Attachment 1 - 1st Quarter 2018 Budget Performance Report FinalBUDGET PERFORMANCE REPORT – 1ST QUARTER FY 2017/18
1
INTRODUCTION
Purpose
This is the first quarterly budget performance report
for Fiscal Year 2017/18, for the three month period
ending September 30, 2017. The purpose of this
quarterly public reporting is twofold. First, it
ensures that the Town is consistently monitoring its
revenues and expenditures so that it can proactively
respond to unanticipated changes or emerging
trends. Second, and equally important, these
reports increase the transparency of the Town’s
finances. The Town is ultimately accountable to its
residents to use the revenue it brings in efficiently
and effectively to provide the highest quality
services, and quarterly public reporting provides the
Town Council and taxpayers with information that
demonstrates the Town is meeting this standard.
Content
This quarterly report presents an overview of the
Town’s operating revenues and expenditures for the
quarter ending September 30, 2017, as compared to
previous years, and explains any notable changes or
trends in these numbers. This report is also used to
provide information on potential budget
adjustments, of which there are none at this time.
Timeframe and Limitations
The information in this report is the most accurate
and up-to-date information available at the time of
publication. However, this report is not an audited
financial statement and the numbers provided
herein are preliminary and subject to change as the
year progresses. No data on revenues and
expenditures are final until the Town has completed
its annual comprehensive audit and finalized its
Comprehensive Annual Financial Report (CAFR),
which is released in the winter of each year for the
prior fiscal year.
With respect to revenues: The Town regularly
monitors and adjusts its year-end revenue
projections based on revenue performance and
other developments that may affect Town revenues
in order to develop a more accurate picture of the
Town’s anticipated year-end financial position.
With respect to expenditures: The expenditure
information in this report is extracted directly from
the Town’s financial management system, and
adjustments are made to account for certain known
payments, reimbursements, or transfers between
Town Departments and funds that have not yet been
processed in the system at the time of publication.
It represents a snapshot of Town expenditures at a
certain point in time and does not reflect final
adjustments made to prepare the Town’s CAFR.
Table of Contents
Introduction .............................................................. 1
Executive Summary .................................................. 2
Status of FY 2017/18 Adopted Budget ....... 2
U.S. Economic Outlook ............................... 2
State Budget Update .................................. 3
General Fund – Key Revenue Analysis ..................... 4
Property Tax ............................................... 5
Sales Tax ..................................................... 6
Franchise Fees ............................................ 8
Business License Tax ................................... 9
Transient Occupancy Tax .......................... 10
Charges for Services ................................. 11
Licenses and Permits ................................ 12
Interest Income ........................................ 13
Financial Summaries and Projections ..................... 14
General Fund ............................................ 14
Special Revenue Fund ............................... 15
Capital Projects Funds .............................. 16
Internal Service Funds .............................. 17
Trust and Agency Funds ........................... 18
Conclusion .............................................................. 19
Attachment 1
BUDGET PERFORMANCE REPORT – 1ST QUARTER FY 2017/18
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EXECUTIVE SUMMARY
Status of FY 2017/18 Adopted Budget
First quarter revenues are trending lower when
compared to the first quarter of Fiscal Year 2016/17.
Key economic revenues such property tax, franchise
fees, and transient occupancy tax have all
experienced increases from prior year first quarter
results, while sales tax, business license tax and
development-related fees decreased. The first
quarter FY 2016/17 sales tax proceeds include a one-
time “triple flip” true up adjustment of sales tax
from prior fiscal years. First quarter business license
tax proceeds primarily consist of prior year true up
payment. The Town has started its follow up
procedure later this year due to a staff vacancy that
is now filled.
General Fund expenditure totals for the first quarter
are trending favorably, with total operational
expenditures at the end of the first quarter at about
25% of the budget. Expenditures include many one-
time annual payments that were disbursed early in
the fiscal year. With only three months of data
available, however, it is difficult to predict revenues
and expenditures for the remainder of the year. In
light of this, staff continues to be cautiously
optimistic while monitoring fiscal developments
closely.
