TO: ADAM PIRRIE, CITY MANAGER
FROM: JEREMY STARKEY, FINANCE DIRECTOR
DATE: APRIL 23, 2024
Reviewed by:
City Manager: AP
SUBJECT:
Title
QUARTERLY FINANCIAL UPDATE - MARCH 31, 2024
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SUMMARY
At the end of each quarter, staff provides the City Council with updates to apprise them and the community of the status of the current year’s budget. This update will focus on financial results through March 31, 2024, the end of the third quarter of the 2023-24 fiscal year.
The next quarterly report will be provided for the quarter ending June 30, 2024.
RECOMMENDATION
Recommended Action
Staff recommends the City Council receive and file the Quarterly Financial Update for the quarter ending March 31, 2024.
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ALTERNATIVE TO RECOMMENDATION
In addition to the staff recommendation, there is the following alternative:
• Request additional information.
FINANCIAL REVIEW
Financial data through March 31, 2024, indicates that for the full year, revenues are likely to meet or exceed budgetary estimates and that expenditures are generally expected to remain within the constraints of the budget. Any significant variances from the budget are discussed further in this report.
The staff cost to prepare this report and administer this contract/project/program is estimated at $1,125 and is included in the operating budget of the Financial Services Department.
ANALYSIS
In June 2022, the City Council adopted an operating and capital improvement budget for 2023-24 that included $59,989,747 in revenues and transfers-in from other funds. Subsequent amendments have been made to the budget to account for grant revenues that have yet to be received, resulting in an adjusted total revenue budget of $60,735,621.
This total revenue budget is spread across a number of fund categories, representing more than thirty distinct funds used to account for a wide variety of programs and activities. Total City revenues by fund category are shown in the table below:
Through March 31, 2024, $42,343,599 in total revenues and transfers-in had been received, representing 69.72% of the full-year budget. This figure is in line with revenues typically received in the first nine months of the fiscal year.
Total expenditures and transfers-out to other funds reflected in the original adopted budget amounted to $62,963,066. Subsequent amendments to the budget for energy efficiency projects, other capital projects, equipment acquisitions, grants, and the carryover of funds from the prior year for projects that were not completed have resulted in an adjusted total budget of $68,674,719.
Expenditures through March 31, 2024, totaled $46,290,585, or 67.41% of the full-year adjusted budget. Given the current status of expenditures, it is expected that the City will remain within the constraints of the current budget.
The figure below shows total expenditures and transfers-out to other funds as of March 31, 2024:
General Fund
General Fund revenues and transfers-in for 2023-24 were originally budgeted at $31,630,963. The budgeted revenues have been adjusted to account for additional grant funding to be received for 2023-24 and stand at $31,774,568 through the third quarter of the fiscal year.
At March 31, 2024, $22,345,887 of budgeted revenues had been received, representing 70.33% of the full-year budget. This is typical for General Fund revenues as most of the major sources of revenue are received in the latter part of the fiscal year.
The figure below shows 2023-24 General Fund revenues and transfers-in as of March 31, 2024:
The major General Fund revenues, and their budgetary highlights at March 31, 2024, are as follows:
1. Property Tax - To date, $6,698,679 in property tax revenues have been received from Los Angeles County, representing approximately 55.86% of the full-year budget. At the same time last year, approximately 53.42% of full-year actual revenues were received by March 31.
2. Sales Tax - Sales tax revenues received through the third quarter of the fiscal year amounted to $4,924,051. In the prior year, $4,878,608 in sales tax revenue had been received by the end of the third quarter of the fiscal year. These revenues are in line with the prior year’s revenues for the same period.
3. Transient Occupancy Tax (TOT) - TOT revenues through March 31, 2024, were $954,787 compared with revenues of $964,822 through the third quarter of the prior fiscal year. TOT revenues in the third quarter are generally in line with the prior year’s revenues for the same period.
4. Business License Tax - With revenues of $717,453, business license tax revenues at the end of the third quarter are 40.3% higher than at the same point in the prior fiscal year. The increase this year is primarily due to the restoration of the full business license fee in 2023-24. In the prior fiscal year, the City Council approved an ARPA-funded rebate of the base business tax amount for Claremont-based businesses of $134.99 per business.
5. Utility User Tax (UUT) - At March 31, 2024, UUT revenues totaled $3,341,591. Through the third quarter of 2022-23, these revenues totaled $3,620,571. Revenues reflect a decrease of approximately 7.7% over the same period in the prior year, which were primarily due to a City Council approved pause in the collection of Gas UUT from July through November to provide assistance to residents and businesses who saw very high gas bills during 2022-23.
6. Other Taxes - Other taxes include franchise fees and property transfer taxes. Through March 31, 2024, these revenues amounted to $291,808, representing 30.56% of the full-year budget. At the same point in the prior fiscal year, $289,671 in revenues had been received. Much of this revenue comes from franchise taxes paid by utility companies, which are typically received in the latter part of the fiscal year.
7. Licenses and Permits - Revenues from public works, grading, and building permits totaled $1,828,991 at March 31, 2024. Current year revenues reflect an increase of 42.4% over revenues of $1,283,964 through the third quarter of the prior year. Year-to-date revenues are 93.44% over the full-year budget.
8. Fines and Forfeitures - Revenues from parking, traffic, and code enforcement citations amounted to $442,050 at March 31, 2024. At the same point in the prior year, revenues totaled $422,166. Current year revenues are in line with prior year revenues.
