HomeMy WebLinkAboutItem 6a. Fiscal Year 2023-24 First Quarter Budget Review Item 6a
Department: Finance
Cost Center: 2002
For Agenda of: 11/14/2023
Placement: Business
Estimated Time: 20 minutes
FROM: Emily Jackson, Finance Director
Prepared By: Natalie Harnett, Policy and Project Manager
SUBJECT: FISCAL YEAR 2023-24 1ST QUARTER BUDGET REVIEW
RECOMMENDATION
1. Receive and file the Fiscal Year 2023-24 First Quarter Budget report; and
2. Adopt a Draft Resolution entitled, “A Resolution of the City Council of the City of San
Luis Obispo, California, approving an amendment to the Fiscal Year 2023-24 Budget”
to appropriate $150,000 of the General Fund Assigned Fund Balance for economic
development efforts.
POLICY CONTEXT
Development and presentation of the quarterly reports conforms with the following
adopted Budget Policies:
Financial Plan Purpose and Organization- Goal Status Reports which
requires that the status of major program objectives be formally reported to the
Council on an ongoing, periodic basis.
Financial Reporting and Budget Administration- Interim Reporting which
requires the City to prepare and issue timely interim reports on the City’s fiscal
status to the Council and staff.
DISCUSSION
The accompanying Financial Report for the first quarter of FY 2023-24 (Attachment A)
provides a high-level overview of the City’s financial condition as of September 30, 2023.
The attached report highlights revenue and expenditure actuals for the first three months
of the fiscal year and an update on the Major City Goal (MCG) tasks and the Capital
Improvement Plan (CIP). The report’s focus is on the General Fund and each of the City’s
four enterprise funds. The report also provides an update on the City’s sto rm-related
expenditures.
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Item 6a
Background
Section 1: General Fund Update: As of September 30, 2023, operating expenditures
trend on target with past years’ first quarters. Property tax revenues are benefiting from
higher than anticipated property value assessments, but sales tax and transient
occupancy taxes are showing signs of general economic cooling.
Section 2: Enterprise Funds: The enterprise funds are also tracking in line with
projected budget and will likely end the year as stated in the adopted budget.
Section 3: Major City Goal (MCG) Update: The City continues to make progress on its
MCG efforts, many of which are continued from the 2021-23 Financial Plan. The two
efforts that were scheduled to be completed in the first quarter are very close to
completion but have updated completion dates were moved to either Q2 or Q3.
Section 4: Capital Improvement Plan Update: The City has completed four CIP
projects between July 2023 and September 2023. Some of the major completed projects
include the Railroad Safety Trail Fencing, Santa Rosa at Monterey Intersection
improvements, and the 2023 Silt Removal project . Some of the major upcoming or active
projects include the North Chorro Greenway and the Marsh Street Bridge Emergency
Debris Clearing.
Section 5: Fund Balances: This section provides the current fund balances for all major
funds considering Council action to date. Because the City’s business license renewal
cycle happens in the first quarter, there is also an update on the renewed versus
delinquent licenses.
Section 6: Outlook and Conclusion: Based on the first quarter results, the City is in a
good financial condition and on track to meet or exceed its o verall revenue projections;
however, future uncertainties remain around storm reimbursements, the spectre of an
economic slowdown and/or more turbulence, and the impact of CalPERS investment
losses which have increased unfunded pension liabilities. Staff will return to Council with
the mid-year report on February 6, 2024, with updated fiscal forecasts.
Budget Amendment to Support Economic Development
On December 8, 2020 Council appropriated $3,425,000 in Local Revenue Measure funds
to be used on a number of efforts described in the agenda report that help support
economic activity and homeless services1. Specifically, one of the recommendations
included local investment into short term Certificates of Deposit to generate interest for a
grant program to help offset the cost of a Tenant Improvement permit.
Due to the low interest rate environment that began shortly after, the city did not make
these investments. Instead, it appropriated over $250,000 to directly offer credits for TI
permits through the TIPP‐Fast 2.0 permitting program and placed the remaining amount
in the General Fund assigned fund balance for use on future economic development
efforts. Since then, some of the funding was used in FY 2022-23 and some was allocated
in the 2023-25 Financial Plan. The remaining balance is $624,441.
1 Resolution 11203, 2020 Series
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Item 6a
Staff recommends appropriating $150,000 of this balance for the following uses to help
support economic recovery:
1. Buy Local Bonus & Eat Local Bonus Programs ($125,000): This funding will
provide expanded support for local programs including the Buy Local Bonus and
the Eat Local Bonus. This program was very successful last year and is a great
way to encourage people to shop and eat at local businesses. Currently there is
$125,000 already allocated for these programs specifically for the purchase of gift
cards, however, the additional funds will allow for more gift card funding to expand
the participation opportunity for more businesses and consumers. This is also
expected to extend the duration of the programs since both “sold out” prior to the
programs’ published end dates last year. Additionally, this funding will support the
development of a new campaign during January, similar to a “Restaurant Week”
campaign to supplement the Eat Local Bonus program, as well as other business
support programs during the season.
2. Downtown & Community Activations ($25,000): This funding will provide expanded
support for activations, promotions, and other community benefit programs to
support economic development. Currently, the City has $25,000 allocated within
Economic Development for these types of programs to implement the Major City
Goal, however this additional funding will provide the City the flexibility to
supplement this program.
Table 1: Economic Development Funding Balance
Balance as of June 30, 2023 $1,416,441
2023-25 Budget Allocations2 $792,000
Current Balance $624,441
One-time Requests $150,000
Remaining Balance (after request) $474,441
Public Engagement
Public comment on this item can be provided to the City Council through written
correspondence prior to the meeting and through public testimony at the meeting. The
First Quarter Financial Report for FY 2023-24 (Attachment A) will be posted on the City’s
website for public review.
