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3W N OF I 1ps�SA`04 TOWN COUNCIL AGENDA REPORT DATE: FEBRUARY 19, 2013 MEETING DATE: 2/19/2013 ITEM NO: -3 TO: MAYOR AND TOWN COUNCIL FROM: GREG LARSON, TOWN MANAGER SUBJECT: FY 2012/13 MID -YEAR BUDGET PERFORMANCE AND STATUS REPORT - SIX MONTHS ENDING DECEMBER 31, 2012 A. ACCEPT FY 2012/13 MID -YEAR BUDGET PERFORMANCE AND STATUS REPORT, INCLUDING FY 2012/13 FINANCIAL PROJECTIONS B. AUTHORIZE BUDGET ADJUSTMENTS AS RECOMMENDED IN THE ATTACHED SECOND QUARTER BUDGET PERFORMANCE REPORT C. PROVIDE DIRECTION ON 2012 -14 STRATEGIC GOALS AND 2013 WORKPLAN RECOMMENDATION: 1. Accept the FY 2012/13 Mid -Year Budget Performance and Status Report, including FY 2012/13 financial projections. 2. Authorize budget adjustments as recommended in the attached Second Quarter Budget Performance Report (Attachment 1). 3. Provide direction on 2012 -2014 Strategic Goals and 2013 Workplan. PURPOSE: The purpose of this report is to provide the Town Council with a status of the FY 2012/13 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 2013 -2018) to provide a context for the FY 2013/14 budget development process and recommended budget approach. In addition, the report discusses the 2012 -2014 strategic goals and the workplan for 2013. PREPARED BY: Stephen D. Conway, Administrative Services and Finance Director NAFINANCEIQtrly Financial Reports\FY2013\2nd Quarter \2013_ Mid _Year _Budget _Staff Report.doc Reviewed by:)LAssistant Town Manager Town Attorney OF PAGE MAYOR AND TOWN COUNCIL/MEMBERS OF THE SUCCESSOR AGENCY SUBJECT: FY 2012/13 MID -YEAR BUDGET PERFORMANCE AND STATUS REPORT - SIX MONTHS ENDING DECEMBER 31, 2012 February 19, 2013 DISCUSSION: FY 2011/12 MID -YEAR BUDGET STATUS Budget Performance Report The attached Budget Performance Report (Attachment I) is a mid -year report covering a six - month period beginning July 1, 2012 and'ending December 31, 2012 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, 2013 Current fiscal year -end projections for FY 2012/13 reflect an anticipated $900,000 surplus of operating revenues over expenditures. This has been achieved as a result of conservative budgeting of expenditures as well as the net revenue additions discussed in Attachment 1. In addition, revenue collections for licenses and permits resulting from increased activity in our building and planning departments have helped to bring in increased revenues for the Town but also some increased expenditures linked to these revenues. Staff would note that the $900,000 in projected year -end surplus does not include the previously budgeted use of $500,000 in reserves which no longer appears necessary and may be available to help in balancing next year's budget. FY 2012/13 MID -YEAR BUDGET UPDATE TRENDS Operating Revenue Trends The FY 2012/13 mid -year update reflects that while some of the economically sensitive revenues are trending ahead of forecasts and indicate an improved economic outlook, other areas, such as Sales & Use tax, General Property Tax, Transient Occupancy Tax and Interest are still trending behind expectations. Key areas such as Charges for Service and Licenses and Permits are trending higher than anticipated which has resulted in staff recommending the net revenue increase. 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. Given Netflix's business model change, the volatile nature of sales tax is evident, underscoring the importance of diversifying the Town's economic portfolio. Operating Expenditure Trends Anticipating that some of the Town's economically sensitive revenues would continue to be impacted by the economy, staff continued to implement cost reduction strategies this fiscal year, including targeted hiring freezes, unpaid furlough days, 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. PAGE MAYOR AND TOWN COUNCIL/MEMBERS OF THE SUCCESSOR AGENCY SUBJECT: FY 2012/13 MID -YEAR BUDGET PERFORMANCE AND STATUS REPORT - SIX MONTHS ENDING DECEMBER 31, 2012 February 19, 2013 Organizational Changes Rapidly rising revenues and workloads in Community Development and Engineering are requiring staffing adjustments and accommodations. Specifically, the administration will be continuing the shared management structure for Parks & Public Works and Community Development, reallocating the salary savings resulting from Wendie Rooney's recent retirement to meet immediate policy and advance planning workloads in Community Development. In addition, the Town has and will engage new, temporary and'consulting staff in both Current Planning and Engineering to meet project specific workloads to be funded by the increased revenues resulting from those workloads. The temporary increased code enforcement staffing has been implemented to meet both Council and community requests as well as freeing up staff time for rising building inspection workloads. Last, staff is now proceeding to fill the former Parks & Facilities Superintendent position (previously held by Christy Wolter) as a lower Supervisor position so that some salary savings can also be reallocated for Engineering and Inspections workload demands. A complete revised staffing structure for Community Development and Parks & Public Works will be presented as part of the proposed budget for next year. State Budget Impacts to Local Governments On June 28, 2011, the Governor signed ABxl 26 and ABxl 27 into law. ABxl 26 (the "Dissolution Act ") proposed to eliminate redevelopment