Prior Fiscal Year Closing Results
The Town is currently in the process of closing the
prior fiscal year. The Fiscal Year 2016/17 closing
preliminary financial results affirm the positive
effects of the Town’s budgetary actions taken in
response to prior downturns in key operating
revenues. Conservative budgeting, vacancy savings,
receipt of “one-time” revenues, and a strong
economy, coupled with ongoing Town-wide
expenditure reductions, generated a surplus General
Fund closing. Staff’s preliminary close of the fiscal
year 2016/17 (subject to final audit) indicates a
surplus of revenues above expenditures; the surplus
amount will be confirmed in December 2017 with
the review of the Comprehensive Annual Financial
Report (CAFR) by both the Council Finance
Committee and the Town Council.
U.S. Economic Outlook
The Congressional Budget Office (CBO) estimates
that, in real terms, GDP will expand by 2.2 percent in
calendar year 2017 and by 2.0 percent in 2018. The
CBO expects consumer spending and capital
investment by businesses to drive that growth. The
growth of real GDP in the CBO’s forecast averages
1.5 percent annually in 2019 and 2020.
The CBO expects the labor market to continue to
tighten over the next two years. The CBO estimates
that the employment shortfall will be eliminated by
the end of 2017, even though labor force
participation will be below its potential rate, because
unemployment will be below its natural rate. In
early 2017, the unemployment rate fell below 4.7
percent, and it continues to drop. The CBO projects
that the unemployment rate will decline to 4.3
percent by the end of 2017 and then to 4.2 percent
in early 2018.
The CBO expects that price inflation will continue to
rise over the remainder of this year. As measured by
the price index for personal consumption
expenditures, inflation is projected to reach the
Federal Reserve’s longer-run goal of 2.0 percent by
2018.
The Federal Reserve has been gradually reducing its
support for economic growth in response to
diminished slack in the economy. That process is
likely to continue through 2020, in the CBO’s view.
The CBO expects the Federal Reserve to raise the
federal funds interest rate from 0.9 percent in the
second quarter of 2017 to 2.0 percent by the end of
2018 and then to 3.0 percent by the end of 2020.
Similarly, in the CBO’s forecast, by the end of 2020,
the interest rate on 3-month Treasury bills rises to
2.7 percent and the rate on 10-year Treasury notes
rises to 3.5 percent.
In addition, federal lawmakers still face the longer-
term budget issues posed by the large projected
national debt and the implementation of rising
health care costs and the aging population.
BUDGET PERFORMANCE REPORT – 1ST QUARTER FY 2017/18
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State Budget Update
The 2017 Budget Act continues to bolster the state’s
Rainy Day Fund and pay down accumulated debts
and liabilities to counter the potential fiscal impact
of federal policy changes on California and the
potential end of an economic expansion that has
surpassed historical averages. While maintaining
fiscal prudence, the Budget focuses state spending
on the Governor’s key priorities—investing in
education, counteracting the effects of poverty, and
improving the state’s streets, roads and
transportation infrastructure.
In addition to a $1.4 billion reserve in the Special
Fund for Economic Uncertainties, the Budget adds
$1.8 billion to the Proposition 2 Budget Stabilization
Account, bringing the balance to $8.5 billion in
2017-18—or 66 percent of its constitutional target.
The Budget uses dedicated proceeds from
Proposition 2 to pay down nearly $1.8 billion in past
budgetary borrowing and state employee pension
liabilities. In addition, the Budget reflects a $6 billion
supplemental payment to CalPERS through a loan
from the Surplus Money Investment Fund that will
reduce the state’s unfunded liabilities, stabilize state
contribution rates, and save $11 billion over the next
two decades.
The Budget implements the Road Repair and
Accountability Act of 2017 (SB 1), which returns the
gas tax’s purchasing power to 1994 levels and
provides $54 billion in new funding over the next
decade, split evenly between state and local funding.
BUDGET PERFORMANCE REPORT – 1ST QUARTER FY 2017/18
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GENERAL FUND – KEY REVENUE ANALYSIS
The following discussion provides a status of significant General Fund revenue sources as of the first quarter,
ending September 30, 2017.
Staff monitors each revenue source closely and may recommend certain revenue adjustments based on revenue
actuals or state budget action. There are no adjustments recommended for this quarter.