CONCURRENCE
Operating departments review and monitor financial results on a regular basis.
Departmental fiscal officers reviewed the numbers and will be closely monitoring the
budget for the remainder of the year.
2 2023-25 Financial Plan Page 107: $396,000 in FY 2023-24 and $396,000 in FY 2024-25.
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Item 6a
ENVIRONMENTAL REVIEW
The California Environmental Quality Act (CEQA) does not apply to the recommended
action in this report, because the action does not constitute a “Project” under CEQA
Guidelines Sec. 15378.
FISCAL IMPACT
Budgeted: Yes, Budget Year: 2023-24
Funding Identified: Yes
Fiscal Analysis:
Funding Sources
Total
Budget
Available
Current
Funding
Request
Remaining
Balance
Annual
Ongoing
Cost
General Fund (Assigned
Fund Balance: Economic
Development)
$624,441 $150,000 $474,441 N/A
State
Federal
Fees
Other:
Total $624,441 $150,000 $474,441 N/A
ALTERNATIVES
Do not appropriate $150,000 of the General Fund Assigned Fund Balance to be
used for economic development efforts supporting holiday activation and
community programs. This is not recommended because this funding is intended for
this purpose and the proposed budget allocations are a great way to get funding out into
the community and encourage people to shop and eat at local businesses.
ATTACHMENTS
A - Fiscal Year 2023-24 First Quarter Budget Report
B - Draft Resolution approving an amendment to the Fiscal Year 2023-24 Budget
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Q1 Financial Report Page 1
First Quarter Financial Report
Fiscal Year 2023-24
Introduction
This financial report provides an overview of the City’s financial position through the first quarter of fiscal
year 2023-24 (July 1 - September 30, 2023) for the General Fund and the four enterprise operating funds.
It also provides an update on the status of the City’s Capital Improvement Program (CIP) projects and
progress on Major City Goals. Notable milestones or trends within the first quarter are addressed and
detailed throughout the document. The report is broken down into the following sections:
Contents
Section 1: General Fund Update ................................................................................................................... 2
1a. General Fund Revenue .................................................................................................................... 2
1b. General Fund Expenditures............................................................................................................. 5
1c. An Update on Storm Expenditures .................................................................................................. 6
Section 2: Enterprise Fund Update ............................................................................................................... 7
2a. Utilities: Water and Sewer Funds .................................................................................................... 7
2b. Parking Fund ................................................................................................................................... 8
2c. Transit Fund ..................................................................................................................................... 9
Section 3: Major City Goal Update .............................................................................................................. 11
Section 4. CIP Update – Completed and Ongoing Projects......................................................................... 12
Section 5: Fund Balances ............................................................................................................................ 14
Section 6: Outlook and Conclusion ............................................................................................................. 14
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Q1 Financial Report Page 2
Section 1: General Fund Update
As of September 30, 2023, operating expenditures and revenues generally trend on target with past years’
first quarters.
1a. General Fund Revenue
Table 1 - Q1 General Fund Revenue
Sales and Use Tax (including Measure G): The actuals listed above are for July and August remittances
from the California Department of Tax and Fee Administration (CDTFA). While these two months show a
reduction compared to the prior year, the numbers above do not provide a complete picture of Q1
revenue. The city will receive September actuals in late November, which often includes a significant
“cleanup” amount. Categorical sales tax data for Q1 is not available yet but based on the recent FY 2022-
23 Q4 data (see Figure 1 on next page), some industries are seeing a “cooling”; however, increases in the
City’s share of the County pool have largely made of up for the gap from the declining industry groups.
At a macroeconomic scale, U.S. Bureau of Economic Analysis reported that U.S. GDP grew at a 4.9% annual
pace in the third quarter, buoyed by a strong consumer despite higher interest rates and inflation.
According to Deloitte’s 2023 Holiday Retail Survey, this year’s holiday spending is predicted to surpass
pre-pandemic levels and Amazon recently reported that their October “prime day” outpaced last year’s
event. Despite these positive reports, the reactivation of student loan repayments and relentlessly high
interest rates may impact consumer spending in the coming months. Staff doesn’t anticipate any need to
General Fund Revenues Q1 Actuals % Received Total Budget Q1 Actuals % Received Variance from
prior year
Tax & Franchise Revenue
1 Sales Tax: Bradley Burns (July-Aug only)3,945,734$ 18%22,578,995$ 3,639,635$ 16.1%-7.8%
2 Sales Tax: LRM G20 (July-Aug only)5,114,415$ 19%30,262,098$ 4,570,414$ 15.1%-10.6%
3 Property Tax 311,029$ 1%21,999,786$ 697,541$ 3.2%124.3%
4 Safety Prop 172 99,220$ 20%498,988$ 92,001$ 18.4%-7.3%
5 Transient Occupancy Tax 3,490,625$ 40%10,704,000$ 3,205,153$ 29.9%-8.2%
6 Utility User Tax 1,397,746$ 25%5,710,320$ 1,277,683$ 22.4%-8.6%
7 Business Tax*3,108,125$ 108%3,252,293$ 2,946,108$ 90.6%-5.2%
8 Cannabis Tax 244,581$ 17%1,100,000$ 286,865$ 26.1%17.3%
9 Franchise Fees 207,841$ 13%1,854,000$ 234,808$ 12.7%13.0%
10 Gas Tax (Special Revenue Fund)339,663$ 27%1,389,292$ 366,000$ 26.3%7.8%
11 SB1 - Gas Tax (Special Revenue Fund)176,565$ 17%1,177,994$ 201,792$ 17.1%14.3%
12 Total Tax & Franchise Revenue 18,435,543$ 20%100,527,765$ 17,518,001$ 17%-5%
13 Development Review 1,734,393$ 28%6,275,536$ 1,674,326$ 26.7%-3.5%
14 Fire 377,831$ 19%1,577,836$ 409,081$ 25.9%8.3%
15 Parks & Recreation 329,467$ 21%2,021,599$ 533,156$ 26.4%61.8%
16 Police 93,182$ 15%615,561$ 118,693$ 19.3%27.4%
17 Grants & Subventions 598,226$ 91%676,750$ 225,846$ 33.4%-62.2%
18 Business Licenses* (Incl Cannabis)159,518$ 16%666,600$ 420,274$ 63.0%163.5%
19 Other Revenue 287,097$ 43%1,017,872$ 253,939$ 24.9%-11.5%
20 Total 22,015,256$ 21%113,379,519$ 21,153,315$ 19%-4%
*Business license and tax certificate renewals are due before September 30th, therefore anticipated revenue for the year has been collected.
