5N N OF
X08 sates COUNCIL AGENDA REPORT
DATE: December 9, 2013
TO: MAYOR AND TOWN COUNCIL
FROM: GREG LARSON, TOWN MANAGER
MEETING DATE: 12/16/13
ITEM NO:
SUBJECT: FISCAL YEAR 2013/14 FIRST QUARTER BUDGET PERFORMANCE AND
STATUS REPORT FOR THE PERIOD JULY 1 2013 - SEPTEMBER 30 2013
ACCEPT 2013/14 FIRST QUARTER BUDGET PERFORMANCE STATUS
REPORT
RECOMMENDATION:
Accept Fiscal Year 2013/14 First Quarter Budget Performance and Status Report
PURPOSE:
This report has two primary goals. First, the report informs the Town Council on the status of the
Town's Fiscal Year 2013/14 Adopted Budget and status of the local economy at the first quarter.
Second, staff provides the Town Council an update on the preliminary General Fund financial
results (unaudited) as of June 30, 2013.
BACKGROUND:
The attached Quarterly Budget Report covers the first three months of the fiscal year beginning
July 1, 2013 and ending September 30, 2013. The report presents analysis and recommendations
related to key General Fund revenues by category and expenditures by fund.
Staff provides to 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. Though financial results are limited to the first three
months, staff is able to provide an update based on early revenue trends for the current fiscal
year, and to advise on potential future revenue and expenditure challenges which may
materialize during the fiscal year.
PREPARED BY: Stephen D.
Finance and
NAFINANCE \Qtrly Financial Reports \FY 2014 \lst Quarter\2013 -14 I
vices Director
Memo for Council doc.doc
Reviewed by: _Assistant Town Manager(( _Town Attorney z�Fmance
PAGE 2
MAYOR AND TOWN COUNCIL
SUBJECT: FISCAL YEAR 2013/14 FIRST QUARTER BUDGET PERFORMANCE AND
STATUS REPORT FOR THE PERIOD JULY 1, 2013 - SEPTEMBER 30, 2013.
December 2, 2013
DISCUSSION:
The attached first quarter budget report includes a recap (prior to final audit) of last year's
General Fund fiscal results. Year end results were sufficient to find approximately $350k in one-
time compensation adjustments for non -sworn employees, including rescission of the FY
2013 /14 furlough. Per Town policy, the remaining balance of $1.9 in will be placed for future
use subject to Council determination during the budget process.
An analysis of FY 2013/14 General Fund revenue confirms that the Town is tracking well
against budgeted revenues for the first quarter. Key economic revenues such as sales tax,
property tax, franchise fees, business license tax and transient occupancy tax have all
experienced slight increases from prior year first quarter results. However, it should be noted
interest is trending below that of the prior fiscal year's first quarter results. The Town is still
facing a challenging economic climate and will continue to identify opportunities to enhance
revenues and reduce expenditures.
In addition, during last fiscal year midyear budget review, the Town increased anticipated Police
overtime by $200,000 due to the Kumra homicide response and investigation. Simultaneously,
the Town increased budget revenues by $200,000 based on a request for funding from the City of
Monte Sereno. The City of Monte Sereno will be considering this request on Tuesday January
14, 2013.
CONCLUSION:
Based on the preliminary first quarter data that is available and results from the prior fiscal year
the continued conservative fiscal planning and efforts to sustain the Town economically sensitive
revenues appear to be obtaining positive results. While the long -range outlook for the Town
indicates a more positive fiscal year ahead, staff will continue to examine revenue and
expenditure activity and work to identify opportunities to enhance revenue to support current and
future operating capital and service needs.
FORMAT OF THE REPORT
The attached Budget Performance Report includes a financial overview comprised of a brief
discussion of the Town's financial condition; the FY 2013/14 financial outlook and a summary
of the performance of the Town's primary General Fund revenue sources.
ENVIRONMENTAL ASSESSMENT:
This budget report is not a project defined under CEQA, and no further action is required.
PAGE 3
MAYOR AND TOWN COUNCIL
SUBJECT: FISCAL YEAR 2013/14 FIRST QUARTER BUDGET PERFORMANCE AND
STATUS REPORT FOR THE PERIOD JULY 1, 2013 - SEPTEMBER 30, 2013.
December 2, 2013
FISCAL IMPACT:
The attached First Quarter Budget Performance Report provides an overview of the first quarter
budget performance.