BUDGET PERFORMANCE REPORT – 1ST QUARTER FY 2017/18
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Property Tax
Property tax is the largest revenue source for the Town’s General Fund, accounting for 28.9% of budgeted General
Fund revenues in FY 2017/18. Property tax is levied by the Santa Clara County Assessor’s Office at 1% of a
property’s assessed value, of which the Town receives approximately 9.5 cents per dollar paid on property located
within the municipal limits of Los Gatos. In compliance with Proposition 13, the assessed value of real property is
based on the 1975/76 assessment roll value, adjusted by 2% inflation factor thereafter. However, when property
changes hands or new construction occurs, property is reassessed at its current market v alue. Real property
values critically impact revenues. With the passage of Proposition 13, voters limited the tax rate that can be
imposed by the Town on property. With the limitation on rates, therefore, higher revenues are generated by a
higher aggregate property value.
Analysis – Property Tax distributions are largely received in the third and fourth quarters. First quarter receipts
are slightly up when compared to the first quarter of the previous fiscal year. Property tax budget projections are
based on valuations projected by the Santa Clara County Assessor’s Office, given increased home sales, coupled
with anticipated adjustments in property tax distribution due to the dissolution of California Redevelopment
Agencies. Property tax revenue for FY 2017/18 was budgeted slightly lower than previous year’s actual revenues
based on these facts and projected Consumer Price Index rate. Prior year property tax revenues are up due to
receipt of “one-time” excess Educational Revenue Augmentation Funds (ERAF) from the County and higher than
expected property transfer tax collection. Staff will continue to monitor these revenues through the mid -year to
determine if a budget adjustment will be recommended at that time.
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
1st Quarter Actual Revenues 123,394$ 125,091$ 109,027$ 134,884$ 153,275$
Fiscal Year Total Actual Revenues 9,054,908$ 10,113,287$ 10,791,743$ 11,532,314$
Fiscal Year Budgeted Revenues 11,383,073$
1st Quarter Percent of Total 1.36%1.24%1.01%1.17%1.35%
Recommended Budget Revision No Change
PROPERTY TAX
$-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
Quarterly and Annual Revenues
5-Year History
1st Quarter Actual
Revenues
Fiscal Year Total
Actual Revenues
Fiscal Year Budgeted
Revenues
BUDGET PERFORMANCE REPORT – 1ST QUARTER FY 2017/18
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Sales Tax
Sales tax is the second largest revenue source for the Town’s General Fund, accounting for 20.3% of budgeted
General Fund revenues for FY 2017/18. The Town receives 1 cent for every 9 cents of sales tax paid per dollar on
retail sales and taxable services transacted within Los Gatos. Since the implementation of the mechanism
commonly known as the “triple flip,” the State Board of Equalization retains 0.25 cents of the Town’s 1 -cent share
and requires the Santa Clara County Auditor to replace it with an equal amount of pr operty tax revenue. Revenues
are remitted from the State to the Town on a monthly basis, and from the County to the Town on a biannual basis.
FY 2016/17 marks the “final triple flip” true-up payment. From FY 2016/17 the State Board of Equalization will
distribute the full 1 percent sales tax share to the Town. These revenues are placed in the General Fund for
unrestricted uses.
Analysis –Based on the most recent Sales Tax and Economic Review update from MuniServices, the Town’s sales
tax analysis consultant, first quarter sales tax receipts statewide grew by 4.2%, while the Town of Los Gatos sales
tax revenues declined by 6.1%. As demonstrated in the graph below the FY 2016/17 proceeds were higher since
the final triple-flip payment was distributed in FY 2016/17. The negative impact associated with the Netflix change
in business model continues to impact the Town as the trend of increased on-line retail versus local mortar and
brick shopping compounded by lower gasoline prices.
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
1st Quarter Actual Revenues 1,243,903$ 914,843$ 871,410$ 2,081,617$ 651,353$
Fiscal Year Total Actual Revenues 8,029,571$ 8,202,678$ 7,501,175$ 8,819,123$
Fiscal Year Budgeted Revenues 7,972,195$
1st Quarter Percent of Total 15.49%11.15%11.62%23.60%8.17%
Recommended Budget Revision No Change
SALES TAX
$-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
Quarterly and Annual Revenues
5-Year History
1st Quarter
Actual Revenues
Fiscal Year Total
Actual Revenues
Fiscal Year
Budgeted
Revenues
BUDGET PERFORMANCE REPORT – 1ST QUARTER FY 2017/18
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As depicted in the graph there is decrease in all the categories of the sales tax revenue when compared to same
quarter results from the prior fiscal year.