2022-23 2023-24
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Q1 Financial Report Page 3
adjust the revenue budget at this point but will provide an update at the mid-year review on February 6,
2024.
Figure 1- City of SLO Sales Tax Revenue by Category: Year-over-year for FY 23 Q4 (Calendar year Q2)
Property Tax: Although the days of record‐low mortgage rates are over for the time being and the market
has cooled, home prices remain sticky because inventory is low, and the demand remains high. In October,
the County provided updated 2023-24 Property Tax estimates that are about $600,000 higher than the
City’s current budget. Staff will update the budget and forecasts at mid-year to account for the increase.
Overall County assessed property value increased by 6.24% (Jan 2022 to Dec 2022), with the City
increasing slightly higher at 7.42%. Property tax assessment increases are limited to no more than 2%
per year as long as the property does not have a change in ownership or any new construction. As a
reminder, only 7.22% of property taxes are distributed to Cities. Approximately 63% goes to schools, with
the County receiving the next highest amount.
Table 2 -City of San Luis Obispo Total Property Assessed Value
2022 2023 Change % Change
$11,732,942,322 $12,604,023,619 $871,081,297 7.42%
Transient Occupancy Tax (TOT): TOT revenue is about 8% lower than last year; however, there are still
four missing hotel payments for the month of September which is not atypical. The missing remittances
could easily turn that number around. Overall, the city is seeing a slight decline in its hotel occupancy
rates (See table 3 below) but given that 2022-23 set a record high for TOT revenue, this cooldown was
anticipated.
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Q1 Financial Report Page 4
Table 3 - Year over Year Hotel Occupancy Rates (Based on Smith Travel Research Report)
Month
Occupancy %
2022-23 2023-24 Change +/-
July 82.6 83.5 1.1%
August 75.8 74 -2.4%
September 72.7 71.2 -2.1%
Utility User Tax (UUT): Despite the Q2 UUT revenue being slightly lower than the same period last year,
it is important to note that FY 2022-23 UUT revenue was a high outlier. The total year end revenue was
about 11% higher than the budget in FY 2022-23. Additionally, the quarter-to-quarter revenue can
fluctuate slightly depending on when businesses remit their taxes. Staff expect this revenue to exceed the
budget and are preparing an updated UUT budget and forecast for the mid-year review.
Business Tax: The City collects business taxes at the beginning of the fiscal year, and they are based on
individual businesses’ gross receipts in the previous calendar year. FY 2023-24 business tax revenues
through Q1 are lower than last year because there are still about 650 businesses that need to remit (see
table 16 in the last section 6 of this report). This is nearly double the delinquent number of businesses
from last year.
The Finance Department makes considerable effort to enforcement business tax compliance, and
businesses are assessed fees and penalties for non-compliance with business tax requirements as outlined
in the Municipal Code. The Revenue division has recently been impacted by vacancies and inconsistent
staffing, which has delayed business tax compliance efforts, but staff is currently working to catch up and
expects to be able to collect revenue from the delinquent businesses and meet its revenue budget for the
year.
Cannabis Tax: Cannabis tax revenue is on track with projections.
Franchise Fees: Franchise Fees are on track with projections. In general, the city has seen an increase in
Franchise revenue over the last 10 months because of the spikes in utility rates. The franchise agreements
are based on the utility providers’ gross receipts.
Gas Taxes: Gas taxes are slightly outpacing projections and are higher than last year. Although the gas tax
is a “per gallon” tax, annual adjustments on the tax help maintain modest growth on this revenue stream.
The FY 2023-24 budget is based on information provided by the state. Gas Tax SB1 (Line 11) has a two-
month delay in remittance so the $201,792 represents only two months of revenue, explaining why it is
only at 17% collected.
Development Review: Development services revenue is on track with projections. July and August had
above-average revenue totals but September slightly lower than average. July’s above-average revenue
can be attributed to mixed-use building permit fees, new single-family building permits, and Accessory
Dwelling Unit permits (ADU). In August, Development review fees, building permits, plan check fees,
inspection fees, and encroachment fees all came in with above-average revenue totals. Planning and
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Q1 Financial Report Page 5
zoning fees and application fees did not meet their average revenue threshold, but they are not far enough
off course to make any adjustments to current projections. Supply chain issues, workforce constraints,
and rising interest rates could slow development for the year. Development Review revenues tend to be
unpredictable, meaning large projects with large fees influence total revenue collection. A weak or strong
quarter could shift the overall outlook, so monthly revenues will be closely monitored by staff.
Parks & Recreation: The Parks & Recreation budget is on track with projections. Youth Services revenue
is tracking higher (year over year) for Q1 due to a shift in the timing that July summer camp was received
due to new partnership with SLCUSD paying for childcare expenses. In the past, it was collected in the
prior fiscal year, when individual families registered and paid for their care. Outdoor Rental fees have
outpaced Q1 of FY 2022-23, due to earlier collection of summer permit fees than last year. First quarter
for the Golf division revenue was forecasting higher than the prior year and general round sales were
approximately 7% less than pre-pandemic (Q1 FY 2019-20) totals, but higher than prior fiscal year quarter
(15%). Within the first quarter, the Aquatics division had an increase of 13% attendance from the prior
year with revenue increase within the same time.