agencies as of October 1, 2011, and essentially restricted redevelopment agencies from entering into new agreements, borrowing or lending funds, or acquiring or disposing of real property prior to dissolution. ABxl 27 (the "Voluntary Program Act ") would have allowed redevelopment agencies to remain in existence and be exempt from ABxl 26 if certain "voluntary" payments were made to the State in FY 2012 and in each fiscal year thereafter. This legislation was later challenged and considered by the California Supreme Court. On December 29, 2011, the California Supreme Court issued its decision in the California Redevelopment Association v. Matosantos case, finding the ABxl 26 Dissolution Act constitutional and the ABxl 27 ( "Alternative Redevelopment Program Act ") unconstitutional. Effective February 1, 2012, all California redevelopment agencies ( "RDAs ") were dissolved and their assets and functions have been transferred to successor agencies and housing functions successors, to "wind- down" the activities of the former RDAs. The Town elected and has been designated to serve as the "Successor Agency" to the former Los Gatos Redevelopment Agency. The Town has also elected to retain and accept specified affordable housing assets, obligations, and housing functions of the former Redevelopment Agency and will serve as the "Housing Functions Successor." While the implementation associated with the legislation is evolving, staff and legal counsel continue to work closely with the California Redevelopment Association (CRA), League of California Cities, California Society of Municipal Finance Officers (CSMFO), and other legal entities to understand and monitor the current and future impacts of the dissolution of the Town's PAGE 4 MAYOR AND TOWN COUNCIL/MEMBERS OF THE SUCCESSOR AGENCY SUBJECT: FY 2012/13 MID -YEAR BUDGET PERFORMANCE AND STATUS REPORT - SIX MONTHS ENDING DECEMBER 31, 2012 February 19, 2013 Redevelopment Agency. At this time Successor Agency monies are being held in a Private Purpose Trust Fund and are no longer shown on the Town's Financial Statements. GENERAL FUND RESERVE STATUS As of June 30, 2012, Town's FY 2011/12 General Fund balance was approximately $23.5 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 Catastrophic reserves, $7.0 million for Capital and Special Projects, and $6.7 million for Budget Stabilization and $2.3 million in unallocated reserves. These reserves remain intact at the mid -year point of FY 2012/13. FY 2013/14 BUDGET DEVELOPMENT PROCESS Concurrent with the update of the Five -Year Financial Plan and in anticipation that service reductions would be necessary for the FY 2013/14 budget, staff began informal budget development discussions in January 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 2013/14 budget which will be presented to council in May 2013. Staff is continuing to use the budget proposals prioritization matrix adopted by Council last year. 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 $900,000, however also forecasts deficits in FY 2013/14 and FY 2014/15. Current and future projections in the Five -Year Plan are based upon conservative revenue and expenditure growth rates and trends. PAGE 5 MAYOR AND TOWN COUNCIL/MEMBERS OF THE SUCCESSOR AGENCY SUBJECT: FY 2012/13 MID -YEAR BUDGET PERFORMANCE AND STATUS REPORT - SIX MONTHS ENDING DECEMBER 31, 2012 February 19, 2013 Updated 02/08/2013 Town of Los Gatos General Fund Updated Five -Year Financial Plan FYI F\ "_' F1'? FN F1'5 2011/12 2012/13 2012113 201314 2014115 2015116 2016117 2017118 Account Resenue Calegom Aeluais Budget Estimated F9renst Forecast Fonnst Forecast Fooest 4100 Property T. S 75 S 8.0 S 7.9 S 7.8 S 8.0 S 8.2 S 8.4 S 8.6 4110 \TF Backfill Property Ta _ - - - -- 23 23 2.4 2.4 2.4 2.5 2.5 25 4200 Sales &Use Ta 9.9 7.9 7.4 79 73 7.9 8.0 83 4250 Franchise Fees 2.0 1.9 2.0 2.0 2.1 2.1 2.2 23 4251 Transient Occupancy T. 11 1.1 1.0 1.0 1.0 1.1 1.1 1.1 4400 Business License T. 1.1 13 13 1.4 IA 1.5 1.5 15 4400 Litenses &Permds - - - 23 2.1 2.6 2A 2.4 25 2.6 2.6 4500 Imertovemmexod _ _- 09 09 OR 0.7 0.7 0.8 0.8 OA 4600 _ Charge forServks ..___.____._ 29 21 2.8 2A 2.4 25 2.6 2.6 4700 Fines & F.,Ntures 09 03 0.7 0.6 0.6 0.4 0.6 OS 0.6 05 0.6 OS 0.6 05 0.7 05 4800 modest _ 4850 Older Sources _ _ 31 35 3.8 39 3.8 3.7 3.8 39 4900 Food Transfers In 0.2 1 0.5 1 0.51 0.51 03 0.2 0.2 01 TOTALRLIE \TES 34A 32.9 335 333 J2.8 33.9 34.6 353 Use of Reese, Depnsia 19 2.4 1.9 0.8 09 09 0.1 TOTAL REI UFS & TRANS FERS S 367 S 353 S 35A S 34.1 S 33.6 S 34.7 S 34.7 S 3S3 2011112 2012113 201VI3 2013/14 2014115 2015/16 2016/17 2017/18 Account Expenditure Category Actuals Budget Estimated Foreest Forecast Forecast Forecast Forecast _ 51101 _ _ S 12.6 S 133 S 12A S 13.2 S 13.2 S 13.2 S 132 S 13.2 5120 Elected ORdah - - 0.0 5130 TsnPoran idnploc ees 0.9 09 1.0 0.7 0.7 0.7 0.7 0.7 5140 __ Ovenbue 05 03 05 OA 0.4 0.4 DA 0.4 5170 Oder Sa6 c - - -" __5,00 03 0.1 01 OA 0.4 0.4 0.4 0.4 Benefit, 6.2 6.5 61 6.7 6.9 7.1 7.4 7.4 6000 Supplies . \Iantlah. & 4t vices _ 4.7 53 51 53 5.4 5.6 5.7 59 7200 Grants & award, - - OS 02 01 02 0.2 0.2 0.2 01 7400 Utilities 0.4 0.4 0.4 0.4 0.4 0.4 0.4 OS 7700 Find Assets _ 8060 mtenul Servse Char�" _ _ 3.1 33 3A 35 3.6 3.7 3.7 39 8900 Debt Service 2.1 2.0 29 2.0 2.0 2.0 2.0 2.0 TOTALEXPENDFTURES 5 31.0 S 322 S 31A S 329 S 331 5 33.7 S 34.1 S 34A 9900 RDA Ransom - - - - 9900 Opammg Trmtsfim Om 0.4 - 9900 Capital Transfers Out 10 GFAR IS 1.9 1.9 09 