Staff will continue to monitor these revenues through the mid-year to determine if a budget adjustment will be
recommended at that time.
BUDGET PERFORMANCE REPORT – 1ST QUARTER FY 2017/18
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Franchise Fees
Franchise fees are collected by the Town for the privilege of operating a utility service within Los Gatos and as a
fee in lieu of a business license tax. Franchise fees are currently received from Comcast for cable television, PG&E
for gas and electric services, West Valley Collection and Recycling for solid waste collection services, and AT&T and
Comcast for video services. Franchise fees represent 5.8% of budgeted General Fund revenues in FY 2017/18.
Analysis – Historically, franchise payments are not remitted equally throughout the fiscal year; therefore first
quarter receipts are not necessarily predictive. Total franchise fee revenues are trending slightly higher than those
in first quarter in FY 2016/17. Staff will continue to monitor trending of this revenue source and no budget
adjustment is recommended at this time.
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
1st Quarter Actual Revenues 247,426$ 275,097$ 266,431$ 290,727$ 305,480$
Fiscal Year Total Actual Revenues 2,063,756$ 2,215,430$ 2,258,892$ 2,221,120$
Fiscal Year Total Budgeted Revenues 2,287,390$
1st Quarter Revenue Percent of Total 11.99%12.42%11.79%13.09%13.35%
Recommended Budget Revision No Change
Franchise Fees
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
Quarterly and Annual Revenues
5-Year History
1st Quarter Actual
Revenues
Fiscal Year Total
Actual Revenues
Fiscal Year Total
Budgeted Revenues
BUDGET PERFORMANCE REPORT – 1ST QUARTER FY 2017/18
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Business License Tax
The Town requires all businesses located within Los Gatos, or those that operate within Los Gatos, to obtain a
business license. The amount of business license tax paid by each business is based on its business activity. Fees for
activities such as wholesale sales and manufacturing are charged on a sliding scale based on gross receipts, as is
retail, however retail business licenses are capped at $975. These activities account for approximately 25% of
annual business licenses, while the remaining 75% are flat fee business licenses. Annual renewal payments are due
on January 2 of each year. Payments for new flat-fee-based businesses are pro-rated by quarter.
Analysis – As a result of the projected increase in economic activity, business license tax revenue for the current
fiscal year was budgeted slightly higher than prior year budgeted number, however significantly lower the FY
2016/17 ending result. First quarter revenues are lower compared to prior year first quarter revenue. FY 2014/15
actual revenues reflected below include a one-time prior year adjustment for business license tax collection from
Netflix. This adjustment was due to a reclassification that happened in the first quarter of FY 2014/15. Generally
the first quarter payments are primarily made up of adjustments to businesses’ gross receipts for 2016. The true
up payments will be processed in the second quarter because the Town started its follow up procedure later this
year due to a staff vacancy which is now filled. Annual business license tax renewal revenue is primarily received
in the second and third quarters of each year; therefore, first quarter performance is not necessarily predictive.
FY 13/14 FY 14/15 FY 15/16
1st Quarter Actual Revenues 52,124$ 472,024$ 82,439$ 162,127$ 24,629$
Fiscal Year Total Actual Revenues 1,130,020$ 1,779,307$ 1,465,547$ 1,720,980$
Fiscal Year Total Budgeted Revenues 1,575,000$
1st Quarter Revenue Percent of Total 4.61%26.53%26.53%6.63%6.60%
Recommended Budget Revision No Change
Business License Tax
FY 16/17 FY 17/18
$-
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
$1,800,000
FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17
Quarterly and Annual Revenues
5-Year History
1st Quarter Actual
Revenues
Fiscal Year Total
Actual Revenues
Fiscal Year Total
Budgeted Revenues
BUDGET PERFORMANCE REPORT – 1ST QUARTER FY 2017/18
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Transient Occupancy Tax
The Town levies a 12% transient occupancy tax (TOT) on all hotel and motel rooms within the municipal limits of Los
Gatos. This tax helps to fund all Town services provided to transitory visitors to Los Gatos.