Other Departmental Revenue (Police & Fire): Police and Fire department revenue are on track with
projections.
Grants and Subventions: Grant revenues fluctuate from year-to-year based on availability and award
success. The budget is adjusted throughout the year as grants are awarded. Year-to-date, the city is on
track to receive all its budgeted revenue in this category.
Business and Cannabis Licenses: Business license fees are on track with projections. Business licenses are
renewed at the beginning of the fiscal year; therefore, most of the revenue for the year has been collected.
An update on the number of renewed licenses is provided in Section 5 of this report. The cannabis
operator license fee budget was developed based on the projected number of businesses that would be
open this year.
Other Revenue: The “Other Revenue” category includes things like interest revenue, lease revenue, and
miscellaneous revenue that is not department specific. This category also includes “net zero” revenues
that are offset by expenditures.
1b. General Fund Expenditures
Overall expenditure trends are on track with budget. The tables below include year-to-date consumption
for FY 2023-24 compared to budget.
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Table 4 - Q1 General Fund Expenditures by Type
As of the first quarter, there are no significant variances to point out in the General Fund departments.
Table 5 - Q1 Expenditures by Department
*Includes the City-wide staffing contingency budget which will be moved into the department budgets as
needed later in the year, explaining why this category is only 12% is spent.
1c. An Update on Storm Expenditures
The City’s winter storms resulted in emergency declarations at the Federal and State level, in addition to
the Emergency Services Director’s local emergency proclamation. The City Council has authorized use of
up to $9 million from the City’s operating reserve in FY 2022-23 and FY 2023-24 to address unbudgeted
storm costs and with adoption of the 20-23-25 Financial Plan, the City Council also approved allocation of
Expenditure Type Total Budget Obligations Expenditures Total
Obligations &
%
Consumed
1 Salaries 46,545,721$ -$ 9,169,608$ 9,169,608$ 20%
2 Retirement/Benefits 11,508,563$ -$ 2,963,119$ 2,963,119$ 26%
3 PERS Unfunded Liability 11,132,870$ -$ 10,998,102$ 10,998,102$ 99%
4 Contract Services 12,875,121$ 4,269,716$ 2,528,209$ 6,846,846$ 53%
5 Other OpEx 5,297,703$ 1,138,849$ 1,156,583$ 2,308,287$ 44%
6 Utilities 3,309,822$ 42,559$ 821,906$ 864,465$ 26%
7 Grand Total 90,669,799$ 5,451,124$ 27,637,528$ 33,150,427$ 37%
FY 2023-24 (July -September)
Department Total Budget Obligations Expenditures
Total
Obligations &
Expenditures
%
Consumed
1 Public Safety
2 Police 22,164,567$ 353,221$ 8,229,428$ 8,595,389$ 39%
3 Fire 15,293,168$ 267,579$ 5,621,868$ 5,890,867$ 39%
4 Community Services Group (CSG)
5 CSG Admin 840,784$ 37,240$ 305,874$ 343,114$ 41%
6 CDD 8,807,387$ 787,159$ 2,108,783$ 2,895,942$ 33%
7 Public Works 17,989,265$ 2,054,320$ 4,824,220$ 6,883,366$ 38%
8 Parks & Recreation 5,706,488$ 98,930$ 1,526,101$ 1,625,031$ 28%
9 Solid Waste - AB 939 406,797$ 54,736$ 124,491$ 179,226$ 44%
10 Internal Services
11 Admin/IT 11,694,286$ 1,161,498$ 2,988,218$ 4,171,755$ 36%
12 City Attorney 1,698,051$ 240,196$ 446,357$ 691,345$ 41%
13 Finance 2,485,965$ 161,704$ 782,206$ 943,910$ 38%
14 Human Resources 2,158,158$ 200,277$ 554,509$ 765,761$ 35%
15 Non-Departmental*1,424,883$ 34,266$ 125,473$ 164,722$ 12%
16 Total 90,669,799$ 5,451,124$ 27,637,528$ 33,150,427$ 37%
FY 2023-24 (July -September)
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$2.75 million to a capital project to fund projects to repair storm damages and mitigate against future
damage.
The Federal and State declarations enable the City eligible to seek reimbursement for certain storm-
related costs. The maximum reimbursement for eligible costs is 93.75% (75% from FEMA and 18.75%
from CalOES), meaning that the City will pay a minimum of 6.25% for certain storm related costs. Based
upon information provided by EY (the consultant hired to provide disaster recovery technical assistance),
staff expects that reimbursement will be received approximately 12 months following formal submittal of
projects to FEMA.
Currently, the city has expended approximately $7.5 million on storm response, including debris removal,
emergency protective measures, and projects to make permanent repairs to damaged facilities. As noted
in prior updates, storm related costs continue to shift as projects are scoped and designed. Currently, the
total storm costs are estimated at $35.6 million. Staff continue to work to prioritize the repairs and
identify which projects will be eligible for the highest reimbursement.
Section 2: Enterprise Fund Update
2a. Utilities: Water and Sewer Funds
The tables below include first quarter actuals for FY 2023-24 compared to the budget.