0.8 OA 0.1 9900 GASB 4i Re1vm 31edie.1 Actuarial 1.1 12 11 13 1.4 15 1.6 1.6 EXPENDFfURES 343 353 345 34.9 35A 36.0 35.8 36.0 9900 Legally Requved Reserve Allocation 9900 Reserve 9900 Transfer to Stabilaation Resme TOTAL EXPENDFfLRES &ALLOCATIONS S 343 S 353 1 S 345 S 34.9 S 35A S 36.0 5 35.8 S 36.0 RE ENUFS LESS EXPENDITURES S 1.9 S 5 0.9 S (0.8) 5 1.8) 5 (13) 5 (1.1) S (0.7) ONOWNGSHORTF.A1I_AIITI(,A I toA S S S S 0.8 S 1.8 5 1.8 S 19 ti]ET RE ENUES LESS EXPENDITURES S 1.9 S S 0.9 1 S (09) S (1.0) S OS S 0.7 S 1.1 ii MAYOR AND TOWN COUNCIL/MEMBERS OF THE SUCCESSOR AGENCY SUBJECT: FY 2012/13 MID -YEAR BUDGET PERFORMANCE AND STATUS REPORT - SIX MONTHS ENDING DECEMBER 31, 2012 February 19, 2013 2012 -2014 STRATEGIC GOALS AND 2013 WORKPLAN On February 21, 2012, the Town Council adopted strategic goals for 2012 to 2014 (Attachment 2). These goals represent special, priority issues to address during the two -year time period. The Council typically reviews the goals on an annual basis to determine if any should be removed due to completion or added for new priorities. Since no separate session is planned to review the strategic goals this year, staff is providing Council the opportunity to do so during the mid -year budget review. 2013 -2014 Strategic Goals Staff is recommending the following changes to the Civic Enrichment strategic goals: Remove the goal to "Construct new sports /recreation facility to meet community needs," as this project has been completed. Remove the goal to "Implement Pageant Grounds improvements to enhance public access." Although this project is still underway, completion is expected by the end of March. No additions are recommended given other ongoing issues and workloads as described below. 2013 Workplan Issues Attachment 3 displays current issues that are on the 2012 -2013 Strategic Goal matrix and are underway or pending, or special issues that have been identified as priorities although they are not on the Strategic Goal matrix. The table lists the project or issue; whether or not the project is linked directly to Council's strategic goals; the estimated timing that the item is targeted to be before Council based on discussions or expressions of interest; and the department or departments who are in the lead on the item. This column also notes if the item would initially be heard in a closed session or a study session. It is expected that the Town Manager's Office would be significantly involved in all of these items, and that other departments besides those listed would also be involved in certain items. Because a number of these items are challenging and/or complex, it is likely that Council agendas may only accommodate one or two at a time. In addition, staff capacity is limited to undertake all of these projects /issues, as well as other strategic goal projects and day -to -day core services. Staff is seeking Council guidance on potential adjustments to the strategic goal matrix and /or to the 2013 workplan list of projects to reflect Council priorities. Adjustments could include delaying projects on either the Strategic Goal matrix or the workplan list. Some projects /issues have timeframes that are outside the Town's control (e.g., affordable housing actions, etc), however, which must be taken into account when making adjustments. The workplan notes PAGE 7 MAYOR AND TOWN COUNCIL/MEMBERS OF THE SUCCESSOR AGENCY SUBJECT: FY 2012/13 MID -YEAR BUDGET PERFORMANCE AND STATUS REPORT - SIX MONTHS ENDING DECEMBER 31, 2012 February 19, 2013 projects /issues that could potentially be delayed given these are within the Town's control. On the Strategic Goal matrix, the Los Gatos Boulevard Plan could be delayed and one or more of the items on the workplan could be substituted. Even among the projects /issues that could be delayed, in most cases there are associated pending or potential community issues that may compel the Town to address them sooner. CONCLUSION: The Town's outlook at mid -year is encouraging due to planned expenditure reductions and increased revenues. 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 its operating costs on an ongoing basis. 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 2012/13. As discussed earlier in this report, staff is currently engaged in the FY 2013/14 budget development process, which will continue with restricted expenditures and limited revenue enhancements, 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 2- 2012 -2014 Strategic Goals 3- Draft 2013 Workplan Issues for Prioritization and Scheduling THIS PAGE INTENTIONALLY LEFT BLANK BUDGET PERFORMANCE REPORT - 2ND INTRODUCTION Purpose This is the second quarterly budget performance report for the Fiscal Year 2012 -13, for "the three month period ending December 31, 2012. 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, 2012, 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 2012/13 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 .....................5 PropertyTax ................. ..............................5 SalesTax ........................ ..............................6 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 ........14 Financial Summaries and Projections ......................16 General Fund ................ .............................16 Special Revenue Fund ... .............................17 Capital projects Funds .... .............................17 Internal Service Funds .... .............................18 Trust and Agency Funds . .............................19 Redevelopment Agency . .............................19 Conclusion....................................... .............................19 ATTACHMENT 1 BUDGET PERFORMANCE REPORT - 2ND QUARTER FY 2012/13 EXECUTIVE SUMMARY Status of FY 2012/13 Adopted Budget Overall second quarter General Fund revenues are trending favorably when compared to the second quarter of Fiscal Year 2011/12. However, due to some projected revenue increases, staff is recommending a cumulative budget increase of approximately $364,470 from adopted budgeted estimates. The current forecast expects a substantial increase in Charges for Services due to new fees being collected from the West Valley Collection & Recycle as well as requested revenues of approximately $225,000 for reimbursement from the City of Monte Sereno as a result of direct expenses related to the homicide investigation that occurred earlier this year in that City. 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 economic outlook is improving as forecasted. 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 48% 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 increased costs for staffing, overtime costs for Police expenses related to the Monte Sereno homicide investigation_ and the Winchester /Lark Intersection Design -Phase project. 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 2013/14 budget development process will endeavor to maintain essential public services while controlling operational costs in light of the five -year fiscal 2 forecast, which predicts operating revenue shortfalls in subsequent fiscal years General Fund Reserve Status - 6/30/12 General Fund Reserves closed at a balance of approximately $23.5 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 Catastrophic Reserve. 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 Policy for an intended purpose. With the dissolution of the RDA, the Town no longer has restricted reserves. Designated General Fund Reserves Amount (Millions) Designated for Capital and Special Projects $ 7.0 Designated for Budget Stablizalion Reserve 6.7 Designated for Catastrophic Reserve 4.2 Unallocated 2.3 Vason land Sale 1.6 Designated for Open Space 0.6 Designated for Special Studies 0.5 Retiree Medical Aclurial 0.4 Suslanabilily Reserve 0.1 Designated for Mani Contingency and Productitily 0.1 Total Designated General Fund Reserves $ 23.6 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 2012/13 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 polity for their intended purpose. The availability of approximately $23.5 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 Much of the economic uncertainty that plagued employers in 2012 due to federal tax and spending policies has carried over into 2013. While temporary State Budget Update Although the state has reached a point where its underlying expenditures and revenues are roughly in balance, under the Governors multiyear plan, the state would still have no sizable reserve at the end of FY 16/17 and would not have begun the process of addressing the huge unfunded liabilities associated with the teacher's retirement system and state retiree health benefits. As such, the state faces daunting budget choices even in a much - improved fiscal environment. Special fund loan repayments and the state's role in funding local governemnt infrastructure could be impacted. Gains in consumer spending and employment in 2012, signal that California is moving in the right direction. Taxable retails sales during the first half of 2012 grew 8.8 percent over th same period in 2011. New motor vehicle registrations issued during the frist 10 months of 2012 increased over 25 percent. During the first 11 montsh of the year, the state payroll tax cuts ended January 1, the deadline for gained an average of 21,200 jobs per month, which making decision on $1.2 trillion in automatic is the strongest pace of job growth since 2005. Job spending cuts as well as debate over raising the debt growth came entirely from the private sector as ceiling was extended to March 1 and May 18, government employment continued to decline respectively. The extension has tempered business throughout the year. investment and hiring. To encourage business to invest in capital improvements, a last minute "fiscal cliff' deal included a one -year tax break extension on new or leased equipment. Nonetheless, a prolonged impasse by federal leaders concerning the debt ceiling could dampen consumer, business, and investor confidence, thereby damaging the modest economic recover much as it did in 2011. Although the payroll tax hike will likely shave up to one percent from gross domestic product (GDP) this year, the looming federal spending cuts that are already written into the books will likely result in GDP growth of about two percent, at best, similar to last year's pace. Consumer confidence, already the highest in five years, is expected to continue improving as home prices and employment rise. wx of BUDGET PERFORMANCE REPORT - 2ND QUARTER FY 2012/13 !ps CaA��9 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, 2012. Staff monitors each revenue source closley and may recommend certain revenue adjustments based on revenue actuals or state budget action. 