Attachment:
Budget Performance Report for the Three Months Ended September 30, 2013
THIS PAGE
INTENTIONALLY
LEFT BLANK
BUDGET PERFORMANCE REPORT - 1ST QUARTER FY 2013/14
rOS s��
INTRODUCTION
Purpose With respect to revenues: The Town regularly
monitors and adjusts its year -end revenue
This is the first quarterly budget performance report projections based on revenue performance and
for the Fiscal Year 2013/14, for the three month other developments that may affect Town revenues in order to develop a more accurate picture of the
period ending September 30, 2013. The purpose of Town's anticipated year -end financial position.
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 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, 2013, as compared to
previous years, and explains any notable aberrations
or trends in these numbers. This report also provides
information on any recommended budget
adjustments.
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 is final until the Town has completed
its annual comprehensive audit and finalized its
Consolidated Annual Financial Report (CAFR), which
is released in the winter of each year for the prior
fiscal year.
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 2013/14 Adopted Budget ........2
Prior Fiscal Year Closing Results ..................2
General Fund Reserve Status .......................2
Greater Economic Outlook ............................3
State Budget Update ........ ..............................3
General Fund — Key Revenue Analysis .....................4
Sales Tax .... ............. ..............................5
Property Tax ............... ..............................6
Franchise Fees ................ ..............................7
Business License Tax ..... ..............................8
Transient Occupancy Tax .............................9
Charges for Services ..... .............................10
Licenses & Permits .......... .............................11
Interest Income ............. .............................12
Financial Summaries and Projections ......................13
General Fund ................ .............................13
Special Revenue Fund ... .............................14
Capital projects Funds .... .............................14
Internal Service Funds .... .............................15
Trust and Agency Funds . .............................15
Conclusion
.............................17
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BUDGET PERFORMANCE REPORT -1ST QUARTER FY 2013/14
EXECUTIVE SUMMARY
Status of FY 2013/14 Adopted Budget
First quarter revenue trends are higher when
compared to the first quarter of Fiscal Year 2012/13.
Licenses & Permit and Charges for Services revenues
increased when compared to the prior year's first
quarter results, because of the timing of one -time
development projects. Other economically sensitive
revenues such sales tax, property tax as franchise
fees and transient occupancy tax show slight growth;
while others, such as interest have declined.
General Fund expenditure totals for the first quarter
are trending favorably, with total operational
expenditures at the end of the first quarter at about
22% of budget. 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 very
closely.
Prior Fiscal Year Closing Results
The Fiscal Year 2012/13 closing financial results
affirm the positive effects of the Town's budgetary
actions taken in response to the continuing flat
revenue growth and prior downturns in key
operating revenues. In developing the 2013/14
budget, Town Council approved a combination of
budgetary initiatives that held the line of service
levels and also structurally reorganized positions and
departments. This strategy, coupled with ongoing
Town -wide expenditure reductions, generated a
favorable General Fund closing balance of
approximately $1.9 million of available revenues
over expenditures , before special items, at fiscal
year -end, June 30, 2013. In addition, year end results
were sufficient to find approximately $350k in one-
time compensation adjustments for non -sworn
employees, including rescession of the FY 2013/14
furlough.
General Fund Reserve Status - 6/30/12
General Fund reserves are classified into two
categories — Restricted and Designated. Restricted
reserves are those which are restricted in use by
accounting standards or legal agreements and are
not considered as available for use for another
purpose. Designated reserves are established by
Council Policy for an intended purpose. With the
dissolution of the RDA the Town no longer has
restricted reserves.
General Fund Reserves closed at a balance of
approximately $25.9 million at June 30, 2012 in
designated reserves which is in accordance with
Town financial policies and operating and capital
budget requirements, and includes a $4.2 million
dollar Economic Uncertainty.
Designated General Fund Reserves
Amount (Millions)
unappropriated 5
0
Designated for Budget Stablization Reserve
6.7
Designated for Economic Uncertainty
4.1
Designated for Capital and Special Projects
11.4
Designated forVasona Land Sale
0.4
Designated for Open Space
0.5
Designated for Y/E Carryover PO's
0
Designated for Y/E Savings Budget Adj.
1
Designated for Retiree Medical Acturia1
0.4
Designated for Special studies /Incentives
0.5
Designated for Sustanability Reserve
0.1
Designated for Manager's Contingency and Productivity
0.1
Total Deisgnated General Fund Reserves
15.9
The reserve for Capital and Special Projects, funded
from annual available General Fund budget savings,
serves as the primary source for replenishment to
the Town's Capital Improvement Fund (GFAR). As
such, it represents a limited source for a large
number of unfunded needs identified during the
annual capital improvement plan process. This
reserve also functions as a potential funding source
for new capital projects or augmentations to
authorized projects funded through the Town's Five
Year Capital Improvement Program (CIP).