Table 6 – Q1 Water and Sewer Revenue
Water/Sewer Fund Revenue Q1 Actuals %
Received Total Budget Q1 Actuals %
Received
Variance from
prior year
601-Water Fund 5,578,487$ 21%27,353,319$ 5,854,193$ 21%5%
602-Sewer Fund 3,845,425$ 20%21,457,327$ 3,650,466$ 17%-5%
Grand Total 9,423,912$ 21%48,810,646$ 9,504,659$ 19%1%
FY 2022-23 FY 2023-24
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Table 7 - Q1 Water and Sewer Expenditures
Revenue: Due to utility billing timings, revenues reflect roughly two months of revenue. Relative to
projected revenues for FY 2023-24, first quarter revenues put the Utilities department on track to achieve
revenue targets. Relative to the FY 2022-23 revenue actuals, water is trending higher, and sewer is
trending lower. Water revenue is trending higher because the rates were increased by 8.5% on July 1,
2023 (Resolution No. 11427). Sewer revenue is currently trending lower due to the timing of Cal Poly
capacity interest payments. Cal Poly contributes to major utility infrastructure in exchange for reserved
capacity in the wastewater system. In the previous fiscal year Cal Poly contributed $243,568 for the design
of the WRRF upgrade. Cal Poly contributions for the construction of the WRRF upgrade will begin
December 2024.
Expenditures: There are no significant variances to point out at this time. It is normal and expected that
contract services and other operating expenses track above 25% because annual purchase orders are set
up at the beginning of the year and the funds are considered “Obligated” from that point forward.
Additionally, costs like contributions to source water reservoirs, permits, and subscriptions are
frontloaded in the fiscal year. Variance in salaries can be attributed to staff vacancies and standby, call
back, and overtime that have not been used yet.
2b. Parking Fund
The tables below include first quarter actuals for FY 2023-24 compared to budget.
Expenditure Type by
Fund Total Budget Obligations Expenditures
Total
Obligations &
Expenditures
% Consumed
1 601-Water Fund
2 Salaries 3,887,239$ -$ 724,126$ 724,126$ 19%
3 Retirement/Benefits 936,831$ -$ 237,025$ 237,025$ 25%
4 Debt Service 1,870,392$ -$ -$ -$ 0%
5 PERS Unfunded Liability 678,507$ -$ 668,626$ 668,626$ 99%
6 Contract Services 1,067,009$ 321,794$ 142,911$ 464,705$ 44%
7 Other OpEx 13,005,131$ 1,971,737$ 6,612,225$ 8,583,962$ 66%
8 Utilities 1,033,720$ 18,756$ 219,701$ 238,457$ 23%
9 Water Fund Total 22,478,829$ 2,312,287$ 8,604,615$ 10,916,902$ 49%
10 602-Sewer Fund
11 Salaries 3,889,630$ -$ 731,540$ 731,540$ 19%
12 Retirement/Benefits 909,393$ -$ 228,444$ 228,444$ 25%
13 Debt Service 1,382,346$ -$ -$ -$ 0%
14 PERS Unfunded Liability 692,112$ -$ 682,034$ 682,034$ 99%
15 Contract Services 1,251,733$ 517,081$ 175,631$ 692,713$ 55%
16 Other OpEx 1,595,059$ 398,077$ 208,601$ 606,677$ 38%
17 Utilities 1,062,892$ 32,086$ 213,099$ 245,186$ 23%
18 Sewer Fund Total 10,783,165$ 947,244$ 2,239,348$ 3,186,593$ 30%
FY 2023-24 (July -September)
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Table 8 - Q1 Parking Fund Revenue
Table 9 - Q1 Parking Fund Expenditures by Type
Revenue: Parking revenues compared to budget are tracking similar to the first quarter of the previous
fiscal year. The hourly rate increases in the parking structures and on-street spaces approved by Council
as part of the FY 2022-23 Supplemental Budget adoption were implemented July 1, 2023, which explains
the significant variance in actual revenue compared to the prior year. Fines and Forfeitures, which is
mainly comprised of parking citation revenue is tracking higher than the budgeted amount and an
adjustment will be recommended with the Mid-Year Review. The Parking Fund also implemented a
gateless operation as well as pilot parking program for in-county residents at the 842 Palm Street parking
structure. So far, these programs have not significantly affected revenues. Staff is continually monitoring
the programs and may recommend adjustments based on further analysis. The totality is that revenues
are tracking to achieve original estimates and will be adjusted based on any Council action at the
November 7, 2023 meeting.
Expenditures: Salaries and Retirement/Benefits are tracking low through the first quarter due to staff
turnover and a minor delay in hiring for the vacant Administrative Assistant position. Contract Services
and Other Operating Expenses are significantly above 25% because most of these funds are obligated at
the beginning of the fiscal year for annual service contracts which is consistent with prior years.
2c. Transit Fund
The tables below include first quarter actuals for FY 2023-24 compared to budget.
Parking Fund
Revenue Q1 Actuals % Received Total Budget Q1 Actuals % Received Variance from
prior year
Parking Fund 1,866,772$ 32%10,203,324$ 3,282,085$ 32%76%
Grand Total 1,866,772$ 32%10,203,324$ 3,282,085$ 32%76%
FY 2022-23 FY 2023-24
Expenditure Type Total Budget Obligations Expenditures
Total
Obligations &
Expenditures
% Consumed
1 Salaries 1,405,279$ -$ 270,807$ 270,807$ 19%
2 Retirement/Benefits 321,392$ -$ 73,589$ 73,589$ 23%
3 Debt Service 852,116$ -$ 369,156$ 369,156$ 43%
4 PERS Unfunded Liability 196,276$ -$ 177,823$ 177,823$ 91%
5 Contract Services 969,370$ 589,720$ 163,334$ 753,054$ 78%
6 Other OpEx 392,450$ 18,146$ 189,421$ 207,567$ 53%
7 Utilities 264,172$ -$ 51,685$ 51,685$ 20%
8 Parking Fund Total 4,401,055$ 607,866$ 1,295,815$ 1,903,681$ 43%
FY 2023-24 (July -September)
Page 89 of 160
Q1 Financial Report Page 10
Table 10 - Q1 Transit Revenue
Table 11 - Q1 Transit Expenditures
Revenue: Transit revenues are primarily made up of federal and state grant funding which require
reimbursement only after funds have been expended. Transit has not drawn down any federal funds
through the first quarter for either operating assistance or capital projects. Similarly, the only state
funding received so far is for formula funds which are not provided via reimbursements. Bus fare is higher
compared to the first quarter of the previous year because Cal Poly’s contribution for student transit
services increased from $600,000 to $750,000 this year.