Analysis – Visit California, formerly the California Travel and Tourism Commission, reports that the total number of
visitors to California grew 2.1% in 2017, following a 1.9% expansion in 2016. Total international visits to California
will decline by 0.9 percent in 2017 before picking up to just above 2.5 percent in 2018 and inc reasing each year
through 2021 (Source: California Office of Tourism). First quarter TOT revenues are trending in line with the first
quarter of FY 2016/17. FY 2016/17 marks the year when one of the hotels previously reporting quarterly switched
to a monthly reporting. Staff will continue to monitor this funding source and based on the updated trend may
recommend a budget adjustment at the time of mid year budget review.
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
1st Quarter Actual Revenues 169,632$ 132,202$ 153,102$ 316,590$ 338,767$
Fiscal Year Total Actual Revenues 1,512,846$ 1,896,721$ 1,943,166$ 2,322,910$
Fiscal Year Total Budgeted Revenues 2,060,000$
1st Quarter Revenue Percent of Total 11.21%6.97%7.88%13.63%16.45%
Recommended Budget Revision No Change
Transient Occupancy Tax
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
Quarterly and Annual Revenues
5-Year History
1st Quarter Actual
Revenues
Fiscal Year Total Actual
Revenues
Fiscal Year Total Budgeted
Revenues
BUDGET PERFORMANCE REPORT – 1ST QUARTER FY 2017/18
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Charges for Services
Town service revenues consist primarily of planning, building, inspections, and engineering fees assessed on local
building and development activity. Development fees and charges are assessed based on recovery formulas, which
reflect approximate costs of providing these regulatory services.
Analysis – First quarter Town service revenues, specifically Charges for Services, are trending significantly lower
than first quarter results from the previous fiscal year. Development permits revenues are projected to be lower
than last fiscal year due to the slowing down of large scale building projects. North 40 fees going into a Pass
Through account will not be included in this revenue source. Staff will continue to monitor this revenue source,
however no budget revisions are recommended at this time.
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
1st Quarter Actual Revenues 795,289$ 706,139$ 567,913$ 712,570$ 618,348$
Fiscal Year Total Actual Revenues 2,684,126$ 2,643,276$ 2,677,944$ 2,634,012$
Fiscal Year Total Budgeted Revenues 2,514,525$
1st Quarter Revenue Percent of Total 29.63%26.71%21.21%27.05%24.59%
Recommended Budget Revision No Change
Charges for Services
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
Quarterly and Annual Revenues
5-Year History
1st Quarter Actual
Revenues
Fiscal Year Total Actual
Revenues
Fiscal Year Total
Budgeted Revenues
BUDGET PERFORMANCE REPORT – 1ST QUARTER FY 2017/18
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Licenses and Permits
Licenses and permits consist mainly of Building Permit fees which are collected by the Town to offset administrative
costs associated with overseeing the proper permitting aspects of development.
Analysis – First quarter License and Permit revenue is trending lower than first quarter results from the previous
fiscal year. First quarter collections include approximately $210,000 deferred revenues from FY 2016/17 collections
as some of the big-scale development projects started in last year were not completed in FY 2016/17. Staff will
continue to monitor this funding source closely to assess the need for mid-year budget adjustments; however no
budget revisions are recommended at this time.
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
1st Quarter Actual Revenues 1,237,390$ 1,229,462$ 1,289,988$ 1,209,100$ 909,572$
Fiscal Year Total Actual Revenues 3,235,122$ 3,687,393$ 3,552,935$ 2,996,583$
Fiscal Year Total Budgeted Revenues 2,941,359$
1st Quarter Revenue Percent of Total 38.25%33.34%36.31%40.35%30.92%
Recommended Budget Revision No Change
Licenses & Permits
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
Quarterly and Annual Revenues
5-Year History
1st Quarter Actual
Revenues
Fiscal Year Total Actual
Revenues
Fiscal Year Total
Budgeted Revenues
BUDGET PERFORMANCE REPORT – 1ST QUARTER FY 2017/18
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Interest Income
The Town earns interest income by investing monies not immediately required for daily operations in a number of
instruments. These investments are made within the parameters stated in the Town Council’s Investment Policy.
The Town’s investment goal is to achieve a competitive rate of return while protecting the safety of its funds.