The Budget Stabilization Reserve was established to
serve as a transitional "bridge' funding source to
BUDGET PERFORMANCE REPORT -1ST QUARTER FY 2013/14
mitigate or smooth out cyclical ups and downs in
locally generated revenues due to fluctuations in the
local economy or "one- time" revenue losses where
the revenue base is likely to be restored in the near
future.
These funds are referred to as Designated General
Fund reserves since these are established by Council
policy for their intended purpose. The availability of
approximately $25.9 million in Designated General
Fund reserves provides the Town with resources to
manage through current and /or future fiscal
challenges and opportunities.
Greater Economic Outlook
The Congressional Budget Office (CBO) expects the
economic recovery to continue at a modest pace for
the remainder of the calendar year, with real
(inflation- adjusted) GDP growing at an annual rate of
about 1.4% in this year. The national unemployment
rate is expected to remain above 7.5 %through next
year, with 2014 being the 6`h consecutive year with
unemployment exceeding 7.5% of the labor force.
The CBO also estimates that the rate of inflation is
estimated to decline to 1.3% this year, compared
with 1.5 %in 2012.
If the current laws that govern federal taxes and
spending do not change, the budget deficit will
shrink this year to $845 billion, or 5.3 % of gross
domestic products, its smallest size since 2008.
Current law leaves many key budget issues
unresolved, and this year, lawmakers were facing
three significant budgetary deadlines
• Automatic reductions in spending are scheduled
to be implemented.
• The continuing resolution that currently
provides operational funding for much of the
government will expire
• The statutory limit on federal debt, temporarily
removed, will take effect again
In addition, lawmakers still face the longer -term
budget issues posed by the large current and
projected federal debt and the implementation of
rising health care costs and the aging population.
On a more positive note, the Commerce Department
reported that home construction rose 11% since last
year. In addition, national sales of new homes were
up nearly 12.6% in August compared to the same
month last year.
State Budget Update
Many of the same economic rebounds experienced
by the nation as a whole are holding true for the
State. Although the State's unemployment rate is
the sixth highest in the nation, it continues to show
improvement in recent months with the latest data
showing a rate of 8.7% in October. Based on current
laws and the State economic forecast, expenditures
are projected to grow less rapidly than revenues
resulting in a $1 billion surplus in 2014/15.
Furthermore, recent press articles are noting that
Silicon Valley's unemployment rate is lower than the
statewide average. Better job growth was largely
the result of recent improvements in sectors that
were hit hardest by the recession and have only
recently started to turn around. A rebound in travel
and tourism has lifted leisure and hospitality
employment. Rebounding real estate markets
helped construction and financial activities sectors.
The Town's real estate values remain strong and
show positive growth for the short term.
BUDGET PERFORMANCE REPORT - 1ST QUARTER FY 2013/14
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, 2013.
Staff monitors each revenue source closely and may recommend certain revenue adjustments based on revenue
actuals or state budget action.
4
BUDGET PERFORMANCE REPORT - 1ST QUARTER FY 2013/14
Sales Tax
Sales tax is the largest revenue source for the Town's General Fund, accounting for 23.1% of budgeted General
Fund revenues for FY 2013/14. The Town receives 1 cent for every 8.75 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 property 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.
These revenues are placed in the General Fund for unrestricted uses.
Analysis — First quarter receipts are trending ahead at those in the same period in the past fiscal year The most
recent Sales Tax and Economic Review update from Muni Services, the Town's sales tax analysis consultant, states
that while sales tax receipts statewide grew by 6.6 %, Town of Los Gatos Sales Tax revenues are down by 2.2 %,
mostly from the continuing decline due to the Netflix change in business model. It should be noted that the Town
anticipated these impacts to continue, albeit at a slower pace, in the future and budgeted revenues at 5% less
than FY 2012/13.
