HomeMy WebLinkAbout2012/03/13 Item 04CITY COUNCIL
AGENDA STATEMENT
J~~ CITY OF
CHULA VISTA
MARCH 13, 2012, Item
ITEM TITLE: QUARTERLY FINANCIAL REPORT FOR THE QUARTER ENDING
DECEMBER 31, 2011
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA
VISTA AMENDING FISCAL YEAR 2011/2012 BUDGET AND
APPROPRIATING FUNDS THEREFOR
SUBMITTED BY: DIRECTOR OF FINA
REVIEWED BY: CITY MANAGER /'~
ASSISTANT CITY ANAGEFI
4/STNS VOTE: YES ^X NO ^
SUMMARY
Section 504 (f) of the City Charter requires quarterly financial reports to be filed by the
Director of Finance through the City Manager.
The quarterly financial reports are intended to give the public and City Council an overview of
actual expenditures and revenues through December 31, 2011 as well as a projection of how
the City expects to end the current fiscal year. Staff is also requesting a number of budget
amendments to various funds to account for changes that have occurred since the adoption
of the budget.
ENVIRONMENTAL REVIEW
The Environmental Review Coordinator has reviewed the proposed activity for compliance
with the California Environmental Quality Act (CECtA) and has determined that filing of the
quarterly financial status report is not a "Project" as defined under Section 15378 of the State
CEClA Guidelines because it will not result in a physical change to the environment;
therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines the actions
proposed are not subject to CEQA.
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FEBRUARY 28, 2012, Item
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RECOMMENDATION
That the City Council accept the Second Quarter Financial Report and adopt the
resolution amending the fiscal year 2011-12 budget.
BOARDS/COMMISSION RECOMMENDATION
Not applicable.
DISCUSSION
Attached for your consideration is the financial report for the second quarter of fiscal
year 2011/12. The detailed financial report for the quarter ending December 31, 2011
(Attachment 1) discusses the financial outlook for the City's General Fund for fiscal year
2011/12.
The following chart summarizes the year end projections based on actual revenue and
expenditure trends through the second quarter.
Reserves-July 1, 2011 (audited) $11.90 $11.90
Revenues & Transfers In 125.4 124.7
Expenditures & Transfers Out (125.4) (125.0)
Projected Surplus/Deficit $0.00 ($0.30)
Projected Fund Balance -June 30, 2012 $11.90 $11.60
Percentage of Operating Budget 9.6% 9.3%
Overall, the second quarter financial projections indicate that there continue to be some
challenges in the General Fund. There has been some improvement in reducing the
projected deficit in the current year; the First Quarter Financial Report reflected a
projected deficit of approximately $900,000. As reflected in the table above, the
projected deficit was reduced to $300,000. Staff is currently reviewing expenditures to
identify potential savings to assist in mitigating impacts to the General Fund reserves by
year end. Staff will also continue to monitor revenue trends and make adjustments as
necessary.
General Fund Revenues -Based on activity through the end of the second quarter,
General Fund revenues are tracking below budget expectations by approximately
$705,000, which represents a projected shortfall of less than 1%. To follow is a brief
summary of some of the major revenue changes.
• Discretionary revenues:
o Property Tax revenues are trending lower than budget by approximately
$400,000 or -2% of anticipated property tax revenues. This projected
shortfall is due to assessed values remaining relatively flat from the prior
year. Staff had assumed a 4% growth in property tax revenues.
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FEBRUARY 28, 2012, Item
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o Sales Tax revenues are trending higher than budget by approximately
$400,000 or +1% of anticipated sales tax revenues. The projected sales
tax revenues are based on information received from the City's sales tax
consultants, HdL Companies, using actual sales tax received through the
first three quarters of calendar year 2011. Information for the last
quarter of the calendar year that includes holiday sales has not yet been
received by the City. Once this information is received, sales tax
projections will be updated.
o Motor vehicle license fee (MVLF) revenues are trending lower than
budget by approximately $913,000 or -S% of anticipated MVLF revenues.
This projected shortfall is related to the State take away of MVLF
revenues of approximately $687,000. The State take away occurred in
August, shortly after the budget was adopted. The decrease in MVLF
revenues also reflects a smaller shortfall in MVLF in lieu revenues
projected at $226,000.
o Franchise Fee revenues are trending higher than budget by
approximately $260,000 or +3% of anticipated franchise fee revenues.
This projected increase is related to increased revenues realized in gas
and electricity.
• Program revenues:
o Charges for Services revenues are trending higher than budget by
approximately $587,000 or +8% of anticipated Charges for Services
revenues. This increase reflects a variety of changes in this category -
most notably it includes approximately $498,000 in reimbursement
revenue from AMR based on contract changes approved earlier this year.
Other notable increases include jail revenues and Fire construction
inspection fees.
o Fines, Forfeitures and Penalties revenue is trending lower than budget by
approximately $838,000 or -38% of anticipated Fines, Forfeitures, and
Penalties revenue. This decrease is a combination of various revenue
shortfalls -most notably decreased parking citations, code enforcement
violations, and negligent vehicle impound processing fees.
o Licenses and Permits revenue is trending higher than budget by
approximately $271,000 or +33% of anticipated Licenses and Permits
revenue. This increase reflects higher than anticipated Housing Permits
and Building Permits.
• Variances in the other revenue categories net to a projected shortfall of $72,000.