Interest income revenue is primarily dependent on two factors: first, the cash balance in the Town’s investment
portfolio and second, the yield on those funds.
Analysis – First quarter receipts are trending above those in the same period in the prior fiscal year, largely because
of small rises in interest rate levels experienced during the past twelve months. The Town’s investment advisors
expect interest rates to rise gradually in calendar year 2018. The increase of the interest earnings experienced this
fiscal year as of first quarter are reflective of the Town’s total portfolio yield increasing from 0.81% as of September
30, 2016 to the current yield of 1.37% as of September 30, 2017 as reflected in the Town Q1 Investment Report.
The strategy for the foreseeable future continues to remain fairly short -term from two to three-year maturity time
periods. Treasuries are being added into the mix of investments to attempt to keep the portfolio somewhat
balanced, even though this has the effect of lowering the overall rate of return. The Town also attempts to find
good solid corporate bonds when possible. There are no recommended changes to this revenue source at this time.
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
1st Quarter Actual Revenues 169,558$ 113,313$ 81,671$ 84,965$ 114,110$
Fiscal Year Revenues 514,380$ 379,154$ 317,766$ 354,765$
Fiscal Year Total Budgeted Revenues 378,410$
1st Quarter Revenue Percent of Total 33.0%29.9%25.7%23.9%30.2%
Recommended Budget Revision No Change
Interest Income
$-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
Quarterly and Annual Revenues
5-Year History
1st Quarter Actual
Revenues
Fiscal Year Revenues
Fiscal Year Total
Budgeted Revenues
BUDGET PERFORMANCE REPORT – 1ST QUARTER FY 2017/18
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FINANCIAL SUMMARIES AND PROJECTIONS
General Fund
The following table in the next page is the Schedule of General Fund Operating Revenues versus Operating
Expenditures for the first quarter of FY 2017/18, which includes comparison information from the prior year. In
the far right column are projections of unaudited, final balances for the current fiscal year based upon the early
trends observed through the first quarter.
BUDGET PERFORMANCE REPORT – 1ST QUARTER FY 2017/18
15
The following financial summaries present data by governmental fund type: Special Revenue Funds, Capital
Project Funds, Internal Service Funds, and Trust and Agency Funds. For each, the fund information starts with a
beginning fund balance, adds current year revenues, and subtracts current year expenditures, resulting in an
ending fund balance. Adopted budget amounts are provided as a basis for comparison of actuals to date.
Special Revenue Fund
Special Revenue Funds account for the proceeds derived from specific revenu e sources that are legally restricted or
assigned to special purposes. The Town’s Special Revenue Funds are Community Development Block Grant Fund,
Housing Conservation Program Fund, Non-Point Urban Runoff Source Fund, and several Landscaping and Lighting
District Funds. The revenue from the Non-Point Source Program fund continues to lag the expenses. This largely
results from increased requirements associated with the Town’s storm water permit, including increased
inspections and monitoring, trash reduction requirements, and administrative costs. Staff has develoed a plan to
move the program toward a sustainable cost recovery model as part of the FY 17/18 budget process. As indicated
in the chart below, Non-Point Source fund balance is negative. It is anticipated that revenues for the Non-Point
Source program will be received by the end of the second quarter and will be reflected in the mid-year budget
report.
CDBG Non-Point LLD's
Grants Source
Beginning Fund Balance (Pre-audit)78,621$ 14,894$ 199,645$
Budgeted Revenues - 584,394 38,861
Total Actual Revenues - 1st Qtr -$ 10,256$ -$
Budgeted Expenditures - 564,910 110,046
Total Actual Expenditures - 1st Qtr -$ 270,457$ 4,520$
1st Quarter Ending Fund Balance 78,621$ (245,307)$ 195,125$
Special Revenue Funds
Budget to Actuals Comparisons
BUDGET PERFORMANCE REPORT – 1ST QUARTER FY 2017/18
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Capital Projects Funds
Capital Projects Funds account for resources used for the acquisition and construction of capital facilities by the
Town. Funds in this category are the General Fund Appropriated Reserve Fund (GFAR), Traffic Mitigation Fund,
Grant Funded Capital Improvement Projects Fund, Utility Underground Fund, Gas Tax Fund, and three Storm Drain
Funds. Capital Projects Funds are generally tracking in accordance with the FY 2017/18 adopted budget. Projects
budgeted from Traffic Mitigation and Utility Undergrounding sources are starting later this fiscal year. Staff will
continue to monitor these expenditures throughout the remainder of the year.