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
RE
Quarterly and Annual Revenues
5 -Year History
FY 09/10 FY 10 /11 FY 11/12 FY 12/13 FY 13/14
1st Quarter Actual Revenues
Fiscal Year Total Actual Revenues
Fiscal Year Budgeted Revenues
1st Quarter Percent of Total
Olaf Qtab Ac Wel
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O Fiscal Y� Total Acml
Rcvcu,es
®Fiscal Ym Budget
]te.eosa
FY 09/10 FY 10 /11 FY 11/12 FY 12/13 FY 13/14
$1,672,973 $1,582,344 $1,184,526 $ 601,716 $ 1,243,903
$8,317,217 $9,971,409 $9,889,100 $ 8,757,428
$ 7,797,615
20.11% 15.87.0/0 11.98% 6.87% 15.95%
Recommended Budget Revision No Change
As indicated in the graph below, this reduction is primarily due to the local effect of Netfli 1s change in its business
model. As depicted in the graph there is a significant decrease in the sales tax revenue in the general retail
category. However, it should be noted that sales tax revenue has increased at least slightly in the food products
and transportation when compared to same quarter results from the prior fiscal year.
BUDGET PERFORMANCE REPORT - 1ST QUARTER FY 2013/14
Sales Tax By Major Business Group
$900,000
$800,000 I-
$700,000
$600,000 --
$500,000 - - --
$400,000
$300,000 _ —_ • 1st Qtr 2012
$200,000 1st Qtr 2013
$100,000
o
1,001, �aceQ ey o
t 5
Sic
Staff will continue to monitor these revenues through the mid -year to determine if a budget adjustment will be
recommended at that time.
6
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BUDGET PERFORMANCE REPORT - 1ST QUARTER FY 2013114
Property Tax
Property tax is the second largest revenue source for the Town's General Fund, accounting for 23% of budgeted
General Fund revenues in FY 2013/14. 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 value. 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 61% 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 2013/14 was budgeted slightly higher than previous year's actual revenues
based on these facts and projected CPI rate. Staff will continue to monitor these revenues through the mid -year to
determine if a budget adjustment will be recommended at that time.
$10,000,000
$8,000,000
$6,000,000
$4,000.000
$2,000,000
Quarterly and Annual Revenues
5 -Year History
FY 09/10 FY 10/11 FY 11/12 FY 12/13 FY 13/14
1st Quarter Actual Revenues
Fiscal Year Total Actual Revenues
Fiscal Year Budgeted Revenues
1st Quarter Percent of Total
FY 09/10
FY 10 /11
$ 65,628
$ 57,225
$ 9,775,954
$ 9,597,378
0.67%
0.600/.
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FY 11/12
FY 12/13
$ 77,619
$ 76,842
$ 9,864,539
$ 9,672,235
0.79%
0.79%
FY 13/14
$ 123,394
$ 10,190,806
1.21%
Recommended Budget Revision No Chanee
7 __
BUDGET PERFORMANCE REPORT - 1ST QUARTER FY 2013/14
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 6% of budgeted General Fund revenues in FY 2013/14.
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 approximately 2% below
first quarter in FY 2012/13. Staff will continue to monitor trending of this revenue source but no budget
adjustment is recommended at this time.
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
Quarterly and Annual Revenues
5 -Year History
FY 09/10 FY 10 /lI FY I I/12 FY 12/13 FY 1.3/14
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R�vewes
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FY 09110 FY 10/11 FY 11/12 FY 12/13 FY 13/14
Ist Quarter Actual Revenues $ 198,499 $ 224,256 $ 245,533 $ 251.349 $ 247.426
Fiscal Year Total Actual Revenues $ 1,699,840 $ 1,901,605 $ 1,952,488 $ 2,028,903
Fiscal Year Total Budgeted Revenues $2,040,030
FY2010 11 ]forward reflects revenue adjustments due to changes in the Garbage Franchise Agreement
1st Quarter Revenue Percent of Total 11.68% 11.79% 12.58% 12.39% 12.13%
Recommended Budget Revision No Change
8
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BUDGET PERFORMANCE REPORT - 1ST QUARTER FY 2013/14
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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, but only to a cap of $975. These activities account for approximately 25% of annual business licenses, while
the remaining 75% are flat fee business. 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 at approximately 6% higher than prior year actuals. Current year first quarter revenues are
trending 17% higher than with those of the previous year. It should be noted that a key factor in these figures is
that first quarter payments are primarily made up of adjustments to businesses' gross receipts for 2012, a year in
which many businesses started to experience small growth. However, annual business license tax renewal revenue
is primarily received in the second and third quarter of each year; therefore, first quarter performance is not
necessarily predictive. Staff will continue its auditing efforts this year to bring past due accounts current and work
with business to collect fees.