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 2012/13. Property tax is levied by the Santa Clara County Assessors 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 up about 19% when compared to the second quarter of the previous fiscal year and are at 47% of budgeted totals. Property tax revenue for FY 2012/13 was budgeted higher than previous years actuals projecting an increase in real estate transactions. Property tax appears to be tracking slightly lower than forecasted and therefore a budget reduction of $173,053 is recommended. $10,000,000 $8.000,000 $6,000,000 $4,000,000 $2,000,000 Quarterly and Annual Revenues 5 -Year History FYMU) IYW /10 FY 10/11 FY 11/12 FY 12/13 02x1 Quarter Actual Revenues oFisral YearToral Actual Revenues • Fiscal Year Budgeted Revenues FY 08/09 FY09 /10 FY 10 /11 FY 11/12 FY 12/13 2nd Quarter Actual Revenues $ 3,160,810 S 3,191,286 $ 3,763,165 $ 3,155,476 $ 3,753,004 Fiscal Year Total Actual Revenues $ 9,724,070 S 9,809,365 $ 9,597,378 $ 7,511,381 Fiscal Year Budgated Revenues S 8,021,117 2nd Quarter Percent of Total 32.51% 32.53% 39.21% 42.01% 46.79% Recommended Budget Revision S (173,053) YIN F. + + BUDGET PERFORMANCE REPORT - 2ND QUARTER FY 2012/13 � s_sp`os Sales Tax Sales tax is the second largest revenue source for the Town's General Fund, accounting for 24% of budgeted General Fund revenues for FY 2012/13. The Town receives 1 cent for every 8.375 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 consistent with those in the same period in the past fiscal year, with collection around 38% of budgeted revenues. It should be noted that the Town anticipated lower sales tax revenue for the year and budgeted revenues at 21% less than FY 2011/12, primarily due to the change in business model for Netflix. Current trends show that sales tax revenue is less than originally forecasted and therefore staff recommends a budget reduction of $416,144. $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $- Quarterly and Annual Revenues 5- YearHistory FY08109 FY09 /10 FY 10 /11 FY I1 /12 FY 12/13 ■ 2nd Quarinr Actual Revenue o Fiscal Year Total Actual Revenues ■ Fiset YwrBudgeted Revenue FY 11/12 FY 08/09 FY09 /10 FY 10/11 2nd Quarter Actual Revenues $3,236,975 $ 3,221,690 $ 4,776,828 Fiscal Year Total Actual Revenues $8,487,000 $ 8,317,216 $ 9,971,409 Fiscal Year Budgeted Revenues 2nd Quarter Percent of Total 38.14% 38.74% 47.91% ■ 2nd Quarinr Actual Revenue o Fiscal Year Total Actual Revenues ■ Fiset YwrBudgeted Revenue FY 11/12 FY 12/13 $ 3,667,071 $ 2,975,082 $ 9,889,100 $ 7,859,000 37.08% 37.860% Recommended Budget Revision $ (416, 144) 5 silos wx �. �V1� � BUDGET PERFORMANCE REPORT - 2ND QUARTER FY 2012/13 SOS Franchise Fees Franchise fees are collected by the Town for the privilege of operating a utility service within Los Gatos, and as a fee in lieu of a business license tax. Franchise fees are currently received from Comcast for cable television, PG &E for gas and electric services, West Valley Collection and Recycling for solid waste collection services, and AT &T and Comcast for video services. Franchise fees represent 5.9% of budgeted General Fund revenues in FY 2012/13. 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 slightly ahead of those of the second quarter in FY 2011/12. This improved trend can be attributed to the increased construction activity and addition of new homes to the customer base. Staff recommends a budget revenue increase of $70,120. $2,000,000 $1,500,000 $1,000,000 $500,000 Quarterly and Annual Revenues 5 -Year History FY08 /09 FY09 /10 FY10 /11 FYII /12 FY12/13 2nd Quarter Actual Revenues Fiscal Year Total Actual Revenues Fiscal Year Total Budgeted Revenues 2nd Quarter Percent of Total n2nd Quarler Actual Revenues ]Fiscal YcarTotal Actual Revenues IRi lYmrTotal Budgelad Revenues FY 08/09 FY 09/10 FY 10 /11 FY 11/12 FY 12/13 $ 548,795 $ 553,434 $ 626,592 $ 669,186 $ 685,308 $ 1,656,100 $ 1,699,850 $ 1,901,605 $ 1,952,488 $ 1,939,820 33.140/6 32.56% 32.95% 34.270/a 35.33% Recommended Budget Revision $ 70,120 3 BUDGET PERFORMANCE REPORT - 2ND QUARTER FY 2012/13 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 19% higher than prior year actuals. Current year second quarter revenues are trending ahead 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 08/06Y 09 /10Y 10 11FY 11 /1BY 12/13 m2naQuarter Actual Revenues OFiscal Year Total Actual Revenues ■ Fiscal Year Total Budgeted 7 FY 08/09 FY09 /10 FY 10 /I1 FY 11/12 FY 12/13 2nd Quarter Actual Revenues 376,704 470,833 368,757 209,377 326,828 Fiscal Year Total Actual Revenues $ 1,139,107 $ 1,220,802 $ 1,136,511 $ 1,077,620 Fiscal Year Total Budgeted Revenues $ 1,286,510 2nd Quarter Percent of Total 33.070/9 38.570% 32.45% 19.43% 25.40% Recommended Budget Revision No Change 7 1 WN �F BUDGET PERFORMANCE REPORT - 2ND QUARTER FY 2012/13 � s'srios 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 spent $102.3 billion, a 7.6% increase from 2011, as both State and national travel industries are recovering from the recession. With a mixed economic outlook, the forecast for California visitation in 2012 is for modest growth, increasing 2% in 2012 and 2.2% in 2013. However, TOT is trending at a slower pace than anticipated and as a result staff is recommending a budget reduction of $99,860. $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 Quarterly and Annual Revenues 5 -Year History FY 08/09 FY 09/10 FY 10 /I1 FY 11/12 FY 12/13 112nd Quarter Actual Revenues ®Fiscal Year Total Actual Revenues EFiscal Year Total D FY 08/09 FY 09/10 FY 10/11 FY 11/12 FY 12/13 2nd Quarter Actual Revenues $ 436,515 $ 354,551 $ 380,129 $ 422,059 $ 434,419 Fiscal Year Total Actual Revenues $ 966,638 $ 923,783 $ 1,004,659 $ 1,174,485 Fiscal Year Total Budgeted Revenues $ 1,099,860 2nd Quarter Percent of Total 45.16% 38.38% 37.840/. 