CITY COUNCIL: Resolution Authorizing $278,708 in Fiscal Year-End Department Budget Transfers & $8,127.63 Transfer in Unspent Grant Revenues for FY 2010-11 to Comply with State Financial Restrictions

Meeting Date: October 4, 2011
Prepared by: Laura Dadiw

City Council
Agenda Item Summary

Name: Consideration of a Resolution authorizing $278,708 in fiscal year-end departmental budget transfers and a $8,127.63 transfer in unspent grant revenues for fiscal year 2010/11 to comply with state financial restrictions.

Description: City policies require that City Council approve year-end budget transfers between departments. Council also must approve transferring grant revenues received, but unspent by the end of fiscal year 2010/11, to the appropriate grant fund accounts. This Resolution authorizes the FY 2010/11 year-end departmental budget transfers and authorizes transferring unspent Public Safety Augmentation funds received in FY 2010/11 from the General Fund to the appropriate grant fund account until expenditures are made in future fiscal years.

Year-end Departmental Budget Transfers
At the end of each fiscal year, a report highlighting department budget to actual expenditure is reviewed. If necessary, transfers of budget monies within a department are made from one line item to another. For fiscal year 2010/11, department line item budget overages were covered by unspent monies from other line items within the same department, except for the departments listed in the top portion of attached Exhibit “A”.

Transfers from other departments may be made to cover the expenditure budget overages. These transfers do not increase the total General Fund expenditures budget. Rather, they shift monies from one line item to another.

Public Safety Augmentation Funds - $8,127.63
Proposition 172 mandates that Public Safety Augmentation Funds must be spent for public safety. The City has two Grants Reserve Fund accounts for Public Safety Augmentation monies: Account 33-24021-0528 for Police Services, with a current balance of $18,478.90; and Account 32-24021-0476 for Fire Services, with a current balance of $14,296.64.

In FY 2010/11, the City received $8,127.63 in new Public Safety Augmentation Funds. Staff recommends that 50% of the monies be transferred to Police Services Account 33-24021-0528 and the other 50% to Fire Services Account 32-24021-0476 for future public safety expenditures.

Staff Recommendation: Adopt the Resolution to authorize the FY 2010/11 year-end departmental budget transfers and the year-end transfers of unspent grant revenues from the General Fund to the appropriate reserve accounts. By adopting the Resolution, the City complies with both City policies regarding budget transfers and with State restrictions on the use of Public Safety Augmentation Funds.

Important Considerations: None

Decision Record: Resolution 2010-79 (December 7, 2010), which approved similar year-end transfers.

Reviewed by:

_______________________________ _________________
John Goss, Interim City Administrator Date

CITY OF CARMEL-BY-THE-SEA
FY 2010-11 FINANCIAL REPORT
TWELVE MONTHS ENDED JUNE 30, 2011-----------------------------------

This report summarizes the fiscal year activities of the City’s General Fund for the twelve months ended June 30, 2011 and is not meant to be inclusive of all finance and accounting transactions. It is intended to
provide the City Council and the public with an overview of the state of the City’s general fiscal condition. The financial figures included in this report are not audited and are subject to change.

Revenue Trends
The City’s General Fund revenues for the twelve months ended June 30, 2011 totaled $13,652,036 as compared to the annual budget of $14,018,287. Revenues fell short of budget by $366,251. The last two columns in the chart below give a percentage difference in actual amounts received 2010/11 compared to the budget and percentage increase or decrease compared to 2009/10 actual amounts, respectively.
Fiscal Year 2010/11 Budget
Fiscal Year 2010/11 Actual
Favorable/(Unfavorable)
2010/11 Actual % Diff vs Budget
2010/11 Actual % Diff vs 2009/10

