LTC 067-2011 Analysis of Budget M1,AM.1
OFFICE OF THE CITY MANAGER
os7 -201 LETTRR (llON
NO. LTC #' { -
1 1'TY CL I; JA
OFF ICE
TO:'. Mayor Matti Herrera Bower and Members of the City Commission
FROM: Jorge M. Gonzalez, City Manager
DATE: March 23, 2011
SUBJECT: ANALYSIS OF BUDGET TO ACTUA EVENUES AND EXPENSES FOR THE
THREE .MONTHS ENDED DECEMBER 31, 2010, WITH OPERATING BUDGET
PROJECTIONS THROUGH SEPTEMBER 30, 2011 FOR THE GENERAL FUND
The purpose of this LTC is to provide the Mayor and Commission with'the status of the FY
2010/1.1 budget to actual revenue and expenses. at the end of the first ,gparter with
projections through, September 30, 2011. Based on the review, it is projected °that, overall,
that General Fund revenues will essentially. equal General Fund expenditures if the City
does not fully expend its operating contingency. While we rarely fully expend the operating
contingency by the end of the fiscal year, at this stage of budget projections,,we take a more
conservative- approach and assume that..the contingency .will be fully expended. If the
.,operating contingencyis fully spent, there will be an operating budget shortfall of $1.2 million
(0.5%) in the General :Fund. It is important to note that this is despite a projected revenue
shortfall of $1.6 million and .pension contributions in excess off budget by approximately
` $665,000 as explained further below. This represents already the absorption of nearly $2.2
million in deviations,from budget, once. again reflecting the pro- active initiatives taken by the
City to reduce expenses below the adopted budget.
At this stage of projecting the fiscal year end, there are many issues still to be determined.
The first 3 months of any.fiscal year are not necessarily the most reliable, indication of the
remainder of the year, but do give us ' a first .glance of _potential Tissues. As you know,
balancing the budget for FY 2010/11 was an extremely challenging exercise over a series of
_committee. meetings. Certain assumptions on both revenue :and expenditures were made
that are still developing and will be adjusted in later projections .'.Those assumptions, as well
as our continued effort 'at managing the City's resources and ,continued adjustments to
revenues and expenditures line items throughout the year will affect our projections going
forward. -
Overview
An analysis of the actual-three month operating_ revenues and expenditures for the period
October 1, 2010 through December 31, 2010, reveals an operating' budget surplus of
$49,571 *,670: While the. surplus as. of December. 31 st seems unusual as compared to the
shortfall projected for the year ending on .September 30 th , . it should` be noted that the City
receives a greater percentage, historically approximately 60 % of its ad valorem taxes in the
first quarter. Ad valorem tax revenues representing approximately 47 %, of total revenues
have been almost 69% received as of the first quarter of the fiscal year, a level slightly
higher than the same'period last'year. The remaining 53% of revenues are approximately at`
%0
the 23 level as of December 31 St as compared to 22% as of the first quarter of last fiscal
year.
LTC ANALYSIS OF BUDGET TO ACTUAL REVENUES AND EXPENSES FOR THE THREE MONTHS ENDED
DECEMBER 31, 2010, WITH OPERATING BUDGET PROJECTIONS THROUGH SEPTEMBER 30, 2011 FOR THE
GENERAL FUND
Page 2
Expenditures are at approximately 24% of the FY 2010/11 budget,however, there are often
delays in expenditures in the first quarter of the year.
FY 2010/11 Budget
Actual as of Variance Over/
General Fund Adopted Budget* 1/4 of Budget 12/31/10 (Under)
Revenues. $ 237,518,114 $ 59,379,529. $ 106,044,817 $ 46,665,288
Expenditures 237,518,114 59,379,529 56,473,147 (2,906,382)
Surplus /(Deficit) $ - $ - $ 49,571,670 $ 49,571,670
Note'. The adopted budget reflected above is prior to the budget amendment that was adopted in February,
2011. This amendment authorized the use of $1.95 million in reserves to be set aside for the FY 2011/12
budget, and has no impact on the net of revenues versus expenditures. The amendment will be reflected as of
the second quarter analysis of actual revenues to expenditures.