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FEBRUARY 28, 2012, Item
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General Fund Expenditures -Based on activity through the end of the second quarter,
General Fund expenditures are tracking below budget by approximately $413,000 which
represents a budget savings of less than 1%.
The following table reflects the projected year end expenditures by department.
.-
City Council $ 1,286,619 $ 1,286,619 $ -
Boards & Commissions $ 40,076 $ 25,076 $ (15,000)
City Clerk $ 1,407,780 $ 959,524 $ (448,256)
City Attorney $ 2,255,035 $ 2,174,241 $ (80,794)
Administration $ 1,698,164 $ 1,673,002 $ (25,162)
Information Tech Services $ 2,869,481 $ 2,848,825 $ (20,656)
Human Resources $ 2,108,634 $ 2,079,691 $ (28,943)
Finance $ 3,193,464 $ 3,137,461 $ (56,003)
Non-Departmental $ 11,810,892 $ 11,414,693 $ (396,199)
Animal Care Facility $ 2,137,321 $ 2,144,234 $ 6,913
Development Services (GF) $ 2,737,684 $ 2,737,684 $ -
Police $ 41,907,078 $ 42,037,587 $ 130,509
Fire $ 21,686,275 $ 22,259,846 $ 573,571
Public Works $ 23,514,322 $ 23,467,146 $ (47,176)
Recreation $ 3,312,410 $ 3,317,974 $ 5,564
Library $ 3,422,601 $ 3,411,047 $ (11,554)
Total Expenditures $ 125,387,836 $ 124,974,650 $ (413,186)
The most significant variances are reflected in the following departments:
• City Clerk -the projections included in the Second Quarter Financial Report
reflect net savings of approximately $448,000 in the City Clerk budget. This
largely reflects the projected savings from the Elections budget. The projected
expenditures reflect the cost of the June election and one ballot measure.
• Non-Departmental -the projections included in the Second Quarter Financial
Report reflect net savings of approximately $396,000 in the Non-Departmental
budget. Included in these savings are lower than expected unemployment
insurance costs, reduced transfers out based on permit activity to the
Development Services fund, offset by the addition of the Police Operational
review estimated at $75,000.
• Police -the projections included in the Second Quarter Financial Report reflect
that the Police Department will exceed their budget by approximately $130,500,
which is largely due to a projected overage in Personnel Services. The FY12
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FEBRUARY 28, 2012, Item
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budget included approximately $335,000 in budgeted salary savings. Based on
the need to keep Peace Officer positions filled the department cannot meet
these salary savings, which is reflected in the projected overage.
• Fire -the projections included in the Second Quarter Financial Report also
reflect that the Fire Department will exceed their budget by approximately
$573,600, which is largely due to a projected overage in Personnel Services. The
projection for Constant Minimum Staffing in the Fire Department has been
lowered from what was reported in the first quarter. Personnel costs due to
injury leave and other personnel issues caused an increased use of Constant
Minimum Staffing overtime. While these issues have been reduced since the
first quarter report, the department is still projected to go over budget in this
category by approximately $469,000. Also contributing to the Fire department
projected overage is the need to replace personal protective equipment and
unanticipated costs in fleet maintenance. With the unanticipated AMR revenue
and better than expected fire inspection revenue, the Department is projected
to stay within its budgeted net cost.
As stated earlier, the second quarter financial projections indicate some potential
challenges. Staff is currently reviewing expenditures to identify potential savings to
assist in mitigating any impacts to the General Fund reserves by year end. Staff will also
continue to monitor revenue trends and make adjustments as necessary.
FISCAL YEAR 2011-12 BUDGET APPROPRIATION REQUESTS
For government entities, a budget creates a legal framework for spending during the
fiscal year. After the budget is approved there are circumstances that require
adjustments to the approved budget. Per the City Charter, the City Council may amend
the budgetthrough a 4/5th vote.
General Fund:
Staff is requesting various budget amendments in the General Fund. The fiscal impact
of the budget amendments is noted with each requested change.
Public Works Department -The Public Works Department is requesting two budget
amendments.
• The Public Works Department's Conservation section has received donations to
support the 2nd edition of the Bike Chula Vista -Map and Guide from McMillin
Companies ($2,000), South Bay Bicycles ($500), Ocean Bikes ($200), and
Performance Bicycle ($50). The $2,750 total donations will be combined with
Conservation Section funds to print and distribute 5,000 bike maps to
community members at weekly Farmers Markets, outreach events, and at the 9
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FEBRUARY 28, 2012, Item
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bike stores in Chula Vista. The appropriation of $2,750 to the Department's
Services and Supplies budget will be fully offset by donation revenues.
• The Public Works Department received a donation from Goodrich earlier this
fiscal year, which Council accepted and appropriated for the purchase of the
trash receptacles for Rohr Park. The amount of the appropriation approved by
Council was $12,000; however the actual grant donation was for $12,450. An
appropriation of $450 is requested to allow the department to utilize the
remaining donated funds for additional trash receptacles. The $450 will be
appropriated to Department's Services and Supplies budget and is fully offset by
donation revenues.
Non-Departmental - A reconciliation of the Other Transportation Fund identified
interest earnings that should have been realized in the General Fund. A transfer of $424
from the Other Transportation Fund to the General Fund is recommended, which will
result in a small positive fiscal impact to the General Fund.
In Summary, the proposed changes to the General Fund result in a small positive fiscal
impact. The requested appropriations of $3,200 are revenue offset.
