FY2013-14 Mid-Year Budget Performance and Status ReporttpW N OF
` '.V�V a
��s cn� s TOWN COUNCIL AGENDA REPORT
DATE: FEBRUARY 12, 2014
TO: MAYOR AND TOWN COUNCIL
FROM: GREG LARSON, TOWN MANAGER
MEETING DATE: 2/18/2014
ITEM NO: M
SUBJECT: FY 2013/14 MID -YEAR BUDGET PERFORMANCE AND STATUS REPORT
SIX MONTHS ENDING DECEMBER 31, 2013
A. ACCEPT FY 2013/14 MID -YEAR BUDGET PERFORMANCE AND
STATUS REPORT, INCLUDING FY 2013/14 FINANCIAL
PROJECTIONS
B. AUTHORIZE BUDGET ADJUSTMENTS AS RECOMMENDED IN
THE ATTACHED SECOND QUARTER BUDGET PERFORMANCE
REPORT
C. AUTHORIZE $150,000 IN CAPITAL FUNDING FOR EXPANDED
INTEROPERABLE RADIO ACQUISITION, CREATION OF A
POLICE ANALYST AND AN ADDITIONAL ONE -TIME
ALLOCATION OF $175,000 FOR FY 2014/15 PATROL OVER -
STRENGTH POSITION.
RECOMMENDATION:
1. Accept the FY 2013/14 Mid -Year Budget Performance and Status Report, including FY
2013/14 financial projections.
2. Authorize budget adjustments as recommended in the attached Second Quarter Budget
Performance Report (Attachment 1).
3. Authorize $150,000 in capital funding for expanded interoperable radio acquisition,
creation of a Police analyst and an additional one -time allocation of $175,000 for FY
2014/15 patrol over - strength position.
PREPARED BY: St Phen D Conway, Admi ratio Service k� Dire' ctor
N:NGR\Admin WorkFiles\2014 Council ReportsQ01 3_ Mid_Year_l3udget_Staff_Report.doc
Reviewed by: Assistant Town Manager Town Attorney _Finance
PAGE
MAYOR AND TOWN COUNCIL/MEMBERS OF THE SUCCESSOR AGENCY
SUBJECT: FY 2013/14 MID -YEAR BUDGET PERFORMANCE AND STATUS REPORT -
SIX MONTHS ENDING DECEMBER 31, 2013
February 18, 2014
PURPOSE:
The purpose of this report is to provide the Town Council with a status of the FY 2013/14
Adopted Operating Budget at the mid -year point, including an overview of revenue and
expenditure trends and financial projections for the current fiscal year. This report also includes
a brief discussion of the Town's current year General Fund Reserve status and an update to the
Town's five -year financial projections (FY 2014 -19) to provide a context for the FY 2014/15
budget development process and recommended budget approach.
DISCUSSION:
FY 2011/12 MID -YEAR BUDGET STATUS
Budget Performance Report
The attached Budget Performance Report (Attachment 1) is a mid -year report covering a six -
month period beginning July 1, 2013 and ending December 31, 2013 The report provides
analysis and recommendations related to the current year's adopted budget revenue and
expenditures and the projected financial condition of all Town funds.
General Fund Projected Year -End Balances June 30, 2014
Current fiscal year -end projections for FY 2013/14 reflect an anticipated $500,000 surplus of
operating revenues over expenditures. As discussed in Attachment 1, reserves are tracking
higher than budgeted and actual expenses typically occur lower than budgeted.
FY 2013/14 MID -YEAR BUDGET UPDATE TRENDS
Operating Revenue Trends
Revenue collections from economically sensitive sources such as property tax, motor vehicle in
lieu fee, sales tax, and transient occupancy tax all point to strong signs that the economy has
improved and is trending in a positive direction. In addition, increased and deferred activity in
the Community Development Department helped to bring in increased revenues as well as rising
workloads.
The Town's revenue forecast is dependent upon the stability of economically sensitive revenues,
including sales tax, property tax, transient occupancy tax, franchise fees, and interest income.
While many of these revenues are increasing, interest income remains low due to continued low
interest rates. Staff continues to monitor all of these revenue sources on a regular basis to ensure
that budget projections are being met.
PAGE 3
MAYOR AND TOWN COUNCIL /MEMBERS OF THE SUCCESSOR AGENCY
SUBJECT: FY 2013/14 MID -YEAR BUDGET PERFORMANCE AND STATUS REPORT -
SIX MONTHS ENDING DECEMBER 31, 2013
February 18, 2014
Operating Expenditure Trends
While it was anticipated that many of the Town's economically sensitive revenues would
increase as a result of the improved economy, staff continued to implement cost reduction
strategies this fiscal year, including targeted hiring freezes, redeployment of staff, and reduction
in materials and supply costs. Many of these reduction strategies have helped to keep current
departmental expenditures below the expected 50% of budget level, which could result in
expenditure savings at year -end. .
Police Staffing and Equipment
Last May in the report for Council's consideration of this year's budget, staff committed to bring
back additional information regarding Police staffing and equipment needs. Specifically, the
staff report said:
"Staffing needs are associated with recurring absences due to retirements and
prolonged medical leaves, resulting in inadequate shift coverage. The previously
budgeted "hire ahead" program for new off cers may be expanded to provide
additional staffing year -round if reallocated funding can be identified. In addition,
there are some one -time Police equipment needs that will be considered based on
available funding carried forward from the current fiscal year. "
The Police Department, Finance and the Town Manager's Office have completed the review of
the Police Department needs and are recommending three mid -year budget and staffing
adjustments.
First, the Police Department's highest budget and staffing priority is restoration of the analyst
position previously eliminated due to budget reductions. Some of that work was transferred to
the now vacant records and dispatch manager, and some of the financial and performance data
analysis has been completed on an ad hoc basis by staff in Finance, Community Development
and Police. The lack of consistent financial and performance monitoring is not sustainable for
effective management of the department, especially with upcoming management transitions.
Consequently, the Police department has proposed eliminating two half time positions (a .5
dispatcher and a .5 community service officer intern) to restore the prior analyst position. The
required additional funding is available from vacancy savings for this year and will be covered
by other ongoing budget adjustments in the proposed budget for next year and beyond.