GFAR Traffic Grant Fund Storm Utility Gas
Fund Mitigation CIP's Drains Undergd Tax
Beginning Fund Balance 18,253,744$ 2,527,529$ (380,247)$ 1,805,441$ 2,929,116$ 693,508$
Budgeted Revenues 4,675,849 1,075,017 1,080,928 101,240 44,280 882,457
Total Actual Revenues - 1st Qtr 101,280 - 3,272 25,364 4,828 117,775
Budgeted Expenditures 21,677,394 1,090,017 1,026,044 158,750 112,000 1,334,229
Total Actual Expenditures - 1st Qtr 2,145,483 4,095 - 2,050 - -
1st Quarter Ending Fund Balance 16,209,541$ 2,523,434$ (376,975)$ 1,828,755$ 2,933,944$ 811,283$
Capital Project Funds
Budget to Actuals Comparisons
BUDGET PERFORMANCE REPORT – 1ST QUARTER FY 2017/18
17
Internal Service Funds
Internal Service Funds finance and account for special activities and services performed by a designated Town
Department for other Town D epartments on a cost reimbursement basis. Included in this fund type are the
Equipment Replacement Fund, Workers’ Compensation Fund, ABAG Self Insurance Fund, Office Stores Fund,
Information Technology Fund, Vehicle Maintenance Fund, and the Facilities Maintenance Fund.
Internal Service Funds are generally tracking in accordance with the FY 2017/18 adopted budget. No revisions to
adopted revenues or expenditures are required at this time. Staff is monitoring expenditures and may propose a
revised cost allocation during FY 2018/19 budget preparation.
Equipment Workers Self Office Information Vehicle Facility
Replacemt Comp Insurance Stores Technology Maint.Maint.
Beginning Fund Balance 1,894,056$ 1,086,884$ 1,148,574$ 200,438$ 2,960,072$ 505,489$ 471,469$
Budgeted Revenues 932,313 969,547 553,953 118,000 1,180,879 586,654 1,736,089
Total Actual Revenues - 1st Qtr 155,819 288,082 136,077 23,412 279,892 146,664 360,352
Budgeted Expenditures 818,211 1,258,466 816,952 134,500 1,439,581 583,491 1,402,052
Total Actual Expenditures - 1st Qtr 207,119 398,093 59,075 23,121 335,575 101,262 232,063
1st Quarter Ending Fund Balance 1,842,756$ 976,873$ 1,225,576$ 200,729$ 2,904,389$ 550,891$ 599,758$
Internal Service Funds
Budget to Actuals Comparisons
BUDGET PERFORMANCE REPORT – 1ST QUARTER FY 2017/18
18
Trust and Agency Funds
Town Trust and Agency Funds have fund balances as of July 1, 2017 of $531,957 for the Library Trust Funds and
$3,622,710 for Successor Agency Trust. No budget revisions are recommended at this time for these funds.
Library SA
Trust Trust
Beginning Fund Balance 531,957$ 3,622,710$
Budgeted Revenues 78,365 3,857,721
Actual Revenues - 1st Qtr 8,950 -
Budgeted Expenditures 72,500 3,856,383
Total Actual Expenditures - 1st Qtr 4,660 1,527,188
1st Quarter Ending Fund Balance 536,247$ 2,095,522$
Trust & Agency Funds
Budget to Actuals Comparisons
BUDGET PERFORMANCE REPORT – 1ST QUARTER FY 2017/18
19
CONCLUSION
The financial results from the prior fiscal year, coupled with the FY 2017/18 first quarter data, confirm the Town’s
continued conservative fiscal planning and efforts to sustain its economically sensitive revenues. Based on available
information at the time of this report and expected receipts, the long-range outlook for the Town indicates that
revenues should generally keep pace with expenditures. As the fiscal year progresses, staff is closely monitoring
revenue and expenditure activity and will evaluate opportunities to enhance revenue to support current and future
operating capital needs.
BUDGET PERFORMANCE REPORT – 1ST QUARTER FY 2017/18
20