35.94% 39.50% Recommended Budget Revision S (99,860) D wx o BUDGET PERFORMANCE REPORT - 2ND QUARTER FY 2012/13 NUNN ��8 CA1�g 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 2011 to December 2012 the LAIF yield declined from 0.382% to 0.326 %; however the three -moth Treasury increased from 0.02% to O -05 %, the six- month Treasury increased from 0.06% to 0.11 %, and the five -year Treasury declined from 0.83% to 0.72 %. 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 $471,334. $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 lEstory FY08/09 FY09 /10 FY10 /11 FY11 /12 FY12/13 2nd Quarter Actual Revenues Fiscal Year Revenues Fiscal Year Total Budgeted Revenues 2nd Quarter Percent of Total FY08/09 FY09 /10 $ 1,011,756 $ 687,571 $ 1,627,727 $ 1,129,895 ®2nd Quarter Actual Revenues oFiscal Year Revenues • Fiscal Year Total Budgeted Revenues FY 10 111 FY 11/12 FY 12/13 $ 545,913 $ 476,653 $ 276,974 $ 942,977 $ 606,454 $ 892,990 62.20/a 60.90/a 57.9% 78.6% 31.0% Recommended Budget Revision $ (47034) E W N Of BUDGET PERFORMANCE REPORT- 2ND QUARTER FY 2012/13 �0s e%toe 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 12/13 Charges for Service were budgeted at 24% less than FY 11/12 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 72% of budgeted revenues already collected. This increase is the result of a change in how certain fees are charged and an increase in development activity. In addition, staff is projecting an increase in revenue from extraordinary staff costs incurred as a result of the homicide investigation. As a result, staff recommends a budget revenue increase of $867,175, which will be offset by increased expenditures. $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 08/09 FY 09/10 FY 10 /11 FY 11/12 FY 12/13 ]FBA Ymr"F pi Actual Rlnnnnns IF&9 Ymr`r ml Budgccd Rmenws 10 FY 08/09 FY 09/10 FY 10111 FY 11 /12 FY 12113 2nd Quarter Actual Revenues $ 1,942,481 $ 2,180,260 $ 2,039,800 $ 2,303,940 $2,211,225 Fiscal Year Total Actual Revenues $ 3,003,821 $ 3,776,411 $ 3,360,607 $ 3,683,044 Fiscal Year Total Budgeted Revenues $3,084,539 2nd Quarter Percent of Total 64.67% 57.73% 60.70% 62.560% 71.69% Recommended Budget Revision 867,175 10 W N OF BUDGET PERFORMANCE REPORT - 2ND QUARTER FY 2012/13 toy s�tos 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 at 11% less than FY11/12 in anticipation that development would remain slow. Analysis — Second quarter License and Permit revenue is trending well ahead of second quarter results from the previous fiscal year, with an increase of 17%. Therefore, staff recommends a budget revenue increase of $487,228, which will be offset by increased temporary and permanent staffing required to meet the rising workloads associated with the increased revenues. $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 Quarterly and Annual Revenues 5 -Year History FY08 /09 FY09 /10 FY 10 /I1 FY I1 /12 FY 12/13 2nd Quarter Actual Revenues Fiscal Year Total Actual Revenues Fiscal Year Total Budgeted Revenues 2nd Quarter Percent of Total nF[ AYear TdlAcmA R... ■Fi gY— TgMudgckd Rvvcuuce FY 08/09 FY09 /10 FY 10/11 FY It /12 FY 12/13 $ 1,121,789 $ 932,495 $ 1,151,498 $ 1,218,432 $ 1,566,216 $ 1,820,007 $ 2,035,308 $ 2,040,811 $ 2,361,510 $ 2,075,945 61.640/. 45.82% 56.42% 51.600/6 75.45% Recommended Budget Revision 487.228 11 BUDGET PERFORMANCE REPORT - 2ND OUARTER FY 2012 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 III General Property Tax (173,053) 111 1201 41141 M otor Vehicle In Lieu (VLF) Property Tax Backfill 127,180 111 1201 41211 Sales & Use Tax (416,144) 111 1201 41211 Prop 172 Public Safety Sales Tax Ill 1201 41613 Franchise Fees 70,120 111 1201 41132 Cable Franchise Fees - 1 I I PD Tow Franchise Fees - 111 1201 41311 Transient Occupancy Tax (99,860) 1 I 1 Business License Tax - III Licenses & Permits 487,228 I I I Building Permits 1 1 1 l 1201 43311 M otor Vehicle In Lieu Fee (126,830) Ill 4202 43336 Intergovernmental 79,351 I I I Charges for Services 642,175 111 44511 PD Services for M cute Sereno 225,000 111 1201 Fines & Forfeitures (59,631) I I I Parking Tickets - 1 l 1 2301 0 Interest (471,334) III GASB investment to market per audit 284,424 111 M iscellaneous /Other 75,844 I I I Fond Transfers (10,000) 1 1 1 4202 43527 AB 109 Public Safety Realignment Revenue 70,000 111 4809 44541 CAL E.M.A. Grant from Next Door Solutions to Domestic Violence 62,499 111 TOTAL GENERAL FUND REVENUES S 766,969 III III General Fund Expenditures 111 3401 62318 Code Compliance 45,000 111 4202 51111 Staff Salaries 70,000 111 4301 51410 Overtime for PD Services for M onte Sereno 225,000 111 4809 50000 CAL E.M.A. Grant from Next Door Solutions to Domestic Violeno 62,499 111 TOTAL GENERAL FUND EXPENDITURES $ 402,499 0 471 Traffic Mitigation 471 471 -813 -0203 45933 Winchester/Lark Intersection Design -Phase 50,000 471 Traffic Mitigation 471 471 -813 -0203 82405 Winchester/Lark Intersection Design -Phase 50,000 50,000 TOTAL OTHER FUNDS EXPENDITURES S 50,000 12 sAios, wx °f I ,jd BUDGET PERFORMANCE REPORT — 2ND QUARTER FY 2012/13 �0s SUMMARY OF KEY RECOMMENDED BUDGET ADJUSTMENTS General Fund Revenues • Licenses and Permits: The recommended increase of $487,228 is primarily due to the increase in revenues from the Building and Planning departments which has resulted from deferred revenues from 2011/12. 