TITLE
Recommendation to receive and file the Fiscal Year 2012 Third Quarter Budget Performance Report. (Citywide)
DISCUSSION
This report includes information on the City's Fiscal Year 2012 (FY 12) budget performance through June 30, 2012 for all funds, with particular emphasis on the General Fund.
Summary
The actions initiated by the City Manager at the end of the first quarter to close the projected $11 million General Fund budget gap are working and no further action is proposed at this time.
As of the end of the second quarter, expenditures in all City funds are expected to end the year under budget. General Fund revenue, however, is projected to end the year at about $397 million or 0.9 percent under budget. To close the mid-year shortfall as discussed in the first quarter report, the City Manager directed the implementation of a 1 percent savings target and recommended the use of one-time revenue of $5 million from FY 11, which was reserved at year-end to address potential revenue shortfalls in FY 12. As a result of these actions, it is anticipated that the General Fund will end the fiscal year within budget.
FY 12 - All Funds
There are no significant spending or revenue concerns to report at this time. Please see Attachment A for a complete summary of expenditures by fund. Staff will update the City Council in the year-end budget performance report if any new problems have arisen. All discussion of General Fund changes is included in separate sections below.
FY 12 General Fund Revenue
As reported in the first quarter performance report, the General Fund revenues have declined or grown slower than expected since the budget was adopted. That trend has not reversed itself in the third quarter, but has not worsened either.
In addition to the causes of the revenue shortfall summarized in the second quarter performance report, this report demonstrates additional decline in prior-year property tax revenues, which had been stable until FY 12. Although we attempt to present the most accurate estimates possible based on available data, third quarter projections have often understated the year-end revenues realized by the City because of the unpredictable nature of those revenues coming in the fourth quarter.
A summary of the top 40 General Fund revenues is included in Attachment B. Attachment C provides a more detailed breakdown of General Fund revenue performance and variances by department. Explanation of departmental variances are provided in the footnotes to this attachment.
FY 12 General Fund Expenditures
As of June 30, 2012, all departments have estimated to end the year within appropriation. In comparison to the second quarter performance report, expense estimates have declined by approximately $271,000 with various departments showing changes in both directions. This is not too surprising since typically, with three quarters of the year complete, a more accurate picture of year-end expenditures is available. Attachment D provides a summary of expenditures by department and footnote explanations of relevant changes.
FY 12 General Fund Budget To Be Balanced by Year-End
Year-to-date estimates, based on nine months of data, show General Fund expenses coming in less than one percent under budget. Financial Management does not anticipate any issues with expenditures ending the year within budgeted Citywide appropriation. As previously mentioned, however, the General Fund revenue and fund transfers are currently estimated to come in $11.8 million under budget. In order to end the fiscal year in balance, the City Manager initiated a 1 percent savings target Citywide for all General Fund departments at the end of the first quarter. All departments are estimating to meet that required savings. In addition, the FY 11 revenue surplus of $5 million will be applied, as needed, to offset the FY 12 shortfall and has been included in the revenue estimates for the first time.
These actions, in combination, have mitigated the projected deficit. Past history indicates it is very possible that unexpected revenues or additional department savings will be reflected at year-end. Further City Council action to address the FY 12 is not needed at this time.
TIMING CONSIDERATIONS
City Council action on this matter is requested on September 11, 2012.
SUGGESTED ACTION
Approve recommendation.
Respectfully Submitted,
JOHN GROSS
DIRECTOR OF FINANCIAL MANAGEMENT
APPROVED:
PATRICK H. WEST
CITY MANAGER