9. Charges for Services - Revenues through the end of the third quarter totaled $1,174,716 compared with prior year revenues for the same period of $1,012,167. These revenues represent an increase of 16.1% over the prior year, representing an increase in revenues related to building and grading plan check activity in 2023-24.
General Fund expenditures and transfers-out for 2023-24 were originally budgeted at $31,140,874. The adjusted budget of $33,123,707 represents amendments to the budget for the carryover of funds from the prior year for projects that were not completed, as well as amendments made through council-approved appropriations during the fiscal year.
The figure below shows 2023-24 General Fund expenditures and transfers-out as of March 31, 2024:
At March 31, 2024, the total General Fund expenditures and transfers-out amounted to $23,949,508, or 72.30% of the adjusted budget for the year. Given that one would reasonably expect 75% of the budget to have been expended at this point in the fiscal year, results to date show that the City is generally on track to remain within budgetary constraints.
Of the City’s operating departments, General Services’ expenditures (110.06%) exceeded the 75% threshold for the first three quarters of the fiscal year. This was primarily due to the full annual payment in July of approximately $3.6 million towards the City’s general liability, workers’ compensation, and property insurance deposits for the year. These costs are distributed throughout the year to the City’s operating departments and it is expected that by the end of the fiscal year, General Services’ expenditures will be in line with the budget.
Given these year-to-date figures, General Fund expenditures appear likely to remain within budgeted amounts for the full year.
Special Revenue Funds
Special Revenue Funds include those funds whose revenues are committed to specific purposes or projects. The City has twenty-two Special Revenue Funds that provide funding for a variety of activities, including supplemental public safety services, the operation of the City’s impound lot, street repairs and upgrades, transportation programs, landscaping and streetlight maintenance, the senior meal program, housing rehabilitation, and economic development.
Revenues for the City’s Special Revenue Funds totaled $8,507,958 compared with a full-year budget of $11,534,285. Receipts through March 31, 2024, represent 73.76% of the budget for the full year and are in line with typical revenues for the period.
Expenditures for the Special Revenue Funds total $8,872,946 against a full-year adjusted budget of $17,364,596. These figures represent 51.10% of the 2023-24 adjusted budget, expended through March 31, 2024. All Special Revenue Funds’ expenditures through March 31 indicate that they will not exceed budgetary constraints by the end of the year.
Capital Projects Funds
Capital Projects Funds are restricted in use to the funding of capital projects. The City has four active capital projects funds.
Revenues to date in the City’s Capital Projects Funds totaled $928,058 at March 31, 2024. These revenues represent 129.66% of the full-year budget of $715,742. Much of the budgeted revenue relates to grants for capital projects for which reimbursement will be received later in the fiscal year.
Expenditures in the Capital Projects Funds totaled $548,710 at March 31, 2024, out of a total adjusted budget of $1153,683, representing approximately 47.56%. Given year-to-date expenditures, it is anticipated that the Capital Projects Funds expenditures will end the year within the constraints of the current budget.
Enterprise Funds
The City operates four Enterprise Funds to provide transportation, sewer, sanitation, and cemetery services. The activities of these funds are intended to be supported solely by revenues from fees charged for services provided.
At March 31, 2024, the City’s Enterprise Funds generated revenues of $8,170,818 versus a budget for 2023-24 of $10,846,356. These revenues represent 75.33% of the full-year budgeted revenues for the year. All the City’s Enterprise Funds are on track to meet budgetary revenue estimates by the end of the fiscal year.
Expenditures in the Enterprise Funds stand at $7,301,448 as of March 31, 2024. This represents 68.40% of the full-year adjusted budget of $10,675,297. Given year-to-date expenditures, it is anticipated that the Enterprise Fund expenditures will end the year within the constraints of the current budget.
Internal Service Funds
The City’s Internal Service Funds provide motor fleet and technology services to support each of the City’s operating departments. Revenues for Internal Service Funds come from fees charged internally to each department for services provided.
At March 31, 2024, Internal Service Fund revenues totaled $1,819,983 out of a total revenue budget of $2,497,302. This amounted to 72.88% of the full-year budget.
Expenditures through the end of the third quarter of the fiscal year totaled $2,402,677, representing 80.36% of the full-year budget of $2,990,069. Internal Service Fund expenditures are expected to remain within budgeted amounts for the full year.
Successor Agency/Debt Service Funds
In addition to the funds already discussed, the City also operates a Debt Service Fund and a Successor Agency Fund. The Debt Service Fund, as its name suggests, is used to account for the expenditure of funds to make payments on outstanding debt obligations of the City. The Successor Agency Fund was established in the wake of the dissolution of redevelopment agencies in California to begin the wind-down of the affairs of the former Claremont Redevelopment Agency.
Revenues in Successor Agency/Debt Service Funds amounted to $570,896 at March 31, 2024, representing 16.95% of the full-year budget of $3,367,368. Expenditures totaled $3,215,296 of a budgeted $3,367,367, representing 95.48% of the full-year budget.
RELATIONSHIP TO CITY PLANNING DOCUMENTS
Staff has evaluated the agenda item in relationship to the City’s strategic and visioning documents and finds that it applies to the following City Planning Documents: General Plan and 2022-24 Budget.
CEQA REVIEW
This item is not subject to environmental review under the California Environmental Quality Act (CEQA).
PUBLIC NOTICE PROCESS
The agenda and staff report for this item have been posted on the City website and distributed to interested parties. If you desire a copy, please contact the City Clerk’s Office.
Submitted by:
Jeremy Starkey
Finance Director