Revenues
Transient Occupancy Tax $ 4,084,000 $ 4,002,509 $ (81,491) -2.0% 4.5%
Property Tax 4,147,055 4,157,789 10,734 0.3% -0.8%
Sales Tax 1,750,000 1,805,510 55,510 3.2% 11.5%
Business License Tax 490,000 526,251 36,251 7.4% -4.4%
Interest & Parking Lot Revenues 353,300 234,943 (118,357) -33.5% -6.1%
Fees and Permits 380,500 390,737 10,237 2.7% -12.9%
Franchise Fees 495,579 476,596 (18,983) -3.8% 5.2%
Grant Revenues 600,760 518,825 (81,935) -13.6% 114.3%
Other Government Agencies 432,540 450,777 18,237 4.2% 16.6%
Other Revenues 173,552 140,057 (33,495) -19.3% 2.5%
Transfer from Road Impact Fees 150,000 15,775 (134,225) -89.5% -74.9%
Transfer from Traffic Safety 250,000 121,139 (128,861) -51.5% -38.5%
Transfer from Gas Tax Fund 74,097 96,105 22,008 29.7%
Transfer from Capital Projects Reserve 263,054 263,054 - - 152.45%
Transfer from Prop 172 & Deposit Accounts 29,700 29,700 - - -32.04%
Transfer from Workers' Comp Reserve 80,000 60,000 (20,000) -25.0% -25.0%
Transfer from Benefit Liability Reserve 56,650 40,000 (16,650) -29.4% -27.3%
Transfer from General Operating Reserve Fund 300,000 300,000 - - 271.9%
Transfers from Debt Service (Bond Refinance
2010/11) 7,500 22,269 14,769 -
Transfers to Hostelry Reserve Fund (100,000) - 100,000 -
Total Revenues --------> $ 14,018,287 $13,652,036 $ (366,251) -2.61% 7.24%

Transient Occupancy Tax (TOT)
Transient Occupancy Tax budgeted revenues were increased at mid-year from $4,004,000 to $4,084,000. The total revenue of $4,002,409 fell near the originally budgeted amount and was $81,491 lower than the revised budgeted amount. The first three quarters of the year had TOT revenues coming
in very strong against budget – a trend that fell off during the fourth quarter – however revenues for the fourth quarter were equal to fourth quarter last year during which the U.S. Open was held.

The balance in the Hostelry Reserve Fund at 6/30/11 is $290,140. A transfer of $100,000 from the General Fund into the Hostelry Reserve Fund to bring the balance to 10% of annual TOT revenues was budgeted however it is recommended that the transfer not be made in light of the shortfall in overall revenues during the year.

Property Tax
Property tax revenues totaled $4,157,789 for the fiscal year, which is approximately 0.8% lower than the previous year. Property transfer tax was the only category higher than budgeted by $34,100. The total of Secured, Unsecured and Unitary tax revenue was lower than expected by $23,366. Overall, property tax revenues were $10,734 higher than budgeted.

Sales Tax
Sales tax revenues totaled $1,805,510 which is $55,510 more than budgeted. The total for the year was higher than the previous year sales tax revenues by $185,542 or 11.45%.

Business License Tax
Business license tax revenues totaling $526,251 was $36,251 more than the mid-year adjusted budget of $490,000 (down from $618,000) and $15,367 or 4.43% less than the previous year’s revenues.

Interest Income & Parking Lot Revenues
In this category, the negative budget variance of $118,356 was primarily from continued low interest income on investments. Only $16,421.44 of the $175,000 interest income budgeted was received.

Parking lot revenues totaled $172,214 amounting to $7,786 under budget for that line item. Cell tower rent revenue remained even with budget at $33,360.

Fees and Permits
Revenues from fees and permits totaled $390,737, exceeding budget by $10,237.

Road Impact Fees
Road impact fees at 0.75% for 2010/11 are to be used explicitly for hard expenses of road projects and are not to be used generally. $15,775 was transferred into the General Fund during the year to cover expenses incurred for road upkeep. $150,000 was budgeted however no specific projects were assigned to the fee revenue during the 2010/11 budget process. The balance of the Road Impact Fee Fund at fiscal year end is $148,438 and has been budgeted for specific road maintenance in 2011/12.