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. • Charges for Services: Staff recommends an increase of $642,175 in this revenue sources primarily due to some increased revenues being received West Valley Collection & Recycle. • PD Services for Monte Sereno: Staff recommends an increase of $225,000 in this revenue source primarily due to increase expenditures incurred as a result of the Monte Sereno homicide investigation. • General Property Tax: Staff recommends a decrease in projected revenues of approximately $173,053 which is in line with the estimates and forecasts provided to the Town from Santa Clara County. • Sales and Use Tax: Staff recommends a budget decrease of $416,144 as a result of the slow economic recovery and effect of the business model change for netflixs. • Transient Occupancy Tax: Actual receipts indicate a slower recovery than anticipated in travel and therefore, staff recommneds an budget decrease of $99,860. • Interest Income: The continued low returns from key investment vehicles will greately affect interet income returns. Staff recommends a budget reduction of $471,334. • Intergovernmental: Intergovernmental revenues are trending slightly higher than adopted budget levels. Staff recommends a budget increase of $79,351. • Franchise Fees: Actual receipts are trending above those estimated on partial actuals from the previous fiscal year. Staff recommends a revenue budget increase of $70,120. • Public Safety Realignment Revenue: The Town anticipates receipt of State money to be used for parole realignment purposes. Staff recommends a budget increase of $70,000. General Fund and Oher Funds • Code Compliance: A budget increase of $45,000 is recommended to fund additional hours for a Code Compliance Officer. During fiscal year 2012/13, additional resources have been allocated to re- establish a dedicated Code Compliance program in the Community Development Department. $45,000 has been used to fund contractual resources— a part-time Code Compliance Officer - that have been combined with in -house resources to re- establish a code compliance program on a four -day per week basis. These 13 wn,16S BUDGET PERFORMANCE REPORT - 2ND QUARTER FY 2012/13 resources have allowed the Town to address code issues that have not received sufficient attention over the last several years. Additionally, calls and concerns are now being addressed in a timelier manner. Resources required to address and fund Code Compliance on a longer -term basis will be identified as part of the 2013/14 Operating Budget process. Staff Salaries: Staff recommends a budget increase of $70,000 in staff salaries. Additional police staffing time will be necessary as a result of the parole realignment revenues received from the State. • Overtime: Staff recommends an increase of $225,000 in overtime costs that were associated with the investigation of the Monte Sereno homicide. • Traffic Mitigation: A budget of $50,000 is recommended to fund the design phase of the Winchester /Lark intersection project. This project will construct a new northbound lane to Winchester Boulevard, relocate signal poles, restripe the intersection and reconfigure the traffic signal system. PD Salaries & Benefits: This expenditure increase is due to the increased overtime costs incurred as a result of the homicide investigation as well as funding for a sergant position that was anticipated to be vacated in December 2012 due to a retirement. The positin is still currently filled and unbudgeted. 14 wx BUDGET PERFORMANCE REPORT - 2ND QUARTER FY 2012/13 as SOS s��g FINANCIALSUMMARIES, 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 2012/13, 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. Reavoues Caneml PmpeMTu V l DOperry Tax Sadeks s & 8 U Use Tax Fewshke Fees Transient OCwpanry Tax MVLFe Bwm.s license Tar licenses d PemWs Iule�go.'em�renlal alaega Or semk. Fines S FoRein. Intmes, Q4SB Westem.1 to \IM m,Audf bl'ncelknmu]0d,er Fund Tmrn t Taal Remoue, Be arOlher Funding swells; Bse of Ram. - Caprll IYOjttm Use of R.em. -SpmW Studies Vasona land Sale Reeve Fund Balance Reauoe,aNns Year End Savings Caeryflreand Allocations PER9 Bolan, Amount Use of Wemal Service Resmes Total Other Fnn&., Sources T.A M.enues pm Rermes To35B of Las Gatos Schedule of Gc.lW Fwd Operating Revenues vs. Operating Expenditures For the period ended December3l, 2012 Ulaodled PY11112 MI /12 M 112 M1112 812113 M2113 M2/13 FY12113 M2/13 Final Adlwkd 2nd Qtr % Adopted A6Jusled 2.d (fir % Flnanee Balance Bud R Actuals YTD Buds.l Budget Aeluals YID Projecaan S ]511}%1 S ],412,4]0 S 3,155,476 47A S 8,021,117 S 7948,064 S 3,753,001 48X S 78%83161 2351.1% 2256,930 - PA 22'/2.820 2.400,000 - 3,173,691 1400,000 9,889.100 8200,004 3,66],0]1 43% 7359000 7,M2,856 2975,082 40Y6 7,442,856 M4,38 1,920,610 669,185 3YA 1,939,820 29D9,940 685}08 34X 2,009940 L174,485 1,000000 422,059 42% 1,099,860 L)D,000 424.419 4314t I,0003D0 152M 141210 152M 49% 142,620 15,'190 15,00 100%, 15,]911 1,0]],620 1.0&5,000 2093]2 19/. 1286510 1286,510 326928 25% 1286510 2361510 1,902335 1218,432 R% 2,075.915 2561173 1566216 61% 2K1173 ]83im 820,140 253.]25 31% 6,58552 ]3],913 290,738 39% ]1]903 1691044 1558,951 2303.940 654 3,029539 3895714 2211y5 576 3,896.714 809,461 67L5 314,]89 47/%, 698,440 638809 254,816 40% 638,809 606.459 865.960 476,653 5515, 892,990 421,656 2]69]4 66 %. 