Second, as noted last year, the Police Department has regular vacancies resulting from both
retirements and prolonged medical leaves, often due to on-the-job injuries. Given reductions
over the past several years, these vacancies directly result in inadequate Police patrol staffing on
a 24/7 basis. Consequently, staff is recommending restoration of the "hire ahead" program in
which new officers are hired in advance of planned retirements so that required training can be
completed prior to the retirement vacancy occurring, thereby preventing or minimizing a
reduction in patrol staffing. In addition, staff is recommending creation of a pilot "over -
strength" position to backfill behind officers on medical leave without the use of overtime. Costs
for the "hire ahead" and "over- strength" positions this year would be covered by departmental
PAGE
MAYOR AND TOWN COUNCIL/MEMBERS OF THE SUCCESSOR AGENCY
SUBJECT: FY 2013/14 MID -YEAR BUDGET PERFORMANCE AND STATUS REPORT -
SIX MONTHS ENDING DECEMBER 31, 2013
February 18, 2014
budget and vacancy savings while one -time funding up to $175,000 would be needed for the
"over- strength" position next year.
Last, the County is moving ahead with an aggressive program for regional interoperability of
public safety communications for police and fire services across all jurisdictions, which was just
added to the Town's Strategic Goals for 2014 -16. Replacement of the Town's vehicular and
mobile radios to be compliant with regional interoperability requirements will cost
approximately $500,000. $150,000 is available and allocated for this purpose in the Town's
equipment replacement reserve. Another $150,000 in one -rime funding is needed this fiscal year
to complete the vehicular unit radio replacement during this Spring's consolidated and
discounted regional acquisition. Town staff will seek grant funding for the remaining $200,000
needed for the mobile unit replacements, and will provide an update as part of next year's
proposed budget or at the Mid -Year Budget Review in 2015.
In summary, staff is recommending the following changes:
1) Create a full time staff analyst position and delete two half -time positions with current
and future year costs offset by other budget savings;
2) Reauthorize "hire- ahead" officers for planned retirements to be funded this year out of
vacancy and budget savings;
3) Add anew patrol officer position as an "over- strength" position to be funded this year out
of vacancy and budget savings and direct staff to include in next year's proposed budget
up to $175,000 in one -time funding required for this pilot position through next fiscal
year;
4) Allocate $150,000 from the Capital and Special Projects Reserve to augment radio
acquisitions in compliance with the regional interoperability project.
State Budget Impacts to Local Governments
Due to fluctuating statewide revenues, the Department of Finance has recently released new
projections for the FY 2014/15 gas tax revenues that were released with the Governor's proposed
2014/15 budget in early January 2014. These projections show that gas tax revenues are
projected to decrease due to Prop 42 sales tax on gasoline.
In addition, in 2013 the CALPERS Board adjusted and changed actuarial assumptions regarding
discount rates and smoothing methodologies which resulted in increased plan costs in the near
term. Furthermore, CALPERS is now considering changes in actuarial assumptions including
mortality and retirement age, changes to either of which would impact employer contribution
rates now and in the future years. It is projected that as a result of these changes rates could
increase by up to 34% spread over the next ten years, which would substantially increase Town
costs.
PAGE
MAYOR AND TOWN COUNCIL/MEMBERS OF THE SUCCESSOR AGENCY
SUBJECT: FY 2013/14 MID -YEAR BUDGET PERFORMANCE AND STATUS REPORT -
SIX MONTHS ENDING DECEMBER 31, 2013
February 18, 2014
Finally, as a result of communication with the State of California, Santa Clara County has
indicated to local jurisdictions that the Property Tax Administrative fee will likely increase by
8% next year, which is on top of the 10 -12% increase that is occurring during this year.
Furthermore, the Town is likely to incur a decrease of 23% of the supplemental property tax
revenues due to the State Controller's opinion to exclude VLF Property Tax In -Lieu from the
basis used to allocate supplemental tax revenues on an annual basis.
GENERAL FUND RESERVE STATUS
As of June 30, 2013, Town's FY 12/13 General Fund balance was approximately $28.3 million,
all of which is legally reserved or designated for special purposes by Council. Included in this
amount are approximately $4.2 million in reserves for Economic Uncertainty, $12.4 million for
Capital and Special Projects, and $6.7 million for Budget Stabilization. These reserves remain
intact at the mid -year point of FY 2013/14.
FY 2014/15
BUDGET DEVELOPMENT PROCESS
Concurrent with the update of the Five -Year Financial Plan and in anticipation that limited
service and staffing restorations may be possible for the FY 2014/15 budget, staff began budget
limited development discussions in late 2013. This process includes the conceptual development
of staffing changes, revenue enhancements, and adjustments to the User Fee Schedule. Staff is
currently working on preparing the FY 2014/15 budget which will be presented to council in
May 2014.
FIVE -YEAR FINANCIAL PLAN UPDATE
The Five -Year Financial Plan is an independent financial tool used to forecast current and future
revenues and expenses. This tool is designed to be more fluid in nature to build various funding
scenarios and test "what if' assumptions, providing a range of budget strategies for
consideration.
The updated Plan for the current year projects a surplus of $500,000 and $400,000 for FY
2014/15. However, deficits in FY 2015/16 and FY 2016 /17 are projected due to the increased
CALPERS rates discussed above. Current and future projections in the Five -Year Plan are based
upon conservative revenue and expenditure growth rates and trends.
PAGE 6
MAYOR AND TOWN COUNCIL/MEMBERS OF THE SUCCESSOR AGENCY
SUBJECT: FY 2013/14 MID -YEAR BUDGET PERFORMANCE AND STATUS REPORT -
SIX MONTHS ENDING DECEMBER 31, 2013
February 18, 2014
Town of Los Gatos General Fund
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PAGE 7
MAYOR AND TOWN COUNCIL/MEMBERS OF THE SUCCESSOR AGENCY
SUBJECT: FY 2013/14 MID -YEAR BUDGET PERFORMANCE AND STATUS REPORT -
SIX MONTHS ENDING DECEMBER 31, 2013
February 18, 2014
CONCLUSION:
The Town's outlook at mid -year is encouraging due to increased revenues, particularly those that
reflect the economic recovery. Understanding the growth limitations of key revenues and
expected increases in operating costs, such as employer retiree medical costs and other personnel
costs, the Town's highest fiscal priority will be to contain operating costs on an ongoing basis,
while providing some relief from workload pressure that has built up during the past five years
while maintaining Town core services with reduced staffing.
