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HomeMy WebLinkAbout02-21-2012 b3 mid year budget 201112counci lj acenOa uepout C I T Y O F S A N L U I S O B I S P O FROM : Katie Lichtig, City Manage r Charles Bourbeau, Director of Finance & Information Technolog y Debbie Malicoat, Finance Manage r SUBJECT : 2011-12 MID-YEAR BUDGET REVIE W RECOMMENDATION 1.Review and discuss the City's financial condition and status of City goals at the mid-point o f 2011-12 . 2.Approve revenue and expenditure changes presented in the accompanying Mid-Year Budge t Review document . DISCUSSIO N The City's two-year Financial Plan process calls for the submittal of a formal financial statu s report to the Council every six months . The accompanying Mid-Year Budget Review for 2011-1 2 meets that requirement and provides a comprehensive overview of the City's fiscal condition at th e mid-point of the fiscal year . Background : Purpose of the Mid-Year Budget Review For routine fiscal monitoring, all departments have on-line access to up-to-date accountin g information, financial reports are issued monthly to key staff members, and quarterly financia l reports are distributed to the Council and staff Additionally, the Finance and Informatio n Technology (IT) Department issues focused reports to the Council and staff on key revenues suc h as sales tax, transient occupancy tax and investments, as well as ad hoc reports as needed . However, the preparation and submittal of a formal review at the mid-point of the fiscal yea r provides an opportunity to take a broader look at the City's financial picture and formally updat e and make adjustments to the 2011-13 Financial Plan . Report Organizatio n The accompanying Mid-Year Budget Review is organized into five main sections : Section A :Transmittal Memorandum :Provides a narrative overview of the City's fisca l environment and a narrative of key changes made to revenue projections as a resul t of this review . Section B:Financial Condition Summaries :Provides comprehensive presentations an d updates of projected revenues and expenditures based on staffs best and mos t Meeting Date 2-21-1 2 kcem Number B3 B3 - 1 2011-12 Mid-Year Budget Review Page 2 prudent professional judgment . Updates beginning fund/working capital balance s based on actual audited 2010-11 results and projected ending balances for 2011-1 2 based on changes from original budget estimates . For the first time, the Mid-Yea r Budget Review contains a brief update to the General Fund Five Year Fisca l Forecast . Section C:Mid-Year Requests :Provides detailed supporting documentation for the requested mid-year budget adjustments . These requests require affirmative action on the par t of Council to be approved . Section D : Recent financial and revenue reports :Provides the most recent Quarterl y Financial Report, Quarterly Sales Tax Newsletter and Monthly TOT Report . Section E:Status of Goals and Objectives :Provides a report on Major City Goals, Othe r Council Objectives, and the status of major Capital Improvement Plan (CIP ) projects . This includes recommended "Action Plan" revisions as discussed in th e report . Summary of Mid-Year Budget Review Result s After reviewing the City's actual results for 2010-11, along with available data regarding curren t fiscal circumstances, there are both positive and negative financial indicators as well a s uncertainty to report in this Mid-Year Budget Review . These include : 1.2011-12 General Fund revenue projections have been updated and key changes are describe d on page A3 . Ongoing revenue sources reflect both increases and decreases that almos t balance each other with a very small net positive . However, a $433,400 increase in pla n check fee revenue associated with one-time development activity brings the total change i n projected revenue for 2011-12 to a positive $559,300 or 1 .1%. 2.Beginning General Fund balance for 2011-12 was stronger than that projected in th e Financial Plan by $1,427,300 as was reported to the Council in December 2011 . 3.Except for the resolution reducing compensation for management and non-represente d personnel, budgeted savings from compensation reductions have not yet occurred pending th e outcome of negotiations with the various bargaining units . To the extent these budgeted reductions do not occur in this fiscal year, personnel costs for 2011-12 will be greater tha n anticipated . 4.State budget cuts continue to be a cause of uncertainty and concern . For example, th e Governor's recently proposed 2012-13 budget included the closure of the Californi a Specialized Training Institute at Camp San Luis Obispo which could affect the City's Transient Occupancy Tax by over $50,000 annually if carried out . Employment and overtim e compensation at State agencies with a substantial local presence (ie California Men's Colony) have been subject to reduction already and may have unforeseen negative impacts o n revenues such as sales tax . B3-2 2011-12 Mid-Year Budget Review Page 3 While the Mid-Year Budget Review primarily focuses on programs and projects financed throug h the General Fund, it does contain relevant information regarding any projected changes affectin g the City's enterprise funds . Consistent with the City's policy of annually reviewing the enterpris e fund rates, a comprehensive analysis will be presented in June 2012 addressing rate and revenu e issues in the Water, Sewer, Parking, and Transit fund s After evaluating the fiscal environment described above, along with the submissions of th e various departments, staff has recommended that Council consider and approve eight operatin g and two CIP requests as part of this Mid-Year Budget Review . Together these requests tota l $288,900 for 2011-12 and $359,600 for 2012-13, affecting the General Fund, Water Fund an d Sewer Fund . The report also reflects steady progress toward the accomplishment of Major City Goals defined b y the Council . ENCLOSURE Mid-Year Budget Review for 2011-1 2 T :\Council Agenda Reports\2012\2012-02-21\Mid-Year Budget Review (Bourbeau)\Council Agenda Report 2011-12 MYR .doc Page intentionally lef t blank .