Other Funds:
The following reflects the proposed budget changes to other funds. The fiscal impact of
the budget amendments is noted with each requested change.
Police Grants Fund -Staff is requesting two budget amendments in the Police Grants
fund.
• CBAG purchase of evidence/purchase of information (PE/PI) or "buy money":
The Police Department is being reimbursed for PE/PI associated with CBAG-
authorized investigations. This one-time funding was not included in the fiscal
year 2011-12 adopted budget. The Department is requesting to appropriate
$18,000 to the Police Grants Fund's Services and Supplies expenditure category
to be fully offset by CBAG reimbursement revenue. There is no net fiscal impact
resulting from this budget appropriation.
• Lenco Bearcat (SWAT armored vehicle): The Police Department was awarded
$302,596 from Operation Stonegarden (OPSG) grant funds to purchase a SWAT
armored vehicle. The vehicle was purchased through the State of California's
Public Safety Procurement Program. The budget for the vehicle was included in
the fiscal year 2011 budget and the purchasing process was started during fiscal
year 2011. The vehicle was completed and received in November 2011; the cost
of $274,161 posted to the Police Grants Fund in fiscal year 2012 but the budget
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FEBRUARY 28, 2012, Item
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for this purchase was not carried over. The Department is requesting to
appropriate $274,161 to the Police Grant Fund's Capital expenses category to
reflect the vehicle costs to be fully offset by grant revenue. There is no net fiscal
impact resulting from this budget appropriation.
Asset Seizure -The Police Department is requesting a transfer of $150,000 from the
Capital expenses category to the Supplies and Services category of the Asset Seizure
Fund. Historically, the Department has used Asset Seizure funding to purchase patrol
vehicles to replace aging vehicles from its fleet. In fiscal year 2012, the Department is
anticipating more Supplies and Services costs than Capital costs due to the e911 project,
implementation of Net Records Management System (RMS) and purchases for the
Forensic and Evidence units. Approval of this item will result in the transfer of $150,000
from the Capital expenses category to the Supplies and Services category in the Asset
Seizure Fund -there is no net fiscal impact as a result of this action.
Other Transportation Fund - A reconciliation of the Other Transportation Fund
identified interest earnings in this fund that should be transferred to the General Fund.
These interest earnings are due to a capital improvement project that was jointly
funded by the General Fund and Other Transportation Fund. It is recommended that
the interest earnings of $28,879 in this fund be transferred to the TransNet Fund
($27,543) and Bicycle Facilities Fund ($912) to address negative fund balances that
would otherwise require a transfer from the General Fund. The balance of the interest
earnings ($424) will be transferred to the General Fund.
TransNet - On June 22, 2010, the City Council approved by Resolution 2010-166 the
various changes related to the reconciliation of the TransNet and TDA funds to address
project deficits in fiscal year 2010. Although Council approved the resolution, the
specific language detailing the transfer amount of $17,997 from CHV06 to CHVOl was
not included in the resolution. This update is required for compliance and disclosure
purposes -there are no budget changes resulting from this item.
The 2011 reconciliation audit report identified unallocated negative interest of $27,543
in the TransNet Fund. The negative interest was allocated as a result of the TransNet
fund carrying a negative cash balance thus earning negative interest. Approval of this
item eliminates the negative interest with a $27,543 a transfer from the Other
Transportation Programs Fund.
Bicycle Facilities Fund (Transportation Development Act) -The Bikeway Master Plan
capital improvement budget included a grant from SANDAL in the amount of $150,000.
Due to an administrative error, SANDAL was only billed $149,685 for the grant related
work though the CIP reflected expenditures of $150,000. This difference combined with
a negative cash balance earning negative interest of $597 has resulted in a negative
$912 in this fund. A transfer from the Other Transportations Program fund will address
the negative fund balance in the Bicycle Facilities Fund.
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FEBRUARY 28, 2012, Item
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Energy Conservation Fund - In order to utilize unused San Diego Gas & Electric Local
Government Partnership funding before it expires in December 2012, staff is requesting
to transfer $70,000 of existing funds from the Other Expenses category to the Supplies
and Services expense category within the Energy Conservation Fund. The transferred
funds will support third-party energy audits of the City's highest energy consuming
facilities (over $2 million in cumulative annual energy costs), streetlight retrofit design
work, and community energy efficiency services (such as the CLEAN Business
program). The impact to the General Fund is reflected in the projections included in this
report.
In summary, the proposed Non-General Fund changes result in a request to appropriate
$321,040 to the Police Grants, Asset Seizure, and Other Transportation funds. The
appropriations to the Police Grants, Asset Seizure, and Energy Conservation funds result
in no net fiscal impact as the appropriations will be fully offset by revenue or offset by
expenditure savings. The appropriation in the Other Transportation Fund results in a
negative fiscal impact due to a correcting adjustment. The fiscal impact to the TransNet
and Bicycle Facilities funds are positive.
DECISION MAKER CONFLICT
With the exception of the item related to the donation for Rohr Park, these budget
changes are not site specific, consequently the 500 foot rule found in California Code of
Regulations section 18704.2(a)(1) is not applicable to this decision.
For the appropriation of the donation for materials for Rohr Park, staff has reviewed the
property holdings of the City Council and has found no property holdings within 500 feet
of the boundaries of the property which is the subject of this action.
CURRENT YEAR FISCAL IMPACT
There is no fiscal impact resulting from accepting the Quarterly Financial Report.