ENVIRONMENTAL ASSESSMENT:
This budget report is not a project defined under CEQA, and no further action is required
FISCAL IMPACT:
The Second Quarter Budget Performance Report includes a number of recommended budget
adjustments necessary for FY 2013/14. As discussed earlier in this report, staff is currently
engaged in the FY 2014/15 budget development process, which will continue with prioritizing
expenditures to effectuate the best use of limited surplus revenues that are contingent upon the
performance of the local economy and any budget actions taken by the State of California to
balance its budget.
Attachments:
1- Budget Performance Report for the Six Months Ended December 31, 2011
THIS PAGE
INTENTIONALLY
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BUDGET PERFORMANCE REPORT - 2ND
INTRODUCTION
Purpose
This is the second quarterly budget performance
report for the Fiscal Year 2013 -14, for the three
month period ending December 31, 2013. 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 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 December 31, 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 revenues: The Town regularly
monitors and adjusts its year -end revenue
1
UARTER FY 2013/14
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 2012/13 Adopted Budget ........2
General Fund Reserve Status...... .................
2
Greater Economic Outlook ............................3
State Budget Update ........ ..............................3
General Fund — Key Revenue Analysis .....................4
Property Tax ................. ..............................5
SalesTax ........................ ..............................6
Franchise Fees ................... ..............................7
Business License Tax ...... ..............................8
Transient Occupancy Tax .............................9
Interest Income ............. .............................10
Charges for Services ..... .............................11
Licenses & Permits .......... .............................12
FY 2012/13 Recommended Budget Adjustments
...13
Summary of Key Recommended Adjustments ........15
Financial Summaries and Projections ......................18
General Fund ................ .............................18
Special Revenue Fund ... .............................19
Capital projects Funds .... .............................19
Internal Service Funds .... .............................20
Trust and Agency Funds . .............................21
Redevelopment Agency... ...........................
21
Conclusion....................................... .............................21
BUDGET PERFORMANCE REPORT - 2ND
EXECUTIVE SUMMARY
Status of FY 2013/14 Adopted Budget
Overall second quarter General Fund revenues are
trending favorably when compared to the second
quarter of Fiscal Year 2012/13. Due to some
projected revenue increases, staff is recommending
a net general fund increase of revenues, offset by
expenditure increases, of approximately $590,000
from adopted budgeted estimates. The current
forecast expects a substantial rise in Transient
Occupancy Tax (TOT) due to increased tourism in the
Bay Area. Revenues such as Business License Tax,
Licenses and Permits, Franchise Fees and VLF Backfill
Property Tax are all trending favorably, a strong
indication that the economy is improving as
projected.
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 463 of budget. With six
months of data now available, staff can better
predict the next six months of expenditure trends,
although unexpected costs can occur. Should any
budget adjustments be necessary to balance
operating revenue and expenditures, staff will advise
Council accordingly. Expenditure additions at this
time include Election fees for a special election,
increased training, recruitment, and safety repairs.
Providing services to the community in this and
future fiscal years will continue to require strong
performance by economically sensitive revenues to
offset uncontrollable cost increases. The FY 2014/15
budget is the first budget in five years that is not
projected to be a deficit budget where cuts are
needed to balance. For the first time in five years
the FY 2014/15 budget will continue to fund
essential public services as well as focus on relieving
workload pressures that have built up over the past
five years while budget cuts reduced the workforce
but workloads remained constant or have grown as
a result of the improved economy.
2
UARTER FY 2013/14
General Fund Reserve Status - 6/30/13
General Fund Reserves closed at a balance of
approximately $28.3 million at June 30, 2013 in
designated reserves which is in accordance with
Town financial policies and operating and capital
budget requirements, and includes a $4.2 million
Economic Uncertainty.
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 available for use for another
purpose. Designated reserves are established by
Council Polity for an intended purpose. With the
dissolution of the RDA, the Town no longer has
restricted reserves.
Designated General For Reserves
Amount Mllllpp
Designated for Capital and Special Projects $
12,4
Deal rated for Budget Stabilimtion
6,7
Desi nated for Economic Uncertain
4,2
Des! natedfor Compensated Absences
2,3
Dealt rated for Open Space
0.6
Designated for Y/E Saung Budget'djusbnents
0.5
Designated for Special StudissAncentiuss
0.5
Desi rated ter Vasona Land Sale
0,4
Desi nated for Retiree Wdical Actuarial
0,4
Designatedfor Sustainablllty Reserve
0,1
Designated for Wna ers Contingency and Productivity
0,1
Designatatl for YIE Cargowr Pds
0.1
Llr.Tnapdated
0
lotal.Designated Ganeral Fund Balance Reserve $
23;3
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).
BUDGET PERFORMANCE REPORT - 2ND QUARTER FY 2013/14
The Budget Stabilization Reserve was established to
serve as a transitional "bridge" funding source to
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. The Town has not yet had to rely on or use
this reserve during the "Great Recession."
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
According to the Congressional Budget Office (CBO),
after a frustratingly slow recovery from the severe
recession of 2007 to 2009, the economy will grow at
a solid pace in 2014 and for the next few years.
Gross Domestic Product is expected to increase by
roughly 3 percent between the fourth quarter of
2013 and the fourth quarter of 2014 —the largest
rise in nearly a decade. Similar annual growth rates
are projected through 2017. Nevertheless, the CBO
estimates that the economy will continue to have
considerable unused labor and capital resources for
the next few years. Although the unemployment
rate is expected to decline, the CBO projects that it
will remain above 6.0 percent until late 2016.
Moreover, the rate of participation in the labor
force —which has been pushed down by the
unusually large number of people who have decided
not to look for work because of a lack of job
opportunities —is projected to move only slowly
back toward what it would be without the cyclical
weakness in the economy.
In addition, Federal revenues are expected to grow
by about 9 percent this year, to $3.0 trillion, or
17.5% of GDP. Revenues were well below that
average in recent years, both because the income of
individuals and corporations fell during the recession
and because policymakers reduced some taxes. The
expiration of various tax provisions and the
improving economy underlie CBO's projection that
revenues will rise sharply this year and further into
2015.
