TAMC Funded) 50,000 (50,000) ‐
Street/Road Projects based on Nichols Eng Rpt 39,988 ‐ 39,988
Install Bike Racks (TAMC Funded) 13,000 ‐ 13,000
Capital Outlays (not part of approved budget)
Dolores St Repaving (Prop 1B Funding) ‐ 74,097 74,097
PD/Youth Center Generator (Construction) ‐ 165,000 165,000
Del Mar U.G. Tank ‐ 229,600 229,600
Total Improvements $ 916,748 $ 271,925 $ 1,188,673
Total Outlays and Improvements $ 1,095,904 $ 270,925 $ 1,366,829
Grant Offset (525,760) 46,001 (479,759)
Grand Total 2010/11 Revised Capital Expenses $ 570,144 $ 887,070
The net budget increase to all capital budget items not including grant offsets is $270,925.
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SUMMARY OF IMMEDIATE RECOMMENDED ACTIONS
1. Operate at current staffing levels for the remainder of FY 2010/11.
2. Continue to aggressively seek and use grant funding for capital projects.
3. Limit spending on materials and supplies as much as feasible.
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CITY COUNCIL
CITY OF CARMEL-BY-THE-SEA
RESOLUTION 2011 –
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA
ADOPTING REVISIONS TO FISCAL YEAR 2010/11 GENERAL FUND BUDGET
WHEREAS, the City Council approved the Budget for Fiscal Years 2010/11 of the
Triennial Budget 2011/12 through 2012/13 by Resolution 2010-45 dated June 16, 2010; and
WHEREAS, adjustments are needed for the Fiscal Year 2010/11 General Fund budget
based on budget review; and
WHEREAS, the 2010/11 General Fund budget adjustments include increases totaling
$56,041 per the attached schedule, Exhibit “A”.
NOW, THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF
THE CITY OF CARMEL-BY-THE-SEA DOES:
1. Approve adjustments to the Fiscal Year 2010/11 General Fund budget, per the
attached schedule Exhibit “A”.
2. Approve transfer of $56,041 from the Capital Projects Reserve to the General Fund.
PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF
CARMEL-BY-THE-SEA this 5th day of April, 2011, by the following roll call vote:
AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
SIGNED,
________________________
ATTEST, SUE McCLOUD, MAYOR
_______________________________
Heidi Burch, City Clerk
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EXHIBIT A
Original YTD % Revised Revised
2010/2011 2010/2011 of 2010/11 2010/11
Budget Actuals YTD Budget Incr/(Decr) Budget
REVENUES
Hostelry Tax $ 4,004,000 $ 2,267,299 56.63% $ 8 0,000 $ 4,084,000
Property Tax 4,147,055 2,364,225 57.01% ‐ 4,147,055
Sales Tax 1,750,000 983,085 56.18% ‐ 1,750,000
Other 2,603,471 1,170,429 44.96% (128,000) 2,475,471
Grant (see Grant Offset below) 6 34,760 2,545 0.40% ( 46,001) 588,759
Transfers from/(to) Reserves 7 88,578 797,161 101.09% 98,326 886,904
TOTALS $ 1 3,927,864 7,584,744 54.46% $ 4 ,325 $ 13,932,189
EXPENDITURES
Personnel Costs $ 8,075,890 $ 3,813,811 47.22% $ (150,535) $ 7,925,355
Materials & Supplies 4,756,070 2,617,101 55.03% ( 60,024) 4,696,046
Capital Outlays 1 79,156 100,472 56.08% ( 1,000) 178,156
Capital Improvements 3 90,988 264,681 67.70% 3 17,926 708,914
Grant Offset 5 25,760 31,995 6.09% ( 46,001) 479,759
TOTALS $ 1 3,927,864 $ 6,828,060 49.02% $ 60,366 $ 13,988,230
Total Surplus/(Deficit) ‐ $ 756,684 $ (56,041) $ (56,041)