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
Quarterly and Annual Revenues
5 -Year History
FY 09/10 FY 10 /11 FY 11/12 FY 17/13 FY 13/14
1st Quarter Actual Revenues
Fiscal Year Total Actual Revenues $
Fiscal Year Total Budgeted Revenues
1st Quarter Revenue Percent of Total
FY09 /10
FY 10 /11
FY 11/12
74,890
1,220,802
6.13%
69,782 43,969
$ 1,136,511 $ 1,077,620 $
6.14% 4.08%
M 1st Quarter Aaual
RN®uP
OFitcal Ycar Toml Actu
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Budgeted Revenues
FY 12/13 FY 13/14
44,393 52,124
1,151,579
$ 1,361,510
3.85% 3.83%
Recommended Budget Revision No Change
9
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BUDGET PERFORMANCE REPORT - 1ST QUARTER FY 2013/14
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Transient Occupancy Tax
The Town levies a 10% transient occupancy tax (TOT) on all hotel and motel rooms within the municipal limits of Los
Gatos. This tax helps to fund Town services provided to transitory visitors to Los Gatos.
Analysis —Visit California, formerly the California Travel and Tourism Commission, reports that visitors to California
spent $106.4 billion in 2012, a 4.5% increase from 2011 spending, as both State and national travel industries are
recovering from the recession. The forecast for California visitation in 2013 is for modest growth, increasing 2.6% in
2014 and 2.7% in 2015. First quarter TOT revenues are trending 25 % higher than the first quarter of 2012/13.
Personal and business related travel is gaining strength. Staff will continue to monitor this funding source closely to
assess the need for future budget adjustments.
$1,400,000
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
Quarterly and Annual Revenues
5 -Year History
FY09 /10 FY 10 /11 FY 11/12 FY 12/13 FY 13/14
Ist Quarter Actual Revenues
Fiscal Year Total Actual Revenues
Fiscal Year Total Budgeted Revenues
1st Quarter Revenue Percent of Total
0 tst Qu Mr Aauil Re mues
OFiscel Ycar Tom] Actu
Rmmu6
aFi al Year Tote) Rudgaw
Rwmua
FY09 /10
FY 10/11
FY 11/12
FY 12/13
$ 99,179
$ 107,453
$ 131,567
$ 135,452
$ 923,783
$ 1,004,659
$ 1,174,485
$ 1,295,887
FY 13/14
$ 169,632
$ 1,015,000
10.74% 10.70% 1.1.200/a 10.45% 16.71%
Recommended Budget Revision No Change
10
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BUDGET PERFORMANCE REPORT - 1ST QUARTER FY 2013/14
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. FY 13/14 Charges for Service were budgeted at
15% less than FY 12/13 because of the loss of redevelopment reimbursement for administrative and housing
support.
Analysis — First quarter Town service revenues, specifically Charges for Services, are trending well ahead of first
quarter results from the previous fiscal year, with an increase of 33%. The increase is largely the result of an
increase in building activity and development. Staff will continue to monitor this revenue source, however, no
budget revisions are recommended at this time.
$5,000,000
$4,500,000
$4,000,000
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
Quartedy and Annual Revenues
5 -Year History
FY09 /10 FY 10 /11 FY 11/12 FY 12/13 FY 13/14
1 st Quarter Actual Revenues
Fiscal Year Total Actual Revenues
Fiscal Year Total Budgeted Revenues
1st Quarter Revenue Percent of Total
FY 09/10 FY 10 /11
$ 938,223 $ 815,237
$ 4,055,322 $ 3,570,110
23.14% 22.84%
01st Q—m Acid R.—
0FXMY =Tn And Rn =
RFms Y= To eu*p
R.—
FY 11/12 FY 12/13 FY 13/14
$ 907,005 $ 1,153,201 $ 1,535,531
$ 3,879,826 $ 4,712,570
$ 1,535,531
23.38% 24.47% 100.00%
Recommended Budget Revision No Channe
11
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BUDGET PERFORMANCE REPORT - 1ST QUARTER FY 2013/14
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 licensing aspects of development. Licenses and Permit revenue was
budgeted slightly more than in FY12/13 in anticipation increased development activity.
Analysis — First quarter License and Permit revenue is trending well ahead of first quarter results from the previous
fiscal year, with an increase of 34 %. The growth is mainly due to one -time development projects planned in
2013/14. Staff will continue to monitor this revenue source, however, no budget revisions are recommended at this
time.