Finally, in the next few years, the CBO expects, that
further growth in housing construction and business
investment will raise output and employment, and
the resulting increase in income will boost consumer
spending. In addition, under current law, the federal
government's tax and spending policies will not
restrain economic growth to the extent they did in
2013, and state and local governments are likely to
increase their purchases of goods and services after
having reduced them for several years. As a result,
the CBO projects, real GDP will expand more quickly
from 2014 to 2017 —at an average rate of 3.1% a
year.
State Budget Update
California has made substantial progress in recent
years in addressing its prior, persistent state
budgetary problems. This progress has been
facilitated by a recovering economy, a stock market
that has been soaring recently, increased revenues
from the temporary taxes of Proposition 30, and the
Legislature's recent decisions to make few new
ongoing spending commitments outside of
Proposition 96. The Governor's 2014/15 budget
proposal continues to focus on paying down the
"wall of debt," a selection of budgetary liabilities the
state incurred in addressing its past budget
problems.
Having coped with a more severe recession than that
of the nation as a whole, California has come back
over the last 18 months with growth that has
outpaced the nation. California's Gross State Product
grew by 3.5% last year, well above the U.S. rate of
2.2%. In addition, the growing housing market and
retail and hospitality industry are providing
increased revenues for the state.
pow x of
BUDGET PERFORMANCE REPORT - 2ND QUARTER FY 2013/14
GENERAL FUND — KEY REVENUE ANALYSIS
The following discussion provides a status of significant General Fund revenue sources as of the second quarter,
ending December 31, 2013. Staff monitors each revenue source closely and may recommend certain revenue
adjustments based on revenue actuals or state budget action.
0
BUDGET PERFORMANCE REPORT - 2ND QUARTER FY 2013114
1pd:-�AyOS
Property Tax
Property tax is the largest revenue source for the Town's General Fund, accounting for 24.5% 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 9.3 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. Second quarter receipts
are trending slightly below those received during the second quarter of the previous fiscal year and are at 34 %of
budgeted totals. However, given that distributions are largely received in the third and fourth quarters staff
recommends a $255,615 increase in General Property Tax.
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
$•
Quarterly and Annual Revenues
5 -Year History
FY 09110 FY 10/11 FY 11/12 FY 12/13 FY 13/14
02nd Quarter
Actual Revenues
OFiseal YearTotal
Actual Revenues
K Fiscal Year
Budgeted
Revwues
FY 09/10
FY 10 /11
FY 11/12
FY 12/13
FY 13/14
2nd Quarter Actual Revenues
$ 3,191,286
$ 3,763,165
$ 3,155,476
$ 3,753,004
$ 3,462,424
Fiscal Year Total Actual Revenues
$ 7,465,871
$ 7,289,897
$ 7,532,073
$ 7,234,746
Fiscal Year Budgeted Revenues
$ 7,766,806
2nd Quarter Percent of Total
42.74aA
51.620/9
41.89%
51.87%
44.58%
Recommended Budget Revision
S 225,615
*-m BUDGET PERFORMANCE REPORT - 2ND QUARTER FY 2013/14
Sales Tax
Sales tax is the second 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 — Second quarter receipts are trending relatively consistent when compared to the same period in the
past fiscal year, with collection around 36.2% of budgeted revenues. The most recent sales Tax and Economic
Review update from Muni Services, the Town's sales tax consultant, states that sales tax receipts increased by
3.4% in statewide and 2.9% in Los Gatos over the same quarter from the previous year. it should be noted that the
Town anticipated lower sales tax revenue for the year and budgeted revenues at 11% less than FY 2012/13 actual
revenue, primarily due to the change in business model for Netflix. Based on these new projections, staff
recommends a budget increase of $70,477.
$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
2nd Quarter Actual Revenues
Fiscal Year Total Actual Revenues
Fiscal Year Budgeted Revenues
2nd Quarter Percent of Total
FY 09/10 FY 10 /11 FY 11/12
m2nd Qumter Actual
Revenues
oFisml YearTOfel
Actual Revemcs
• Fiscal YearBudgeted
Revenues
FY 12/13 FY 13/14
$ 3,221,690 $ 4,776,828 $ 3,667,071 $ 2,975,082 $ 2,825,414
$ 8,317,216 $ 9,971,409 $ 9,889,100 $ 8,757,428
$ 7,797,615
38.74% 47.91% 37.08% 33.97% 36.23%
Recommended Budget Revision $ 70,477
(WIUDGET
PERFORMANCE REPORT - 2ND 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 second
quarter receipts are not necessarily predictive. Total franchise fee revenues are trending in line with those of the
second quarter in FY 2012/13. No budget adjustment recommended this time.
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
Quarterly and Annual Revenues
5 -Year History
FY09 /10 FY 10 /11 FY 11/12 FY 12/13 FY 13/14
02nd Quarter Actual
Revenues
OFisml Year Total
Actual Revenues
Butiped Revenues
FY 09/10
FY 10 /11
FY 11/12
FY 12/13
FY 13/14
2nd Quarter Actual Revenues
$ 553,434
$ 626,592
$ 669,186
$ 685,308
$ 681,431
Fiscal Year Total Actual Revenues
$ 1,699,850
$ 1,901,605
$ 1,952,488
$ 2,028,903
Fiscal Year Total Budgeted Revenues
$ 2,040,030
2nd Quarter Percent of Total
32.56%
32.95%
34.27%
33.78%
33.40%
Recommended Budget Revision
lows F
BUDGET PERFORMANCE REPORT - 2ND QUARTER FY 2013/14
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 retail is capped at $975. These activities account for approximately 25% of annual business licenses,
while the remaining 75% are flat fee businesses. 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 18% higher than prior year actuals. Current year second quarter
revenues are trending 8 % higher of those of the previous year, consistent with the trending economic forecast and
improved economic outlook. Business license revenue is primarily received in the second and third quarter of each
fiscal year, and therefore the increased revenue trend in this quarter is consistent with expectations. There are no
recommended budget changes to this revenue source.