As stated above, the second quarter financial projections indicate some potential
challenges as discussed in the first quarter financial report. No budgetary adjustments
are recommended at this time as staff is currently reviewing expenditures to identify
potential savings to assist in mitigating any impacts to the General Fund reserves by
year end. Staff will also continue to monitor revenue trends and make adjustments as
necessary.
The following table summarizes the projected year end revenues and expenditures for
the General Fund.
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FEBRUARY 28, 2012, Item '7
Page 9 of 10
'~ Reserves-July 1, 2011 (audited) $11.90 $11.90
Revenues & Transfers In 125.4 124.7
Expenditures & Transfers Out (125.4) (125.0)
Projected Surplus/Defcit $0.00 ($0.30)
Projected Fund Balance-June 30, 2012 $11.90 $11.60
Percentage of Operating Budget 9•S~ 9.3~
The second quarter financial projections indicate that there continue to be some
challenges in the General Fund. There has been some improvement in reducing the
projected deficit in the current year; the First Quarter Financial Report reflected a
projected deficit- of approximately $900,000. No budgetary adjustments are
recommended at this time. Staff is currently reviewing expenditures to identify
potential-savings to assist in mitigating impacts to the General Fund reserves by year
end. Staff will also continue to monitor revenue trends and make adjustments as
necessary.
Approval of the resolution amending the fiscal year 2011/12 budget will result in the
following appropriations. The resulting fiscal impacts to various funds are also listed in
the following table.
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FEBRUARY 28, 2012, Item 7
Page 10 of 10
Summary of Budget Appropriations and Amendments by Department and/or Fund
r~ r•
GenerelFund:
Public Works Correct amount for Goodrich donation $ 450 $ 450 $ -
Public Works Bike map donation $ 2,750 $ 2,750 $ -
Non-Departmental Correct interest earnings in Other Transportation Fund $ - $ 424 $ 424
Subtotal General Fund $ 3,200 $ 3,624 $ 424
Other Funds
Police Grants Fund CBAG buy money $ 18,000 $ 18,000 $ -
PoliceGrantsFund SWAT vehicle $ 274,161 $274,161 $ -
AssetSeizure Reduce Capital expenses $(150,000) $ - $ 150,000
Asset Seizure Increase Supplies&Services $ 150,000 $ - $( 150,000)
Other Transportation Fund Correct prior yearinterest earnings $ 28,879 $ - $ (28,879)
TransNet Fund Correct negative interest earning $ - $ 27,543 $ 27,543
BicydeFacilitiesFund Correc[negativeinterestearning&stafftimecharges $ - $ 912 $ 912
Energy Consevation Fund Reduce Other Expenses $ (70,000) $ - $ 70,000
Energy Consevation Fund Increase Supplies&Services $ 70,000 $ - $ (70,000)
Total Other Funds $ 321,040 $320,616 $ (424)
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ONGOING FISCAL IMPACT
There are no ongoing fiscal impacts resulting from the budget amendments described
above.
ATTACHMENTS
1. Second Quarter Financial Report
Prepared by: Angelica Aguilar, Budget and Analysis Manager, Finance Department
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CHULA VISTA
OVERVIEW
This financial report summarizes the City's General
Fund financial position for the fiscal year through
December 31, 2011 and projecting out to June 30,
2012. The purpose of this report is to provide the City
Council, Management and the Citizens of Chula Vista
an update on the City's fiscal status based on the most
recent financial information available.
ECONOMIC UPDATE
The National Forecast' - In his December 2011 report,
UCLA Anderson Forecast Senior Economist David
Shulman notes that despite a modestly growing GDP,
the nation's labor market remains mired in along
slump. And while the forecast calls for job growth on
the order of 150,000 per month, total payroll
employment will still be three million jobs below the
2007 peak and real personal income is still below the
level reached in 2008.
That said, Shulman points out that recent economic
data has improved -taking the threat of a double-dip
recession off the table. Still, the forecast calls for real
GDP growth at below trend rate for the next five
quarters.
The California Forecast2 - In the California report,
Senior Economist Jerry Nickelsburg takes note of
some of the positive signs in the recent data being
reported regarding the state's economy. "... the
September employment numbers, released in late
October, turned out to be a pleasant surprise,"
The California forecast is similar to that of September.
Employment growth of 1.4% and 2.1 % is expected in
2012 and 2013 respectively. Payrolls will grow less
rapidly at 1.4%, 1.2% and 2.0% for the last two
forecast years. Real personal income growth is
forecast to be 3.9% in 2011, followed by 2.6% and
2.1% in 2012 and 2013 respectively. The
unemployment rate will hover around 11.6% through
2012.
Quarterly
Second Quarter Ending
Financial Report
December 31, 2011
March 13, 2012
The San Diego Forecast3 -The USD Burnham-Moores
Center for Real Estate's Index of Leading Economic
Indicators for San Diego County fell 0.2 percent in
October. For the fourth straight month, half of the
components were up and half were down. Sharp
decreases in consumer confidence and residential units
authorized by building permits outweighed a strong
increase in the outlook for the national economy and a
moderate gain in help wanted advertising to push the
USD Index to a loss. Initial claims for unemployment
insurance (positive) and local stock prices (negative)
were virtually unchanged and offset each other.