Expenditures: There are no significant variances through the first quarter. Percentage consumed for
Contract Services and Other Operating Expenses are significantly above 25% because most of these funds
are obligated at the beginning of the fiscal year for annual service contracts which is consistent with prior
years.
Transit Fund Revenue Q1 Actuals % Received Total Budget Q1 Actuals % Received Variance from
prior year
Federal -$ 0%7,571,830$ -$ 0%
Local (Bus Fare)194,947$ 23%990,000$ 225,864$ 23%16%
Other Revenue/ Interest Revenue344,183$ 116%13,579$ -$ 0%-100%
State 751,816$ 37%3,179,564$ 684,577$ 22%-9%
Grand Total 1,290,946$ 12%11,754,973$ 910,440$ 8%-29%
FY 2022-23 FY 2023-24
Expenditure Type Total Budget Obligations Expenditures
Total
Obligations &
Expenditures
% Consumed
1 Salaries 337,815$ -$ 77,414$ 77,414$ 23%
2 Retirement/Benefits 74,554$ -$ 21,217$ 21,217$ 28%
3 PERS Unfunded Liability 45,388$ -$ 44,728$ 44,728$ 99%
4 Contract Services 4,487,341$ 2,863,564$ 360,568$ 3,224,132$ 72%
5 Other Operating Expenditures 410,200$ 262,321$ 79,291$ 341,612$ 83%
6 Transit Fund Total 5,355,298$ 3,125,884$ 583,218$ 3,709,103$ 69%
FY 2023-24 (July -September)
Page 90 of 160
Q1 Financial Report Page 11
Section 3: Major City Goal Update
Table 12 - Major City Goal Tasks with Completion Dates in FY 2023-24 Q1
Task
Original
Completion
Date
Updated
Completion
Date
Comments (if applicable)
Diversity, Equity,
Inclusion (DEI)
Strategy 2.4: Enhance
Inclusive & Equitable
Workplace Environment:
Task a. Develop and adopt
a DEI statement for the
organization.
FY 23-24 Q1 FY 23-24 Q3
DEI Statement is being developed as
part of the DEI Strategic Plan that will be
before Council in Winter 2024.
Housing and
Homelessness
Strategy 3.4: Public Safety:
Task b. Implement the
new Community Service
Officer (CSO) program
over the next fiscal year to
ensure effectiveness and
improvements in quality-
of-life surrounding
homelessness issues in
the downtown (funding
approved on March 7,
2023)
FY 23-24 Q1 FY 23-24 Q2
Contract CSO's have recently
interviewed and are in the process of
being converted from contract
employees to FTE's. In addition, two
CSO vacancies are being filled with an
expected start date in late 2023. (Both
candidates are starting the background
process) The contract CSO's have proven
to be a force multiplier downtown and
have made a significant improvement in
our ability to proactively address quality
of life issues in the downtown.
Page 91 of 160
Q1 Financial Report Page 12
Section 4. CIP Update – Completed and Ongoing Projects
Table 13 - Completed and Ongoing Construction Projects (July 2023 – September 2023)
*Includes carry over budget from prior years.
ID#Project Total Budget*
Estimated
Construction
Completion
Date
Additional Comments
1 842 Palm Parking Structure Gateless Entry $ 175,000 Complete
2 2022 Pedestrian Crossing Improvements $ 841,644 Complete
3 Railroad Safety Trail Fencing $ 350,000 Complete
4 Santa Rosa at Montery Intersection
Improvements $ 1,067,084 Complete
5 Silt Removal 2023 $ 38,055 Complete
6 Wastewater Resource Recovery Facility Upgrade $ 143,376,754 Q2 FY 23-24 Construction Ongoing
7 Calle Joaquin Lift Station Replacement $ 9,225,565 Q2 FY 23-24 Construction Ongoing
8 2022 Roadway Sealing $ 5,550,000 Q2 FY 23-24
Construction almost complete.
Pending delivery of electrical
cabinet.
9 Whale Rock Dam Maintenance-Spillway
Underdrain Repairs $ 455,360 Q2 FY 23-24 Construction Ongoing
10 San Luis Obispo Creek Emergency Bank
Stabilization Project near Johnson Avenue $ 1,700,455.00 Q2 FY 23-24 Construction Ongoing
11 Marsh Street Bridge Emergency Debris Clearing $ 325,370 Q2 FY 23-24 Construction Ongoing
12 CDBG Curb Ramps 2022 $ 800,128 Q2 FY 23-24 Construction Ongoing
13 San Luis Drive Emergency Repair $ 7,000,000 Q2 FY 23-24 Construction Ongoing
14 Cultural Arts District Parking Structure $ 54,614,116 Q3 FY 25-26
Construction Ongoing. All
Phases(Phase 1A, 1B, and 2) in
construction.
