City of Culver City, California
City Council Agenda Item Report
RECOMMENDATION:
Staff recommends the City Council receive and file the Fiscal Year 2012/2013
General Fund Preliminary Year-End Report.
BACKGROUND:
The purpose of the attached report is to provide an update on the financial results for
the General Fund for Fiscal Year 2012/2013. While the numbers contained in the
report are not expected to change, staff is still working with the independent auditors
to finalize the annual financial statements. Therefore, it is possible there could be
minor changes. A final report will be provided, including all other funds as well, once
the audited financial statements are completed.
DISCUSSION:
During Fiscal Year 2012/2013, there was a continued recovery in the overall
economy, as well as the local economy. Additionally, the resources available to the
General Fund were assisted by the increased Transient Occupancy Tax rate
increase being effective for the full fiscal year, along with a partial quarter of receipts
from Measure Y (the temporary local sales tax of 0.5%). For the first time in several
years, revenues outpaced expenditures. These preliminary results indicate the
difference is $2.1 million for Fiscal Year 2012/2013. This was an improvement from
the estimated $1.6 million operating deficit at the time the Fiscal Year 2013/2014
budget was originally presented to City Council. This $3.7 million improvement to
the financial results for the year is attributable to a $2.9 million improvement in
Meeting Date: 11/25/2013 Item Number: C-4
AGENDA ITEM: Receipt and Filing of Fiscal Year 2012/2013 General Fund
Preliminary Year End Report.
Contact Person/Dept.: Jeff Muir, Finance
Department
Phone Number: (310) 253-5865
Fiscal Impact: Yes [] No [X] General Fund: Yes [] No [X]
Public Hearing: [] Action Item: [] Attachments: [X]
Public Notification: (Email) Meetings and Agendas – City Council (11/19/13); (Email)
Ongoing Topics – Fiscal and Budget Issues (11/19/13)
Department Approval:
Jeff Muir (11/18/13)
City Attorney Approval:
Carol Schwab (by H. Baker) (11/19/13)
Chief Financial Officer Approval:
Jeff Muir (11/18/13)
City Manager Approval:
John M. Nachbar (11/19/13) City of Culver City, California
City Council Agenda Item Report
projected revenues and expenditures of $0.8 million less than projected. Details are
provided in the attached report.
FISCAL ANALYSIS:
There is no fiscal impact from this item.
ATTACHMENT(S):
1. Fiscal Year 2012/2013 General Fund Preliminary Year-End Report
MOTION:
That the City Council:
Receive and file the attached Fiscal Year 2012/2013 General Fund Preliminary
Year-End Report.
MEETING DATE: 11/25/2013
AGENDA ITEM: Fiscal Year 2012-13 General Fund Preliminary Year
End Report.
ATTACHMENTS
1. Fiscal Year 2012-13 General Fund Preliminary Year-
End Report.
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City of Culver City
PRELIMINARY YEAR END REPORT
FISCAL YEAR 2012-13
GENERAL FUND
1
CITY OF CULVER CITY
2012-13 Preliminary Year End Report
General Fund
INTRODUCTION
During Fiscal Year 2012-13, there was a continued recovery in the overall economy, as well as the
local economy. Additionally, the resources available to the General Fund were assisted by the
increased Transient Occupancy Tax rate increase being effective for the full fiscal year, along with
a partial quarter of receipts from Measure Y. For the first time in several years, revenues outpaced
expenditures by $2.1 million. This was an improvement from the estimated $1.6 million operating
deficit at the time the Fiscal Year 2013-2014 budget was presented to City Council. This $3.7
million improvement to the financial results for the year is attributable to a $2.9 million improvement
in projected revenues and expenditures of $0.8 million less than projected.
The Finance Department is working with the City’s independent auditors to complete the financial
statements for FY 2012-13. While the numbers in this report should correspond with the final
audited results, they are considered preliminary until the audit and annual financial statements are
complete. This report discusses the preliminary results of the General Fund only. Other City funds
will be discussed in the staff report presenting the audited financial statements for Fiscal Year (FY)
2012-13.
REVENUES SUMMARY
General Fund Revenue Overview (as of 06/30/2013)
General Fund revenues slightly exceeded the adjusted FY 2012-13 budget by $2.8 million, or
3.4%. Revenue categories that performed under the adjusted budget, such as Sales Tax, Utility
Users’ Tax – Telecommunications, Use of Money and Property, and Other – Transfers, were offset
by categories that exceeded the budget, such as Property Tax, Business Tax, Real Property
Transfer Tax, Transient Occupancy Tax and Charges for Services.