The projected year -end operating revenues and expenditures through September 30, 2011,
is, therefore, a more realistic snapshot of anticipated shortfall at this point in time. Further,
while the actual revenues and expenditures presented are as of December 31, 2010, the
projections have incorporated more recent information as available.
A summary of preliminary projected. General Fund Revenues. and Expenditures as of
September 30, 2011 is as follows:
FY 2010/11 Budget
% Over/
General Fund Adopted Budget Projected Budget/ Projected (Under)
Revenues $ 237,518,114 $ 235,900,770 $ (1,617,344) -0.7%
Expenditures* 237,518,114 235,960,069 (1,558,045) -0.7%
Surplus /(Deficit). $ - $ (59,299) $ (59,299).
Operating Contingency $ 1,100,000
Net surplus (Deficit) $ (1
* Prior to Expenditure of Operating Contingency
While property tax revenues were significantly reduced in FY 2008/09 and.FY 2009/10 (2.3%
and 1.6% below budget at year -end, respectively), we are projecting full collections this year.
Although the exact amounts are unknown, the FY 2008/09 and FY 2009/10 property tax
revenues were impacted by appeals that continued into the current fiscal year. These
outcomes from these appeals are therefore accruing to the FY 2010/11 fiscal year and may
increase current property year tax revenues, as evidenced by the year to date collections
being above prior years. On the other hand, there may be an impact from FY 2009/10
appeals that will result in revenues that will not be collected until FY 2011/12, however, at
this point the extent and amount of the impact is unknown.
In addition, the projections assume decreased telephone and electricity franchise taxes
(Other Taxes) primarily due to the expiration of an additional fuel surcharge on electrical
bills, decreased interest earning, and decreased revenues previously anticipated from the
Commercial Pole Banner Program and corporate sponsorships which are still being pursued
and negotiated. In addition, fines and forfeit revenues are projected to be below budget
primarily due to red light camera revenues not performing at the level previously anticipated
i
LTC ANALYSIS OF BUDGET TO ACTUAL REVENUES AND EXPENSES FOR THE THREE MONTHS ENDED
DECEMBER 31, 2010, WITH OPERATING BUDGET PROJECTIONS THROUGH SEPTEMBER .30, 2011 FOR THE
GENERAL FUND
Page 3
as reported to you at the March, 2011 Commission meeting.- These are partially offset by
increased sales tax revenues (Intergovernmental Revenues), increased Business Tax
Receipts and Building Permits (Licenses and Permits), and increased Rents and Leases
based on year -to -date collections.
As noted above, the expenditure for pension contributions is expected to be approximately
$665,000 above budget for the following reasons:
• The.2% pension contribution from FY 2009/10 for AFSCME, GSA, Unclassified and
"Other" employees, previously anticipated to - reduce the ARC payment for FY
2010/11, is now anticipated to accrue to FY 2011/12.
• Further, other than the pension plan savings resulting from no cost -of living
adjustments to the FOP and 1AFF bargaining units, other Fire and Police pension
plan savings anticipated for FY 2010/11 are. pending the outcome of the litigation
between the City and the Fire and Police Pension Board
`However, as in the last few years since the economic decline, the expenditure projection
continues to reflect the impact of pro- active initiatives by the City to reduce expenses below
the adopted budget. These initiatives included close scrutiny of major purchases, and
continuous evaluation of opportunities to reduce costs in all departments.
For a detail of General Fund Revenues by category and Expenditures by Department, see
attached schedule. Detailed comments on those revenue and expenditure categories with
significant variances over $300,000 are shown below.
