Attachment 5 - Replacement Page 2 of 4 Staff ReportPAGE 2 OF 4 SUBJECT: Mid-Year Budget Performance Report – Six Months Ending December 31, 2022 DATE: February 15, 2023
REMARKS (continued):
Highlights of the Mid-Year Budget Report include:
Financial Overview and Executive Summary
As discussed in the Report, the current fiscal year-end projections for FY 2022/23 reflect an
anticipated $0.7 million surplus of operating revenues and planned use of reserves over
expenditures compared to the anticipated $3.2 million deficit in the Adopted Budget.
As discussed in greater detail later in this Report, the primary drivers of the reduction in the
projected deficit are estimated increases in property tax, business license tax, Transient
Occupancy Tax (TOT), and franchise fee distribution. ln addition to the improvement in
revenue projections, staff is estimating that there will be year-end operating expenditure
savings. Staff anticipates savings attributable to Departmental vacancies and lower cost
structures associated with retiree replacements. In addition, for FY 2022/23, salaries were
again budgeted at actual salary plus a one step increase, which was a significant budgeting
methodology change from previous practice.
On June 7, 2022, the Town Council adopted the combined use of American Rescue Plan Act
(ARPA) funding, residual Measure G proceeds, and Other Post-Employment Benefits (OPEB)
Trust reimbursement to balance the FY 2022/23 budget as illustrated in the table below.
The significant revenue increases combined with projected expenditure savings indicate that
the approved sources might not be necessary; however, it can only be determined at the time
of the final close of the fiscal year. Staff recommends not to re-program the proposed sources
until the fiscal year is closed. Since it is probable that not all sources will be utilized, staff is
asking for Council direction regarding what source should be utilized first to cure current fiscal
year deficit, if needed. Due to the fact that OPEB Trust withdrawal should be requested in June,
significantly earlier than the final numbers are available, staff recommend to not utilizing the
Trust Reimbursement first. The Finance Commission did not agree with the staff
recommendation. It preferred using the ARPA source last so as to give Council more resources
to reprogram.
ARPA Replacement Reveneue $1,643,281
Measure G Residual for Operation $679,443
OPEB Trust Reimbursement for Retiree Medical $902,579
Total $3,225,303
Planned Use of One-Time Sources Balancing the FY 2022/23 Operating Budget
ATTACHMENT 5