15 North Chorro Neighborhood Greenway $ 8,218,904 Q3 FY 23-24 Construction Ongoing
16 2023 Arterials $ 8,521,058 Q3 FY 23-24 Construction Ongoing
17 Transit Facility Electric Vehicle Charging
Infrastructure $ 2,025,408 Q4 FY 23-24 Construction Ongoing
18 Water Treatment Plant Generator Improvement
Project at Facility 98 $3,527,523 Q4 FY 24-25 Construction Ongoing
19 North Broad Street Neighborhood Park $ 1,739,474 Q4 FY 23-24 Construction Contract Awarded.
20 Buchon Street Traffic Calming $ 337,370 Q2 FY 23-24 Awarded
21 Ruth and Iris Storm Drain Repair $ 321,656 Q2 FY 23-24 Awarded
22 842 & 919 Palm Parking Structure Repairs $ 3,462,180 Q2 FY 23-24 Awarded
23 Prefumo Creek LOVR to Laguna Lake $ 335,950 Q2 FY 23-24 Awarded
24 Fire Station 1 Fleet Maintenance Roof $ 361,436 Q3 FY 23-24 Awarded
25 Cheng Park Revitalization $ 807,786 Q3 FY 23-24 Awarded
26 Tank Farm Lift Station Discharge Pipe
Replacement $ 200,000 Q4 FY 23-24 Advertising for Construction Bids
27 Corporation Yard Fuel Island and Wash Station
Rehabilitation $ 847,688 Q4 FY 23-24 Advertising
28 Reservoir No. 2 Cover Replacement Project $ 2,834,678 Q1 FY 24-25 Advertising
Completed & Ongoing Construction Capital Projects (July 2023 - September 2023)
Page 92 of 160
Q1 Financial Report Page 13
Table 14 - Status of Major Projects in Design
ID#Project Total Budget
Estimated
Construction
Start Date
Additional Comments
29 Mission Plaza Restrooms and Kiosk Cafe $ 3,377,529 Q4 FY 23-24 Finalizing design documents.
30 Mid-Higuera Bypass $ 9,077,709 Q4 FY 23-24 Finalizing design documents and
easement acquisition process.
31 Prado Road Bridge and Road Widening $ 5,560,380 Q1 FY 25-26 Working on regulatory permits
and 90% constuction documents
32 California and Taft Roundabout $ 655,824 Q1 FY 25-26
Right of way acquisition in
progress and finalizing design
documents.
33 Prado Road Interchange $ 4,426,375 Q1 FY 27-28
Alternative analysis and
environmental document.
Pursuing advertisement of CEQA
document and final project
report.
34 Public Safety Center $ 399,215 To Be
Determined
Consultant to analyze two site
option and present conceptual
design for review. Currenlty
working on 1106 Tenant
Improvement project.
Status of Major and Legacy Projects in Design
Page 93 of 160
Q1 Financial Report Page 14
Section 5: Fund Balances
Fund balance represents unspent expenditures, and revenues over expense brought forward from the
previous year (ending balance) in order to fund the next year’s budget. In the case of the enterprise funds,
the “Working Capital” is a shown below. Working Capital is equal to the fund’s current assets minus
current liabilities. The total balance includes reserved or restricted amounts.
Table 15 - Fund Balance/Working Capital by Fund
Fund Balance/Working Capital by Fund
101 - General Fund $ 18,712,486
601 - Water Fund $ 42,559,433
602 - Sewer Fund $ 50,916,875
611 - Parking Fund $ 14,531,947
621 - Transit Fund $ 1,570,068
Q1 Update on Business License and Other Permit Renewals
Annual business licenses and various permit renewals and fees are due to the city in the first quarter of
the fiscal year. Staff were successful in collecting most of the renewals by the due date (July 31, 2023).
Delinquent customer accounts are now subject to late fees and/or administrative fines. The table below
provides a snapshot of status made relative to collection of these license and permit renewals as of
October 31, 2023.
Table 16 - License and Permit Renewal Status
License/Permit Type Renewed Delinquent
Business Licenses 8,150 661
Business Licenses – Homestays 146 8
Fire Permits 196 73
Industrial User Permits 420 111
Section 6: Outlook and Conclusion
All the City’s major funds began FY 2023-24 in good financial standing and overall, on track with budgets.
While revenue trends are looking favorable, there are some indications of a “cooldown”. Staff anticipated
this in preparing the 2023-25 Financial Plan and created the revenue budgets accordingly. It also worth
noting that the City has a fully funded 20% operating reserve and a $2 million “Revenue Stabilization
Reserve” to help hedge against any sudden fluctuations. Updated long-term forecasts will be presented
to Council at the February 6, 2024, Mid-year review.
Page 94 of 160
R ______
RESOLUTION NO. _____ (2023 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, APPROVING AN AMENDMENT TO THE
FISCAL YEAR 2023-24 BUDGET
WHEREAS, on June 6, 2023, the City Council adopted the 2023-25 Financial Plan
and the Fiscal Year 2023-24 budget (Resolution 11429, 2023 Series); and
WHEREAS, in accordance with San Luis Obispo Charter Section 804, at any
meeting after the adoption of the budget, the Council may amend or supplement the
budget by motion adopted by a majority vote of the Council; and
WHEREAS, on December 8, 2020, Council approved $3,425,000 of Local
Revenue Measure funds to be transferred into the General Fund for economic
development efforts and homeless services (Resolution 11203, 2020 Series); and
WHEREAS, after considering the adopted use of funds as outlined on page 107 in
the 2023-25 Financial Plan, a balance of approximately $624,000 is available for future
use; and
WHEREAS, staff have identified an immediate use for the some of the funds to
help support local programs and community activations; and
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis
Obispo as follows:
Page 95 of 160
Resolution No. _____ (2023 Series) Page 2
R ______
SECTION 1. The 2023-24 budget is hereby amended to appropriate $150,000
from the General Fund Assigned Fund Balance to the Economic Development program’s
operating budget to support economic development efforts.
Upon motion of _______________, seconded by _____________, and on the
following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this _____ day of _____________________ 2023.
___________________________
Mayor Erica A. Stewart
ATTEST:
________________________
Teresa Purrington,
City Clerk
APPROVED AS TO FORM:
________________________
J. Christine Dietrick,
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the
City of San Luis Obispo, California, on ______________________.