October's decline pushed the string of alternating
declines and advances in the USD Index to six straight
months. With no turning point being signaled, the
outlook for the local economy remains unchanged from
what was previously reported: positive but weak growth
through at least the first half of 2012. The chart below
reflects the San Diego Index of Leading Economic
Indicators from January 2007 to October 2011.
San Diego Index of Leading Economic Indicators
ias - -----
ias ~ ---------- -----
ias ------ -----_._.----------- --
us ~,
ios '--
i
95 -___-
as ~---•- -- - - -
'Source: UCLA Anderson Forecast, December 2011
s Source: UCLA Anderson Forecast, December 2011
3Source: University of San Diego School of Business
Administration, USD Index of Leading Economic
Indicators, November 2011; retrieved from URL:
http'//home sandieoo edu/-agin/usdlei/index html
4-11
QUARTERLY FINANCIAL REPORT
SECOND QUARTER OF 2011/12
Page 2 of 6
GENERAL FUND SUMMARY
General Fund Reserves -The General Fund Reserve
policy was established to ensure that the City's
finances are managed in a manner which will:
1. Continue to provide for the delivery of quality
services
2. Maintain and enhance service delivery as the
community grows in accordance with the General
Plan
3. Minimize or eliminate the need to raise taxes and
fees because of temporary revenue shortfalls
4. Establish the reserves necessary to meet known
.and unknown future obligations and ability to
respond to unexpected opportunities.
Based on activity through the end of the second quarter,
General Fund revenues are tracking below budget
expectations by approximately $705,000, which
represents a projected shortfall of less than 1%.
Variances in the City's major revenue sources are
discussed in further detail in the revenue section of this
report. Program revenues continue to be challenging as
there were some unanticipated revenue shortfalls in
parking citations, code enforcement violations, and
negligent vehicle impound processing fees. Some
positive trends in program revenue include the
reimbursement revenue from AMR based on contract
changes approved earlier this year and better than
expected revenues from Housing Permits and Building
Permits.
In November 2009, the City Council approved a
resolution updating the City's General Fund Reserve
Policy. As part of the update, the policy set a new
long-term goal for a higher level; increasing the policy
for reserve level from 8% to 15%. The City started the
current fiscal year with an available reserve of 9.5%.
The final audited numbers for fiscal year 2010/11 were
presented to Council in January 2012. The following
table has been updated to reflect the audited General
Fund reserves as of July 1, 2011.
., .,
Reserves-July 1,2011 $11.9 $11.9
(audited)
Revenues & Transfers In 125.4 124.7
Expenditures 8 Transfers Out (125.4) (125.4)
Projected Surplus/Defcit $0.0 ($0.3)
Projected Fund Balance- $11.9 $11.6
June 30, 2012
Percentage of Operating Budget 9.5% 9.3%
The second quarter financial projections indicate that
there continue to be some challenges in the General
Fund. There has been some improvement in reducing
the projected deficit in the current year; the First
Quarter Financial Report reflected a projected deficit of
approximately $900,000. No budgetary adjustments
are recommended at this time, staff is currently
reviewing expenditures to identify potential savings to
assist in mitigating impacts to the General Fund
reserves by year end. Staff will also continue to
monitor revenue trends and make adjustments as
necessary.
Based on activity through the end of the second quarter,
General Fund expenditures are tracking below budget
by approximately $413,000 which represents a budget
savings of less than 1 %. The projections reflect the Fire
and Police departments exceeding their allocated
budget and smaller projected overages in Animal Care
Facility and Recreation -these overages are offset by
savings in the other departments. Most of the savings
are reflected in the City Clerk and Non Departmental
budgets and related to savings for election costs and
unemployment insurance respectively. Departments are
continuing to work to identify and implement expenditure
saving measures to help mitigate the impact to the
General Fund.
Revenues
Reflected in the following table are discretionary and
departmental programmatic revenues. The projections
indicate both discretionary and programmatic revenues
are trending down when compared to budget. Updated
sales tax figures and other revenues may help to
mitigate some of the projected shortfalls. Staff will
continue to monitor revenue trends and make
adjustments as necessary.
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QUARTERLY FINANCIAL REPORT
SECOND QUARTER OF 2011/12
Page 3 of 6
General Fund Revenues
Property Taxes $ 25,230,494 $ 24,836,185 $ (394,309)
Sales Tax $ 19,837,472 $ 20,094,856 $ 257,384
Motor Vehicle License Fees $ 17,207,233 $ 16,287,965 $ (913,268)
Other Revenues $ 74,144,932 $ 14,309,828 $ 1fi4,896
Transfers From Other FUnds $ 12,472,414 $ 12,475,639 $ (58,775)
Franchise Fees $ 7,533,386 $ 7,793,000 $ 259,614
Charges for Seances $ 7,004,717 $ 7,592,008 $ 587,291
Sales Tax in lieu $ 6,563,322 $ 6,701,827 $ 1311,505
Utility Users Taxes $ 3,240,633 $ 3,240,633 $ -
OtherAgency Relenue $ 2,699,027 $ 2,724,225 $ 25,198
Use of Money antl Property $ 2;285,498 $ 2,187,812 $ (97,686)
Fines, Forteitures & Penalties $ 2,199,885 $ 1,361,660 $ (838,225)
Transient Occupancy Taxes $ 2,086,377 8 2,108,878 $ 22,501
Business License Tax $ 1,273,000 $ 1,755,400 $ (57,600)
Real Properly Transfer Tax $ 849,816 $ 777,016 $ (72,800)
Licenses and Permits $ 825,fi30 S 7,096,186 $ 270,55fi
Total Revenaa $ 125,387,836 $ 124,683,118 Y (704,718)
Sales Tax
Property Taxes -The City of Chula Vista receives
property tax revenue based upon a 1.0 percent levy on
the assessed value of all real property. Property tax is
the City's second largest revenue source, representing
20.2 percent of General Fund revenues in the fiscal year
2011/12 adopted budget.