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 /1.1 FY 11/12 FY 12/13 FY 13/14
2nd Quarter Actual Revenues
Fiscal Year Total Actual Revenues
Fiscal Year Total Budgeted Revenues
2nd Quarter Percent of Total
Recommended Budget Revision
FY 09/10
470,833
$ 1,220,802
38.57%
®2nd Quarter
Actual Revenues
OFiscal Year Total
Actual Revenues
/Fiscal Year Total
Budgeted
Revenues
FY 10 /11 FY 11/12 FY 12/13
368,757 209,377 327,237
$ 1,136,511 $ 1,077,620 $ 1,151,579
12
FY 13/14
352,049
$ 1,361,510
32.45% 19.43% 28.42% 25.86%
.pow x o0
l' ) BUDGET PERFORMANCE REPORT - 2ND QUARTER FY 2013/14
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 visitors to Los Gatos.
Analysis — Visit California, formerly the California Travel and Tourism Commission, reports that visitors to California
in 2014 are projected to spend $119 billion, a 5.9% increase, as both State and national travel industries are
recovering from the recession. The forecast for California visitation in 2014 is for solid growth, increasing by a
projected 2.6% in 2014. Second quarter TOT revenues are trending 29% higher than the second quarter of 2012/13,
and as a result staff is recommending a budget increase of $185,000.
$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
FY 09/10
2nd Quarter Actual Revenues $ 354,551
Fiscal Year Total Actual Revenues $ 923,783
Fiscal Year Total Budgeted Revenues
2nd Quarter Percent of Total 38.38%
02nd Quarter Actual
Revenues
oFiscal Year Total
Actual Revenues
■Fiscal Year Total
Budgeted Revenues
FY 10 /11
FY 11/12
FY 12/13
FY 13/14
$ 380,129
$ 422,059
$ 434,419
$ 562,906
$ 1,004,659
$ 1,174,485
$ 1,295,887
$ 1,015,000
37.840/.
35.94%
33.52%
55.46%
Recommended Budget Revision $ 185,000
0
BUDGET PERFORMANCE REPORT - 2ND 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 — Second 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 December 2012 to December 2013 the LAW yield
declined from 0.33% to 0.26%; however the five -year Treasury increased from 0.72% to 1.75 %, the three -month
treasure increased from 0.05% to 0.07 %, and the six- month Treasury declined from 0.11% to 0.10 %.
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. As the Town's Investment Policy requires investment in conservative vehicles such as the LAW and
Treasury bills, their continued low returns will greatly affect interest income returns. Staff recommends a revenue
budget reduction of $175,680.
$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
02nd Quarter Actual
Revenues
OFiscal Year
Revenues
■ Fiscal Year Total
Budgeted Revemnes
10
FY 09/10
FY 10/11
FY 11/12
FY 12113
FY 13/14
2nd Quarter Actual Revenues $
687,571
$ 545,913
$ 476,653
$ 476,653
$ 251,835
Fiscal Year Revenues $
1,129,895
$ 942,977
$ 606,454
$ 606,454
Fiscal Year Total Budgeted Revenues
$ 892,990
2nd Quarter Percent of Total
60.9%
57.9%
78.6%
78.6%
28.2%
Recommended Budget Revision
$ (175,680)
10
tow x o
BUDGET PERFORMANCE REPORT - 2ND QUARTER FY 2013114
!p8 °exiOS
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
17% less than FY 12/13 because of the loss of redevelopment reimbursement for administrative and housing
support.
Analysis — Second quarter Town service revenues, specifically Charges for Services, are trending well ahead of
second quarter results from the previous fiscal year, with 73% of budgeted revenues already collected. The
increase is largely the result of an increase in building activity and development. Development fees were collected
in advance for projects and deferred through fiscal years. Staff recommends a $122,333 revenue increase at mid-
year.
$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
Quarterly and Annual Revenues
5 -Year History
FY 09/10 FY 10/11 FY 11/12 FY 12113 FY 13/14
FY 09/10
2nd Quarter Actual Revenues $ 2,180,260
Fiscal Year Total Actual Revenues $ 3,776,411
Fiscal Year Total Budgeted Revenues
2nd Quarter Percent of Total 57.73%
]FisW Y.T.WAEwd
Xc nws
IFi A YMrTMIBWSeWd
R...,
FY 10 /11 FY 11/12 FY 12/13 FY 13/14
$ 2,039,800 $ 2,303,940 $ 2,211,225 $2,509,769
$ 3,360,607 $ 3,683,044 $ 4,105,015
$3,435,758
60.70% 62.56% 53.87% 73.05%
Recommended Budget Revision 122,333
11
.tons r
BUDGET PERFORMANCE REPORT - 2ND QUARTER FY 2013/14
(ps B�S�S
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 higher than FY12 /13 in anticipation increased development activity.
Analysis — Second quarter License and Permit revenue is trending well ahead of second quarter results from the
previous fiscal year, with an increase of 23 %. Therefore, staff recommends a budget revenue increase of $249,500.