Total General Fund revenue for FY 2012-13 was higher than FY 2011-12 by approximately $6.5
million, or 8.1%. This was primarily due to increased receipts for Property Tax, Sales Tax,
Measure Y, Transient Occupancy Tax, and Use of Money and Property. The table below
summarizes the General Fund revenue results for FY 2012-13:
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2011-12
ACTUALS
ADJUSTED
BUDGET 2012-13
2012-13
ACTUALS
%
RECEIVED
BUDGET
VARIANCE
Property Tax 4,224,516 4,940,000 6,291,986 127.4% 1,351,986
Sales Tax 16,970,122 17,700,000 18,095,663 102.2% 395,663
Measure Y 0 1,800,000 1,163,591 64.6% (636,409)
Public Safety Sales Tax (PSAF) 350,992 345,000 338,601 98.1% (6,399)
Business Tax 9,930,602 10,050,000 10,253,802 102.0% 203,802
Franchise Tax 1,271,563 1,350,000 1,399,727 103.7% 49,727
Real Property Transfer Tax 1,732,998 1,700,000 2,382,116 140.1% 682,116
Electricity UUT 5,823,861 6,000,000 5,976,520 99.6% (23,480)
Gas UUT 949,193 1,000,000 978,089 97.8% (21,911)
Water UUT 1,241,373 1,175,000 1,252,729 106.6% 77,729
Telecomm UUT 5,605,205 5,525,000 5,396,223 97.7% (128,777)
Cable UUT 744,076 775,000 915,247 118.1% 140,247
Transient Occupancy Tax (TOT) 3,781,092 4,800,000 5,195,349 108.2% 395,349
Commercial/Industrial Dev. Tax 204,452 400,000 405,100 101.3% 5,100
Licenses and Permits 2,481,562 2,503,323 2,604,208 104.0% 100,885
Intergovernmental 3,460,453 3,470,837 3,495,781 100.7% 24,944
Charges for Services 6,779,991 6,568,710 7,264,871 110.6% 696,161
Fines and Forfeitures 3,064,774 3,509,700 3,543,606 101.0% 33,906
Use of Money & Property 490,776 2,074,000 1,425,760 68.7% (648,240)
Other Revenues 1,502,481 558,112 920,220 164.9% 362,108
Other - Transfers 9,184,776 7,244,878 6,995,455 96.6% (249,423)
TOTAL GENERAL FUND $79,794,858 $83,489,560 $86,294,645 103.4% $2,805,085
GENERAL FUND REVENUES
? Property Tax receipts exceeded the prior year by 48.9%, and exceeded the adjusted budget
projection by 27.4%. However, most of this increase is due to one-time distributions of
former redevelopment tax increment and not a result of dramatic assessed value increases.
At the time of the projection, staff inadvertently excluded a one-time distribution (referred to
above) of over $1 million. Otherwise, the projection would have been much closer to the
actual result.
? Sales Tax receipts exceeded the prior year by 6.6%, and exceeded the adjusted budget
projection by 2.2%. Continued economic recovery has resulted in sales tax receipts growth
over the past year.
Measure Y went into effect on April 1, 2013. Actual receipts were $0.6 million less than
anticipated. This is primarily just due to timing differences in when receipts are actually
received, with several hundred thousand attributable to FY 2012-13 being recognized in FY
2013-14.
? Real Property Transfer Tax exceeded the prior year by 37.5%, and exceeds the adjusted
budget projection by 40.1%. This revenue source is dependent on real estate sales
transactions occurring, and can vary wildly from year to year. The sale of a significant
commercial property can greatly inflate the amount received in a particular year. While it is
good news that this item performed so well in FY 2012-13, this performance cannot be
counted on as operating revenue for future years.
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? Generally, by combining all categories, UUT performed closely to adjusted budget
projections, and was only slightly higher than the previous year. Increased competitiveness
amongst cell phone providers, along with more consumer utilization of pre-paid plans led to
a slight decline in Telecomm UUT. This is an area for future concern that staff is monitoring.
? Transient Occupancy Tax (TOT) exceeded the prior year by 37.4%, and exceeded the
adjusted budget projection by 8.2%. FY 2012-13 marked the first full year of the increased
tax rate (from 12% to 14%), which would account for a 17% increase over the prior year.
Obviously, the realized increase was much greater than that, showing that hotel occupancy
and room rates are both increasing. This was the highest year of TOT receipts in the City’s
history.
? Commercial/Industrial Development Tax is another revenue that is very hard to predict, and
varies significantly from year to year. It is completely dependent upon new commercial
development activity. The amount realized in FY 2012-13 was approximately double the
prior year amount.
? Charges for Services exceeded the prior year by 7.2%, and exceeded the adjusted budget
projection by 10.6%. This category consists of a variety of charges administered by virtually
all City departments. Primary factors in the increase were building related fees, parks
facility rentals and recreation class fees.
? Fines and Forfeitures is primarily comprised of red light camera violations and moving
violations written by Culver City traffic enforcement. These sources exceeded the prior year
by 15.6%, and slightly exceeded the adjusted budget projection by 1.0%. The primary
reason for the increase is red light camera intersections that had been out of service for
parts of the prior year due to construction being back in service.
