Staff Report
PREPARED BY: STEPHEN CONWAY
Finance Director
Reviewed by: Town Manager, Assistant Town Manager, and Town Attorney
110 E. Main Street Los Gatos, CA 95030 ● 408-354-6832
www.losgatosca.gov
TOWN OF LOS GATOS
COUNCIL AGENDA REPORT
MEETING DATE: 02/19/2019
ITEM NO: 7
DATE: FEBRUARY 13, 2019
TO: MAYOR AND TOWN COUNCIL
FROM: LAUREL PREVETTI, TOWN MANAGER
SUBJECT: FISCAL YEAR 2018/19 MID-YEAR BUDGET PERFORMANCE REPORT - SIX
MONTHS ENDING DECEMBER 31, 2018
A. RECEIVE FY 2018/19 MID-YEAR BUDGET PERFORMANCE REPORT;
B. AUTHORIZE BUDGET ADJUSTMENTS AS RECOMMENDED IN THE
ATTACHED BUDGET PERFORMANCE REPORT.
RECOMMENDATION:
Staff recommends that the Town Council:
A. Receive the Fiscal Year (FY) 2018/19 Mid-Year Budget Performance Report – six month
ending December 31, 2018;
B. Authorize budget adjustments as recommended in the attached Budget Performance
Report.
EXECUTIVE SUMMARY:
The purpose of this report is to provide the Town Council with a status of the adopted FY
2018/19 Operating Budget at the mid-year point, including a brief discussion of the Town’s
proposed mid-year adjustments.
BACKGROUND:
Staff provides the Town Council periodic updates on the status of the current year’s adopted
budget revenues and expenditures, and the projected financial condition of Town funds,
concentrating on the Town’s General Fund. The report provides analysis and recommendations
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SUBJECT: FISCAL YEAR 2018/19 MID-YEAR BUDGET PERFORMANCE REPORT - SIX
MONTHS ENDING DECEMBER 31, 2018
DATE: FEBRUARY 13, 2019
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BACKGROUND (continued):
related to the current year’s adopted budget revenues and expenditures and the projected
financial condition of all Town funds.
DISCUSSION:
The attached Mid-Year Budget Report (Attachment 1) covers the first six months of the fiscal
year beginning July 1, 2018 and ending December 31, 2018.
General Fund Projected Year-End Balances June 30, 2019
Current fiscal year-end projections for FY 2018/19 reflect an anticipated $0.4million surplus of
operating revenues over expenditures. As discussed in Attachment 1, revenues are tracking
higher than budgeted and actual expenses are trending lower than budgeted.
Operating Revenue Trends and Proposed Mid-Year Adjustments
The current forecast expects increases in property tax, motor vehicle in lieu, and transient
occupancy tax (TOT) due to the continued strength of the local economy as well as strong
tourism and business travel within the Bay Area. Sales tax revenues are continuing to decline
due to the impact of online retail sales versus traditional brick and mortar transactions and the
reduced taxable transactions from Netflix. Revenues such as licenses and permits, and fees for
services are all trending favorably, a continued reflection of the current economy. The
combined recommended mid-year revenue adjustments total an increase of $1.0 million.
Specific revenue adjustments are shown beginning on page 12 of Attachment 1.
Operating Expenditure Trends and Proposed Mid-Year Adjustments
General Fund expenditure totals for the second quarter are trending in accordance with
forecasts, with total operational expenditures at the end of the second quarter at about 4 2% of
the adopted budget. With six months of data now available, staff can better predict the next
six months of expenditure trends, although unexpected costs can still occur. Should any budget
adjustments be necessary to balance operating revenue and expenditures, staff will advise the
Council accordingly. Recommended expenditure additions total $0.1 million and include
increased mandatory well testing expenses, training expenses, and legal services expenses (see
Attachment 1).
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SUBJECT: FISCAL YEAR 2018/19 MID-YEAR BUDGET PERFORMANCE REPORT - SIX
MONTHS ENDING DECEMBER 31, 2018
DATE: FEBRUARY 13, 2019
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DISCUSSION (continued):
FY 2019/20 Budget Development Process
In addition to this mid-year report, the Town Council has the opportunity to provide direction
on the preparation of the FY 2019/20 Operating and Capital budgets with the Five-year
Financial Forecast and Budget Assumptions item later with this same Council agenda. As
mentioned in that report, staff expects next year’s budget to remain “status quo” with the
continuation of the Town’s current service levels in all Departments.
Based on the Town Council’s identified Strategic Priorities and in anticipation of Council
direction, staff has started budget development work, including an update of the Five-Year
Financial Forecast, identification of critical Town needs, contractual obligations, unfunded
mandates, potential adjustments to the User Fee Schedule, and other analyses. Staff is actively
engaged in the 2019/20 budget process with the primary focus of ensuring that the available
Town resources are allocated to meet the priority service needs of the community. The
Proposed FY 2019/20 budget will be presented to Council on May 21, 2019.
CONCLUSION:
The financial results from the prior fiscal year, coupled with the FY 2018/19 first and second
quarter data, confirm that the mid-year financial results are stable. Staff recommends that the
Town Council approve the proposed revenue and expenditure budget adjustments as described
in Attachment 1.
ENVIRONMENTAL ASSESSMENT:
This is not a project defined under CEQA, and no further action is required.
Attachment:
1. Budget Performance Report for the Six Months Ending December 31, 2018
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