$3,500,000
$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
DFi" Y ®r Te%I Acwd
Revenues
I Fiuel Y® To IBudgekd
R..n
12
FY 09/10
FY 10/11
FY 11/12
FY 12/13
FY 13/14
2nd Quarter Actual Revenues
$ 932,495
$ 1,151,498
$ 1,218,432
$ 1,566,216 $
1,930,933
Fiscal Year Total Actual Revenues
$ 2,035,308
$ 2,040,811
$ 2,361,510
$ 3,060,948
Fiscal Year Total Budgeted Revenues
$
2,577,413
2nd Quarter Percent of Total
45.82%
56.42%
51.60%
51.17%
74.92%
Recommended Budget Revision
249,500
12
.tOW N f
i BUDGET PERFORMANCE REPORT - 2ND QUARTER FY 2013/14
�Dg gA�O
FY 2012/13 Recommended Budget Adjustments
Budget adjustments are recommended for the following revenues and expenditures at the second quarter as
described below:
Fund Prgm Account General Fund Revenues
111
1201
45432
Property Tax
255,615
111
1201
43311
Motor Vehicle In Lieu Fee
233,404
111
1201
41211
Sales & Use Tax
70,477
111
1201
41311
Transient Occupancy Tax
185,000
111
0
0
Licenses & Permits
249,000
111
0
0
Charges for Services
122,333
111
0
0
Fines & Forfeitures
(125,000)
111
2301
0
Interest
(175,680)
111
0
0
Miscellaneaus Other
83,853
111
0
0
Transfer in from Successor Agency Trust Fund
(90,297)
Ill
4810
43208
EMPG Grant
17,899
ill
7201
0
PLP Innovation Grant
2,000
ill
7204
0
PLP Innovation Grant
12,732
111
TOTAL GENERAL FUND REVENUES $
841,336
ill
111
General Fund Erpenditures
111
1201
63213
Executive Recruitment Services
50,000
111
1201
62227
SCC- Election Fees for Special Election
54,000
ill
1201
64121
Town -wide Training per Council Discussion
15,000
111
4810
61226
EMPG Grant
17,899
111
5301
0
Safety &Repair
28,287
111
5301
61212
New Park Signs as a Result of Town Park Code Changes
1,776
111
7201
51310
PLP Innovation Grant - 2,000 Temp Librarian Hours
2,000
111
7204
61132
PLP Innovation Grant - 201pads, Laptops & 2 Charging Stations
12,533
111
7204
63332
PLP Innovation Grant - M S Word for Laptops 2 copies
199
111
62142
Memberhsip Fees
12,925
111
62164
BMP Housing Program
12,925
111
62343
Credit Card M erchant Fee
12,925
111
62613
Utdity/Water
15,950
111
62624
Street/Lite Signal
15,000
111
TOTAL GENERAL FUND EXPENDITURES $
251,419
13
low x oa
BUDGET PERFORMANCE REPORT - 2ND QUARTER FY 2013/14
!p8 Gp`pS
Fund
Prgm
Account Other Fund Expenditures
_
411
GFAR
411
Police lnteroperability Radios
150,000
150,000
481
Gas Tax
481 481 -811 -9901
82405
Budget Originally Set to Spend Fund Balance
(222,710)
(222,710)
ABAG Town Liability
611
1302
65511
Insurance Premium
56,000
611
1302
65512
Admin Premium
57,000
113,000
Workers Compensation
612
2202
62332
Additional Ergonomic Evaluation Expenses
5,000
612
2202
65532
Field Investigation
140,000
612
2202
65531
Indemnity - Mandatory Salary
200,000
345,000
Equipment Replacement
631
5402
62145
PD Police Car Laptop Conversion
10,000
10,000
Vehicle Maintenance
632 5403 62145 PD Police Car Laptop Conversion 5,000
632 5403 81210 Replace Wiring for Fuel island Monitoring System 10,000
15,000
Buildin gMaintenance
633 5404 62371 PPW Office Painting ( $29,924 & Civic Center Projects ($8,800) 38,724
38,724
TOTAL OTHER FUNDS EXPENDITURES $ 449,014
14
�pWN F
BUDGET PERFORMANCE REPORT - 2ND QUARTER FY 2013/14
!ps GA�pS
SUMMARY OF KEY RECOMMENDED BUDGET ADJUSTMENTS
General Fund Revenues
Licenses and Permits: The recommended increase of $249,500 is primarily due to the increase in
revenues from the Building and Planning departments which has resulted from deferred revenues from
2012/13. The deferred revenues are based on larger projects that came in close to fiscal year end and the
work is not completed until the next fiscal year. This revenue increase also includes $30,000 projected
revenue from the recently introduced Taxi Licensing fee.
Charges for Services: Staff recommends an increase of $122,333 in this revenue sources primarily due to
increased revenues being received for development related services
General Property Tax and Motor Vehicle in Lieu Fee: Staff recommends an increase in projected revenues
of approximately $55,615 in General Property Tax and $233,404 Motor Vehicle in Lieu fee which are in
line with the estimates and forecasts provided to the Town from Santa Clara County.
Sales and Use Tax: Staff recommends a budget increase of $70,477 as a result of the positive economic
outlook provided by MuniServises, The Town Sales Tax advisor.
• Transient Occupancy Tax: Actual receipts and Visit California forecasts indicate a growth in travel and
therefore, staff recommends a budget increase of $185,000.
• Interest Income: The continued low returns from key investment vehicles will greately affect interest
income returns. Staff recommends a budget reduction of $175,680.
Miscellanious Other: Miscellanious revenues are trending slightly higher than adopted budget levels,
including donations from the Police Foundation, Billy Jones railroad and one -time medicare Subsidary
payment. Staff recommends a budget increase of $83,753.04.
• Fines and Forfetures: Actual parking fines receipts are trending lower than those estimated on partial
actuals from the previous fiscal year. Staff recommends a revenue budget decrease of of $125,000.
Emergency Management Performance Grant (EMPG): The Town received $17,899 grant funding to be
used for emergency management services. Staff recommends a budget increase of $17,899
• Pacific Library Partnership ( PLP) Innovation Grant: Pacific Library Partnership ( PLP) Innovation Grant:
The Pacific Library Partnership is a consolidation of four library systems working towards the common
goal of improving the services of its constituent member libraries by maintaining existing California Library
Services Act programs, leading research and development efforts to ensure that libraries are best
positioned to respond to demographic, economic, and cultural changes through innovative and
collaborative approaches to programming and services and the enhancement of collective resource
li 1.1
�os.G�`oS BUDGET PERFORMANCE REPORT — 2ND QUARTER FY 2013/14
building and sharing. Staff anticipates to receive $14,732 grant funding and recommends a revenue
appropriation increase.
• Transfer In: Staff recommends a budget decrease of $90,297 resulting from the FY 2013/14 true -up of the
Administrative Budget for the Successor Agency.
General Fund and Oher Funds Expenditures
• Executive Recruitment Services: Due to the high number of executive recruitments that are anticipated
during FY 2013/14 as well as relocation costs, staff recommends $50,000 budget adjustment.
• Special Election: Staff recommends a one -time budget increase of $54,000 from the Capital and Special
Projects Reserve to fund $100,000 in special election expenses.
Town -wide Training: Staff recommends a one -time budget increase of $15,000 in town -wide training
expenses from the Capital and Special Projects Reserve.
Emergency Management Performance Grant (EMPG): The Town received $17,899 grant funding to be
used for emergency management services. Staff recommends an expenditure budget increase, to offset
the corresponding revenue increase, of $17,899 for emergency management services spending.
• As previously discussed the Town received a FLIP Innovation Grant for library services. The Town
anticipates receipt of grant money to spend $2,000 on temporary staff hours $12,732 and Laptops, Ipads
and softwares.
• Safety, Compliance and Maintenance:Staff recommends an accumulated one -time $28,287 expenditures
budget increase for various unanticipated safety repairs and compliance projects from the Capital
Reserve. This includes $12,000 expenditure increase for park vandalism clean -up.