Franchise Fees
Garbage, cable, water, and gas and electric franchise fee revenues of $476,596 were down approximately 3.83% from last year’s revenues, which in turn were down 3% from 2008/09. Total franchise fees ended the year with a negative budget variance of $18,983.

Traffic Safety
Traffic safety revenues were hit hard in the slow economy, down $128,861 as compared to budget and $96,105 less than the previous year.

Grants Revenues
$400,000 in Proposition 1B funds had been received by the City in April of 2008 and was placed into the Gas Tax Fund. $158,858 was used by June 30, 2009 for: Scenic Avenue Slurry Seal; Ocean Avenue north/south crosswalks; and repaving of the Sunset Center parking lot. A 2010/11 transfer of $96,105 was made from the Gas Tax Fund to the General Fund to cover expenditures for Dolores Street repaving and initial planning and notice of the Del Mar parking lot repaving. At year ending June 30, 2011 $128,616 in Prop 1B funds remain within the Gas Tax Fund balance of $169,038.

TAMC funding of $312,587 was received as full reimbursement for the Junipero Avenue repaving project.

COPS funding of $100,000 was received in four quarterly payments of $25,000; the interest on the revenues has not yet been received and should be approximately $5,000.

A $29,000 grant reimbursement for the Police Department 9-11 system upgrade was expected in the 2010/11 year of the expenditure. However in clearing up a miscommunication with the State funding department it was discovered that $15,000 was the extent of the reimbursement to be disbursed late in 2011. Therefore the grant revenue will not be booked until the 2011/12 fiscal year.

Other Governmental Agencies
Revenues from Other Governmental Agencies include State Motor Vehicle In-Lieu fees, Monterey County HOPTR, and State POST reimbursements for Public Safety training. Total revenues received were $18,237 more than budgeted.
Other

CSA 74 Funds in the amount of $10,355 were received from the County for back payment of the $12 parcel tax it had been accumulating in a fund to be dispersed to jurisdictions to be used for training and equipment for first responders. The CSA 74 fund allotment is now scheduled to be received from the County each year with $55,404 already received for 2011/12.

A Monterey County Workforce Housing, Inc. refund of a contribution of $50,000 was received by the City during the year. The Council had contributed $50,000 to the Workforce Housing program under Resolution 2007-40.

June 30, 2011 balances in the Reserve Funds are:
Capital Improvements and Outlays $2,234,947 In Deposits Fund: $512,503
General Operations Reserve Fund 1,916,165 In Public Safety Augmentation Fund: Fire - $14,296.64 Police - $18,478.90
Other Post-employment Benefits 1,079,340
Workers’ Compensation 728,501
Deb Reduction Reserve 713,676
Debt Service 400,007
Parking In-Lieu 695,997
Benefit Liability 414,293
Natural Disaster 250,000
Hostelry 290,140
Forest Theater Improvements 69,793
$8,792,859 (vs. $8,921,572 budget estimate if the $100,000 Hostelry transfer had been made)

Operating Expenditures
The City’s operating expenditures for the twelve months ended June 30, 2011 totaled $12,507,855 as compared to the annual budget of $12,656,358. The favorable budget variance of $148,503 was primarily from savings in Professional Services, Debt Service, and Workers’ Compensation Insurance.

The category with the highest negative variance was the Regional Ambulance Subsidy due to the subsidy request from CRFA for the year not accounting for new hires and CRFA salary increases.