421A% (14230 t261.") - (284,424) 2359,668 2548302 2254,493 88' /. 2560288 2,6J6n2 222;811 Ms.. 2,IiM.132 21,'23 416920 62.M 1514 536920 526.920 47,285 9•/. 5M,9M Mp6L042 32959,045 15,023317 46V. 32]89,99] 3342,467 15,060995 4Y% 33,424,467 650000 700.000 700.000 ]00,000 2,7KM 12000w 1200,000 1200,000 300,000 49,0,000 d900W - JASO,IDO - - 2 }9pdD0 2391),000 - 1.900.000 S M.461912 S M609W S 15.023317 _ S 15 F10992 S 35914467 S 15,060,996 S 35}24,46] Ell"mm,(IntloMS awl uo -tatnns) Tnnarmn, Capial Pmieds M,.,&COUnN 188334 2m,655 91.921 M% 213,057 211,516 92248 M% 211,516 Treasurer 112 - 109 0 - _ Taal Capital@ Olbee 2,939,882 - Anomey 215.M 223964 105,170 4]% 228,809 Mt51 101,451 45Y. 225,451 Adail"smlim Semk. 2,690.411 2947550 1124.748 470 2913}88 2974,921 1241,170 43% 2,874922 Comm Development 3,235,675 3,173,691 15311,151 48% 35211554 3532286 LM160 SPA 3532286 Pollee 13,411194 13,631320 6627583 49% 1338$939 13,3M.7M 6.455.714 Msl. 13538,758 Pads @Public WOds 5.440168 502,894 2,6113]0 W. 5,733W 5,6n Wl 2119,025 483l. 5.6]1969 Lbrary 1,810,809 1908357 929243 49% 2,192,690 2,1]4}011 1,091,418 W/.. 2,174118 Tana Depi Pape.. S 26972,519 S 2],6.55354 S 13.120295 47,1 S 2.1911022 S 2.035210 S 13.41%236 JA% S 2,015110 Non -PyI E@end'aue , and otheruses General Umematuat 4167,611 4384781 1988,761 3989265 4200.076 888.22 21Y. 1,726391 Talal No. -Depi Expenses S 4367.611 S 4_lW.781 S 1988761 681. S 3.989165 S 4100076 S 888.417 21% S 1.726.8% Taal Opening hMnmlums S 31110,130 $ 32,010615 $ 1610)056 5(sl. S RJW.2s2 S 32235286 S 14}14183 = ". 5 29.812.104 Cap xl & Oher ,,,endiWms Tnnarmn, Capial Pmieds 1919,882 3 }509)1 190oc00 1,500,0011 1326.185 3226.185 Post Redmmenl BeveOls- .m.fl.l 1,090o1D 1.090900 1100900 1,200,000 0 1200,000 Taal Capital@ Olbee 2,939,882 4,440,000 3,100,1100 3,100000 4,476,185 Net Ocenaog Remnues Beare Capial Tram A BUdlemd Beg Fund Balance S 34280,012 S 164x0,615 5 I61W,056 S I $ 15280204 S 1335186 S 14 314183 S 0 S 34288189 R.erm,td ladwu CapitalPmjttesi5p.el Prejeces _ _ _ TWA Endelled Be ar Rem- 5 - S - $ - _ S _ S S PA 5 Net Surputur(L'se)ar Rem- S 1-'80.012 S 36480.615 S 16.109.056 5P4 5 352811282 S 35312M S 14314183 =% S 2288189 15 wll o " I BUDGET PERFORMANCE REPORT - 2ND QUARTER FY 2012/13 ! 86 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. Soecial 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 Beginning Fund Balance (Pre - audit) Budgeted Revenues Total Actual Revenues - 2nd Qtr Budgeted Expenditures Total Actual Expenditures - 2nd Qtr 2nd Quarter Ending Fund Balance Capital Proiects Funds CDBG Non Point Grants Source LtDs 30,571 76,536 129,918 279,108 502,000 39,348 4,219 209,143 647 273,985 338,798 33,943 3,274 160,166 7,936 31,516 125,513 122,629 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 2012/13 adopted budget. Staff will continue to monitor these expenditures throughout the remainder of the year. 16 wx . BUDGET PERFORMANCE REPORT - 2ND QUARTER FY 2012/13 °8 sal °s Beginning Fund Balance Budgeted Revenues Total Actual Revenues - 2nd Qtr Budgeted Expenditures Total Actual Expenditures - 2nd Qtr 2nd Quarter Ending Fund Balance Internal Service Funds Capital Project Funds Budget to Actuals Comparisons GFAR Traffic Grant Fund Storm Utility Gas Fund Mitigation CIP's Drains Undergd Tax 7,211,987 3,191,626 (671,281) 1,116,633 2,450,322 193,300 4,371,593 1,936,474 1,723,892 - 14,815,245 1,983,274 2,686,980 1,013,093 2,241,471 102,540 ` 536,002 91,697 1,655,593 284,560 688,735 241,845 51,250 834,560 31,883 303,870 - 756,000 - 650,000 6,248,899 2,178,533 (824,014) 966,485 2,482,205 (152,830) 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 2012 -13 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 Senice Funds Budget to Actuals Comparisons 17 Equipment workers Self Office \Imgt Info Vehicle Building Replacemt Comp Insurance Stores Systems Malin. Dlaint. Beginning Fund Balance 3,133,400 2,300,638 1,595,140 206,571 2,473,342 521,709 1,020,686 Budgeted Revenues 439,532 659,429 501,292 127,500 1,020,673 544,325 1,138,086 Total Actual Resenues -2nd Qtr 262,420 355,982 243,183 31,867 504,307 268,750 620,772 Budiseted Expenditures 714,201 742,411 652,249 143,050 1,370,665 540,532 1,715,544 Total Actual Expenditures -2nd Qtr 60,611 486,914 527,948 59,476 444,865 206,208 446,234 2nd Quarter Ending Fund Balance 3 ,335,209 2,169,706 1,310,375 178,962 2,532,784 5849251 1,195,224 17 BUDGET PERFORMANCE REPORT - 2ND OUARTER FY 2012/13 Trust and Agency Funds Town Trust and Agency Funds have fund balances as of December 31, 2012 of $175,003 for Parking District #88 and $876,601 for the Library Trust Funds. No budget revisions are contemplated at this time for these funds. Internal Service 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 Trust District 859,802 311,722 24,059 138,090 32,598 1,045 235,262 143,526 15,799 137,764 876,601 175,003 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 (ROPS). 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 2012/13 second quarter data, confirm that the second quarter financial results are stable and improving. The Five -Year Financial Plan projects that Town's financial outlook in future years is still challenging with revenue shortfalls forecasted. Therefore, staff will continue to examine revenue and expenditure activity and work to identify opportunities to enhance revenue to support current and future operating capital needs. 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