• Credit Card Merchant Fee: Due to increased merchant expenses with the tow -wide acceptance of credit
card payments, staff recommends a $12,925 expenditure budget increase.
Utilities: Staff recommends a $15,950 expenditure increase in water utilities and $15,000 increase to
Street Signal expenditures to cover increased energy cost.
Staff recommends a $15,000 expenditures increase for Police Car Laptop Conversion from Vehicle
Maintenance and Vehicle Replacement funds.
Staff recommends $38,724 expenditures increase to cover Parks And Public work Office Painting and Civic
Center Projects from Facilities Maintenance reserve.
16
0�'N
BUDGET PERFORMANCE REPORT - 2ND QUARTER FY 2013/14
• Staff recommends a $150,000 expenditure adjustment to fund Police interoperability radios.
• Expenditures in Workers Compensation and ABAG are trending significantly higher due to adjustments in
insurance premiums and claim activity. The staff recommends a $113,000 increase to adopted ABAG
expenditures and a $345,000 increase the Workers Compensation funds expenditures.
17
N
1 y "" BUDGET PERFORMANCE REPORT - 2ND QUARTER FY 2013114
Boa s��o
FINANCIAL SUMMARIES, PROJECTIONS AND RECOMMENDATIONS
General Fund
The following table is the Schedule of General Fund Operating Revenues. Vs. Operating Expenditures for the second
quarter of FY 2013/14, this 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 second
quarter.
Nn opmatiog Re,eduee Before Spedal Berne E 2220347 $ 51839 $ (2,347579) $ $ 481709 E 629,176 S 574,409
Specid items (One- Time"Rd Sale &RDA Dissdut
2203,62]
For the period ended December 31, 2013
0
0
Total Budgeted Use of Reoenes S
$
Unsullied
$
S
E 0% S
Net Surplus or (Use) of Resomms $
4423974 S
51.839 E (2347579)
0% $
S
481.709 $ 629.06 W. E 574409
PY12 /13
FY12113
FY12 /13
M2 113
M3114
W13114
M3114
M3114
1rY13 1I4
new
Adjusted
2nd Qtr
%
Adopted
Adjarhd
2nd Qtr
%
Sdomce
0.1....
Budget
Attitude
YID
Budget
Budget
ArtuW
YTD
Protec8m
Reneuee
General atopedy, Tax
E ]$34,]46 $
1,848,064 E
3)53,004
48% S
],]0,806 E
8,022,421 $
3 ,462,424
43% E
8,031,613
VLF Baclfill Property Tax
2,437,489
2,40,000
-
05o
2,424,000
2,657,404
-
$
2,657,404
Sale, &Use Tax
8,]5],428
7,442,856
4975,082
40'h
7,fl,615
7,86 &092
2,825,414
36% E
7,868,092
Frenelme I.
2'28,903
2,009,940
685,506
34%
2,010,030
2,010,030
681,431
33% $
2,035,500
amount (]c Mnlcy Tax
1,295,887
1'0'000
434,419
43%
1,015,000
1,200,000
562,906
47% E
1,20'000
MV Fuu
15,790
15,]90
15,]90
16,030
16'30
13,068
82% $
16,030
asuma Uism.Tax
1,151,519
1,286,510
327)37
25%
1,361510
1,361510
352,019
26% $
061,510
Licenses &Permits
3,060,948
2 ,563,173
1566216
61%
2,/1.413
2,57{413
1,930,933
75% E
2,837,@2
Intergovernmental
908,867
752,504
264,992
35%
]23,655
]23,655
282,086
39% $
732,090
masges for Senka
4,515,716
4,10;015
220225
54%
3,435,758
3,558,091
2509,769
71% S
3,613,186
Fines & Fdrfcituna
688,110
638,809
254,816
40%
732,520
6'1520
233,414
38% S
615,420
Interest
38,919
421,656
27,974
66%
57!,970
4 '2w
251,835
63% E
402,290
GASBInvah tto MNpn Audit
(549,990)
-
-
(10'000)
(Iwxo)
-
E
(100'00)
Miscefleneous /Other
3217,984
203.067
249,016
9%
2,596312
2,680,365
2,3019S5
86% E
2,680,164
Fund Tmnsfem
546,]99
516920
47,785
9%
761,920
794,551
45,]22
6% S
581,623
Total Demons
350],1]5
33,654301
13,061,864
39%
33,726,739
34,409371
17,596,001
51%
34$31,944
We d'aber and, Smmeea:
Ilse of Reserves - FalliedProtects
70'000
M."
2,754,401
2,754,401
2,754.401
Use of Rea m es - Special Studies
Vienne land Sale Reserve
1234,730
1,200'00
and Balance Rionteemions
Your Fad Savmgs/Budeet Amendment
490'00
43,782
137,899
_
arryPoruard Allocations
PPRS Lability Account
30'000
-
Uec oflvttmal Service Reserves
Total aher Fedddg seems
11934,-130
2,690'02
2,798,183
2,892300
-
2,754,401
Total Bee<epes pas X.Roee,
E 37.631,905 E 36349304 S 13,061964
E 36324,922 E 3]301,6]2 E 1]396,00]
E 37286345
Expood core, (Imudes Aber me eamm6nnces)
Mayas &COUneg
185,084
211,516
92,248
44%
201,104
199,537
8,805
44%
202,134
Ali..,
20],]46
225,451
101,451
45%
230327
227,0P/
114,028
SOY<
231,506
Admmutmtive Services
2,664269
2,874,922
1244,170
43%
2,814,01
2,787,654
1,256578
45%
2,828,439
Comm Development
4235,832
3,9951966
1,771,660
M%
3940380
3,935,487
1,991,716
51%
3,060555
Police
13,403,435
13,772,871
6,455,622
4Th
13,492,115
13501258
6,362,870
47A
13561,197
Palm & Public W orls
5565,529
5,813,969
2,715,413
4-I%
5,899,429
5,90'815
2,643,613
45%
5929,635
I.btany
2,055,069
2,174308
1,041,418
48%
2231317
2227,156
1,05$956
48%
2242,742
Total Wept Btcevees
S 28316,964 E
29,069,009 S
13,421982
46% S
28,8081703 E
28.782934 S 13314566
47% 28,956209
Non -Dept Expenditures and othervaa
General Govemmmt
7,094594
7323,456
1,987,461
28% ]]16219
8,022029
3252365
41%
],755,72]
Total Non -Dep Espeoses
S 7,094599 S 7223,456 $ 1,987,461
28% S 7,716219 E
8,037,029 E
3252.265
40%
7,755,727
Taal operating FSpeodmre+
E 35.411558 E
36292465 E
15.409.443
42% E 36324,922 S
36.819963 E
16,766,831
46%
36,711,936
Nn opmatiog Re,eduee Before Spedal Berne E 2220347 $ 51839 $ (2,347579) $ $ 481709 E 629,176 S 574,409
Specid items (One- Time"Rd Sale &RDA Dissdut
2203,62]
0 0
0
0
Total Budgeted Use of Reoenes S
$
$
S
E 0% S
Net Surplus or (Use) of Resomms $
4423974 S
51.839 E (2347579)
0% $
S
481.709 $ 629.06 W. E 574409
18
BUDGET PERFORMANCE REPORT - 2ND QUARTER FY 2013/14
!ps Olt S
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.