Sales Tax (Sales Tax and Sales Tax in lieu) -Sales
tax is projected to be the City's largest revenue source,
representing 21.1 percent of General Fund revenues in
the fiscal year 2011/12 adopted budget.
City staff has received sales tax data from the City's
sales tax consultant, HdL Companies, for the third
quarter of calendar year 2011. They report that the
change in sales tax receipts between third quarter
calendar year 2011 and third quarter calendar year
2010 increased by 8.6 percent Statewide, by 7.0
percent in San Diego County and 4.1 percent in Chula
Vista.
Sales tax projections for the current fiscal year indicate
that sales tax is tracking close to budget with a slight
positive trend. Based on the most recent report
received from the HdL Companies, the City is expected
to realize an additional $395,900 in sales tax when
compared to budget. This is an increase of less than
1 % for the year.
The following chart represents actual sales tax
collections since fscal year 2007/08. Fiscal year
2011/12 is projected and does not reflect actual
collections.
Property tax projections indicate that these revenues are
trending down when compared to budget. This shortfall
is due to assessed values remaining relatively flat from
prior year. A projected shortfall of $394,300 is projected
for this revenue category, a shortfall of approximately -
1.6%. The following chart represents actual property tax
collections since fiscal year 2007/08. Fiscal year
2011/12 is projected and does not reflect actual
collections.
Property Tax
4-13
QUARTERLY FINANCIAL REPORT
SECOND QUARTER OF 2011/12
Page 4 of 6
Motor Vehicle License Fee (VLF). With the State
Budget Act of 2004, the allocation of VLF revenues to
cities and counties was substantially changed. For FY
2005/06 and beyond, the majority of VLF revenues for
each city will grow essentially in proportion to the
growth in the change in gross assessed valuation. Due
to the new formula by the State, 96% of the City's VLF
revenues fluctuate with changes in assessed values in
the City. The other 4 percent of VLF revenues
received by the City are based on a per capita formula.
For the 2011-12 fiscal year, the Governor signed SB89.
Provisions in SB89 shift hundreds of millions of Vehicle
License Fee revenues to fund the state law
enforcement grants beginning in FY2011-12.
Statewide, SB89 takes $130 million of city general
revenue and shifts it to save state law enforcement
grant programs. Less than $100 million of these police
grant funds will go back to cities.
The City of Chula Vista is estimated to lose
approximately $687,029 due to the State take away.
This estimated loss will be offset by one-time VLF
back-payments received from the State in the current
fiscal year.
In addition to the shortfall discussed above, there is a
shortfall of approximately $226,000 in the State Motor
Vehicle License in lieu revenue due to assessed values
remaining relatively flat from prior year.
The following chart reflects actual VLF revenue since
fiscal year 2007/08. Fiscal year 2011/12 is projected
and does not reflect actual collections.
Franchise Fees -Franchise fee revenues are generated
from public utility sources such as San Diego Gas &
Electric (2% on gas and 1.25% on electricity), trash
collection franchises (9.05% fee), and cable franchises
(5% fee) conducting business within City limits. SDG&E
collects the franchise fee from Chula Vista customers
and remits these revenues to the City. Trash franchise
fees and cable fees are based on fixed rates and
remitted to the City on a monthly and quarterly receipt of
the revenues respectively.
Current projections for Franchise Fee revenues indicate
that these revenues are trending to exceed budget by
approximately $259,600; an increase of approximately
3.3% when compared to budget. The following chart
reflects actual Franchise Fee revenue since fiscal year
2007/08. Fiscal year 2011/12 is projected and does not
reflect actual collections. The chart reflects the drop off
in Franchise Fee revenues due in part to lower natural
gas prices and the loss of revenue from the closure of
the South Bay Power Plant.
Transient Occupancy Tax (TOT) -The City receives 10
percent of hotel and motel room rates for stays less than
30 days. Current projections for TOT revenues indicate
that no change from budget is required at this time.
The following chart reflects actual TOT revenue since
fiscal year 2007/08. Fiscal year 2011/12 is projected
and does not reflect actual collections.
4-14
Franchise Fees
Motor Vehicle License Fees
QUARTERLY FINANCIAL REPORT
SECOND QUARTER OF 2011/12
Page 5 of 6
Expenditures
The General Fund's Amended Budget reflects the
Council adopted budget of $124.6 million and mid-year
appropriations of $0.8 million approved by City Council.
The following table reflects the General Fund amended
budget and actual expenditures by department as of
December 31, 2011. In total, Departments have
expended 45 percent of the General Fund budget after
50 percent of the fiscal year has elapsed.
General Fund Expenditures as of 12/31/2011
Utility Users Tax (UUT) -The City adopted its Utility
Users Tax (UUT) in 1970. The City of Chula Vista
imposes a UUT on the use of telecom at the rate of 5%
of gross receipts and the UUT on natural gas services
is $0.00919 per therm and $0.00250 per kilowatt on
electricity services, which equates to approximately a
1 % tax.