Fiscal Year 2010/11 Budget
Fiscal Year 2010/11 Actual
Favorable/ (Unfavorable)
2010/11 Actual % Diff vs Budget
2010/11 Actual % Diff vs 2009/10
Expenditures
Salaries and Wages $ 6,916,689 $ 6,904,661 $ 12,028 -0.2% 0.3%
Professional Fees, Outside Labor,
Contract Svcs 1,531,901 1,360,631 171,270 -11.2% -4.4%
Sunset Center Operations 650,000 650,000 - 0.00% -4.4%
Employee Insurance Program 721,564 714,016 7,548 -1.1% 3.3%
Debt Service 563,830 509,341 54,489 -9.7% -10.4%
Materials and Supplies 927,604 996,320 (68,716) 7.4% 39.4%
Regional Ambulance Subsidy 200,000 300,000 (100,000) 50.0% -34.0%
Workers' Compensation Insurance 283,166 232,544 50,622 -17.9% -18.8%
Property/Liability Insurance 238,200 255,442 (17,242) 7.2% 15.4%
Destination Marketing 180,403 180,313 90 -0.1% 7.1%
Utilities 208,066 187,776 20,290 -9.8% 8.4%
Dues/Memberships 55,117 52,224 2,893 -5.3% -3.9%
COPS Grant Expenditures 105,000 104,912 88 -0.1% -0.5%
Community Donations 25,000 19,774 5,226 -20.9% -5.9%
Other 49,818 39,901 9,917 -19.9% -69.3%
Total Expenditures -----> $ 12,656,358 $ 12,507,855 $ 148,503 -1.2% -0.6%

Capital Projects and Equipment Acquisition
The FY 2010/11 annual Capital Budget totaled $1,101,679, net of the mid-year budget adjustments. In total, $1,078,895 was spent, resulting in a positive budget variance of $22,784. The repaving of the Del Mar parking lot and the underground tank and booster pump, as well as a portion of the PD/Youth Center generator installation project, have been carried forward in the FY 2011/12 Capital Budget. The Junipero Street and Dolores Street repaving projects were completed. Street and Roads Projects miscellaneous expenditures will be covered by a transfer from the Road Impact Fee fund. Seawall repairs and the San Antonio pathway project were also completed during the year. The Dry Weather Diversion Project is a $2.5 million State grant project with a 5% City match. The project is underway
and due to be completed by 2013. The State of California Cal-EMA collected on de-funded 1998 storm repair funding, requiring approximately $16,000 to be paid back by the City in monthly installments the last quarter of 2010/11 and the first quarter of 2011/12.

Fiscal Year 2010/11 Budget
Fiscal Year 2010/11 Actual
Favorable/ (Unfavorable)
% Diff from Budgeted
Capital Projects & Equipment Acquisition
Capital Lease Obligations $ 149,156 $ 132,368 $ 16,788 -11.3%
PD Telephone System 9-1-1 Upgrade 29,000 29,000 -
Park Branch Mist Fire Protection System - 6,642 (6,642)
PD/Youth Center Generator 190,000 198,890 (8,890) 4.7%
2010/11 Street/Roads Projects - 1,076 (1,076)
1998 FEMA Storm Repair Funding Payback - 8,402 (8,402)
Repave Del Mar Parking Lot - 23,815 (23,815)
Beach Sand Replenishment 26,000 24,675 1,325 -5.1%
Del Mar Underground Water Tank / Booster Pump - 15,797 (15,797)
Carmel Beach Seawall Repairs 50,000 45,355 4,645 -9.3%
San Antonio Pedestrian Pathway 179,071 179,071 -
Dry Weather Diversion Project 30,000 19,310 10,690 -35.6%
Repave Junipero Avenue btw Ocean/8th 363,662 312,588 51,074 -14.0%
Repave Dolores btw 4th & 5th 74,097 71,213 2,884 -3.9%
Monterey County NGEN Radio System 10,693 10,693 -
Total --------> $ 1,101,679 $1,078,895 $ 22,784 -2.1%

Summary of Financial Results-Fiscal Year Ended June 30, 2011
The General Fund financial results for Fiscal Year 2010/11 show a deficit of $194,964 as compared to an expected budget surplus of $260,250. Actual net revenues to expenditures were a positive $65,286.

Revenues suffered as the result of the slow economy. However, revenue losses were partially offset by positive budget variances in operating expenditures and Capital budget expenditures.

The financial results as presented are not audited and therefore may change after the annual audit is complete.