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. Staff will continue to monitor these revenue funds but at this time no budget adjustment is recommended.
Special Revenue Funds
Budget to Actuals Comparisons
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 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. Staff recommends
decreasing Gas Tax Expenditure Budget by $227,710 to better match Gas Tax revenues available to spend this fiscal
year. Staff will continue to monitor these expenditures throughout the remainder of the year.
19
CDBG
Non Point
Grants
Source
UDs
Beginning Fund Balance (Pre - audit)
37,103
120,102
149,847
Budgeted Revenues
68,689
332,000
39,054
Total Actual Revenues - 2nd Qtr
3,987
-
589
Budgeted Expenditures
118,344
359,045
24,665
Total Actual Expenditures - 2nd Qtr
-
212,577
7,899
2nd Quarter Fading Fund Balance
41,090
(92,475)
142,537
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 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. Staff recommends
decreasing Gas Tax Expenditure Budget by $227,710 to better match Gas Tax revenues available to spend this fiscal
year. Staff will continue to monitor these expenditures throughout the remainder of the year.
19
OW8 F
BUDGET PERFORMANCE REPORT - 2ND QUARTER FY 2013114
!ps 8A10
Beginning Fund Balance
Budgeted Revenues
Total Actual Revenues - 2nd Qtr
Budgeted Expenditures
Total Actual Expenditures - 2nd Qtr
2nd Quarter Ending Fund Balance
Internal Service Fund
Capital Project Funds
Budget to Actuals Comparisons
GFAR
Traffic
Grant Fund
Storm
Utility
Gas
Fund
Mitigation
CB"s
Drains
Undergd
Tax
6,613,127
2,399,546
(641,976)
1,110,841
2,519,548
169,346
3,633,746
1,569,266
2,020,958
105,120
45,000
833,290
541,424
-
479,802
62,721
57,508
460,554
7,906,703
1,596,266
1,449,564
-
-
1,041,000
1,658,093
253,468
37,759
-
-
48,300
5,496,458
2,146,078
(199,933)
1,173,562
2,577,056
581,600
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 significantly higher due
to adjustments in insurance premiums and claim activity. The staff recommends a $113,000 increase to adopted
ABAG expenditures and a $345,000 increase the Workers Comp Adopted expenditures.
Internal Sersfce Funds
Budget to Actual Comparisons
Equipment Workers Self Office Mmgt Info Vehicle Building
Replacemt Comp Insurance Stores Systems kfaint Motor.
Beginning Fund Balance 3,260,532 2,2469915 1,352,034 159,213 2,495,698 608,566 1,25027
Budgeted Revenues 473,929 659,429 503,815 117,000 1,023,191 528,600 1,222,014
Total Actual Revenues -2nd Qtr 254,966 355,982 240,313 16,510 519,820 264,587 627,634
Budgeted Expenditures 603,720 764,422 699,926 143,150 1,171,234 531,091 1,790,518
Total Actual Expenditures -2nd Qtr 25,902 610,687 667,040 35,256 386,274 201,568 492,384
2nd Quarter Ending fund Balance 3,489,596 1,992,210 915,307 140,467 2,629,244 671,585 1,393 ,577
20
BUDGET PERFORMANCE REPORT - 2ND QUARTER FY 2013/14
Trust and Agency Funds
Town Trust and Agency Funds have fund balances as of December 31, 2014 of $84,154 for Parking District #88
$755,231 for the Library Trust Funds and $2,129,984 for the SA Trust Fund. No budget revisions are contemplated
at this time for these funds.
Trust & Agency Funds
Budget to Actuals Comparisons
Beginning Fund Balance
Budgeted Revenues
Total Actual Revenues - 2nd Qtr
Budgeted Expenditures
Total Actual Expenditures - 2nd Qtr
2nd Quarter Ending Fund Balance
library
Parking
SATrust Fund
Trust
District
757,264
224,156
3,852,331
46,004
-
4,195,209
39,360
364
1,935,749
180,167
140,366
4,195,066
41,393
140,366
3,658,096
755,231 84,154 2,129,984
Successor Aeencv to the Redevelopment Aeencv
During the second quarter, the Successor Agency Board and staff continued to work diligently to satisfy the many
requirements and deadlines established by the state through AB1x26 and AB1484. AB1x26 is the "Dissolution Bill"
that eliminated the Town's Redevelopment Agency effective February 1, 2012. AB 1484 is the "clean -up" bill that
revised and attempted to clarify AB1x26. In accordance with the law, the Successor Agency continues to wind down
the affairs and operations of the former Redevelopment Agency by implementing programs and activities in
accordance with the State - approved Recognized Obligation payment Schedule (RODS). The Successor Agency
monies are now accounted for in a Private Purpose Trust fund and no longer part of the Town's Financial
Statements.
CONCLUSION
The financial results from the prior fiscal year, coupled with the FY 2013/14 second quarter data, confirm that the
second quarter financial results are stable and improving. Staff is cautiously optimistic as the five -year financial
plan projects that Town's financial outlook in future years is improved with only two years of projected shortfalls
forecasted. Therefore, staff will be proposing budgeting for workload pressure relief to offset the increased
workload being carried by few staff. Equally important to workload pressure relief is to ensure that the Town's
resources are also allocated to meet the priority service needs of the community.
21
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