TITLE
Recommendation to receive and file the Fiscal Year 2013 Third Quarter Budget Performance Report. (Citywide)
DISCUSSION
This report includes information on the City's Fiscal Year 2013 (FY 13) budget performance through June 30, 2013 for all funds, with particular emphasis on the General Fund.
Summary
As of the end of the third quarter, expenditures in all City funds are still expected to end the year within budget, General Fund revenues are anticipated to exceed expenses by $36.9 million, which will be reserved at year-end for one-time use in accordance with the FY 14 Adopted Budget. The current estimate of the FY 13 General Fund ending fund balance is $675,000.
FY 13 General Fund Expenditures
After the third quarter of FY 13, 71 percent of Adjusted General Fund appropriations have been expended, which is roughly on pace with the spending pattern of the previous fiscal year. The current FY 13 Budget includes adjustments to capture the savings from the agreement with the International Association of Machinists and Aerospace Workers (lAM) to have employees pay their total employee contribution rate to CaIPERS. The estimated savings to the City's General Fund of approximately $2.5 million ($6.3 million in All Funds) in FY 13 is reserved as part of the available one-time funds to be used in FY 14. Current estimates also include the repayment to the Successor Agency for debt service payments in FY 12 and the release of reserve to offset that expense.
As a result of the timing of the Third Quarter Budget Adjustment report scheduled to be heard by the City Council with this performance report, a few departments appear to be over-budget. This is the result of a timing issue; once the third quarter budget adjustments, with offsetting revenues are approved, the General Fund will be back within appropriation. Staff will continue to closely monitor expenses and report any significant changes.
FY 13 General Fund Revenue
Revenue projections as of the third quarter are estimated at $451.9 million, or 13.8 percent above adjusted budget. Of this amount, $51.6 million or 11 percent are onetime revenues and were unbudgeted at the start of the fiscal year. Un budgeted onetimes will be discussed later in this report.
During the third quarter of the fiscal year, the General Fund experienced higher than expected growth in several revenues, including property tax, transient occupancy tax and pipeline franchise revenue. These revenues declined during the economic downturn and are now experiencing a rebound. Per the County of Los Angeles, payments of property taxes have been made more timely and with fewer delinquencies than in the recent past. Over the past few years, delinquencies have comprised 3 to 4 percent of all property taxes; fewer delinquencies have resulted in additional revenue to the General Fund. Transient Occupancy Tax has also experienced increases. Revenue per average room in Long Beach was up by 7.8 percent during the first six months of 2013 compared to the same period in 2012, resulting in an increased year-end projection of approximately 9 percent. Gas pipeline franchise revenue is also experiencing a rebound from record lows.
While many of the major revenues are experiencing growth, others have not experienced a turnaround. Telephone Utility Users Tax (UUT) and Emergency Ambulance billing are both performing below budgeted levels. A 5 percent decline in the Telephone UUT revenue projection reflects the impact of constant price declines in the mobile phone industry, as well as the growing trend of prepaid cellular phones by customers. As part of the FY 13 Adopted Budget, Emergency Ambulance revenue was increased by $1.25 million in recognition of the additional Medicaid reimbursements made possible by AB 678. Federal and State approval and implementation of this reimbursement program has taken longer than expected and revenues associated with it are no longer anticipated in FY 13; revenue estimates have been adjusted accordingly.
A list of top 40 General Fund revenues is included in Attachment C.
One-time Resources
The FY 13 Adopted Budget included $16.9 million in one-time revenues and expenses. Revenues were primarily from Uplands Oil revenue over $70/bbl and anticipated one-time back payment of Ground Emergency Medical Transport per AB 678. Of this $16.9 million, $3.6 million in Emergency Ambulance revenue attributed to the adoption of AB 678 is no longer anticipated in FY 13, but is instead expected in FY 14. Expenses that were to be funded in FY 13 by anticipated AB 678 funds will instead be funded by other General Fund revenues that have exceeded budget projections.
One-time revenues realized in FY 13 are now projected at a net of $43.4 million (excluding $10.8 million in a Subsidence Fund loan repayment from the State). These one-time revenues include RDA related one-times, litigation proceeds related to County property tax administrative fees, SERRF Tip Fees, and PERS savings from the lAM employees. FY 13 one-time funds not spent in FY 13 are designated for reservation at year-end for expenditure in FY 14 based on the FY 14 Budget as adopted by City Council.
FY 13 Expenditures - All Other Funds
There are no spending concerns to report at this time. Please see Attachment A for a complete summary of expenditures by fund.
FY 13 Revenues - All Other Funds
There are no spending concerns to report at this time.
TIMING CONSIDERATIONS
City Council action on this matter is requested on September 17, 2013.
SUGGESTED ACTION
Approve recommendation.
Respectfully Submitted,
JOHN GROSS
DIRECTOR OF FINANCIAL MANAGEMENT
APPROVED:
PATRICK H. WEST
CITY MANAGER