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
Quarterly and Annual Revenues
5 -Year History
FY 09/10 FY 10/11 FY 11/12 FY 12/13 FY 13/14
1 st Quarter Actual Revenues
Fiscal Year Total Actual Revenues
Fiscal Year Total Budgeted Revenues
1st Quarter Revenue Percent of Total
0191 Q�A "Rcvcmca
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R�vc,uca
FY 09/10 FY 10/11 FY I1 /12 FY 12/13 FY 13/14
$ 428,946 $ 583,524 $ 550,905 $ 837,937 $1,143,264
$ 1,756,397 $ 1,831,308 $ 1,831,308 $ 2,643,899
$2,214,300
24.42% 31.86% 30.08% 31.69% 51.63%
Recommended Budget Revision No Change
12
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BUDGET PERFORMANCE REPORT - 1ST QUARTER FY 2013/14
Interest Income
The Town earns interest income by investing monies not immediately required for daily operations in a number of
money market 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 below those in the same period in the prior fiscal year. Financial
indicators throughout the market are mixed. For example, from September 2012 to September 2013 the LAIF yield
increased from 0.11% to 0.26 %; however the three -month Treasury decreased from 0.11% to 0.01 %, the six- month
Treasury decreased from 0.14% to 0.04 %, and the five -year Treasury increased from 0.65% to 1.41 %.
The strategy for the foreseeable future continues to be to remain fairly short -term and to invest in callable agency
bonds in order to attempt to pick up a few basis points over non - callable agencies and treasuries. 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.
$1,800,000
$1,600,000
$1,400,000
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
Quarterly and Annual Revenues
5 -Year History
FY 09/10 FY 10/11 FY 11/12 FY 12/13 FY 13/14
®1st Quarter Actual Rwmues
OFiscal Ycar Rcvcnucs
■Fiscal Ycar TMI BudgdW
Rana.
13
FY 09/10
FY 10 /11
FY 11/12
FY 12/13
FY 13/14
1st Quarter Actual Revenues
$ 259,807
$ 205,707
$ 183,979
$ 111,401
$ 86,094
Fiscal Year Revenues
$ 1,627,727
$ 904,474
$ 606,454
$ 386,919
Fiscal Year Total Budgeted Revenues
$ 577,970
1st Quarter Revenue Percent of Total
16.0° /a
22.7%
30.3%
28.8%
14.9%
Recommended Budget Revision
No Chance
13
BUDGET PERFORMANCE REPORT - 1ST QUARTER FY 2013/14
!138 ,Alps
FINANCIAL SUMMARIES, PROJECTIONS AND RECOMMENDATIONS
General Fund
The following table is the Schedule of General Fund Operating Revenues. Vs. Operating Expenditures for the first
quarter of FY 2012/13, which includes comparison information from the prior year. In the last column are
projections of final balances for the current fiscal year based upon the early trends observed through the first
quarter.
Town of Loa Gatos
SehedWe of General Food
Operation Revenues vs. Opernthln ExpendiM1rres
Forthe period ended Sephaedlaer 30, 2013
9beofO ecreo ...I
Dawmed
Ca F.i:
Uae offteserves- GphalPmjats
1M2113
M2/13
FV12/13
M2113
M3114
M3114
M3114
M3114
M3114
Use ofRese - Special Studice
now
Aymled
Is4Q
%
Adopted
ANasnd
frt()rr
%
Mo.-.
VmonalendsaleReaervc
Bsluaee
Bad'.
Actual,
VID
Budget
eudno
A.0,
VFD
ProJeedou
R<w
490,000
43,782
132,899
137,899
Gevml6Pmppty Tax
$ 2,2343746 S
9,848,064 S
26,842
1% S
2,266,806 S
7,7*Q 5
123,395
2% S
8,148,951
Pmp TaxG Tax BrG
15129)
15,790
15,290
16,030
16,030
13,068
82%
16,30
Sales &Use Tax
8,252,428
7,44 ?856
W1,216
8%
2,292,615
2,29),615
1,243,903
16%
&03,.00,
Francs.. Fees
2,028,903
2,00 %940
251j49
13%
?010,030
?0401030
2A 7,426
12%
2052,102
T....,O .Tex
1,295,887
I,000,WO
65A7
7%
1,015,000
1,015,000
169,632
ITh
I'mono
Busmeaa Doen,e TSx
11151,979
1,285,510
0,393
3%
1,361,510
1,361,510
52,1731
4%
1,20'000
Iiceoses&Prank,
2,643,893
2,2Wa55
832,932
38%
?214,302
2,214,300
1,143,264
52%
2,323,125
MolorVehicle In lieu
2,437,489
2,400,000
-
M
242,000
2,424,000
-
0%
2,424,000
ha"aOvemmentel
858,862
252,504
53,020
2%
M'655
Mass
159,830
22%
240,25
Ch.'. 16, 5wbea
4j31,249
4,238,540
1,153,201
22%
3,528,428
3,5)8428
1,535,531
43%
3,592,251
Fin. &F.ffeft ,
688,110
638,809
54,399
9%
73 ?520
732,520
121,105
1376
3770,120
Inle¢,t
386,919
421,656
111,401
26%
522,920
522,9ID
sa,m
15%
MQIXr2
Q SS NVertnml m mars. peraudh
(549,990)
-
-
36,619,09 S 8,015,579
(1001000)
(100,000)
-
19892U
51,839
M.ccUrneous /(hhm
3438,371
2,873,460
240,940
8%
2,816,905
2,816,905
2,310,062
82%
;816,365
F..dT -fv.