Current projections for UUT revenues indicate these
revenues are tracking on budget. The following chart
reflects actual UUT revenue since fiscal year 2007/08.
Fiscal year 2011/12 is projected and does not reflect
actual collections.
City Council $ 1,286,619 $ 640,770 50%
Boards antl Commissions $ 40,076 $ 3,364 8%
City Clerk $ 1,407,760 $ 311,401 22%
City Attorney $ 2,255,035 $ 640,480 37%
Administration $ 1,698,164 $ 781,791 46%
Information Technology Sncs $ 2,869,481 $ 1,442,060 50%
Human Resources $ .2,108,634 $ 963,040 46%
Finance $ 3,193,464 $ 1,465,041 47%
Non-Departmental $ 11,810,892 $ 4,409,766 37%
Animal Care Facility $ 2,137,321 $ 1,036,086 48%
Development Sertices (GF) $ 2,737,684 $ 1,287,791 47%
Police $ 41,907,078 $ 19,485,451 46%
Fire $ 21,686,275 $ 10,465,391 48%
Public Works $ 23,514,322 $ 10,723,524 46%
Recreation $ 3,312,410 $ 1,518,003 46%
Library $ 3,422,601 $ 1,538,457 45%
Expenditures thru 12/31 $ 125,387,836 $ 56,932,416 45%
The following table reflects the projected June 30, 2012
expenditures for the General Fund by Department.
General Fund Projections for 06/30/2012
.~,
•
City Council $ 1,286,619 $ 1,286,619 $ -
Boards 8 Commissions $ 40,076 $ 25,076 $ (15,000)
City Clerk $ 1,407,780 $ 959,524 $ (448,256)
City Attorney $ 2,255,035 $ 2,174,241 $ (80,794)
Administration $ 1,698,164 $ 1,673,002 $ (25,162)
Information Tech Sncs $ 2,869,481 $ 2,848,825 $ (20,656)
Human Resources $ 2,108,634 $ 2,079,691 $ (28,943)
Finance $ 3,193,464 $ 3,137,461 $ (56,003)
Non-Departmental $ 11,810,892 $ 11,414,693 $ (396,199)
Animal Care Facility $ 2,137,321 $ 2,144,234 $ 6,913
Dev Sertices (GF) $ 2,737,684 $ 2,737,684 $ -
Police $ 41,907,078 $ 42,037,587 $ 130,509
Fire $ 21,686,275 $ 22,259,846 $ 573,571
Public Works $ 23,514,322 $ 23,467,146 $ (47,176)
Recreation $ 3,312,410 $ 3,317,974 $ 5,564
Library $ 3,422,601 $ 3,411,047 $ (11,554)
Total Expenditures $ 125,387,836 $ 124,974,650 $ (413,186)
4-15
Transient Occupancy Tax (TOT)
Utility Users Tax (UUT)
QUARTERLY FINANCIAL REPORT
SECOND QUARTER OF 2011/12
Page 6 of 6
Year-end projections indicate that based on activity
through the end of the second quarter, General Fund
expenditures are tracking below budget by
approximately $413,000, which represents a budget
savings of less than 1 °/p.
The major projected expenditure variances are
reflected in the following departments:
• City Clerk -the projections included in the Second
Quarter Financial Report reflect net savings of
approximately $448,000 in the City Clerk budget.
This largely reflects the projected savings from the
Elections budget. The projected expenditures
reflect the cost of the June election and one ballot
measure.
Non-Departmental -the projections included in the
Second Quarter Financial Report reflect net
savings of approximately $378,000 in the Non-
Departmental budget. Included in these savings
are lower than expected unemployment insurance
costs, reduced transfers out based on permit
activity to the Development Services Fund, offset
by the addition of the Police Operational review
estimated at $75,000.
Police -the projections included in the Second
Quarter Financial Report reflect that the Police
Department will exceed their budget by
approximately $130,500, which is largely due to a
projected overage in Personnel Services. The
FY12 budget included approximately $335,000 in
budgeted salary savings. Based on the need to
keep Peace Officer positions filled the department
cannot meet these salary savings, which is
reflected in the projected overage.
Fire -the projections included in the Second
Quarter Financial Report also reflect that the Fire
Department will exceed their budget by
approximately $573,600, which is largely due to a
projected overage in Personnel Services. The
projection for Constant Minimum Staffing in the
Fire Department has been lowered from what was
reported in the first quarter. Personnel costs due
to injury leave and other personnel issues caused
an increased use of Constant Minimum Staffing
overtime. While these issues have been reduced
since the first quarter report, the department is still
projected to go over budget. With the unanticipated
AMR revenue and better than expected fire
inspection revenue, the Department is projected to
stay within its budgeted net cost.
Departments are continuing to work identify and
implement expenditure saving measures to help mitigate
the impact to the General Fund.
Mid-Year Budget Amendments
Mid-year appropriations approved through the first half
of the fscal year totaled $808,885 with offsetting
revenues resulting in no net impact to the General Fund.
+1 Etitlence Control Assistant & hourly $ 165,000 $ 165,000 $ -
6acdrichDanalion-Rohr park trash bins $ 12,000 $ 12,000 $ _
Slate E-911 reimbursement hr CAD intertace $ 120,453 $ 120,453 $ -
fiutlget clean up item - venous 8 101 402 $ 101 4°2 $ -
Ccunty Grent for Centennial History Walk 8 20,000 $ 20,000 $ -
Appmpdations approved in Secon0 quarter
Misc Recreation budget changes $ 390,030 $ 390,030 $
Council AppropAa0ons E 000,68E E 008,08E E -
The Council approved the following budget amendments
during the second quarter:
• Recreation -approved an appropriation of $390,030
for additional recreation classes and programs to be
offset by grants, donations, and other unanticipated
revenues.