General Fund Operating Revenues
As of December 31, 2010, revenues collected were approximately 45% of budget or
$106;044 Historically, the City receives approximately 60% of its ad valorem taxes in
the first quarter, which must be considered when analyzing actual revenues and formulating
year- end revenue projections. Year -end projections through September 30, 2011 which total
$235,900,770 indicate that revenues will be below budget by $1.6 million or approximately
0.7 %. Significant variances to budget in excess of $300,000 by revenue category are
explained below:
1. J Intergovernmental Revenues - This category includes sales tax revenues, including
local option sales taxes and is projected to be in excess of budget by $548,284 and in
excess of prior year intergovernmental revenues by over $800,000, reflecting continuing
improvement in the economy.
2. Other Taxes - This category includes franchise and utility taxes on. services.
Projections indicate that year -end collections will be below budget by over $2 million
(8 %). This is primarily due to a decrease of approximately $1.5 million in revenues due
to the expiration of a fuel surcharge on electric_ ity, as well as almost $500,000 decrease
in telephone utility taxes based on trends for the first three months of the fiscal year.
3. Licenses and Permits - This category includes licenses and building and special use
permits and is projected to be above budget by approximately $1.2 million, primarily due
to continued increases in revenues from Business Tax Receipts as. a result of
increased compliance with Business Tax Receipt requirements. as well as increases in
LTC ANALYSIS OF BUDGET TO ACTUAL REVENUES AND EXPENSES FOR THE THREE MONTHS ENDED
DECEMBER 31, 2010, WITH OPERATING BUDGET PROJECTIONS THROUGH SEPTEMBER 30; 201 1 'FOR THE
GENERAL FUND
Page 4
revenues related to Certificate of Use and the building development process across all
departments involved, also estimated to be as a result of an improving economy.
4. Fines and Forfeits - Projections indicate that year -end collections will be below budget.
by 26% or $847,000. This is mainly due to lower than expected revenues from red light
cameras as reported to you at the March, 2011 Commission meeting.
5. Miscellaneous — This category includes concessions, planning fees, and other
reimbursements. Projections indicate that year -end revenues will be 5% below budget
or $577,000. This is due primarily to lower than anticipated revenues from. the
Commercial - Pole Banner Program and corporate'sponsorships which are still being
pursued and negotiated.
General Fund Operating Expenditures
As of December 31, 2010, actual expenditures were approximately 24% of budget. or
$56,473,147. Year -end projections through September 30, 2011 indicate that expenditures
will be $237 million approximately $450,000, or 0.2% under - budget, assuming operating
contingency is fully expended.
It is important to note that the budgets at the time of adoption, the City was at impasse with
the Communication Workers of America (CWA) bargaining unit, and the budget included the
impact of several initiatives that would have significantly reduced expenditures related to
CWA employees through contracting, conversion to part -time schedules for more efficient
scheduling, etc. (Plan B). The first -year savings from these initiatives amounted to over
$200,000 in the General Fund across various departments. Not being able to anticipate the
outcome of these negotiations at the time of adopting the budget, an increased operating
contingency was budgeted under the Citywide Accounts. Subsequent to the adoption, aa�
agreement was reached with CWA that included several employee give -backs that fully met
our budgeted savings in exchange fora no- layoff provision. Therefore the proposed plan B
initiatives will not be implemented and some departments could see variations. in their
budget.
At this time, no department is anticipated to be significantly over budget, despite absorbing
the pension expenditure impacts and the impacts from no lay -offs of CWA employees as
described above. r
Details on expenditures by department are provided in the attached schedule.
'CONCLUSION
This analysis of budget to. actual operating revenues and expenses for the General 'Fund
with pro1ections through September 30, 2011, provides the status of the FY 2010/11 General
Fund Budget as of the first three months of the Fiscal Year. The Administration will continue
to monitor revenues and expenses to ensure that we close the fiscal year in a positive
position with overall revenues exceeding overall expenses.