546,793
516,920
21,934
4%
261,920
761,920
12,612
$ 4,193,351 S
246,920
Toml Rewau..
35^552
33,654,304
3,528,209
10%
33,26,739
33,226,739
7,22205(1
21%
],431,432
9beofO ecreo ...I
Ca F.i:
Uae offteserves- GphalPmjats
)0'000
700,000
2,754,401
2,254,401
2.751,401
Use ofRese - Special Studice
-
VmonalendsaleReaervc
1,234,no
1,200,000
-
V Savings/Budget Aalcadmcnt
490,000
43,782
132,899
137,899
PFRSWbbey A. Unr
300,000
-
Ten10t6erVUUAn85au-
1,934,230
2,693,100
2798,183
2,892,30
-
2,892300
Taml Rewouee pue Reeerw.
3 37,401,282 S
36.34,304 5
3,528,209
S 36.524,922 S
36.619,039 3
7123,050
_ S
37,323,37
ExpeoAl.... l od.."eH but uo eucumbranme)
Moyot &Councal
185,084
211,516
43,347
20%
201,104
199,537
39484
20%
19),00)
Anomey
207,745
225,451
43,170
19%
230,327
227,027
46,995
21%
225,138
Ad -oadve rives
2,664,269
2,874,922
580,016
2f N/
2,814,031
2,))5,124
516,509
19%
?752,131
Noo- Depll.( Cml Cnvemment
7,004,594
7%23,456
1,225,315
17%
7,716,219
7,942179
2274,019
19%
7,876,092
feow Developmanl
4y5,832
3,935,966
747,050
19%
3,940,380
3,935,487
713,805
18%
31932740
Policc
13,403,435
13,28,877
2,750,855
20%
13,492115
13,487,359
28,328
1036
13,375,131
Pedo &Public Wo&
5,565,529
5,813,969
1,251,693
22%
5,899,429
5,839,80
1,182684
204
5,791,209
Linty
2,055,069
2,174,308
507,431
13%
2231,3)7
2,212424
48),)55
22%
2194,014
Taml Oper.neg Rxp.uees
S 35,411,558 $
36.292465 S
2148.877
20% S 34524,922 S
36,619,09 S 8,015,579
372% S
36,314,331
Net Opmmlag Rewuaes Befaee S'd.a llemc
19892U
51,839
- 3620,658
0
0
- 792529
1,003,404
Sp,W ft-( Doe -Time ra.d Sule &11DA Dierolulluu)
S 2,203,627 S
-
3
-
Net Surplur a,(U..W R,.eew.
$ 4,193,351 S
51,839
(3620668)
3
- 6
-
(192529)
1.009.404
The groups of financial summaries on the following pages 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.
it]
BUDGET PERFORMANCE REPORT - 1ST QUARTER FY 2013/14
Special Revenue Fund
Special Revenue Funds account for the proceeds derived from specific revenue 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, Urban Runoff Source Fund, and several Landscaping and Lighting District
Funds. As indicated in the chart below, Non Point Source fund balance is negative. This is because the Town has
not yet received a payment which is to be credited to this fund. It is anticipated that this payment will be received
and updated during the mid -year budget report.
Beginning Fund Balance (Pre- audit)
Budgeted Revenues
Total Actual Revenues -1st Qtr
Budgeted Expenditures
Total Actual Expenditures - 1st Qtr
1st Quarter Ending Fund Balance
Capital Proiects Funds
CDBG
Grants
Non Point
Source
LIDs
37,102
120,106
149,846
68,689 332,000 39,054
2,108 - _
60,000 359,045 24,665
- 187,077 3,759
39,210 (66,971) 146,087
Capital Projects Funds account for resources used for the acquisition and construction of capital facilities by the
Town. Funds in this category are the GFAR (General Fund Appropriated Reserve) Fund, Traffic Mitigation Fund,
Grant Funded CIP Projects Fund, Utility Underground Fund, Gas Tax Fund, and three Storm Drain Funds. Capital
Projects Funds are generally tracking in accordance with the FY 2013/14 adopted budget. Projects budgeted from
Traffic Mitigation and Gas Tax sources are starting later this fiscal year. It is expected that Gas Tax expenditures
would be high during the second and third quarters. Staff will continue to monitor these expenditures throughout
the remainder of the year.