___________________________
Teresa Purrington,
City Clerk
Page 96 of 160
1
FY 2023-24 Q1 Budget Review
November 14, 2023
2
Recommendation
1.Receive and file the Fiscal Year 2023-24 First Quarter Budget report; and
2.Adopt a draft resolution entitled, “A Resolution of the City Council of the City of San
Luis Obispo, California, approving an amendment to the Fiscal Year 2023-24
Budget” to appropriate $150,000 of the General Fund Assigned Fund Balance for
economic development efforts.
3
Revenue Overview Major Funds
Fund FY 2022-23 FY 2023-24 % Received Variance from
prior Year
General Fund $ 22,015,256 $ 21,153,315 19%-4%
Water Fund $ 5,578,487 $ 5,854,193 21%5%
Sewer Fund $ 3,845,425 $ 3,650,466 17%-5%
Parking Fund $ 1,866,772 $ 3,282,085 32%76%
Transit Fund $ 1,290,946 $ 910,440 8%-29%
Negative
variances from
prior year due to
timing of receipts.
Overall, funds are currently on track with budget projections.
Cooldown in some tax revenue; however, expect to be offset by increases in property tax.
4
Expenditure Overview Major Funds
FY 2023-24 (July -September)
Fund Total Budget Total Obligations &
Expenditures % Consumed
General Fund $ 90,669,799 $ 33,150,427 37%
Water Fund $ 22,478,829 $ 10,916,902 49%
Sewer Fund $ 10,783,165 $ 3,186,593 30%
Parking Fund $ 4,401,055 $ 1,903,681 43%
Transit Fund $ 5,355,298 $ 3,709,103 69%
Staffing
20%
Contract Services
58%
Other OpEx
58%
Utilities
25%
Percent expended* by type
*includes obligations
5
Major City Goals
Strategy 2.4: Enhance Inclusive & Equitable Workplace Environment:
Task a. Develop and adopt a DEI statement for the organization.
2 Major City Goal tasks Scheduled to
complete in Q1
Strategy 3.4: Public Safety:
Task b. Implement the new Community Service Officer (CSO) program over the
next fiscal year to ensure effectiveness and improvements in quality-of-life
surrounding homelessness issues in the downtown (funding approved on
March 7, 2023)
FY 2023-24 Q3
FY 2023-24 Q2
Updated
Completion Date
6
Capital Projects
Completed projects in FY 2023-24 (July-Sept):
•842 Palm Parking Structure Gateless Entry
•2022 Pedestrian Crossing Improvements
•Railroad Safety Trail Fencing
•Silt Removal 2023
Projects Under Construction or Near Complete
•WRRF Upgrade
•Cultural Arts District Parking Structure
•North Chorro Greenway
•2023 Arterial Streets Project
•Calle Joaquin Lift Station Replacement
Full list on page 12 (Attachment A)
7
Storm Update
Storm Projects Underway
Johnson Avenue Creek Bank Stabilization – construction ongoing
San Luis Drive Creek Bank Repairs/Retaining Wall – construction ongoing
Marsh Street Bridge Debris Cleanup – construction ongoing
City Council has authorized use of operating reserves in FY 2023-24 to respond to repairs
$9 million was forecasted in the 23-25 Financial Plan
Additionally, Council appropriated of $2.75 of LRM funding
Operating reserves currently remain at policy level of 20%
Approximately $7.5 million spent to date
Total storm costs estimated to exceed $35 million
City will seek maximum reimbursement from FEMA & CalOES
8
Storm Update
10 projects totaling approximately $2.5M have been submitted to FEMA for review
$1.6M for January debris removal- eligible for 100% reimbursement
Project 93.75% reimbursement on other submitted costs
6 projects undergoing final review by consultant before submittal to FEMA
Forecasting reimbursement within 12 months of submittal to FEMA
9
Recommendation - Budget Amendment
Appropriate $150,000 of the Economic Development Funding Balance (Assigned Fund
Balance) to help support economic vitality:
1. Buy Local Bonus & Eat Local Bonus Programs ($125,000)
2. Downtown & Community Activations ($25,000)
10
Looking Forward
Finalization of FY 2022-23 Audit. Publish ACFR by 12/31/23
Update revenue projections and any expenditure forecast
changes.
Staff to create recommendations for use of one-time unassigned
fund balance from FY 2022-23 (if applicable)
Preparation
for Mid-Year
11
Recommendation
1.Receive and file the Fiscal Year 2023-24 First Quarter Budget report; and
2.Adopt a draft resolution entitled, “A Resolution of the City Council of the City of San
Luis Obispo, California, approving an amendment to the Fiscal Year 2023-24
Budget” to appropriate $150,000 of the General Fund Assigned Fund Balance for
economic development efforts.
12
Backup slide – Breakdown of $2M Economic Development Funding
FY 20-21 Q4 Unbudgeted LRM Revenue Estimate 3,425,000$
TI Program - Invest in CDs - Economic Development 2,000,000$
Small Business Grants 500,000$
Downtown Vitality 425,000$
Shop Local Incentive 200,000$
Homeless Services 300,000$
Fiscal Year TI Program Amount Beginning Balance 2,000,000$
FY 2020-21 Immediate Investment into TI Program (50,000)$
FY 2021-22 TIPP Fast 2.0 Program (250,000)$
FY 2022-23 FY 22-23 Mid-year Economic Development SOBC (283,559)$
FY 2022-23 Year End Balance 1,416,441$
FY 2023-24 Per 2023-25 Financial Plan - Appropriated (396,000)$
FY 2024-25 Per 2023-25 Financial Plan - Adopted (396,000)$
Current Available Balance 624,441$
FY 2023-24 11/14/23 Recommendation (150,000)$
Balance after 11/14/23 474,441$
Council Action from 12/8/20 (R-11203)