? Use of Money & Property includes interest income and income from the rental of city
property. Receipts exceeded the prior year by 190.5%, and fell short of the adjusted budget
projection by 31.3%. The increase over the prior year was due to rental income received
from the Pacific Theater being accounted for in the General Fund after the dissolution of
redevelopment. This rental income fell short of budget expectations due to decreased
theater attendance compared to the prior year.
? Other Revenues consists primarily of unscheduled or unanticipated revenues outside of the
other categories. These are normally one-time items, with the exception of the annual sign
revenue from Westfield. Year to year fluctuations in this category are expected.
? Other – Transfers is comprised of interfund transfers and cost allocation transfers from other
funds. Revenue was 23.8% lower than last year because of the State action to dissolve
Redevelopment Agencies, and 3.4% lower than the adjusted budget projection due to less
administrative cost reimbursement from the Successor Agency than anticipated.
EXPENDITURES SUMMARY
General Fund Expenditure Overview (as of 06/30/2013)
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Overall, General Fund expenditures were $84,199,242, or 95.5% of appropriations.
Total General Fund expenditures for FY 2012-13 were 3.8% (approximately $3.1 million) more
than FY 2011-12.
2011-12
ACTUALS
ADJUSTED
BUDGET 2012-13
2012-13
ACTUALS
%
EXPENDED
BUDGET
VARIANCE
ADMINISTRATION $1,228,081 $1,278,605 $1,283,248 100.4% ($4,643)
CITY CLERK $463,243 $375,400 $355,336 94.7% $20,064
CITY ATTORNEY $1,475,243 $1,842,899 $1,685,020 91.4% $157,879
FINANCE $4,448,495 $4,509,342 $4,414,704 97.9% $94,638
HUMAN RESOURCES $998,797 $1,046,704 $1,090,615 104.2% ($43,911)
INFORMATION TECH. $3,054,292 $2,853,150 $2,703,103 94.7% $150,047
PARKS, REC. & COMMUNITY SVCS $5,868,940 $6,785,988 $6,403,661 94.4% $382,327
POLICE DEPARTMENT $27,910,635 $31,216,643 $29,227,373 93.6% $1,989,270
FIRE DEPARTMENT $16,148,703 $17,348,554 $16,987,109 97.9% $361,445
COMMUNITY DEVELOPMENT $6,745,827 $5,663,134 $5,314,945 93.9% $348,189
PUBLIC WORKS $8,808,140 $9,702,782 $9,201,039 94.8% $501,743
NON-DEPARTMENTAL $2,527,279 $3,208,600 3,049,922 95.1% $158,678
Transfers $701,350 $500,000 $500,000 100.0% ($0)
Retiree Health Pre-funding $750,291 $1,850,000 $1,983,167 107.2% ($133,167)
TOTAL GENERAL FUND $81,129,316 $88,181,801 $84,199,242 95.5% $3,982,559
GENERAL FUND EXPENDITURES
As is common, position vacancies during the course of the year create savings versus the budget.
There is a lag time between when positions become vacant and when a recruitment process is
completed and a new individual put in place. While the formal hiring freeze has been lifted, the
City still reviews each vacancy prior to conducting a recruitment. To the extent no vacancies occur
during a particular year, the full budget appropriation authority would be required, and therefore
such annual savings are considered one-time, or non-recurring.
Year to year comparisons of actual expenditures within a department can be difficult if there are
vacancies that exist in one year that did not in a prior year, or vice versa. This can make it appear
that departmental expenditures increased or decreased more than they would all other things
being equal. Beyond such year to year variations, there were several items that worked to
increase or decrease expenditures over the prior year:
? Safety salary increases from the Salary Initiative Ordinance, an increase in retirement
contribution rates, and increases in health care costs resulted in higher costs for Police and
Fire.
? Increased retirement contribution rates and health care costs also occurred in non-safety
departments.
? The General Fund increased its contribution towards pre-funding retiree health care benefits
by $1.2 million over the prior year.
? Community Development Department costs decreased due to the elimination of a number of
positions that were formerly funded by the Redevelopment Agency.
? Non-Departmental costs for utilities and insurance premiums increased.
5
CONCLUSION
It was originally anticipated there would be a General Fund deficit for FY 2012-13 of $1.6 million.
Revenues $2.9 million over projections coupled with $0.8 million in additional expenditures savings
over projections resulted in a surplus of $2.1 million. A significant portion of the revenues over
projections were due to one-time items, or revenue sources that vary significantly from year to
year. The expenditure savings are also considered one-time. The final results of FY 2012-13 will
be factored into any revised projections for the FY 2013-14 budget when the Mid-Year Budget
Monitoring Report is completed.