SUMMARY
2010/11 Budget
2010/11 Actual
Favorable/ (Unfavorable)
Revenues $ 14,018,287 $ 13,652,036 $ (366,251)
Less Operating Expenditures (12,656,358) (12,507,855) 148,503
Excess of Revenues over Expenditures 1,361,929 1,144,181 (217,748)
Less Capital Improvements and Outlays (1,101,679) (1,078,895) 22,784
Net Surplus (Deficit) $ 260,250 $ 65,286 $ (194,964)

CITY OF CARMEL-BY-THE-SEA
CITY COUNCIL
RESOLUTION 2011-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA AUTHORIZING $278,708 IN FISCAL YEAR-END DEPARTMENTAL BUDGET TRANSFERS AND A TRANSFER OF $8,127.63 IN UNSPENT GRANT REVENUES FOR FISCAL YEAR 2010/11 TO COMPLY WITH STATE FINANCIAL RESTRICTIONS
_______________________________________________________________________
WHEREAS, year-end budget transfers between departments require City Council
approval; and

WHEREAS, any Public Safety Augmentation monies received in fiscal year
2010/11 but not expended should be transferred to the appropriate grants reserve fund and returned to the General Fund for authorized expenditures during the next fiscal year.

NOW, THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA DOES:

1. Authorize FY 2010/11 budget transfers totaling $278,708 to and from the departments per Exhibit “A”.

2. Authorize the transfer of Public Safety Augmentation funds of $8,127.63 received but not spent in fiscal year 2009/10 from the General Fund to Grants Reserve Fund accounts (50% to Police Services Account 33-24021-0528 and 50% to Fire Services Account 32-24021-0476) for future expenditures for public safety, as mandated by Proposition 172.

PASSED AND ADOPTED BY THE CITY OF COUNCIL OF THE CITY OF CARMEL-BY-THE SEA this 4th day of October, 2011, by the following roll call vote:

AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:

SIGNED:

______________________
SUE McCLOUD, MAYOR

ATTEST:

_________________________
Heidi Burch, City Clerk

k:\\users\ldadiw\finacial reports\09-10 final budget adjustments

EXHIBIT A
Dept. Acct # Description Transfer To (From)
Administration 64010 Salaries $ 34,740
Administration 64053 Contractual Svcs $ 13,284
IT 65045 Materials/Supplies $ 5,618
IT 65049 Equipment Maintenance $ 5,247
IT 65053 Contractual Svcs $ 2,264
Building/Planning 69019 Workers Compensation $ 4,491
Facilities Maintenance 70010 Salaries $ 8,480
Facilities Maintenance 70053 Contractual Svcs $ 16,152
Fire 72010 Salaries $ 5,592
Fire 72202 Regional Ambulance Subsidy $ 100,000
Public Works 76016 Retirement $ 13,591
Public Works 76017 Medical Program $ 9,108
Public Works 76046 Fuel $ 25,212
Library 84017 Medical Program $ 8,892
Library 84019 Workers Compensation $ 2,837
Library 84023 Part-time Assistance $ 23,200
Subtotal - Transfer To $ 278,708
Community Housing Trust 60208 Reimbursement $ (50,000)
Legal 61010 Salaries $ (10,000)
Legal 65051 Professional Services $ (80,000)
Administrative Services 67010 Salaries $ (31,678)
Building/Planning 69010 Salaries $ (17,336)
Building/Planning 69039 Printing $ (4,834)
Building/Planning 69040 Advertising $ (3,534)
Building/Planning 69051 Professional Services $ (11,368)
Building/Planning 69053 Contractual Svcs $ (2,710)
Facilities Maintenance 70050 Outside Labor $ (17,929)
Police 74016 Retirement $ (69,964)
Forest, Parks, Beach 78010 Salaries $ (10,593)
Community Services 82010 Salaries $ (1,372)
Community Services 82055 Community Activities $ (17,390)
Subtotal - Transfer From $ (278,708)