4
JMG /KGB /JC
FY 2010/11 General Fund Operating Summary Projection
Adopted Actual as of Projected Proj -Adptd
FY 2010/11 Dec. 31, 2010 FY 2010/11 Over/ Under
REVENUES
Ad Valorem Taxes $ 100,222,022 $ 68,952,678 $ 100,222,022 0
Ad .Valorem Taxes -S Pte Costs 10,145,339 6,979,986 10,145,339 0
Ad Valorem Cap.Renewal & Replace. 1,777,2'54 1,222,749 1,777,254 0
Ad Valorem Taxes -Norm Shores 100,517 69,156 100,517 0
Other Taxes 25,417,600 4,238,037 23,368,256 (2,049,344)
Licenses and Permits 15,506,204 7,844,145 16,679,129 1,172,925
Intergovernmental 9,618,140 1,736,548 10,166,424 548,284
Charges for Services 4,843,895 936,332 4,851,439 7,544
Golf Courses 5,504,155 1,271,643• 5,533,155 29,000
Fines and Forfeits 3,211,263 452,223 2,364,126 (847,137)
Interest 3,552,000 942,851 3,459,000 (93,000)
Rents and Leases 4,892,352 839,826 - 5,084,188 191,836
Miscellaneous 11,392,781 2,462,709 10,815,329 (577,452)
Other - Resort Tax contribution 24,465,440 6,116,360 24,465,440 0
Other - Non Operating revenues 8,065,443 1,979,574 8,065,443 0
Reserve- Building Department Ops. 1,546,709 0 1,546,709 0
FY 09 Year -End Surplus Set Aside 3,657,000 - 0 3,657,000 0
Prior Yr Surplus from Parking Oper Fd 3,600,000 0 3,600,000 0
Fund Balance 0 0 0 0
TOTAL REVENUES $ 237,518,114 _ $ .106,044,817 $. .235,900,770. $ 1,61 -7,344
EXPENDITURES
Mayor and Commission $ 1,534,322 $ 380,094 $ 1,487,824 $ (46,498)
City Manager 2,350,894 497,083 2,198,611 (152,283)
Communications 878,482 206,399 889,716 11,234
City Clerk 1,500,597 333,573 1,460,187 (40,410)
Finance 4,124,205 971,289 4,085,703 (38,502)
Office of Budget & Perf Improve. 1,820,829 434,639 1,750,219 (70,610)
Human Resources /Labor Relations 1,697,128 407,146 1,710,945 13,817
Procurement 969,238 251,107 979,794 10,556
City Attorney 4,002,642 913,121 4,038,783 36,141
Real Estate, Housing & Comm Dev 776,768 216,054 784,458. 7,690
Community Services 430,093 105,348 430,093 0
Homeless Services 759,337 167,690 759,337 0
Building 9,316,891 2,104,967 9,355,014 38,123
Code Compliance 4,146,931 966 4,311;791 164,860
Planning 3,113,588 704,098 3,186,731 73,143
Tourism & Cultural Development 2,643,624 673,896 2,584,534 (59,090)
Parks and Recreation 21,648,891 4,674,724 21,479,374 (169,517)
Golf Courses 6,123,820 2,046,696 5,994,386 (129
Public Works 6,372,884 1,359,810 6,268,714 (104,170) '
Capital Improvement Program 4,520,748 1,011,191 4;325,000 (195,748)
Fire 56,115,331 14,208,316 56,013,814, (101,517)
Police 88,920,529 22,430,067 89,100,548 180,019
Citywide Accounts 9,578,508 1,409,459 9,914,561 336,053
Citywide Acc- Operating Contingency 1,321,902 0 0 (1,321,902)
Citywide Accounts - Normandy Shore 157,678 0 157,678 0
Citywide Accounts - Transfers 915,000 0 915,000 0
i
Capital Renewal& Replacement 1,777,254 0 1,777,254 0,
TOTAL EXPENDITURES $ 237,518,114 $ 56,473,147 $ 235,960,069 $ 1,558,045
I
EXCESS OF REVENUES OVER /
UNDER EXPENDITURES $ 0 $ 49,571,670 $ 59,299 $. 59,299
i
Citywide Ac6-Operating Contingency 0 0 1,100,000 1,100,000
EXCESS OF REVENUES OVER/
(UNDER)'EXPENDITURES (NET OF I
OPERATING CONTINGENCY ) $ 0 $ 49,571,670 $ 1,159,299 $ 1,159,299
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