Budget Transfers
The following table reflects the administrative budget
transfers that occurred during the second quarter.
AtllustmeM br Personnel Sernces to
tra~ellcorrferencesl antl City Council $ 3,000 Supplies 8 Senices
meetin s
Realign budget antl adjust wages
City Cwncil
$ 5,41fi Supplies 8 Services to
relates objects Personnel Services
T2nsrerto account kr copier Administration $ qg~ personnel Sernces to
costs Supplies & SerHCes
Transfer for purchase of
NorvDept
$ 13,640 Capital to Supplies 8
Sertices
computer equipment/software
4-16
RESOLUTION NO. 2012-
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA
AMENDING FISCAL YEAR 2011/2012 BUDGET AND
APPROPRIATING FUNDS THEREFOR
WHEREAS, On June 21, 2011 the City Council of the City of Chula Vista adopted a $124.6
million General Fund budget for fiscal year 2011-12; and
WHEREAS, subsequently staff has identified various budget adjustments in the form of
transfers and new appropriations that are recommended for approval; and
WHEREAS, these budget adjustments are necessary in order to properly reflect the
expenditures that are programmed to fund the City's operations in the current fiscal year; and
WHEREAS, Council Policy 220-02 "Financial Reporting and Transfer Authority', requires
that the City Council approve budget transfers between departments and/or amounts greater
than $15,000; and
WHEREAS, a budget appropriation of $2,750 is recommended in the Public Works
Department for expenditures related to the production of the 2nd edition of the Bike Chula
Vista -Map & Guide, these costs will be offset by donations from McMillin Companies, South
Bay Bicycles, Ocean Bikes, and Performance Bicycle; and
WHEREAS, a budget appropriation of $450 is recommended in the Public Works
department for trash receptacles in Rohr Park, this cost will be offset by a donation from
Goodrich; and
WHEREAS, a recommended adjustment to prior year interest earnings in the Other
Transportation Fund results in a transfer from said fund to the General Fund of $424; and
WHEREAS, a budget appropriation of $18,000 is recommended in the Police Grants fund
for purchase of evidence/information that is offset by CRAG reimbursement revenue; and
WHEREAS, a budget appropriation of $274,161 is recommended in the Police Grants
fund for purchase of a SWAT armored vehicle that is offset by grant revenue; and
WHEREAS, a budget transfer of $150,000 is recommended in the Asset Seizure fund to
reduce the capital expenses category and increase the services and supplies expense category;
and
WHEREAS, a recommended adjustment to prior year interest earnings in the Other
Transportation fund results in a transfer out of $28,879; and
4-17
Resolution No.
Page 2
WHEREAS, a budget transfer of $27,543 from the Other Transportation Fund to the
TransNet fund will address negative interest earnings in the TransNet fund; and
WHEREAS, a budget transfer of $912 from the Other Transportation fund to the Bicycle
Facilities fund (Transportation Development Act) will address negative interest earnings and
correct for unreimbursed staff time charges in the Bicycle Facilities fund; and
WHEREAS, in order to comply with funding regulations staff is requesting a transfer of
$17,997 from CHV06 to CHV01; and
WHEREAS, a budget transfer of $70,000 is recommended in the Energy Conservation
fund to reduce the other expenses category and increase the services and supplies expense
category; and
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula Vista does
hereby approve the following appropriations:
,.
General Fund:
Public Works
Public Works
Non Departmental
$
$
$
450
2,750
-
$ -
$ -
$ -
$
$
$
-
-
-
$
$
$
-
-
-
$ 450
$ 2,750
$ -
$ 450
$ 2,750
$ 424
$
$
$
-
-
424
Total General Fund $ 3,200 $ - $ - $ - $ 3,200 $ 3,624 $ 424
Other Funds:
Police Grants Fund $ 18,000 $ - 5 - $ - $ 18,000 $ 18,000 $ -
Police Grants Fund $ - $ 274,161 $ - $ - $ 274,161 $ 274,161 $ -
AsseiSeizure $ 150,000 $(150,000) $ - $ - $ - $ - $ -
OtherTransportationFund $ - $ - $ - $ 28,879 $ 28,879 $ - $ (28,879)
TransNet Fund $ - $ - $ - $ - $ - $ 27,543 $ 27,543
Bicycle Facilities Fund $ - $ - $ - $ - $ - $ 912 $ 912
Energy Conservation Fund $ 70,000 $ - $ (70,000) $ - $ - $ - $ -
Total Other Funds $ 238,000 $ 124,161 $ (70,000) $ 28,879 $ 321,040 $ 320,616 $ (424)
Total Budget Amendments $ 241,200 $ 124,161 $ (70,000) $ 28,879 $ 324,240 $ 324,240 $ -
NOW, THEREFORE, BE IT FURTHER RESOLVED that the City Council of the City of Chula Vista
does hereby approve the transfer of $17,997 from CHV06 to CHV01.
4-18
Resolution No.
Page 3
Presented by
Maria Kachadoorian
Director of Finance/Treasurer
4-19
Approved as to form by