Capital Project Funds
Budget to Actuals Comparisons
1st Quarter Ending Fund Balance 5,411,942 2,389,756 (677,630) 1,141,542 2,541,817 324,041
15
GFAR
Traffic
Grant Fund
Storm
Utility
Gas
Fund
Mitigation
CIP's
Drains
Undergd
Tax
Beginning Fund Balance
6,613,127
2,399,546
(671,976)
1,110,841
2,519,548
169,346
Budgeted Revenues
3,633,746
1,596,266
2,020,958
105,120
45,000
833,290
Total Actual Revenues - 1st Qtr
164,594
-
-
30,701
22,269
154,695
Budgeted Expenditures
7,906,703
1,449,564
1,596,266
-
-
1,041,000
Total Actual Expenditures -1st Qtr
1,365,779
9,790
5,654
1st Quarter Ending Fund Balance 5,411,942 2,389,756 (677,630) 1,141,542 2,541,817 324,041
15
(*1
BUDGET PERFORMANCE REPORT - 1ST QUARTER FY 2013/14
Internal Service Funds
Internal Service Funds finance and account for special activities and services performed by a designated Town
department for other Town departments 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,
Management Information Systems Fund, Vehicle Maintenance Fund, and the Facilities Maintenance Fund.
Internal Service Funds are generally tracking in accordance with the FY 2013/14 adopted budget, although
expenditures in the Workers' Compensation and Self- Insurance Liability Funds are trending slightly higher due to
adjustments in insurance premiums and claim activity. No revisions to adopted revenues or expenditures are
required at this time.
Internal Service Funds
Budget to Actuals Comparisons
Equipment Workers Self Office Mmgt Info Vehicle Building
Replacemt Comp Insurance Stores Systems Maint. Maint.
Beginning Fund Balance 3,260,532 2,246,914 1,352,034 159,213 2,495,698 608,566 1,258,328
Budgeted Revenues 473,929 655,549 503,815 117,000 1,023,191 528,600 1,222,014
Total Actual Revenues - ist Qtr 118,483 154 ,536 110,142 1,271 251,553 132,437 334,743
Budgeted Expenditures 603,720 764,422 699,926 143,150 1,171,234 531,091 1,790,518
Total Actual Expenditures -1st Qtr 2,352 239,992 607,363 16,197 161,203 85,440 180,438
tat Quarter Ending Fund Balance 3,376,663 29161,458 854,813 144,287 2,586,048 655,563 1,412,633
Trust and Agency Funds
Town Trust and Agency Funds have fund balances as of July 1, 2013 of $224,156 for Parking District #88, $658320
for the Library Trust Funds and $3,852,331 for Successor Agency Trust. No budget revisions are contemplated at
this time for these funds.
Trust & Agency Funds
Budget to Actuals Comparisons
Beginning Fund Balance
Budgeted Revenues
Actual Revenues - 1st Qtr
Budgeted Expenditures
Total Actual Expenditures - 1st Qtr
1st Quarter Ending Fund Balance
16
Library
Parking
SA
Trust
District
Trust
658,320
224,156
3,852,331
46,004
-
4,195,209
36,135
-
1,936,833
180,167
140,366
4,195,066
5,925
146,366
3,653,783
688,530
77,790
2,135,381
owN °,r
BUDGET PERFORMANCE REPORT - 1ST QUARTER FY 2013/14
SOS ci,� s
CONCLUSION
The financial results from the prior fiscal year, coupled with the FY 2013/14 first quarter data, confirm the Town's
continued conservative fiscal planning and efforts to sustain its economically sensitive revenues. This is especially
important in light of the ongoing loss of Netflix sales tax revenue and other key sales tax projections. The long -
range outlook for the Town indicates that revenues are moderately improving, with small excess revenues beyond
expenditures forecast for the short term, potentially allowing the Town to plan for some small restoration of
services versus planning for reductions. As the fiscal year progresses, staff will continue to closely monitor
revenue and expenditure activity and work to identify opportunities to enhance revenue to support current and
future operating capital needs.
17
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